With the inauguration of a moderate, Hassan Rouhani, as president of Iran -- a clear sign the Iranian people and political establishment want the damaging western economic sanctions ended through a change of course in the stalemated nuclear dispute with America – prominent Iranians are promoting the traditional liberal message that free trade fosters peace as well as prosperity.
In an op-ed last month in the private economic newspaper Donya-e-Eqtesad, Professor Mousa Ghaninejad, a respected public intellectual, invoked Montesquieu, who inspired America’s founders, in explaining that free trade creates wealth as it promotes civility, respect for other people’s rights, and peace by increasing interdependence. Ghaninejad, who in the last two decades has tirelessly advocated liberalism and free enterprise for Iran, went on to argue that sanctions are both counterproductive and unlawful. He concluded by calling on the Iranian people to appeal to the world for an end to the sanctions.
Ghaninejad’s message has resonated in Iran. Every day, newspapers feature articles and interviews critical of the sanctions. A Facebook page opposing them has more than 10,000 fans. On August 8, 55 prominent Iranian political prisoners joined the campaign by sending an open letter to President Obama (published in the Guardian) that called for an end to the sanctions, pleading with him to seize the opportunity presented by Rouhani’s presidency to bring the conflict to a mutually acceptable resolution.
Sanctions are nothing new to Iran, and history tells us they have never been effective.
When Iran nationalized the Anglo-Iranian Oil Company in 1951, Great Britain immediately froze Iran’s assets, banned exports to the country, and blocked all shipping there by placing the British navy in the Persian Gulf. That embargo had severe economic consequences for the Iranian people, but it failed to change the government’s nationalization policy. Instead, it empowered the politicians who opposed any compromise. At one point in the arbitration conducted by the United States and the World Bank, the two sides were close to an agreement. But by then nationalistic and anti-compromise sentiment among the public was so high that the emboldened radicals were able to persuade Prime Minister Mohammed Mosaddeq to reject the resolution. What followed was a military coup against Mosaddeq (with the help of the CIA), 25 years of authoritarian rule under the Shah, and the 1979 Islamic revolution.
Again, when the American staff of the U.S. embassy in Tehran was taken hostage in 1979, the U.S. government froze Iranian assets and imposed sanctions, which have only intensified since then. The hostage crisis certainly demanded a strong reaction by the U.S. government, but did the sanctions ultimately bring the release of the hostages? No. It has been argued that even without sanctions, diplomatic pressure on Iran’s revolutionary government, whose credibility as a member of Non-Aligned Movement was severely damaged, would have brought the same outcome.
It’s worth asking: What if the American people remained a strong trading partner of the Iranian people during the last 34 years, despite all the political conflict? Wouldn’t the countries be in a better position to resolve the current dispute?
This is an urgent matter for the Iranian people. The International Monetary Fund says the sanctions, which the United States has pushed other nations to honor, are the major reason the Iranian economy is shrinking. In 2012, Iran’s real GDP declined 1.9 percent, and the IMF forecasts that GDP will decline 1.3 percent further this year.
In this unfortunate situation, there is one thing to celebrate. The Iranian people’s campaign against sanctions, which has support from across the political spectrum, is founded on the age-old truth that “restricting trade makes us poorer.” It is a lesson they learn daily in the marketplace. As Ghaninejad, the godfather of classical liberalism in Iran, points out, it follows that because of the benefits of the division of labor and the good will engendered through economic cooperation, liberating trade makes us richer.
This is true whether the trade restrictions come from U.S. sanctions or Iranian tariffs and quotas.