Wednesday, September 2, 2009

Economic Sanctions Don't Work

In fact, they usually strengthen the very people they are designed to hurt. Take Iran, for example:

American sanctions against this country are not only obviously ineffective, as my walk along Fayyazi demonstrated, they often have unintended consequences that hurt American interests.

President George W. Bush’s 2005 sanctions on financial assets, meant to crack down on rogue banks facilitating Iran’s nuclear program, had two unforeseen side effects. Freezing the financial assets of these banks increased the price of credit, making it more costly for honest financial firms like ours to operate. It also increased the value of Western goods like TV satellite dishes, cigarettes and alcohol, which the Revolutionary Guards sell on the black market, netting an estimated $12 billion a year.

To see real change in Iran, we must economically empower the private market enough to challenge state authority. This can be done with good old fashioned global trade.

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