November 2, 2021

Memo: The Humanitarian Impact of U.S. Sanctions on Iran

Sanctions imposed on Iran during the Trump administration have harmed the Iranian economy, the welfare of its people, efforts to fight the pandemic, the work of humanitarian organizations, and efforts to help Afghan refugees in Iran.

The Biden administration has expressed a desire to reenter the Iran nuclear deal and has engaged Iran in indirect negotiations in Vienna since April 2021 towards this end. While lifting nuclear sanctions is a key subject of the negotiations, U.S. sanctions policy towards Iran remains largely unchanged to this day.

There are humanitarian exemptions to U.S. sanctions on Iran on paper, but in practice these have failed to ensure vital humanitarian goods such as medicine and COVID-19 aid get into the country. The following memo explains the humanitarian impact of U.S. sanctions on Iran:

Sanctions Have Hampered Iran’s COVID response

Sanctions exacerbated the impact of the humanitarian toll of the pandemic in Iran. They not only compounded the economic pain caused by the outbreak but harmed Iran’s access to vital medical goods, including COVID-19 vaccines.

In recent months, Iran has made steady progress in securing vaccines, showing that new exemptions and assurances from the U.S. government are having an effect. However, at times during the past year, Iran encountered complications in vaccine procurement that are at least partially attributable to U.S. sanctions. More can and should be done to remove financial obstacles and expedite Iran’s access to mRNA vaccines.

  • Iran was one of the early flashpoints for the pandemic and has been one of the hardest hit countries in the Middle East, with over 125,000 confirmed deaths as of October 26th.

  • Early in the pandemic, U.S. sanctions prevented Iran from importing COVID-19 testing kits from the World Health Organization due to shipment restrictions. The medical journal Lancet also documented how sanctions contributed to “shortages of test kits, protective equipment, and ventilators.”

  • Sanctions played a role in preventing Iran from paying for vaccines last year. At the time, the primary issue was foreign banks being averse to handling Iranian money to pay for vaccines. Iran paid for 16.8 million doses of vaccines through Covax on January 6th, but their delivery was delayed for many months, which Iranian officials blamed on sanctions. However, organizations such as Human Rights Watch also highlighted supply issues in disturbing Covax vaccines.

  • The Iranian government’s mismanagement has also hampered its procurement of COVID-19 vaccines, including a ban on “American and British” vaccines by Supreme Leader Ayatollah Khamenei.

  • Leading Iranian medical experts have highlighted the impact of sanctions, including Kayhan Azadmanesh, the head of virology research division at a medical institute in Tehran, in an August 2021 interview with Nature.

  • Azadmanesh said: “The sanctions have caused a lot of difficulty, because they make it hard for us to buy materials and equipment. For example, chromatography resins we need to purify vaccines are mostly produced by multinational companies that are major suppliers to the United States, so they might be afraid of selling to us. The United States says that we can apply for exemptions, but, in our experience, that hasn’t worked.”

  • In March 2021, the UN Human Rights Council released a report that highlighted significant economic, political and social challenges experienced by Iran in confronting the Covid-19 pandemic. Special Rapporteur Javaid Rehman highlighted how “sanctions had in part hindered the Government’s efforts to counter the pandemic” and called for sanctions to be eased to help Iran contain the pandemic.

  • In June, the Treasury Department issued new general licenses that sought to expand on exemptions to ensure COVID-19 aid gets to Iran and other sanctioned countries. Iran since then has been able to import larger quantities of vaccines.

  • After the General License was issued, Rick Brennan, the Regional Emergency Director for WHO’s Regional Office for the Eastern Mediterranean, said on September 15th that he is “not aware of any instance where sanctions on Iran or any other country have been a limitation in accessing vaccines through Covax and other facilities.”

  • While Khamenei partially reversed his ban in August and the rate of vaccinations in Iran has increased in recent months, VOA has noted how “U.S. sanctions imposed on Iran mean the cash-strapped government has limited funds to purchase vaccines abroad.” Iran has asked that it be given access to some of its frozen assets in South Korea to purchase humanitarian goods. South Korean officials have discussed the matter with the U.S., but the Biden administration maintains that no sanctions will be eased until there is a mutual return to the nuclear deal.

  • Iran has largely relied on donations of Western vaccines, especially the AstraZeneca vaccine, and most of the vaccines imported into the country have been China’s Sinopharm vaccine.

  • Iran has not been able to import substantial quantities of the more effective mRNA vaccines. While there is still a prohibition on the Pfizer vaccine, officials have also cited an inability to pay for these vaccines as a reason for why they have not been imported. Iranian officials have blamed Pfizer and Johnson and Johnson subsidiaries in Europe for falling through on Iranian orders of vaccines, though the veracity of their comments are unclear.

Impact of Sanctions on Iran’s Economy & Humanitarian Trade

Sanctions targeting Iran’s energy sector and other sectors have impeded trade and access to goods that are vital for public health and basic needs. They have caused the economy to contract, spurred currency devaluation and runaway inflation, and have shrunk the middle class.

  • Organizations such as Human Rights Watch have documented how sanctions have harmed Iran’s ability to procure medicines, especially medication for patients with rare and advanced diseases. The Stockholm International Peace Institute has also found a direct correlation between Iran’s trade in medical goods with the EU and the imposition of U.S. secondary sanctions.

  • Sanctions have also contributed to a shrinking of the Iranian middle class, from 45 percent of the population in 2018 to 30 percent by March 2020. Sanctions also resulted in sharp increases in food prices, including for basic commodities such as rice and lentils.

  • Iran’s rial currency dropped from about 43,000 rials to the dollar in January 2018, before the U.S. reneged on the nuclear deal, to roughly 277,000 today. As the New York Times has noted: “everything from rents to clothing prices is based on the dollar because most raw materials are imported, so Iranians are spending much more of their incomes on much less.”

  • In October 2020, a group of UN human rights experts noted how overcompliance with U.S. sanctions “harms the ability of Iranian patients to enjoy their human rights, particularly the rights to health, to be free from physical and psychological pain, inhuman treatment and the right to life.”

  • The UN experts highlighted the cases of a Swedish bandage maker, which produces a special bandaid for a rare severe and life-threatening skin condition, which has stopped doing business with Iran as a result of U.S. sanctions.

Humanitarian Exemptions Have Not Worked

Despite humanitarian exemptions to U.S. sanctions on Iran, the broad scope of the sanctions has created an environment of risk aversion and overcompliance that has obstructed humanitarian trade.

  • Most firms and humanitarian organizations cannot find financial institutions to process payments for humanitarian goods, transfer donations, or even pay local aid workers.

  • In early 2020, the Norwegian Refugee Council reported that for most of 2018–19 it “could not find a single international bank able to transmit Western donor money to aid Afghan refugee communities across Iran and natural disaster victims in most affected provinces.”

  • Firms and humanitarian organizations engaging in permitted trade must shoulder additional burdens to comply with sanctions, which is a time- and resource-consuming process. This has led to a “chilling effect” and many firms ending all provision of goods and services to Iranians, including the provision of personal communication tools and services by companies such as Amazon and Google, which were vital for Iranians to circumvent their own government’s censors.
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