Hadi Kahalzadeh and John Schiemann write: The latest wave of sanctions against Iran comes into effect today. Such measures are largely predicated on a “rational actor model” in which the west hopes Iran’s leaders will eventually find it in their own interests to give up their nuclear programme. The problem with such a strategy is not that Iran’s leaders are irrational but that such a game only works if the west knows how Iran evaluates costs and benefits and the options Iran believes it has available.
After the failure of previous sanctions, the west has imposed a new set of much tougher sanctions while Iran has adopted a more assertive stance vis-a-vis the west, stating that it will respond to economic and military threats with its “own threats”. Why, then, has Iran failed to respond to international pressure?
According to the basic sanctions model, the target of sanctions will alter its behaviour in the desired direction when the costs of defiance become greater than its perceived costs of compliance. Yet despite Iran’s reliance on oil, the structural weakness of its economy, and deep economic costs such as the sharp rise in inflation, negative economic growth and increasing unemployment, it has failed to bend. This should prompt policymakers to ask how Iran evaluates the costs of sanctions and defying the west. [Continue reading…]