Economic Sanctions Play Out In Strange Ways In Iran

By Deborah Amos

Published March 15, 2014 at 8:00 AM EDT

Iranian shoppers buy vegetables from a street vendor in Tehran last November, a day after a six-month nuclear deal took effect. The U.S. says crippling sanctions — which caused prices for necessities like bread, rice and soap to increase — forced Iran's hand.

It's hard to see crippling sanctions at a modern shopping mall in north Tehran — the shops are stocked, the cafes are full. The latest western electronics – even iPhones and iPads, are available for those who can afford it.

But talk to middle class Iranians and you hear dire stories. They say they suffered as prices on almost everything rose dramatically for two years. International sanctions fueled skyrocketing inflation, estimated at 45 percent. Practically, that means that necessities – bread, rice, soap – got more expensive every month.

In a small neighborhood shop, a baker fills a machine with dough that pops out loaves of hot bread. Sanctions changed the way Iranians shop, says a customer, who doesn't give her name. Whatever the price, she says, you still have to buy the basics.

"Some things are expensive, but they are necessary and needed," she says. "The unnecessary things we ignore."

Iran's economy has been badly damaged over the past two years. International sanctions froze oil assets and isolated Iranian banks, which shut off most official international trade. Iran's currency lost 80 percent of its value, says economist Saeed Laylaz.

"We are in a catastrophe, disaster situation at the moment," Laylaz says.

Since January, when a six-month nuclear deal took effect with the easing of some sanctions, there's a slight economic revival, he says.

"Inflation, from 45 percent to 27 percent almost," Laylaz says.

That's something people notice in their everyday lives, he says.

President Hassan Rouhani, elected to fix the economy last year, is credited with that achievement. Iranian leadership deny this, but Alex Vatanka, an Iran analyst in Washington, says economic pain convinced Iran to get serious about nuclear talks.

"Iran needs to, for its own survival — to trade, export its oil, to import material, and all the rest of it," Vatanka says. "So I think what Rouhani represents is engagement, and the supreme leader is also largely on board."

At the Tehran Peace Museum, a facility dedicated to eradicating weapons of mass destruction, Dr. Shahriar Khateri believes sanctions punished Iranians in ways other than hitting their wallets.

Iran has more than 70,000 survivors of gas attacks in the 1980s, when Iraq's Saddam Hussein used mustard gas against Iranian troops. As a 15-year-old volunteer, Khateri was exposed during the war. Now, he's an expert on the long-term effects of poison gas. He says critical medicines for patients who need corneal transplants and relief for lung damage have been scarce for two years. He blames sanctions.

"Some of the vital inhalers, medicine, was not available at all. So, we had serious problem, and unfortunately, several of them died over the past couple of months," he says.

But U.S. officials say sanctions specifically allow imports of food and medicines. Iranian officials counter that many companies stop doing any business with Iran – even when legal – because they're scared off by U.S. warnings against breaking the sanctions. But now Khateri says many specific drugs are back on the market.

"It's easier to find some of them, not all of them, but still the problem is not solved," he says.