Iran, protests, and sanctions

Summary

Podcast Summary: Planet Money – "Iran, protests, and sanctions"

Date: February 7, 2026
Hosts: Mary Childs, Rick (Nick) Fountain
Guests/Sources: Ali (Iranian protester, pseudonym), Eva Leila Pesaran (Political Economist), Asfand Yar Batmanghelidj (Researcher on Iran and Sanctions)

---

Episode Overview

This episode explores the interplay between Iran’s recent wave of mass protests, mounting economic hardships exacerbated by U.S. sanctions, and the nation's long struggle with economic independence. The hosts narrate how decades of sanctions have both failed and succeeded, igniting unrest, impoverishing ordinary Iranians, and entrenching powerful interests. Interviews with an Iranian protester, an academic, and a sanctions expert illuminate how economics, politics, and hope for change remain inseparably tied.

---

Key Discussion Points & Insights

1. On-the-Ground Reality in Iran (00:16 – 03:50)

• Ali’s Visit: Ali, a returning Iranian, observes significant social change—such as increasing numbers of women appearing in public without hijabs and women riding motorcycles, previously forbidden (00:34).
• Economic Fear: “Other changes… have been more ominous. People were way more worried about money than they used to be, he says.” (00:49)
• Soaring Prices: During a brief stay, the price of a dozen eggs jumped by over 30% in one week (01:20).
• Protests Sparked by the Economy: A sharp devaluation of the currency triggers a historic protest; even vendors in Tehran’s bazaar cannot profit (01:31).
• Covert Protest Code: “Going for a walk that night was at 8pm was the key word for hey, I'm going out to join the protest.” (Ali, 02:13)
• Mass Mobilization: The protest is unprecedented in size and reach: “This time, it was everywhere... All the cars that were driving would see the people, and as a support, they were honking…” (Ali, 02:41)
• Hope and Despair: There is an initial sense of hope: “We're finally going to get a revolution that we want.” (Ali, 03:09)

2. Sanctions as (Economic) Warfare (03:50 – 06:49)

• Roots of Economic Pain: Economic hardship is driven by both regime corruption and the prolonged effect of U.S. (and Western) sanctions (03:50).
• Purpose of Sanctions: Intended to pressure Iran to cease support for militias and nuclear ambitions by making citizens uncomfortable enough to demand change (04:10).
• Human Cost: The government responded to protests with violent force—thousands killed, thousands more imprisoned; estimates of death far exceed official numbers (05:04).
• Generational Impact: The young are especially affected: “Most of the people that have been shot are the younger generation because they're fearless. But they're putting the dream of freedom ahead of their own dream.” (Ali, 05:42)

3. The History of Iran’s Economic Policy and Sanctions (07:50 – 26:24)

a. Post-Revolution—Defining Identity Through Opposition (09:12 – 17:16)

• Eva Leila Pesaran’s Research: Explores how the 1979 Revolution and U.S. hostility shaped Iran’s self-image (09:32). The U.S.-engineered Shah’s regime is overthrown; new leadership institutionalizes a deep suspicion of foreign investment (10:37).
• Pivotal Moment: Embassy hostage crisis prompts the U.S. to impose its first sanctions, reinforcing Iran’s economic protectionism (15:34).
• Shifting Policy: “There was one event that had a huge impact on their decision making. The hostage situation… changes the mood of the room.” (Mary Childs, 14:40)
• Constitutional Changes: Foreign economic concessions are forbidden, “They go full protectionist.” (Rick Fountain, 15:58)

b. Opening Up and Growth (17:16 – 22:38)

• After the Iran-Iraq War: Iran slowly opens to global trade, inviting foreign investment, and pursuing economic liberalization (18:00).
• Neoliberal Shift: Many Iranian economists in government are trained in the US/Europe and support market reforms (18:45).
• Modern Economy: “You had a diversified economy with a large services sector and you had local manufacturing. You had, of course, agricultural sector as well.” (Yar, 20:28)
• On-the-Ground Changes: Move towards Western-style supermarkets (Carrefour joint ventures) and a growing middle class, but gathering economic unease (21:00).

c. The “Smart” Sanctions Era Post-2010 (22:38 – 26:24)

• New U.S. Strategy: The U.S. partners with other countries to systematically choke financial ties to Iran, e.g. conditioning access to dollar-based financial systems (23:49).
• Banking Isolation: Relentless US pressure leads to overcompliance; most global banks refuse to deal with Iran (24:18).
• Visible Economic Decline: Rapid devaluation, high inflation, and a first major contraction since the 90s (24:36).
• People’s Response: “Many blamed their own government… their government’s defiance was causing the sanctions.” (Mary Childs, 25:18)
• Result: The 2015 Iran nuclear deal—sanctions relief in exchange for rolled-back nuclear activity, which was initially hailed as a diplomatic triumph (26:07).

