In the decades since the end of the Cold War, a powerful myth has taken hold in the West. It is the myth of the “smart” sanction, a foreign-policy tool that is supposed to be a clean, precise and humane alternative to war.
The belief is that by skilfully targeting a hostile regime’s key revenue sources and finances, one can bring it to heel without harming its citizens.
This is a dangerous delusion. As our recently published research on Iran reveals, the sanctions regime on Iran was far from being a surgical strike; instead, it was a sledgehammer that smashed the very group that represents the best hope for a more moderate and stable future—the middle class.
In this sense, the devastation of the Iranian middle class constitutes a major strategic failure for the West.
- Advertisement -
The rise of Iran’s modern middle class was a century-long process. It began under the Pahlavi dynasty with the emergence of a secular, professional class of civil servants, professionals and managers who built the country’s modern infrastructure, funded by oil rents.
- Advertisement -
After the 1979 revolution, the Islamic Republic continued to expand the ranks of the middle class, lifting millions of previously marginalised families from poverty into a new world of education and opportunity.
This educated, empowered class became the political foundation for change. It was the power base for the reformist movement of President Mohammad Khatami in the late 1990s. It was the faces in the crowds of the 2009 Green Movement, and the driving force behind the “Woman, Life, Freedom” protests.
It was the entrepreneurs building a vibrant tech scene from scratch in Tehran, creating local versions of Amazon (Digikala) and Uber (Snapp) that served millions of their fellow citizens.
This was the engine of a modern Iran looking to the future. Sanctions laid waste to it all.
- Advertisement -
How can we be so certain this was the fault of sanctions, and not just the regime’s own chronic mismanagement? To find out, we had to move beyond anecdote and partisan claims.
In our peer-reviewed study published by the European Journal of Political Economy, we used a robust methodology to answer this question: We built a “virtual Iran” out of data.
Using a powerful statistical technique called the synthetic control method, we created a data-driven twin of Iran: A composite, weighted average of comparable countries like Tunisia, Qatar, Malaysia, Azerbaijan, and Indonesia that mirrored Iran’s economic and social trajectory perfectly before 2012, but was never hit with the international sanctions.
This rigorous approach allowed us to see what would have happened in the absence of sanctions, providing a clear, empirical baseline to measure the true damage. Although Iran has been a target of various sanctions for more than four decades because of its radical foreign policy, the intensity and scale of the new sanctions that were introduced in 2012 were at a much higher level in comparison with the previous years.
The results are heartbreaking. Starting in 2012, Iran’s middle class began to shrink dramatically compared with its sanction-free twin in our model. Between 2012- 2019, the sanctions caused an average 17 percentage point gap between the potential and actual size of Iran’s middle class.
By 2019, a year after US President Donald Trump launched his “maximum pressure” campaign against Iran, the cumulative effect was devastating: The middle class was now 28 percentage points smaller than it should have been.
These are not abstract numbers. These are millions of real people. They are the engineers, doctors, teachers, small business owners, and retirees who had finally achieved a measure of economic security, only to see it all evaporate under the post-2012 sanctions regime.
This isn’t just a story told by our model; you can see it in how Iranians see themselves. Before the sanctions hit, in 2005, a global representative survey (World Value Survey) found that a confident 79 percent of the respondents identified as middle-income. They had arrived.
In early 2020, that number had collapsed to less than 64 percent. It is a devastating collapse that economists on the ground in Iran have also confirmed.
This social decline was not an accident; it was the direct result of predictable economic mechanisms. First, the sanctions starved the country of the foreign investment needed to create skilled, well-paying jobs. The capital that would have built factories and funded tech startups vanished.—Al Jazeera
