Iran’s economy is already in a precarious state, burdened by severe water and power shortages, massive budget deficits, and a rapidly depreciating currency. Experts now anticipate a further downturn.
This Sunday at 8 p.m., the United Nations Security Council is poised to re-impose stringent sanctions on Iran due to its nuclear activities. This follows the collapse of intensive diplomatic efforts that took place during the General Assembly this week.
These forthcoming U.N. sanctions are far more comprehensive than the existing American ones. They originate from an ongoing disagreement with European nations concerning Tehran’s compliance with the 2015 nuclear agreement, further aggravated by Iran’s recent decision to block international inspectors from its nuclear sites following attacks by Israel and the United States in June.
The new measures will target a broad spectrum of Iranian entities and individuals, imposing asset freezes and travel bans. Furthermore, they grant international authorization for countries to interdict and inspect cargo originating from Iran, whether by air or sea, particularly those carried on Iranian government vessels, including crucial oil tankers.
Additionally, these sanctions will forbid Iran from any level of uranium enrichment, from launching ballistic missiles capable of carrying nuclear warheads, and from transferring technical expertise related to its ballistic missile program. A comprehensive arms embargo will also be reinstated.
Iran’s President, Masoud Pezeshkian, has strongly condemned the impending sanctions, labeling them ‘unjust and illegal’. During a briefing with reporters in New York on Friday, President Pezeshkian asserted, ‘They want to overthrow us. If you were in our position, what would you do?’
The Iranian government has yet to declare its response to these new sanctions. President Pezeshkian indicated that a decision would follow consultations with officials upon his return to Iran. In a diplomatic move, Iran’s Foreign Ministry recalled its ambassadors from France, Britain, and Germany to Tehran on Saturday for urgent discussions.
While hard-line elements within Iran have advocated for a withdrawal from the Nuclear Nonproliferation Treaty as a form of retaliation – a step that would ignite serious international concern by dismantling existing safeguards – President Pezeshkian, a known moderate, has dismissed this idea, stating it is not a viable option.
Should these sanctions proceed as planned, they will undoubtedly strike Iran during a period of extreme vulnerability.
The nation is still recovering from a devastating 12-day conflict with Israel in June, which saw American forces deploy bunker-buster bombs that damaged three of Iran’s nuclear facilities. Concurrently, the Iranian government has been struggling for months to manage a severe energy and water crisis, resulting in forced rationing across numerous urban centers.
Naysan Rafati, a senior Iran analyst at the International Crisis Group, commented that while the U.N. sanctions ‘may not match the financial severity of current U.S. measures, they will significantly worsen the existing economic pressures on Iran.’
The 2015 deal to curb Iran’s nuclear program relieved the country from U.N. sanctions that had been passed by the Security Council between 2006 and 2010. But the 2015 agreement allowed those sanctions to be reimposed, using the so-called snapback mechanism, if Iran violated the terms of the deal by the end of October 2025.
If the deadline passed with no action, the provision would automatically expire and the sanctions would lapse. But in August, France, Britain and Germany triggered the mechanism and moved the deadline up to Sept. 28.
Europe has accused Tehran of violating the terms of the 2015 agreement by accelerating its nuclear enrichment to 60 percent from 3.5 percent and accumulating a stockpile of 400 kilograms of highly enriched uranium, which would allow Iran to build several nuclear bombs if it chose to weaponize its program, and not allowing international inspectors following the airstrikes.
Iranian officials maintain that the country’s nuclear program is for peaceful purposes. They say they accelerated enrichment only because the United States unilaterally exited the nuclear accord in 2018 under President Trump, who called it “a horrible one-sided deal,” even though Iran was in full compliance and reimposed sanctions. To comply with the American sanctions, the Europeans ended trade with Iran. Iranian officials say that by doing so, European powers effectively violated their end of the deal.
In the briefing, Mr. Pezeshkian said again that Iran did not plan to pursue a nuclear weapon and expressed surprise that the world did not believe it. He also said Iran would not simply do whatever U.S. and European powers demanded without complaint. “We will not accept this,” he said.
The Europeans have also criticized Tehran’s decision, following the Israeli and American strikes, to suspend cooperation with the International Atomic and Energy Agency by denying its inspectors access to Iran’s nuclear sites.
Europe had laid out three conditions for Iran to avoid the new sanctions: to provide immediate access for the outside inspectors; to give the location of the 400 kilogram stockpile of highly enriched uranium; and to open direct nuclear negotiations with the United States.
Mr. Pezeshkian said that Iran was ready to cooperate with the Europeans, “whether it’s with the international atomic agency, or about the stockpile of enriched uranium and the inspectors to come and investigate.”
He said in the briefing and in comments to Iranian media on Saturday that Iran had conceded to negotiations and to giving access to inspectors, but the United States had demanded that Iran turn out all of its 400 kg stockpile in exchange for a three-month suspension of snapback sanctions, a condition that Mr. Pezeshkian called unreasonable.
Russia and China, Iran’s two main allies and permanent members of the Security Council, tried on Friday to delay the sanctions by six months, pushing the deadline to April. But the measure was defeated, with nine countries opposed, including Britain, France and the United States.
Russia and China have already said they do not consider the snapback measure legitimate and are likely to soften the effects of the sanctions by continuing their trade with Iran. Russia and Iran have close military ties, with Iran selling Russia drones it uses in the war in Ukraine.
China and Iran also have strong economic ties. China is the main client for Iran’s oil sales, purchasing crude oil at a discount of around 20 percent, helping the government stay economically afloat.
A senior official in Iran’s Oil Ministry said in a telephone interview that the new sanctions would not stop China from buying oil from Iran but would add other hurdles. He added that China would be likely to use them as leverage to extract even more of a discount, possibly by raising concerns about Iranian oil tankers being intercepted and seized in the open seas.
Some political figures in Iran have downplayed the impact of the sanctions, saying the country was already managing under the current sanctions and would find ways to cope with the new ones. They also sought to place the blame on the West, saying that Europe and the U.S. were never seriously interested in reaching a diplomatic agreement.
“They have made their decision, now we must make our decision, too,” Mahdi Mohammadi, a conservative senior adviser to the head of Iran’s Parliament said in a social media post. “The only way is to become strong to a level that erases the idea of Iran surrendering to the enemy.”
Nevertheless, Iran’s economy has tanked in recent years, suffering not just from the American sanctions but from chronic mismanagement and corruption. On Saturday, Iran’s markets quickly reacted to the news of the new sanctions, with the rial dropping 4 percent on Saturday to a microscopic 1,126,000 to the dollar in the black market, which is the commonly accepted rate and the marker for inflation.
For ordinary Iranians, the news hit hard. They are already struggling with inflation of over 40 percent, rising unemployment and uncertainty about the direction of the country. Many fear the return of war with Israel and the U.S., as the government’s showdown with the West continues.
Mehdi Bostanchi, the head of Iran’s Council of Industries, said in an interview from Tehran that businesses and industries are bracing for a decline in demand and expect more hurdles in procuring goods from abroad and more restrictions on insurance, banking and shipping.
“These restrictions create a spillover effect,” Mr. Bostanchi said. The greatest pressure will be on small and medium-sized enterprises, he said, “which account for over 90 percent of Iran’s industrial units and about half of industrial employment.”
Leily Nikounazar contributed reporting from Belgium.