Iran’s coronavirus fight collides with US sanctions

Bloomberg | Marc Champion and Golnar Motevalli: Iran was among the earliest countries to suffer a major Covid-19 outbreak, and now is one of the first to suffer a resurgence. It drew scrutiny for scenes of pilgrims licking holy shrines, questionable death figures and a belated government response that saw a slew of top officials contract the disease. As the virus spread, though, governments elsewhere also proved slow to grasp the threat and other leaders fell ill or were exposed to the virus. Yet the Islamic Republic remains unique in one way: It’s dealing with the pandemic while under some of the most damaging sanctions in history, and is trying to leverage the crisis to get them lifted.

1. Why was Iran’s outbreak so dramatic?

It’s now clear that by the time the government made public Iran’s first virus deaths in Qom on Feb. 19, the disease had been filling hospital beds for weeks. The government hesitated to quarantine the city, home to the nation’s largest theological seminary, describing such a step as “medieval.” It was also slow to halt flights from China, its main economic and geopolitical partner, and to close holy sites such as Qom’s shrine of Fatima Masumeh, from which Shiite pilgrims carried the virus across the Middle East. After enacting movement restrictions, it was quick to allow people to return to work, in April, which may have contributed to the rebound in infections. By June Iran was reporting record daily numbers of new cases.

2. What else went wrong?

The pandemic struck after a series of missteps had already shaken confidence in the government and its security pillar, the Islamic Revolutionary Guard Corps. In November, as U.S. sanctions reduced Iranian oil revenues to a trickle, the government slashed fuel subsidies, prompting protests that it suppressed at the cost, according to Amnesty International, of at least 304 lives. In January, the U.S. killed Iran’s most powerful military general, Qassem Soleimani, in a targeted drone strike in Iraq. The surge of national unity that followed was cut short when authorities initially sought to cover up the IRGC’s mistaken shooting-down of a civilian airliner on Jan. 8. With trust in government at an all-time low, millions boycotted parliamentary elections in February, and ignored directives not to travel during the Persian New Year, in late March.

3. How bad has Iran’s performance been?

It’s hard to be sure. As with China, Iran’s figures suggest the country of about 83 million brought a rampant outbreak under control. It was quick to boast of success relative to richer countries. But that was before the second surge of infections, which took Iran’s official totals of cases and deaths to 182,545 and 8,659 respectively, by June 12. At the same time, Iran’s data may be even less accurate than elsewhere. Low testing rates mean the Tehran government has likely understated cases. It also stopped reporting provincial figures in mid-March, after hard-hit areas posted numbers that were multiples of official data. Media interviews with doctors and nurses, including by Bloomberg, and an Iranian parliament report suggest systematic misdiagnosis and under-reporting of deaths.

4. What role have U.S. sanctions played?

After two years of U.S. President Donald Trump’s “Maximum Pressure” campaign, following on earlier sanctions, Iran entered the virus crisis with 41% inflation, rising unemployment and an economy estimated by the International Monetary Fund to have shrunk by 5.4% in 2018 and a further 7.6% in 2019. Crude oil exports, Iran’s biggest source of foreign exchange, are about 7% of their level just before the U.S. withdrew from a multilateral nuclear agreement in May 2018. Under that accord, reached in 2015, Iran forfeited some 97% of its enriched uranium, which if processed further could fuel a nuclear weapon, and mothballed some three-quarters of the centrifuges needed to refine the heavy metal. The Trump administration says its sanctions aim to pressure Iran’s leadership into abandoning its nuclear program, ending support for groups in the region such as Hezbollah and halting the development of ballistic missiles.

5. What has been the effect?

U.S. sanctions mean the country is now largely cut off from the international financial system and has little foreign currency to purchase imports, including medical supplies. Where other nations borrowed or dug into reserves to cushion the impact, Iran had little capacity to do either. Despite exceptions to U.S. sanctions for food, medicines and medical equipment, the U.S. government has frequently warned businesses and banks to avoid any trade with Iran, making it difficult for them to do even legitimate deals. U.S. leverage rests with the central role American banks, and the U.S. dollar, play in the global economy. Anyone violating the sanctions could see their U.S.-based assets blocked or lose the ability to move money via the U.S. banking system.

6. Will the U.S. relent?

There’s no sign of this so far, with both sides using the crisis to pursue geopolitical advantage. The U.S. blocked Iran’s request for a $5 billion IMF loan, the first Iranian application since 1960. Although the U.S. offered Iran “unconditional” medical aid, Supreme Leader Ali Khamenei refused it, citing Iran’s lack of trust in the leadership in Washington. Iran sought to pin blame for the virus on the U.S., with Khamenei promoting a theory that the U.S. had engineered it to target people with the genetic make up of Iranians.

7. Will the virus help Trump’s policy to succeed?

There’s little sign of that, either. Some right-wing Washington think tanks and commentators argue the coronavirus is piling pressure on Tehran to capitulate to U.S. demands, making this the wrong time to ease sanctions. Yet the crisis instead appears to have empowered the IRGC and Bonyads — charities-cum-industrial conglomerates linked to the Supreme Leader and religious bodies — which have distributed welfare to supplement government aid. Iran’s goading of Washington also continues. In March, Iran-backed militias shelled a U.S. base in Iraq; in April, Iranian gun boats swarmed a U.S. naval ship and coast guard cutter in the Persian Gulf; and in May, the country launched its first military satellite with rocket technology the U.S. said could power ballistic missiles.

8. Does Iran have any international support?

Iran has sought to stir international opposition to sanctions, which Foreign Minister Javad Zarif slammed as “medical terror.” Calls for Trump to lift them have come not just from Russia, China and other Iran-friendly nations, but also former U.S. and European officials, four former NATO secretaries general, human rights groups and some lawmakers in Congress. The Trump administration says Iran can access medicines, food and other humanitarian goods, and that it could afford more for the pandemic if it spent less on military adventures.

9. How has the virus affected the nuclear issue?

This remains about as contentious as ever. Iran, which signed the treaty on the non-proliferation of nuclear weapons in 1968, insists it’s developing atomic technology only for non-military purposes. The U.S. disputes that. The IAEA said it made a record number of site visits in Iran last year, although some relating to Iran’s past activities were blocked. Covid-19 has since made the process more reliant on digital monitoring.