4. Why Sanctions Often Don't Work as Advertised (27:45 – 33:09)

• Overcompliance Problem: After sanctions are (temporarily) lifted post-nuclear deal, global banks are unwilling to re-enter Iranian markets (28:17).
  • “It was, it's safe to do business with Iran now… But the response from the banks was not exactly cooperation.” (Yar, 28:37–29:01)
  • “The chief legal officer for HSBC wrote this incredible op ed… and just said that his bank was not going to re engage Iran.” (29:11)
• American Ideals Limiting U.S. Leverage: US government cannot force private entities to resume business (29:46).
• Sanction Whiplash: Trump withdraws the US from the nuclear deal in 2018, imposing harsher sanctions; inflation and poverty in Iran worsen (30:24).

5. Who Benefits (and Who Suffers) Under Sanctions (31:05 – 33:09)

• Empowering the Wrong Actors: Sanctions often enrich entities like the Islamic Revolutionary Guard Corps (IRGC), which controls up to half the economy due to lack of foreign competition (31:31).
  • “Instead of Exxon or Boeing getting a contract, they get it.” (Rick Fountain, 31:57)
• Sanctions = Economic Violence: Sanctions are not as bloodless as often depicted—they block access to essentials. “If you've got diabetes, maybe you, you don't get your insulin.” (Eva Leila, 32:26)
• Real World Toll: Recent peer-reviewed research attributes over half a million deaths per year to US and EU sanctions (32:49).
  • “Sanctions are not non violent. They are a form of warfare and they just sound more palatable.” (Eva Leila, 32:33)

6. The Futility and Tragedy of Sanctions (33:43 – 34:47)

• Regime Resilience: “The regime has shown an ability to withstand and endure through a lot of protest movements previously…” (Eva Leila, 33:09)
• Protester’s Perspective: Ali believes that sanctions, though brutal for ordinary people, may help weaken the regime (33:56).
  • “Of course, the effect of it is felt by the people... But going after this brutal regime, they have had to do this.” (Ali, 33:56)
• A Cry for External Help: “If we can have some sort of help, it's going to happen sooner. There's going to be less lives lost. But there is no way that things can go back to normal.” (Ali, 34:27)

---

Notable Quotes & Memorable Moments

• On Hope and Protest:

  “We're finally going to get a revolution that we want.”
  — Ali, Iranian protester (03:09)

• On the Real Target and Effects of Sanctions:

  “The actual mechanism by which sanctions put pressure on a government is the immiseration of its people.”
  — Mary Childs (32:03)

• On the Side Effects of Economic Isolation:

  “Sanctions actually benefit some people in the sanctioned country. So in Iran, … the IRGC has benefited from the lack of international competition.”
  — Mary Childs (31:05)

• Sanctions as Warfare:

  “Sanctions are not non violent. They are a form of warfare and they just sound more palatable.”
  — Eva Leila Pesaran (32:33)

• The Overcompliance Trap:

  "You have to let economic activity resume. And we're just very bad at that when it comes down to it."
  — Asfand Yar Batmanghelidj (30:04)

• Youth and Despair:

  "They don't have much to look forward to. Basic human rights are not there. That's why...most of the people that have been shot are the younger generation because they're fearless."
  — Ali (05:42)

• On the Irreversibility of Change:

  “There's no way you can go back...everyone can see the end. It's just the sooner…if we can have some sort of help...there's going to be less lives lost.”
  — Ali (34:27)

---

Timestamps for Key Segments

• 00:34–01:07: Ali describes shifts in social norms and escalating economic worry
• 01:20: Price of eggs used as an economic indicator
• 02:13: “Going for a walk” as code for protest participation
• 03:09: Ali’s hope for revolution
• 03:50–04:10: Connection between economic pain, corruption, and sanctions
• 05:12: “No one’s okay” after crackdown
• 09:32–13:34: Eva Leila’s research on Iran’s constitutional debates about foreign influence
• 14:40–15:58: Hostage crisis and its role in shaping a protectionist economy
• 18:00–21:30: Iran’s period of economic liberalization and subsequent anxieties
• 22:38–24:36: Effects of post-2010, multilateral banking sanctions
• 28:17–30:24: Overcompliance and failure to deliver sanction relief
• 31:05–32:33: How sanctions enrich the IRGC and harm ordinary citizens
• 33:56: Protester’s conflicted view on the need for sanctions
• 34:27–34:47: Hope and the need for international assistance

---

Episode Tone

The episode is empathetic, forthright, and analytical—balancing on-the-ground stories with policy history. Personal accounts lend a sense of immediacy and pain; academic and policy voices explain the broader economic and political dynamics.

---

Conclusion

Planet Money’s episode provides a nuanced account of how U.S. sanctions have interacted with Iranian society and politics: intended to force reform, they have inflicted deep economic pain, killed hope for ordinary life, empowered the regime’s hardliners, and left Iranians desperate for lasting change and external support. The episode complicates the notion that sanctions are a nonviolent or surgical tool—they are revealed as blunt instruments with widespread, often tragic, consequences.

Transcript

[Commercial Announcer]

This message comes from Capella University. That spark you feel, that's your drive. For more. Capella University's flexpath learning format lets you earn your degree at your pace without putting life on pause. Learn more at capella. Edu.

[Mary Childs]

This is Planet Money from npr. Ali goes back to Iran every few years. And in those visits, he always notices how it's changed. Every once in a while for the better. Like when he was just there in December, he went to a restaurant and looked around.

[Ali (Protester in Iran)]

I was like, wow, I cannot believe I'm sitting at the restaurant and no one is wearing hijab.

