Does the U.S need to lift Economic Sanctions over Iran and Russia during COVID-19 pandemic?

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Context: Iran, devastated by the coronavirus, is asking the U.S. to lift sanctions on humanitarian grounds. U.S. officials say sanctions aren’t to blame; Iran is.

Prelims: Current events of national and international importance
Mains: GS II And III-

  • India and its neighborhood- relations. Bilateral, regional and global groupings and agreements involving India and/or affecting India's interests Effect of policies and politics of developed and developing countries on India's interests, Indian diaspora.
  • Important International institutions, agencies, and fora- their structure, mandate.
  • Indian Economy and issues relating to planning, mobilization of resources, growth, development, and employment. Inclusive growth and issues arising from it.
  • A global pandemic demands game-changing actions by all nations in order to halt its global spread, provide relief in terms of medical supplies and to rebuild shattered lives.
  • The global community has the responsibility to rise to the occasion. Any global cataclysm affects poor countries more than the rich ones as the former do not have the resources to meet the unexpected economic challenge.

  • Many international sanctions imposed on the basis of political and economic decisions and taken as a part of diplomatic efforts by countries, multilateral or regional organizations against states or organizations that exist around the world.
  • These were meant either to ‘protect national security interests, or to protect international law, and defend against threats to international peace and security.
  • These measures include the temporary imposition on a target of economic, trade, diplomatic, cultural or other restrictions’ and can be lifted only through a long process of ascertaining whether their objectives were met.
  • The UN Security Council has a ‘mandate by the international community to apply sanctions that are binding on all UN member states.
  • Peace enforcement is possible if the sanctions fail, but that is only in the rarest of rare cases.
  • The sanctions often lie dormant for technical reasons even if their original intent and purpose have lost their relevance.
  • The victims of these sanctions suffer in silence or engage in negotiations to get relief.
  • Over the years the US has put many sanctions on Iran for various reasons. The list of sanctions and the years they were imposed are given below.
  • The first sanctions were imposed in 1979 by the US after the hostage crisis of the US embassy in Tehran.
  • The second sanctions were imposed in 1987 because of Iran’s actions against US shipping vessels in the Persian Gulf.
  • The third sanctions were imposed in 2006 as Iran failed to comply with the United Nations Security Council (UNSC) resolution which demanded a halt on Iran’s nuclear enrichment program.
  • The fourth sanctions were imposed on Iran by the US in 2018, due to terrorist activities of Iran and the development of ballistic missiles.

  • US Sanctions mean there would trade barriers, tariffs, and restrictions on financial transactions of various entities in Iran. They would not be able to carry out a trade or have any kind of cooperation with entities from other countries.
  • The following industries or segments of Iran were sanctioned by the US:
    • Banking industry
    • Shipping industry
    • Insurance industry
    • Energy/Petroleum Industry
    • Nuclear Industry
    • International trade
    • Missile/Arms industry
    • Islamic Revolutionary Guard Corps.
  • As of 2020, the following countries have been facing US sanctions:-
    • Iran
    • Cuba
    • Venezuela
    • Syria
    • North Korea
    • Sudan
  • As of 2020, persons from the following countries have been facing US sanctions.
    • Russia
    • China
    • Iraq
    • Congo
    • Libya
    • Myanmar
    • Somalia
  • Overall persons from 23 countries are facing US sanctions.
  • The 4 types of sanctions are listed below:
    • Economic Sanction:
      • It is a ban on the trade of energy, food, medicines, financial transactions, etc. An example would be US sanctions on Iran.
    • International Sanction:
      • It is a sanction imposed by a group of countries on a particular nation
    • Sanctions (law):
      • It is something that is imposed by Courts.
    • Pragmatic Sanction:
      • These were kind of sanctions imposed by kings in the ancient and medieval ages.
  • After the initial invasion of Kuwait by Iraq, the UN ‘placed an embargo on the nation in an attempt to prevent an armed conflict.
  • The U.S.’s withdrawal from the Iran deal has now resulted in Iran facing crippling sanctions.
  • Perhaps, the impact of COVID-19 was severe in Iran on account of the sanctions and the resultant economic crisis in the country.
  • Temporary sanctions in protest against the policies of countries often result in expulsion or withdrawal of diplomatic personnel.
  • The politics of sanctions entered a new era when “Countering America’s Adversaries Through Sanctions Act” (CAATSA)that grouped together sanctions against Russia, Iran, and North Korea.
  • The wide network of sanctions is comprehensively monitored by the Office of Foreign Assets Control of the US Department of the Treasury which enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes and related entities and individuals.
  • There is no estimate of the losses sustained by these countries on account of these sanctions.
  • But these countries will be much relieved if these restrictions are removed. The present global pandemic and the requirement of massive resources may be an occasion to lift these sanctions.
  • The countries which have imposed these sanctions will not have to make any financial outlay to assist these countries at this time of a humanitarian emergency.
  • The G20 Chairman, the King of Saudi Arabia, on a suggestion by Prime Minister Narendra Modi, had convened a video conference of G20 leaders.
  • As a follow up of that meeting, the G20 could consider proposing the lifting of multilateral and bilateral sanctions.
    • There’s no question that the virus has slammed Iran’s already teetering economy.
    • Most small businesses, restaurants and hotels and other service industries have been closed for over a month during what is usually their most lucrative season, around the Persian new year. Factories have scaled-down production and unemployment has spiked, with economists saying Iran is losing at least a million jobs per month.
    • In a sign of desperation, Iran requested a $5 billion loan from the International Monetary Fund, the first time it has applied for such a loan since the 1960s.
    • The European Union has said it would support the loan, but the United States is expected to block it.
    • The European Union donated $22 million in humanitarian aid to Iran last week, and Japan sent $23.5 million. On Tuesday, the European Union exported medical goods to Iran in its first use of a financial mechanism set up last year to allow European companies to work around American sanctions.
    • Economic distress brought Iranians to the streets in November, and the government is aware that it could do so again now that the economy is even worse. Blaming the United States could deflect some of that anger.
    • Economists said the coronavirus would shrink Iran’s GDP by a third and create at least a $10 billion budget deficit this year. Before the virus, sanctions had already cost Iran about $200 billion in revenue, mainly from decimated oil sales, and devalued the currency by half in the past two years. And oil sales to the few countries that still flout American sanctions, like China, have plummeted as the price of crude oil has plunged.
  • One way of dealing with the emergency in an emergency mode is to consider the lifting economic sanctions imposed by the United Nations and individual countries on developing countries.
  • They serve as the international community’s most powerful peaceful means to prevent threats to international peace and security or to settle them’.
  • Peace enforcement is possible if the sanctions fail, but that is only in the rarest of rare cases.
  • U.S. sanctions should not be contributing to this humanitarian disaster,” Senator Bernie Sanders, one of the signatories, said in a statement on Tuesday. He added:
    • “Every country on earth is going to be affected by the coronavirus. We are all in this together. If there was ever a moment to show each other unprecedented cooperation and support internationally, this is that moment.”
  • The present global pandemic and the requirement of massive resources may be an occasion to lift these sanctions.
  • The countries which have imposed these sanctions will not have to make any financial outlay to assist these countries at this time of a humanitarian emergency.
  • As Winston Churchill said, “ Never let a good crisis go to waste.”

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