Understanding Iran Under Sanctions – Oil and the National Budget

The efficacy or inefficacy of international sanctions has been a long-standing concern of observers of the Islamic Republic of Iran. Mainstream analyses have tended to address this question by attempting to gauge the resilience of the Iranian leadership in the face of economic hardship. This mode of analysis tends to present Iran’s predicament as a ‘zero-sum game’ in which the Islamic Republic will either give in to pressure from the USA and its allies, or continue to absorb this pressure. What this mode of analysis tends to obscure is how sanctions are being absorbed by Iran’s political elite in a continuous and dynamic fashion. This article will attempt to shed more light on this question by addressing the way in which diminished oil revenues have occasioned a shift in attitudes toward sanctions, as observed through the public statements of decision makers and the domestic media. This shift has been especially important in discussions surrounding the Iranian government budget for the forthcoming year (2013/14). As discussions of how best to reformulate government finances have progressed, Iran’s Oil Ministry has emerged as an important voice. With the political backing of the Iran Revolutionary Guards Corps (IRGC), the Ministry has lent its voice to calls for changes in the relationship between oil and the government budget.

By: William Yong , Alireza Hajihosseini