[Mary Childs]

None of the women were covering their hair.

[Ali (Protester in Iran)]

They were riding a motorcycle. Bikes. Women were not allowed to ride motorcycle bikes, but they were choosing to do it.

[Mary Childs]

But other changes he's noticed have been more ominous. Like this trip. People were way more worried about money than they used to be, he says.

[Ali (Protester in Iran)]

A decade ago, people were more open. They didn't have struggle. They didn't have to think about their businesses. They didn't have to think about their struggles, like the financial struggles and all that.

[Rick Fountain]

The financial struggles. That has been a huge part of the change that Ali's been tracking. Like he says, things changed even over the course of his short visit in December to see family and friends from childhood, the few that stayed.

[Ali (Protester in Iran)]

One simple indicator was the price of egg. Yeah, like a dozen egg, like just within that weeks that I was visiting, just like jumped by 30 something percent.

[Mary Childs]

And in part because of the dire economic situation this year and in recent years, while Ali was in Tehran, a protest started, the one you've probably heard about. It was sparked by the currency plummeting. Vendors in Tehran's bazaar went on strike because they couldn't sell anything at a profit.

[Rick Fountain]

Then a popular opposition figure, the son of the former monarch, Reza Pahlavi, he urged Iranians to go out into the streets on January 8th and just walk with their family and friends.

[Ali (Protester in Iran)]

A lot of people called me and they're like, hey, don't go out. It's risky. You know, you may get arrested, you may get shot, you may. Something can happen. Your entire life is there. Don't go out.

[Mary Childs]

But then he kept talking to more people, people in Tehran.

[Ali (Protester in Iran)]

Everyone told me they're going for a walk. And going for a walk that night was at 8pm was the key word for hey, I'm going out to join the protest.

[Rick Fountain]

Ali ended up joining the protests too. Took some video, by the way. He asked us to use his nickname to avoid retribution from the Iranian government.

[Mary Childs]

What did you see?

[Ali (Protester in Iran)]

It was Crazy. Like, it's something. It was something that I never had witnessed, like, to that extent, to that degree in terms of the number of people that I actually witnessed with my own eyes. Like, this time, it was everywhere, literally at every area, right? All the cars that were driving would see the people, and as a support, they were honking on the horn and people are starting to chant, you know, like, down with dictator. All these chants. Honestly, like I would say myself and everyone that was looking, everyone was hopeful. We're like, wow. We're like, this many people came out and this is great. We're finally going to get a revolution that we want.

[Mary Childs]

It seemed to Ali that everyone in the country was fighting corruption, fighting for freedom, for their human rights, and for economic stability. The regime has had intense protests over human rights for decades. This protest was about all that, too, but it was triggered by economic pain.

[Rick Fountain]

And a lot of that economic pain is from corruption, but a lot of it is because of the US because of sanctions. The US has been sanctioning Iran in one way or another for 47 years. The aim has been to push the regime to stop arming militias and terrorist groups in the Middle east to stop pursuing nuclear weapons.

[Mary Childs]

And one way sanctions can push countries towards change is by infuriating their citizens. The economic pain people experience can lead people to pressure their governments to comply to stop the pain. And for a second in Iran, with those protesters in the street, it looked like sanctions might help achieve the goal of putting. Pushing the Iranian government towards change.

[Rick Fountain]

But instead, the regime cracked down, shot thousands of people in the streets, imprisoned thousands more, shut down the Internet.

[Ali (Protester in Iran)]

All of a sudden, we. We saw a panic in the crowd, so we couldn't tell what was happening. We have to move you. You hear the panic. Like, you hear people like. Like some sort of, like, scream and they're trying to run. There was definitely fear in there.

[Mary Childs]

Ali managed to get home safely. But in the days that followed, as people in Iran got connected back to the Internet, he would learn about all the killing.

[Rick Fountain]

The Iranian government has said 3,000 people were killed. Independent observers estimate the true number to be many times that in the tens of thousands.

[Ali (Protester in Iran)]

My friends are okay, but when I say okay, no one's okay. People are not okay. They may be alive, but they're not okay.

[Rick Fountain]

Ali says, you gotta keep in mind the entire history of this regime in Iran has been littered with protests and violent crackdowns. Protests and filing crackdowns. This is not new. But there is a difference. Lately, partly because the economic situation has gotten so grim which is particularly demoralizing for young people.

[Ali (Protester in Iran)]

Their, their lives, their future, their hope. Everything's changed, right? Like they don't have much to look forward to. Basic human rights are not there. That's why most of the people that now you see their photos, most of the people that have been shot are the younger generation because they're fearless. Of course, they all have a dream too. But they're putting the dream of freedom ahead of their own dream.

[Rick Fountain]

Hello and welcome to Planet Money. I'm Nick Fountain.

[Mary Childs]

And I'm Mary Childs. Today, as we hit publish on this episode, representatives from the US And Iran have just met in Oman after a week in which President Donald Trump threatened attacks and Iran continued to crack down on protesters.

[Rick Fountain]

The protests in Iran are about so many things. The biggest things, human rights, women's rights, anti corruption freedom. But this time they are also motivated by economic hardship caused in part by U.S. u.S. Sanctions. Today on the show, what were those sanctions? What do they do to Iran's economy? And what has been the result?

