Sanctions and Medical Supply Shortages in Iran

Siamak Namazi, a Dubai-based consultant and former Public Policy Scholar at the Woodrow Wilson Center, presented his findings on the role of sanctions in creating shortages of life-saving medical supplies and drugs in Iran.

On February 8, the Middle East Program at the Woodrow Wilson Center hosted a discussion, “Sanctions and Medical Supply Shortages in Iran”withNamazi. Suzanne Maloney, a Senior Foreign Policy Fellow at the Saban Center for Middle East Policy at Brookings, commented on Namazi’s presentation. Haleh Esfandiari, Director of the Middle East Program at the Wilson Center, moderated the event.

Namazi presented the outcomes of a recent study carried out by a team of Iranian consultants, which found that, despite existing provisions meant to facilitate humanitarian trade, unilateral sanctions by the United States and Europe are causing disruptions in the supply of medicine and medical equipment in Iran. Namazi went on to explain that sanctions are affecting the supply of the most advanced medicines, providing relief in the most dire cases of illness, including cancer, multiple sclerosis, and hemophilia.

This crisis, Namazi emphasized, was not an intended consequence of the sanctions regime. However, the sanctions have created bottlenecks in the banking facilities necessary for trade, and they have caused a scarcity in the hard currency needed to trade with European and American manufacturers. He also acknowledged that Iran has intensified the problem with its own mismanagement. Nonetheless, he maintained that most of the American, European, and Iranian pharmaceutical representatives with whom he interviewed found that Western sanctions were the greatest obstacles to humanitarian trade with Iran.   

Namazi explained that the existing legal provisions that allow for humanitarian trade are flawed because they make it all but impossible to do so by blacklisting Iran’s main banking infrastructure. In addition, most international banks will not trade with Iran because they fear the ramifications associated with violating U.S. sanctions. Humanitarian trade in Iran has been greatly reduced, and the few banks that continue to trade with the country are experiencing delays because they cannot handle the volume of trade and the long list of filing requirements. In addition, the sanctions have caused a shortage of the hard currency needed to pay American and European pharmaceutical companies. Presently, the majority of European and American pharmaceuticals that sell their goods to Iran do so under cash-advance terms.

Namazi concluded that there are definitive “winners” and “losers” in the medical shortage crisis in Iran. The “winners” are the Indian and Chinese pharmaceutical companies who now supply most of Iran’s medications, the smugglers and black market dealers, and government-owned businesses. The “losers” are the Iranian people, the American and European pharmaceutical companies, and the independent private sector of importers and manufacturers in Iran.

Namazi ended the discussion by providing three recommendations to alleviate the medical shortages in the country. First, he argued that existing contradictions in the legal structure must be removed to permit humanitarian trade. Second, the financial institutions must be reassured that there will be no punitive actions taken against them if they trade with Iran. Lastly, Namazi argued, Iran must be given a narrow ability to receive hard currency solely for the purchase of Western medicine and medical treatment.

Maloney commented on Namazi’s presentation, arguing that the sanctions regime did anticipate such developments in the Iranian economy. The U.S. and European policymakers were aware that even legal transactions with Iran would be made more cumbersome as a result of the sanctions, and trade limitations would have a “multivector” effect on Iran that would cripple its economy on a broad and complex scale. They also anticipated the negative impact this would have on U.S. businesses conducting trade with Iran.

Additionally, U.S. policymakers understood that there would be a negative humanitarian impact. However, their primary concern was not to effect social or regime change in Iran but, rather, to pressure the regime into changing its foreign and domestic policies, particularly regarding its nuclear program.

Thus, she contended, despite the negative consequences associated with the sanctions, they have received almost unanimous support on Capitol Hill. However, in her concluding remarks, Maloney warned that these policy choices will have far-reaching consequences with tremendous costs for the future of America’s relations with Iran. America’s diplomatic actions to isolate Iran, which is a significant country with strong ties with the rest of the region, could prove to be misguided.

By Darya Razavi, Middle East Program