Skip to main content

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."

ADVERTISEMENT
Part of complete coverage on
September 3, 2014 -- Updated 0952 GMT (1752 HKT)
Jim Boulden on the future of online shopping.
August 29, 2014 -- Updated 0842 GMT (1642 HKT)
Recep Tayyip Erdogan is Turkey's new president . So can he revitalize its economic fortunes?
August 28, 2014 -- Updated 1244 GMT (2044 HKT)
The European Union is stepping in to save its dairy from going sour.
August 18, 2014 -- Updated 1236 GMT (2036 HKT)
Europe's deteriorating relationship with Russia has hit the region's growth, even before new food sanctions begin to bite.
July 16, 2014 -- Updated 1634 GMT (0034 HKT)
With cyberattacks on the rise and here to stay, it's a modern-day challenge for people and businesses to get smarter about preventing them.
August 14, 2014 -- Updated 1324 GMT (2124 HKT)
Airstrikes, rebels seizing control of oil fields, plus a severe refugee crisis are a recipe for market panic. So why are Iraq oil prices stable?
July 20, 2014 -- Updated 1524 GMT (2324 HKT)
Evidence points to pro-Russian separatists as perpetrators of the attack and Vladimir Putin is facing uncomfortable questions, David Clark writes.
August 5, 2014 -- Updated 1440 GMT (2240 HKT)
The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.
July 3, 2014 -- Updated 0902 GMT (1702 HKT)
Macau has overtaken Switzerland in the wealth stakes, being named the world's fourth richest territory by the World Bank.
July 18, 2014 -- Updated 1447 GMT (2247 HKT)
Saudi Arabian Bateel brand is best known for its delectable dates but it now has more than a dozen cafes and a new bakery in the works.
July 17, 2014 -- Updated 1100 GMT (1900 HKT)
A British nanotech company has created what it says is the world's darkest material. It is so dark the human eye can't discern its shape and form.
July 16, 2014 -- Updated 1602 GMT (0002 HKT)
Jibo robot is designed to be an organizer, educator and assist family members. CNN's Maggie Lake met him and says she was impressed with his skills.
July 18, 2014 -- Updated 2109 GMT (0509 HKT)
American burger joints have sprung up all over London, but how to know which ones are best? CNN's Jim Boulden investigates.
June 18, 2014 -- Updated 1222 GMT (2022 HKT)
Sandwiched in between Iraq and Syria, Jordan's destiny seems to be one of a constant struggle for survival. John Defterios explains.
June 18, 2014 -- Updated 1502 GMT (2302 HKT)
At the last football World Cup, it was all about 3D. This time around, it's nothing less than 4K.
July 16, 2014 -- Updated 1058 GMT (1858 HKT)
Bob Mazzer has photographed inside London's Tube network for 40 years. He's captured history.
July 18, 2014 -- Updated 1712 GMT (0112 HKT)
Exotic animals are becoming a profitable business opportunity for Nicaraguan entrepreneurs. CNN's Rafael Romo reports.
June 13, 2014 -- Updated 1529 GMT (2329 HKT)
Iraq produces 3.3 million barrels per day and has the world's fourth-largest oil reserves. But the current crisis is putting all this in danger.
June 18, 2014 -- Updated 1222 GMT (2022 HKT)
Sandwiched in between Iraq and Syria, Jordan's destiny seems to be one of a constant struggle for survival. John Defterios explains.
June 16, 2014 -- Updated 1314 GMT (2114 HKT)
The gas standoff between Russia and Ukraine could have a knock-on effect on Europe. Explore this map to find out why is the EU nervous.
July 16, 2014 -- Updated 1058 GMT (1858 HKT)
Bob Mazzer has photographed inside London's Tube network for 40 years. He's captured history.
June 17, 2014 -- Updated 1206 GMT (2006 HKT)
The UK capital promotes its tech stars and shows it can compete with Silicon Valley. Here are five companies that pitch to make it big.
ADVERTISEMENT