[Mary Childs]

Sanctions are supposed to avert war, but how different from war are they really?

[Sponsor/Advertisement Voice]

This message comes from Capital One. Capital One offers checking accounts with no fees or minimums. What's in your wallet? Terms apply. See capitalone.combank for details. Capital One NA member, FDIC support for NPR. And the following message comes from Rippling. Tired of using HR systems that feel fragmented and manual? Rippling unifies hr, IT and finance into a single platform to run your business. In as little as 90 seconds, rippling can onboard a new employee automatically setting up payroll, benefits, devices and corporate cards all from one place. It's a simpler way to run your business. Head to rippling.com money and sign up today. That's R-I-P-P-L-I-N-G.com money.

[Mary Childs]

So what are sanctions? Sanctions are a tool countries use to try to get another country to do what it wants. Like to stop being communist or to stop doing a war. The idea is to influence political behavior without military force by imposing restrictions on trade and capital instead of but as a tool.

[Rick Fountain]

Most experts will tell you they only work some of the time, like when communication is really good, the goals really narrowly defined, and the targeted country isn't too big or too well integrated into the global economy.

[Mary Childs]

The US sanctions on Iran have not always conformed to those expert recommendations. Nonetheless, the US has had sanctions on Iran for basically the past 47 years. Iran cannot have a nuclear weapon. Almost every US president from Trump back to Jimmy Carter has imposed Senate some.

[Rick Fountain]

Sanction and most comprehensive multilateral sanctions that cut off all trade and investment with Iran.

[Mary Childs]

I took a risk with regard to.

[Rick Fountain]

Our action in Iran. It did not work.

[Eva Leila (Political Economist)]

International economic sanctions upon Iran.

[Rick Fountain]

To understand how all those sanctions fed into this moment, a bigger than ever protest, a violent crackdown, and the US threatening an attack, we're going to look at three key moments in Iran's economic history and the history of U.S. sanctions. Three moments that help explain how we got here.

[Mary Childs]

The first moment is right around the time of the very first US sanction against the Islamic Republic. It was the founding moment of this new country when the Supreme Leader, Ayatollah Khomeini took power in 1979 and Iran was redefining itself that is the year after political economist Evillela Pesaran was born.

[Eva Leila (Political Economist)]

I was born in the midst of a revolution.

[Mary Childs]

Eva Leila is an academic at the University of Cambridge. Her parents were among those who left during the revolution.

[Eva Leila (Political Economist)]

That was where I should have grown up, essentially. My parents were like waiting for me to get my passport and to be big enough to go on a plane. And then we left and we moved to England.

[Rick Fountain]

Eva Leila's dad had been the head of research at the Central bank of Iran under the Shah. A very, very US friendly monarch. So friendly that the US engineered a coup to reinstall him as the Shah in 1953.

[Mary Childs]

Under the Shah, Iran had for decades been very connected with and influenced by the west, most notably the UK and the US. Photos from the 1970s circulate periodically. Maybe you've seen them, they look a lot like Europe. Kind of women are out and about with their hair out, wearing Western style dresses.

[Rick Fountain]

Western influence was also very pronounced in Iran's economy. The US and Iran were tied together by oil at the time. American companies had a deal where they owned 40% of Iran's oil shares and UK companies owned another 40%. The UK and the US were constantly interfering in Iranian politics.

[Mary Childs]

After decades, the Iranian people decided to reject the rule of the Shah and all this Western influence violently. In 1979, enormous protests over corruption and economic disparity and foreign influence overthrew the Shah and the Islamic Republic's first religious and political leader was installed. And growing up in England, Eva Leila always heard about her origin story about being spirited away in the midst of this revolution.

[Eva Leila (Political Economist)]

So then I was always interested in trying to find out more about this, like, what is this country that in my other parallel life, like I would have grown up there and lived there.

[Rick Fountain]

So she focused her research on Iran, ended up writing a whole book about.

[Eva Leila (Political Economist)]

It, Iran's Struggle for Economic Independence. And it has a subtitle which I don't remember honestly.

[Mary Childs]

The subtitle is like, so legit. Hang on, let me find it.

[Eva Leila (Political Economist)]

Is reform and counter reform in the post revolutionary era potentially crushed it.

[Mary Childs]

If you're trying to understand how sanctions have impacted Iran over time, Evalela says this period just after the revolution is super important because from the beginning, a huge part of the new government's project was to define itself against the US and Western influence.

[Rick Fountain]

Eva Leilla started to understand this way back when she was semi following in the footsteps of her economist dad, getting a PhD. She is a political economist and at the outset she wanted to understand how the politics of the moment led Iran to set up its economy in the years after the revolution.

[Mary Childs]

Totally new country, writing new founding documents. And one of the biggest debates was how this new Iran would interact with the rest of the world and with the United States.

[Rick Fountain]

To start the research for her PhD, Eva Leila flies to Tehran. She wants to go to the National Archives to dig into what media coverage of the country's founding looked like, to see what people were actually saying at the time. So she needs to request access to those archives. Like, hey, do you mind if I come dig through your history a bit?

