Alarming Impact of EU Sanctions on Iran

Sanctions on Iran


Relations between the West and Iran are always at needle points. The approach of western democracies and strong-headed Iran has always led to a discussion at global and organizational levels. Iran has a non-bowing attitude, while other nations believe that world order must be maintained at all costs. 

In the present-day global village idea, no nation can survive on its own, and every state needs to run in coordination and rhythm of welfare for all. In this article, we will discuss the alarming impact of EU sanctions on Iran.

From time to time, various steps have been taken to make Iran behave in a certain global order by imposing sanctions, embargoes, and answering calls of the International Atomic Energy Agency IAEA. 

In this race of world order and peace, Iran leads its path to economic welfare by facing all the challenges to growth.

Sanctions technically mean punitive measures by any country or group of countries to make policy changes.

Sanctions on any country not only affect its policies, but also affect the common citizens and businesses alike. Iran is one of the highest-sanctioned countries in the whole world, which makes it hard for any country to carry on trade there.

Why Sanctions on Iran?

Sanctions in Iran are not new. This country has been facing sanctions since 1980 to respond to growing concerns about terrorism. There are instances when the sanctions have been lifted, or more rigorous sanctions on Iran have been imposed.

Iran is accused of causing instability, and terror in the Middle East and around the world, unjustified detaining of foreigners, curbing the freedom of civilians and surveilling people.

Attacks on Saudi oil facilities, missile launching, testing nuclear weapons, and threatening other nations. Due to this attitude, they attracted the most strict sanctions from the US and its allies in July 2015 as they were found guilty of testing nuclear and enriching uranium.

Countries, groups of nations, and organizations have been imposing sanctions on Iran from time to time. Sanctions on Iran range from politicians and business organizations to individuals alike.

Sanctions on Iran targeted oil and banking sectors are affecting the whole economy. Sanctions have affected the GDP of Iran IMF (International Monetary Fund) has predicted the relevant shrinking of the economy and people slipping into poverty.

Countries such as the US, the United Kingdom, etc. organizations like European Union, GCC (Global Cooperation council), and United Nations have put sanctions on Iran to make it change its policies and attitude. 

2014 Nuclear deal signed by the US, Europe, and Iran, as the Joint Comprehensive Plan of Action (JCPOA). Iran froze its nuclear program in exchange for billions of dollars of economic benefits. It was an agreement of international importance that uplifted the value of Iran in the international arena. This agreement came into existence after decade-long negotiations between Iran and other countries.

Later this agreement was withdrawn by the US in 2018 unilaterally, and the EU had to decide its future course of action to maintain relations with Iran.

In this article, you will get to know what sanctions are imposed on Iran by the EU and what are its implications on Iran.

Relation Between Iran and the European Union.

The European Union is a trade ally of Iran despite sanctions. 

When Iranian students attacked the American embassy, the relations between European nations and Iran were severely affected. Though diplomatically, there was no boycott, economically and socially, there was a significant impact.

But the harder blow came to the relations between the EU and Iran after Iran was accused of nuclear proliferation in 2003. EU supported multilateral and unilateral sanctions on Iran. 

The EU has raised concerns about human rights violations in Iran and has participated in political and diplomatic dialogues with Iran. The EU decided on an oil embargo on Iran, imposed sanctions on numerous Iranian banks and insurance companies, and decided to deny access to Iranian banks to SWIFT, a provider of specialized financial messaging services. The impact on trade was clear. EU exports to Iran declined from €11.3 billion in 2006 to €7.3 billion in 2012. 

Before 2003 relations between the EU and Iran were diplomatic and political, but after the EU joined in negotiation with Iran for procuring nuclear experiments, the relations also grew. There is significant growth in trade between the EU and Iran.

Europeans are interested in the economic gains from such a partnership. European companies in the fields of energy, automobiles, railway and transportation, telecommunications, and agribusiness believe that Iranian markets offer innumerable opportunities. 

