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Do economic sanctions 'strengthen your enemy'?

By Ramy Inocencio, for CNN
December 5, 2012 -- Updated 0747 GMT (1547 HKT)
STORY HIGHLIGHTS
  • Sanctions on oil exports from Iran are hurting the nation's economy
  • Iranian crude sales have dropped 60% in the past year
  • It is hoped that the sanctions will stop Iran from developing nuclear weapons
  • Steve Hanke at Johns Hopkins university warns that sanctions might be counterproductive

(CNN) -- Economic sanctions have effects, says an expert at Johns Hopkins University, but not all may be intended.

"Sanctions historically are quite counterproductive in the sense that if you impose sanctions on your enemy, it tends to strengthen your enemy," Steve Hanke told CNN's John Defterios.

In Iran -- where oil exports provide about 70% of government revenues according to the Congressional Research Service -- ongoing sanctions that bar the export of oil are hurting its economy.

In the past year, Iranian crude sales have dropped 60% while the value of the rial has fallen to near-historic lows. Since 2010, the currency has dropped nearly 24% against the U.S. dollar. At the same time, food prices for everything from meat for kebabs to yogurt have surged.

The international community hopes the sanctions will pressure Iran to stop its alleged development of nuclear weapons.

Iran has maintained its nuclear program is for peaceful energy purposes yet only last month the International Atomic Energy Agency released a report saying Iran can now readily convert its uranium stockpiles to a weapons-grade level.

Hanke, an economics professor and expert on sanctions, says the economic restrictions on Iran could be dangerous for the global oil trade and threatens safe passage through the Strait of Hormuz, a narrow shipping lane in the Persian Gulf.

"If you squeeze and squeeze and you don't allow the Iranians to sell any oil, then what do they have to lose by shutting the Strait of Hormuz down? And if they do that, that's 35% of all the world's oil that comes through the strait and 20% of the liquefied natural gas in the world," Hanke says.

Hanke adds if the Strait of Hormuz is shut down for even a week, the economic impact would be "bigger than any bomb we could conceive of."

Looking elsewhere in the world, Hanke points to relations between the United States and Cuba as another example of sanctions not succeeding.

"That's why we've seen Castro and the Communists hanging around for so long in Cuba."

Washington first imposed an embargo on Cuban goods in 1960 to pressure the Communist government under Fidel Castro into collapse. But Cuba is still ruled by a Castro -- Fidel's brother, Raul -- and is still Communist. While there has been a thawing of bilateral relations with the U.S. in recent years, restrictions remain. On Tuesday, the United Nations General Assembly passed a symbolic condemnation of Washington's embargo of Cuban goods, 188-3. This vote has occurred for the past 21 years in a row.

This past September, U.N. Secretary General Ban Ki-moon said Israel should lift its blockade of Gaza to ease the plight of civilians, saying that the policy would backfire.

"Keeping a large and dense population in unremitting poverty is in nobody's interest except that of the most extreme radicals in the region," he declared.

Hanke says those on the receiving end of sanctions, "will point their finger at those who are imposing the sanctions, they'll say they're the enemy, they're the bad guys."

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