[Eva Leila (Political Economist)]

Economics seems like it's not political. Of course, it is inherently extremely political. But it was easy to go and say, oh, I'm just trying to understand all of these imperialist exploiters, how you've navigated that and protected Iran from further exploitation. And it wasn't a lie because I am interested in that as well.

[Mary Childs]

She gets permission. So she puts on her headscarf and goes to the archives to read old newspapers and magazine articles, contemporaneous accounts of the revolution in 1979 and the years immediately after.

[Eva Leila (Political Economist)]

A lot of it, the older newspapers were not digitized. So initially it was literally looking at.

[Rick Fountain]

Huge books, like a year's worth of newspapers all bounded to one huge book.

[Eva Leila (Political Economist)]

And it was just turning the pages and taking notes and just reading, what are you looking for? I sort of didn't know at the very beginning.

[Mary Childs]

That resonates.

[Rick Fountain]

But as she is reading the news clips and then the official transcripts, she finds her way to the heart of this big, big debate among Iran's new leaders.

[Eva Leila (Political Economist)]

They're in a chamber and they're all debating. So you've got like the, the representative from Zanjan or from Tehran or from Isfahan, and they're just all debating what do they want their new constitution to look like?

[Rick Fountain]

She sees that into their laws and constitution, they're writing things about how the previous regime was looting the national wealth and made Iran economically dependent on foreign capitalists. In the constitution's preamble, they write, this time they weren't going to be subject to foreign exploitation, and that this new nation purged itself of foreign ideological influences.

[Eva Leila (Political Economist)]

And then gradually, a picture starts to emerge that you realize that, wow, people really were talking about this quite a lot.

[Rick Fountain]

One faction seemed to believe that Iran had to have economic growth powered at least in part by foreign investment, money from abroad. Another faction felt that foreign investment would be a betrayal, could lead only to exploitation like foreigners getting rich up Iran's oil again.

[Mary Childs]

And there's one thing in these big books that she finds really instructive. She sees in these newspaper pages and transcripts that there was one event that had a huge impact on their decision making. The hostage situation. In November 1979, militant Iranian students took over the US embassy in Tehran and held 52Americans hostage.

[Rick Fountain]

The students were protesting that the US had allowed the deposed Shah to come to New York for cancer treatment. But more broadly, overthrowing the old regime had been about rejecting US Influence.

[Mary Childs]

And down the road, Iran's new government representatives are trying to keep up in real time.

[Eva Leila (Political Economist)]

It's not that far from where they're sitting. I could see the movie of what I was reading in my mind's eye that they're commenting on. Oh, wow, this is. Wait, what's going on outside? What's the latest news and what's happening? And that really radicalizes the direction of the discussion.

[Mary Childs]

And then there's one more key piece of news in the archives. The US responds to the hostage situation by putting its first sanction on Iran, freezing assets held in the US until they released the hostages. And all this. The students, the American pressure, it changes.

[Eva Leila (Political Economist)]

The mood of the room. And it's like, you can see, it's like this flashpoint where it sort of could have gone in a slightly different direction.

[Rick Fountain]

Yeah, economically, the mood changed in favor of shutting out foreign investments. One guy suggests banning foreign companies from getting any concessions, permission to operate in the country. And Eva Leila writes in her book, they quickly whip up a line and put it in the Constitution absolutely forbidding foreign concessions. They go full protectionist.

[Eva Leila (Political Economist)]

And they make those decisions in the context of this really live, discursive war with the Americans and conflict through the embassy seizure.

[Mary Childs]

That's one of the big things Ivalella found in all those big books. That the hostage situation and the sanctions that followed, the clear desire to keep foreign influence out of Iran helped calcify Iran's oppositional stance. Their whole economic identity was created in opposition to the US and the west.

[Rick Fountain]

Which meant for the coming decade, while growing global trade was lifting its peer countries, Iran was cut off voluntarily and through sanctions.

[Mary Childs]

Iran in this period wanted to have its own economy. The idea being we can do it all ourselves.

[Rick Fountain]

That proved pretty challenging. At that same time, Iran and Iraq began a devastating eight year war. Iran needed foreign imports like raw materials and consumer goods, which made surviving with a closed economy even more difficult.

[Asfand Yar Batmigelic (Researcher)]

The damage and the cost of that war is the thing that really set Iran back.

[Mary Childs]

This is researcher Asfand Yar Batmigelic or Yarn. He's Iranian American. His parents also left Iran in the revolution.

[Asfand Yar Batmigelic (Researcher)]

For them, Iran was a place of childhood memories. My father went back to Iran for the first time in 2009 and I was an impressionable high school student at that point. And Iran became real in a way that it hadn't been up until that point.

[Rick Fountain]

When Yar is in college, he does his first academic research on Iran, a pretty cool project about the smuggling of cigarettes under sanctions. Now he has a think tank focused on Iran and West Asia and he researches and teaches about sanctions and their effects.

[Mary Childs]

And he told us that after the Iran Iraq war in the 90s, the country started to open up, increasing trade with non US partners.

[Rick Fountain]

Right. That period of opening up, that is the second key moment in our brief economic history. A period during which Iran started inviting economic exchange with many countries despite the US sanctions of the 90s.

