Iran Sanctions

(18:38) Guest: Raj Bhala, a leading expert on international trade and Rice Distinguished Professor at the University of Kansas School of Law  Iranian leaders have famously called America the “Great Satan.” So why now, are they willing to come to the table with Western nations, including the United States, and consider making a deal to limit its ability to develop a nuclear weapon? What does Iran stand to gain from such concessions?  The answer lies in Iran’s desire to get out from under trade sanctions imposed by the U.S., the European Union and the United Nations on various sectors of Iran’s economy.  As the nuclear negotiations face an interim deadline of March 24th, we’re taking some time to better understand the nature of these sanctions Iran is so eager to be rid of.  “When you look at the conventional measures of the performance of a domestic economy, Iran performs poorly during the sanctions period. Unemployment is very high, and that of course is dangerous in any society for the rulers because if there are a number of smart educated people that aspire to a better future, they can’t find employment. Inflation is very high partly because of the supply constraints—goods are not available in ready supply. There is cost-push inflation but also demand-pull inflation. Iran has not been able to get the investment it needs from abroad because of the sanctions. The performance of the banking system has also been poor,” explains Bhala.  “There’s a large, fragile middle class in Iran that has suffered a lot from the sanctions,” says Bhala.