U.S. sanctions hurt Iran’s economy and workers

Oct. 2019 Iran retired workers
Retired workers in Tehran protest impoverishment in September 2018.


Since the Iranian revolution, U.S. capital has felt threatened by the Islamic Republic’s opposition, both real and imagined, to imperialist domination. The decade began with Barack Obama signing into law the Comprehensive Iran Sanctions, Accountability, and Divestment Act alongside the UN’s freezing the assets of major Iranian banks and imposing travel bans on government officials. The sum total of economic actions taken by the U.S., the EU, and the UN during this time is described by one bourgeois analysis (Farhad Rezaei, “Iran’s Policy after the Nuclear Agreement,” Palgrave Macmillan 2019) as isolating the Iranian economy virtually overnight.

Economic and diplomatic pressures were increased until the signing of the Joint Comprehensive Plan of Action (JCPoA), also known as the Iran “deal.”

Even after the JCPoA’s implementation, the Iranian government still maintained too much independence for the U.S. ruling class. Despite the Iran deal having the intended effect of allowing skyrocketing foreign investment and commodity imports into Iran, the Trump administration unilaterally withdrew from the internationally negotiated agreement on May 8, 2018. While other countries have criticized the decision, there is no clear pathway for European countries to circumvent U.S. sanctions. Iran never had a developed nuclear weapons program nor a clear interest in creating one.

U.S. capitalists have been trying to get back to the type of political and economic relationship with Iran that they had under the Shah. That is to say, a relationship of total dependence and subordination.

Since the revolution there have been two opposing but inseparable tendencies within the Iranian ruling class. The section headed by current president Rouhani and his supporters has a vision for increased integration with the global capitalist class with the hope that this will lead to capital investment and economic growth in Iran. The other section, a remnant of the bazaari petit bourgeois thermidor that overtook the working class after the 1979 revolution, also wants integration, but on better terms than Rouhani and his ilk. Both sections are venomously opposed to the self-activity of Iranian workers, with the relatively liberal Rouhani declaring, “One of the main challenges that employers and our factories face, is the existence of labor unions.”

The U.S. has a few main goals with subduing Iran: increasing its share of Iranian oil profits, opening up the Iranian market to U.S. imports, and stopping the military threat to its regional allies that it sees in Iran. An emblematic example of the thinking on this last point is Mike Pompeo’s very first public talk after becoming Secretary of State. In it, he points the finger at Iran in everything from the real cause of the war in Yemen to an existential threat to Israel by way of Hezbollah. All of this, says Pompeo, was made worse by the JCPoA, and the main effect of increased trade for Iran was, in this view, more funding for military adventurism that threatens U.S hegemony in the Middle East.

Iranian capital needs foreign investment

A major drive for Iranian capitalists to take the steps towards opening their economy laid out in the JCPoA is the need for capital investment in Iran. Iranian companies need new machinery and equipment, as well as customers, to make their major industry, oil production, as profitable as possible. More economically dominant countries with advanced technological resources, all imperialist at this point in time, are seizing on the opportunity to gain a foothold in both exporting products to and importing surplus value from Iran. Originally, the United States under Obama used sanctions to secure the Iran Deal, which left itself as the country with the most international influence over Iran’s economy. This is shown to some extent by the difficulties European and Asian countries have had with continuing trade relations with Iran over the last year.

At the same time, Trumpian tactics of isolation has pushed Iran towards searching for new partners. China became the country with the largest volume of exports to Iran in 2017, and now also accounts for almost a third of all energy exports from Iran. Since the unilateral withdrawal by the US from the Iran Deal, China has wavered on whether or not to abide Trump’s decision. With an increasingly hot tariff war between the two countries, the effect of US sanctions against China have become more meaningless. Reports indicate that China has begun importing Iranian oil in a direct violation of the US dictate.

Without access to foreign exchange and investment, the Iranian economy has started to contract, and oil revenues have dropped precipitously from a multi-year high in March 2018. Without the ability to maximize profitable investment, Iranian capitalists have gone on a spree of firings and continued the common practice of withholding wages. The Washington Post reported that since the 2018 sanctions “Iran’s currency has lost 60 percent of its value and the price of staples such as red meat and onions has skyrocketed 120 percent. Imported medicines have disappeared from pharmacies, and the cost of travel has become out of reach for most.”

U.S. sanctions have been felt hard by Iranian working people. They have exacerbated already high inflation and unemployment in the country and brought the economy to a virtual standstill. Since the U.S. left the Iran deal, it has placed new sanctions on financial products, currency exchange, and medicine, as well as forbidding the whole world from engaging in trade with Iran. The New York Times reports that “harsh banking restrictions and the threat of secondary sanctions … have made it nearly impossible for foreign pharmaceutical companies to continue working in the country.”

Working-class struggles

Since late 2017, there has been a constant upsurge of struggle by Iranian workers for economic and political rights. One of the catalysts of the movement, which has spread throughout the country and kept workers in motion for almost two continuous years, has been the deteriorating living standards for Iranian workers.

Despite promises from the Rouhani administration that the JCPoA would increase wealth and prosperity through foreign trade, what actually happened was an increase in austerity measures. Instead of using the greater ability to sell oil on the world market to fund domestic industries and raise wages, the Islamic Republic cut its own developmental budget and attempted to end a program of cash transfers that gave each Iranian a stipend of about $90 per month.

Since then, there have been nearly daily strikes all around the country, with major plants being the Haft Tapeh Sugar Company and a steel manufacturer in Ahvaz. Workers have struck over non-payment of wages and raised demands that their pay be tied to the cost of basic necessities.

They have also been fighting for the release of trade-union leaders arrested by the Iranian government. The problem of government repression is especially acute for the teachers. Dozens have been arrested since late 2018, with the most recent round on International Teachers’ Day when thousands of teachers participated in workplace and street demonstrations.

U.S. workers have a big role to play in defending Iranian rights. We can not give one inch to the imperialist war machine, whether it sings the song of sanctions or rockets. Neither can we expect that pure diplomacy and “good trade relations” will solve the economic crisis in Iran. The Iranian ruling class is interested only in maintaining its own rule and finding the best means of exploiting its domestic working class.

There is only one way out of the crisis, which is for the continuation and deepening of working-class fightback under the leadership of a revolutionary party, capable of learning from the successes and defeats of Iran’s long and militant history of class struggle.

Intervention by U.S. imperialism into Iran, whether “diplomatic” or outright warmongering, can only serve to put additional blocks and catastrophes in the way of a growing and militant workers’ movement. “U.S. Out of Iran Now! No War, No Sanctions, No Blockades!”





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