Role of the European Union in Iran Nuclear Deal

  1. Lifting of all the early sanctions by EU and UN.
  2. Provide relief and Social security.
  3. Development in sectors like trade and investment, agriculture, drugs, and education.
  4. Financial aid to uplift social status.

When the US declared withdrawal from the nuclear deal, the European Union objected strongly to this withdrawal. 

European Union is a signatory to the US Iran Nuclear deal, so they must comply with the re-imposition of sanctions. European Union is now helping Iran by imparting academic cooperation, trading goods without any money exchange, and essential drugs.

In May 2018, President Trump announced that he was withdrawing the United States from the Iran nuclear deal and reimposing sanctions on Iran. The European Union (EU) reacted by reimposing its sanctions.

As a result of this move, all EU sanctions imposed over the previous eight years have come back into force. Therefore, companies had to apply for authorization for any business with Iran or Iranian companies.

Areas Where Fresh Sanctions are Applied

  1. Trade or commerce in any way with Iran is banned.
  2. Imports and exports.
  3. Access to any financial bank or system.
  4. Medical equipment.
  5. Transportation and communication.
  6. Crude oil and petrochemical.
  7. Any legal compliance with the Iranian company.
  8. Manufacturing goods.
  9. Cargo and shipping.
  10. Military goods
  11. Satellite systems.
  12. Essential machinery for the petrochemical industry
  13. Gold, silver, diamond, and other gemstones.
  14. Natural gas.
  15. Raw or naturally occurring metals, e.g., steel.
  16. Key naval pieces of equipment and technology for shipbuilding.
  17. Software.
  18. Services related to the construction of any services mentioned above.
  19. Insurance services in and outside Iran.

Penalties for Breach

The company incorporated in the EU will be held liable, its directors will be held liable for the actions of a company, and any EU national anywhere in the world can be held liable for up to two years of imprisonment and an unlimited fine. 

What Is the Impact of the Sanctions on Iran?

Medical Infrastructure 

Iran lacks its own medicine and cannot produce its modern medicines, making it hard for common people to seek better medical help. Though it is a universal principle that medical aid cannot be denied to any country, but suppliers, due to complex and rigorous economic policies, do not want to carry on trade with Iranian local business; thus, there is no production of modern medicines.

Air Travel and Transportation 

Airlines based in Iran cannot upgrade the fleet of aircraft as they are sanctioned. This means traveling in old airbuses is a risk for travelers.

Service-based Industry

Sanctions on Iran with respect to service-based industry have shut down all work units that depended on foreign supplies, as there is a shortage of resources that cannot be sourced locally, resulting in a major disruption of supply and production.

Increase in Food Prices

Sanctions on importing food supplies have made it hard to avail of food, leading to huge demand and supply gaps. Prices of all the essential commodities have increased, making it challenging for common people to afford them.

No International Technology 

Iranian people cannot access or download apps or technology; the internet has strict restrictions.

Ban on Buying Gold, Aluminum, and Other Precious Metals.

Non-locals of Iran can’t buy gold, aluminum, steel, or any other material from Iran.

Sanctions on the Oil Industry, Shipping, Insurance, and Central Bank.

 In 1995 Iran was producing 6% of the world’s petroleum, but due to sanctions, as of 2018, Iran is supplying only a fraction of the world’s petroleum. This indicates the amount of trade reduced during the period of sanctions.

Due to instability and repeated sanctions, companies are not ready to invest in Iran. Iran is not ready to change its policies, attracting more sanctions and punitive measures.

Sanctions are giving tough times to people.

Way Forward 

As Iran is moving towards more isolation and self-production. Here are some developing methods and ways to survive by:

  1. Exploring regional cooperation with non-sanction countries like India, China, UAE, and other Asian countries.
  2. Making cautious relations with European countries like UK and others.
  3. Encouraging investments in military and strategic investments.
  4. More exchange in civil society relationships.
  5. Iran is resisting and fighting back against the sanctions.
  6. People are rendering to small businesses which depend on local resources.

Many countries have supported and accepted Iran as it is and started working for the common people’s welfare.

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