[Asfand Yar Batmigelic (Researcher)]

There was a concerted effort on the part of Iranian leaders, and here we're talking about in the Islamic Republic, to belatedly make good on the promise of the revolution to improve the living standards of ordinary people.

[Mary Childs]

They needed to rev the economy to do that. They kind of put away their whole no foreign investment thing and they gave more leeway to the private sector.

[Asfand Yar Batmigelic (Researcher)]

It was surprisingly neoliberal. Part of the reason for this being that many of the economists who were in senior positions in government at the time, despite having stayed in Iran after the revolution, they had nonetheless been trained in the US and Europe in the 70s when this kind of neoliberal consensus was really consolidating. These are people who felt that Margaret Thatcher had done a lot of great things.

[Rick Fountain]

During this opening up period. Iran worked to lower the tariff rates it charged to be more in keeping with the norms of global trade. It reopened the stock exchange in Tehran and it started to change policies to actively attract foreign investment.

[Mary Childs]

And over time, this liberalization basically worked. GDP grew in fits and spurts, but keeping pace with its peers like Turkey. The middle class of Iran was growing. Economically, things were basically fine.

[Rick Fountain]

And all of that happened while there were US sanctions. During the 90s, the US imposed sanctions on Iran for state sponsorship of terrorism and also because Iran was pursuing nuclear capabilities. But Iran was able to find enough economic partners that weren't the us. Those sanctions were kind of weak sauce.

[Mary Childs]

Yar actually got to see the results of this second period of our economic history of Iran, the yield of those two decades of opening up and economic growth. In 2013, Yar's dad went back to Iran again, and this time Yar went with him. He was in college at the time.

[Rick Fountain]

The country hadn't opened up much politically. Women still had to wear hijabs. Homosexuality was still a crime. The state was executing increasing numbers of people. Huge anti government protests were violently quashed. But economically, Iran was surprisingly vibrant.

[Asfand Yar Batmigelic (Researcher)]

You could see that this was a country where most of the things in the stores were made in Iran, where, unlike most countries, the cars that people were driving were made in the country. This was a country where you had a diversified economy with a large services sector and you had local manufacturing. You had, of course, agricultural sector as well. And then the oil sector was like, you know, a part of it.

[Mary Childs]

How did that manifest as you're like, on the ground walking around with your dad?

[Asfand Yar Batmigelic (Researcher)]

Yeah, I mean, it seems crazy, but traditionally people would be buying their food and household goods in a bazaar. But the country was moving towards basically modern supermarkets. And in fact, in Iran at the time, there was a joint venture between the French supermarket giant Carrefour and a UAE company called Majid Al Futaim. And they were building hypermarkets, supermarkets the size of like a Walmart. And it was revolutionizing modern retail in Iran.

[Mary Childs]

There were more mall developments going up. People were buzzing around, buying their things.

[Rick Fountain]

But Yar had landed at an interesting time because while things on the surface were looking relatively good, there was an undercurrent of anxiety. This period of economic growth was already on its way out.

[Asfand Yar Batmigelic (Researcher)]

It was as though these things were taking place, but in a mood that was ultimately quite depressed. I remember a conversation, obviously with a taxi driver, not to Thomas Friedman myself, but where, you know, he asked me how much my flight had cost to come to Iran. And what he was doing was mental math to understand how that related to his monthly wage.

[Mary Childs]

He was calculating how much. Not keeping up, he Was. And you are thinking, what is this feeling? Why are the vibes so off?

[Asfand Yar Batmigelic (Researcher)]

What I was sensing, it later became clear to me, was that in starting in 2012, Iran had experienced its first major economic contraction in what was essentially two decades.

[Rick Fountain]

And this brings us to our third of three moments in Iran's economic history. This contraction, which was largely the effect of the biggest, most comprehensive sanctions yet. Better tailored sanctions with international cooperation.

[Mary Childs]

Yeah. This time, the US Successfully got a bunch of other countries to join in, and the US Started to figure out how to isolate and cut off, specifically Iran's financial system. These new sanctions began in about 2010 and aimed to pressure Iran into abandoning its nuclear program. And they tried to strike a delicate balance. The US Wanted to avoid war and to avoid hitting Iran with new sweeping oil sanctions because hurting its oil would hurt the global oil market, which could tank the U.S. economy.

[Rick Fountain]

So policymakers came up with a staggered version of sanctions that pressured other countries to reduce how much oil they imported from Iran, but only bit by bit, one chunk every six months. And if those countries refused to join in on these staggered oil sanctions, the US Would sanction them, their banks. So the countries complied.

[Mary Childs]

And US Officials also peer pressured banks around the world to stop doing business with Iran. The US treasury says it engaged eventually with over 120 financial institutions and bank regulators in over 60 countries, basically saying, oh, look at that transfer you facilitated into that small random bank in Iran. It actually went to fund terrorism. Did you mean to do that? Unfortunately, if you do it again, we will have to cut you off from any financial systems that interact with the dollar, which is to say almost all.

[Rick Fountain]

Financial systems, which basically meant, do you prefer doing business with Iran or the us Your call.

[Mary Childs]

And these novel techniques worked to cut Iran off from the banking system, which is why by the time Yar was walking around those new malls, he could already kind of feel the effects of those sanctions.

