How Trump's sanctions are crippling Iran's economy
06/24/2019June 24, 2019
The US move to reimpose sanctions on Iran and choke off the last remaining sources of Tehran's oil revenue has crippled the Iranian economy. For many ordinary Iranians, it's becoming increasingly hard to get by.
US President Donald Trump has slapped fresh sanctions on Iran as part of his "maximum pressure" campaign against the Middle Eastern nation. Trump's executive order on Monday targeted none other than Iran's supreme leader, Ayatollah Ali Khamenei, and his associates, with financial sanctions.
US Treasury Secretary Steven Mnuchin said Trump's order will lock up billions of additional dollars in Iranian assets.
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Tehran and Washington are currently locked in a bitter standoff, and escalating tensions have fueled fears of an unintended slide toward a military confrontation between the two sides, particularly after Iran shot down a US spy drone over the Persian Gulf last week.
The US has also beefed up its military presence in the region and blacklisted Iran's Revolutionary Guards as a "foreign terrorist organization." In response, Iran declared the US a "state sponsor of terrorism" and American forces in the Middle East and beyond as "terrorist groups."
Last year, Trump unilaterally pulled the US out of the landmark nuclear deal that Iran and six world powers struck in 2015. He has since reimposed wide-ranging sanctions, aimed at putting an end to Iran's oil exports, crippling its main source of foreign exchange and forcing Tehran to abandon its nuclear ambitions.
Donald Trump slaps sanctions on IranDonald Trump slaps sanctions on Iran
Since pulling the US out of the nuclear deal, Trump has reimposed wide-ranging sanctions on IranImage: picture-alliance/abaca/M. H. Simon
How have US sanctions hit Iran?
The US moves have hit the Iranian economy hard. While the oil-rich nation's crude exports have been down, inflation and unemployment have risen drastically.
Iran, which sits on the world's fourth-largest oil reserves and second-biggest gas reserves, shipped over 2.5 million barrels per day of crude in April 2018, the month before Trump withdrew the US from the nuclear deal. That figure was down to about 400,000 to 500,000 barrels per day in May, reported Reuters news agency, citing industry sources.
The lifting of international sanctions in 2016 spurred rapid growth in Iran, with the country's economy expanding by more than 12% in 2016. But the reimposition of sanctions last year dealt a massive blow. The Iranian economy, the second-largest in the region behind Saudi Arabia's, shrunk by 3.9% last year, estimated the International Monetary Fund (IMF).
In 2019, IMF forecasts say, Iran's economy will shrink by a massive 6%.
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Frustration over the sanctions is running high among Iranians, who have seen the value of Iran's currency, the rial, plummet by about 60% over the past year. Inflation is up to 37% and the cost of food and medicine has soared by 40% to 60%, according to EU figures.
"In the last weeks and months, the prices of daily products have increased dramatically for every Iranian," Michael Tockuss, managing director of the German-Iranian Chamber of Commerce, told DW. "The sanctions are not specific anymore; they're not directed against special companies or against the rulers of the country. Instead, they hit average Iranians all over the country."