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 skillfully 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.
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. 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.
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…