[Asfand Yar Batmigelic (Researcher)]

And so, you know, for ordinary people, this was a blow. They were experiencing increased inflation. Their currency had devalued in a way that was wiping out their purchasing power. The country was struggling to do basic banking with the international community.

[Rick Fountain]

Iran was now falling behind its peer countries. All these emerging economies around the world in Latin America and Southeast Asia were emerging, and Iran wasn't. It was backsliding. The Iranian people were upset.

[Asfand Yar Batmigelic (Researcher)]

The fundamental reason why Iran stopped experiencing robust growth after 2012 is the sanctions.

[Mary Childs]

Yahar says some Iranians blamed the US for that, but many blamed their own government. They knew the sanctions were causing their misery, but they saw the logic that their government's defiance was causing the sanctions.

[Rick Fountain]

And in 2013, Iranians surprised the world by voting in a president who wanted to ease tensions with the US and the world. The president in Iran is number two to the Ayatollah, and this president was a critic of Iran's nuclear program and its geopolitical costs.

[Mary Childs]

So at the close of this third and final moment in our economic history of Iran, Iran came to the negotiating table and agreed to a nuclear accord. What we in this country call the Iran nuclear deal was finally negotiated under President Obama in 2015. The US would remove its nuclear targeted sanctions, provide economic relief, and in exchange.

[Rick Fountain]

As we speak, Iran has rolled back its nuclear program, shipped out its uranium stockpile, and the world has avoided another war. The Iran nuclear deal seemed like this big triumph of negotiation and nonviolent tools. The sanctions had worked.

[Mary Childs]

After the break, the other side of that triumph.

[Commercial Announcer]

This message comes from Dell Technologies. PCs like the Dell 14+ with Intel Core Ultra processors will help you do more faster. Enjoy huge savings by visiting Dell.com deals.

[Sponsor/Advertisement Voice]

Support for NPR and the following message come from Ethos. Ethos makes getting life insurance fast and easy. 100% online. You can get a quote in seconds, apply in minutes, and get same day coverage. There's no medical exam, just a few simple health questions. You can get up to $3 million in coverage. Some policies are as low as $30 a month. Protect your family's future in minutes with life insurance through Ethos. Get your free [e-mail] money application. Times and rates may vary. This message comes from Wix. Nothing beats seeing your ideas turn into cold hard cash. Well, if you use Wix Harmony, you better get used to it. Wix Harmony makes it unbelievably easy to create a fancy new website that's built to sell. Get the perfect blend of AI and drag and drop tools that puts you in control of every detail, plus an AI agent to help you every step of the way. Try it for [e-mail] harmony so the.

[Mary Childs]

US and other countries had made a deal with Iran. Iran would roll back its nuclear program and the US would de escalate sanctions and provide Iran with economic relief.

[Rick Fountain]

But now that we're done with our brief economic history, we are going to walk you through a few ways that sanctions didn't work quite exactly as the US planned or hoped.

[Mary Childs]

The first problem showed up when the U.S. wanted to reward Iran for negotiating with the U.S. so the U.S. had to remove some sanctions, end the economic pain it was inflicting and Give Iran its frozen money back.

[Rick Fountain]

Yar says, here is a twist in the story of these successful sanctions. You spent so much time thinking about a little nuance. See, US Officials had just spent years pressuring banks all over the world to stop dealing with Iranian institutions for fear of funding terrorism. And they were so convincing that they'd created a culture of overcompliance.

[Asfand Yar Batmigelic (Researcher)]

So there was famously a meeting in May of 2016 where Secretary of State John Kerry went to London and had this roundtable with senior executives from international banks. And the message was exactly that. It was, it's safe to do business with Iran now. Be careful, do your compliance. But you know, we actually want to see Iran reconnected.

[Mary Childs]

Like we told you to stop doing business there. Now we are telling you to start again. Thank you so much. And the response from the banks was not exactly cooperation.

[Asfand Yar Batmigelic (Researcher)]

The then chief legal officer for HSBC wrote this incredible op ed in the Wall Street Journal where he kind of told John Kerry to pound sand and just said that his bank was not going to re engage Iran.

[Rick Fountain]

This chief legal officer at hsbc, a former US sanctions official himself, was saying, nah, no thank you. His bank and probably also his peers were not going to jump back into Iran. The US just spent years telling all of the banks how dangerous it is to do business there. We are a private bank and we will make our own private decisions about the risks.

[Mary Childs]

And to some extent, the US can't seem to undo the sanctions properly because of its own lofty American ideals. Like the US can't force private banks to pursue business they don't want to do. It's a free country.

[Rick Fountain]

Yar says the banks have been so well trained to steer very clear of the risk.

[Asfand Yar Batmigelic (Researcher)]

This culture of overcompliance has become an Achilles heel for the ability of in particular the US when the time comes to make a concession and to roll back the sanctions, you have to let economic activity resume. And we're just very bad at that when it comes down to it.

[Mary Childs]

So despite that very important person meeting in May of 2016, big banks did not really go back into Iran. So on that front, the US failed to deliver on the supposed benefits of coming to the negotiating table. But that wasn't the only way that sanctions didn't quite work out as hoped. It became obvious that the US can't keep its own promises in another way too, because just over a year after the Iran nuclear deal, it got torn up after Donald Trump was inaugurated in 2018. Trump reimposed the sanctions and over the years has added more and the economic misery in Iran worsened. Inflation has gone up and up. GDP has fallen, and so has GDP per capita.

[Rick Fountain]

And there is this other really big flaw with sanctions in Iran, and this one is almost always true of sanctions, and it is that sanctions actually benefit some people in the sanctioned country. So in Iran, the Islamic Republic, the people in charge, they may not even mind the sanctions that much.

[Mary Childs]

Eva Leila, our political economist who pored over those giant books in Iran's archives, she says sanctions can make some people very rich.

[Rick Fountain]

Yeah, namely there's this sort of parallel military in Iran that answers to the Ayatollah called the Islamic Revolutionary Guard Corps, or irgc. It's also like a company. And the IRGC has benefited from the lack of international competition. Like instead of Exxon or Boeing getting a contract, they get it.

[Eva Leila (Political Economist)]

I don't think we really know exactly like what proportion of the economy they control, but it's a, it's a really big chunk that they are involved in.

[Rick Fountain]

By some estimates, they control 50% of Iran's economy. They are the most powerful economic player in Iran.

[Mary Childs]

And the last way that sanctions haven't really worked as advertised. It's become increasingly clear that sanctions are not quite the bloodless tool the US suggests, because the actual mechanism by which sanctions put pressure on a government is the immiseration of its people. At first it's just inflation. Things start costing more and then it becomes hard to get what you need.

[Eva Leila (Political Economist)]

In theory, sanctions aren't supposed to affect people's ability to access medical supplies, but then they do.

[Mary Childs]

Yeah.

[Eva Leila (Political Economist)]

So then it becomes harder to get your medicine. So if you've got diabetes, maybe you, you don't get your insulin. That is then a way in which we can see that sanctions are not non violent. They are a form of warfare and they just sound more palatable.

[Mary Childs]

Research published last year at the Lancet Global Health Journal found that over the past decade, US and EU sanctions have caused more than half a million deaths per year. And Eva Leila says when you impose sanctions on a regime that's not responsive to pressure from its people, which has often been the case in Iran, it's an even more likely path to violence.

[Eva Leila (Political Economist)]

The regime has shown an ability to withstand and endure through a lot of protest movements previously. And it has lots of very powerful tools at its disposal to shut down the Internet and to shoot people and to put many more people in prison. And I don't know if it can do all of that. It can hold onto power in some form.

[Rick Fountain]

If you ask Ali, who kind of narrowly avoided the violent crackdown on protesters in Iran. He says he does think sanctions have isolated the Iranian regime and weakened it economically, militarily and politically.

[Ali (Protester in Iran)]

And of course, the effect of it is felt by the people, by ordinary people, and it's very sad. But going after this brutal regime, they have had to do this. I think it's, it's an effective way to cripple the regime.

[Rick Fountain]

This is a rapidly evolving story. Trump has been talking about maybe attacking Iran, and the US has been building up a military presence nearby.

[Mary Childs]

Ali says the Iranian people need help from other countries. Help he says was promised.

[Ali (Protester in Iran)]

All the brutal things that happen there, there's no way you can go back. You can't go back to be normal, right? So everyone can see the end. It's just the sooner, like if, if we can have some sort of help, it's going to happen sooner. There's going to be less lives lost. But there is no way that things can go back to normal.

[Mary Childs]

Like Ali was chanting with his friends in the streets, they want this uprising against the Islamic Republic to be the last one.

[Rick Fountain]

This episode of Planet Money was produced by James Sneed. It was edited by Marianne McCune. Fact checked by Sierra Juarez, engineered by Jimmy Keeley and Sina Lofredo. Alex Goldmark is our executive producer.

[Mary Childs]

Thank you to Nargis Bogli, co author on a great book about the effects of sanctions on Iran, and to Eddie Fishman, author of Choke American Power in the Age of Economic Warfare. I'm Mary Childs.

[Rick Fountain]

And I'm Rick Fountain. This is npr.

[Asfand Yar Batmigelic (Researcher)]

Thanks for listening.

[Sponsor/Advertisement Voice]

Foreign.

[Commercial Announcer]

This message comes from BetterHelp. During February, it can feel like everyone has it all together in their love lives, but the truth is, most people are still figuring it out. Take the pressure off and feel lighter in therapy. Visit betterhelp.com NPR for 10% off.

[Sponsor/Advertisement Voice]

This message comes from Vanta. What's your 2am Security worry? Is it do I have the right controls in place or are my vendors secure? Enter Vanta Vanta automates manual work so you can stop sweating over spreadsheets, chasing audit evidence and filling out endless questionnaires. Their trust management platform continuously monitors your systems, centralizes your data, and simplifies your security at scale. Get [e-mail] that's V A N T.

[Rick Fountain]

A dot com Vanta this message comes.

[Commercial Announcer]

From Capital One with the Venture X card. Earn unlimited Double miles, a $300 annual Capital One travel credit and access to airport lounges. Capital One what's in your wallet? Terms apply [e-mail].