The Iranian Art Market Amidst Sanctions: How Financial Pressures Impact Iran’s Domestic Art Industry

Iranian contributions to art, film and architecture are world renowned and stem from an ancient history. In the midst of severe economic sanctions, Iran’s domestic art market continues to survive. However, broad economic sanctions have various impacts on all industries and sectors, and Iran’s domestic art market is no exception.

The recent devaluation of the rial has contributed to a spike in art sales. According to Hormoz Hematian, the founder of one of Tehran’s leading contemporary art galleries, the equivalent of $10,000 can buy “almost quadruple what it would have been able to 15 months ago.”  As a result, Iran’s elites have flocked to auction houses in Tehran, largely because they view purchasing such art as an investment. According to art specialist Bibi Naz Zavieh, the economic pressures in Iran have triggered and reaffirmed the age-old belief that art is “still one of the safest places to invest and keep money value.”

For some Iranians, economic difficulties and the looming threat of bankruptcy has forced them to sell their art collections. While some look to sell, others look to capitalize on such opportunities. Moreover, under Iran’s current tax code, art is a tax-free commodity, and those investing in expensive works can claim their purchases as business expenses in order to pay less taxes. The use of art as a store of value provides the wealthy with a safety net during times of economic duress. It also demonstrates one of the many ways that the ultimate burden of broad economic sanctions is borne by the most socioeconomically vulnerable classes.

These financial mechanisms provide little to no monetary gain for the producing artists in the Iranian art industry, who often find that sanctions prevent them from participating in global art events. Sanctions also have helped create monopolies in Iran’s domestic art market. As the value of the rial has decreased and international business has become next to impossible, some galleries no longer do business outside of Iran and instead trade amongst themselves and domestic art collectors exclusively. Auction houses have also become exclusive, and many experts at the Tehran Auction are also the sellers. These conflicts of interest can compromise the transparency and credibility of the experts, and affect the selection of works and artists involved in the auctions. As an indirect result of sanctions, emerging Iranian artists have even less access to international opportunities, and auction houses have even more power over artists’ visibility.

Broad economic sanctions have contributed to a redirection of resources throughout Iran’s economy, which has increased domestic investment in Iran’s art market. The recent upsurge in domestic art sales involves complex developments and changes in the buying and selling of Iranian art – changes that may become systemic over time, and which can distract the industry from foster long-term vision for the prosperity of Iran’s artists.

By Nikki Vafai

Cyber Privacy in SMS-Alternative Messaging Applications: WhatsApp Case Raises Novel Legal Questions

Messaging applications like Telegram and WhatsApp emerged as alternatives to SMS-based messaging, and significantly enhanced our ability to communicate with friends and family in other countries, irregardless of telecom networks and carriers. There are a range of concerns that may go into a user’s decision as to which messaging application to use to connect to their coworkers, friends and family. Privacy is often one of the main concerns. Privacy issues in this area are twofold: privacy related to the service provider and platform themselves, and privacy relating to outside third-party infiltration of the service. 

With respect to the first privacy concern, some users may have legitimate concerns about the access granted to the very company that provides the service in the first place. It is understandably essential for users to have some level of confidence in the provider of the service that connects them to their loved ones and colleagues. This is why the sizable acquisition of WhatsApp by Facebook in 2014, after its earlier acquisition of Instagram in 2012, raised privacy concerns alongside competition issues in different jurisdictions around the world. These concerns centered around the newfound ability of the parent company to share users’ data across its three platforms. 

To clear the deal, Facebook had to give assurances to U.S. Federal Trade Commission (“FTC”), among other authorities, that its use of WhatsApp data after the acquisition would not undermine the users’ privacy choices. Nevertheless, Facebook allegedly violated these promises. In July of this year, Facebook agreed to pay a $5 billion penalty to settle FTC charges, the largest fine ever imposed on any company for violating consumer privacy. The company also agreed to submit to new restrictions and a modified corporate structure that, according to the FTC, will hold the company accountable for the decisions it makes about its users’ privacy.

The company has faced similar issues in Europe, where privacy protections arguably are even stronger under EU’s General Data Protection Regulation (“GDPR”). These concerns came into the forefront again after reports earlier this year that Facebook planned to merge data from its three messaging services into a single platform in 2020. The UK Information Commissioner Office had ruled in March 2018 that an earlier plan to share user information between Facebook and WhatsApp would be illegal under GDPR.

The second privacy concern, noted above, concerns the ability of third-parties to infiltrate the otherwise secure systems and platforms provided by companies such as WhatsApp. A novel lawsuit filed this October by WhatsApp in federal court in the Northern District of California may become a precedent-setting case on this aspect of privacy (WhatsApp Inc. v. NSO Group Technologies Limited).

Starting in April 2019, a cybersurveillance firm named NSO allegedly used WhatsApp servers to send malware to approximately 1,400 mobile phones and devices. Their malware was designed to infect these “target devices” for the purpose of conducting surveillance of specific WhatsApp users. According to WhatsApp, NSO was unable to break WhatsApp’s end-to-end encryption. Instead, NSO developed its malware to access messages after they were decrypted on an infected target device, abusing in-app vulnerabilities and the operating systems that power our mobile phones. In May 2019, WhatsApp detected and stopped NSO’s unauthorized access and abuse of its service.

Cybersecurity attorney Scott Watnik of Wilk Auslander in New York has called WhatsApp’s lawsuit against NSO “entirely unprecedented,” explaining that service providers often avoid litigation for fear of compromising their digital security. WhatsApp says this is the first time that an encrypted messaging provider is taking legal action against a private entity that has carried out this type of attack against its users. But this might be because in other past similar incidents, the attacker was not a legally incorporated private entity that could be sued in court.

We have yet to see where these developments will lead. Important points to watch would be the result of the WhatsApp lawsuit, and also how Facebook will address the privacy concerns of its users and the relevant legal challenges it faces in different jurisdictions.

By Amin Bahrami, Legal Fellow

OFAC’s October 2019 Guidance for Foreign Governments and Foreign Financial Institutions Engaging in Humanitarian Trade with Iran

The Office of Foreign Assets Control (OFAC) is the financial intelligence and enforcement agency of the U.S. Treasury Department; more specifically, OFAC administers and enforces U.S. economic and trade sanctions. In the past, companies engaging in JCPOA-related, sanctions-exempt, or specifically licensed trade activities with Iran often sought, to little avail, detailed guidance from OFAC on what, in OFAC’s view, constituted sufficient due diligence and compliance programs. Until recently, interested parties relied on public releases of OFAC settlement agreements and financial penalty decisions for takeaways on best practices and mistakes to avoid, but this type of targeted analysis necessarily requires after-the-fact assessments and comparisons to complex, case-specific situations. OFAC’s May and October 2019 publications of additional guidance attempt to address these concerns in unprecedented detail.

OFAC’s May 2, 2019 General Guidance on Sanctions Compliance Programs 

Earlier this year, OFAC took steps to clarify its expectations of compliance programs, by issuing its most comprehensive guidance to date. On May 2, 2019, OFAC issued, “A Framework for OFAC Compliance Commitments,” to encourage companies to “develop, implement, and routinely update” a risk-based sanctions compliance program (“SCP”). The guidance was intended for U.S. companies as well as non-U.S. companies, and laid out five “essential components” of an effective SCP: (i) management commitment; (ii) risk assessment; (iii) internal controls; (iv) testing and audit; and (v) training.

OFAC’s October 25, 2019 Iran-Specific Guidance on Humanitarian Trade, Due Diligence & Reporting Expectations

Most recently, on October 25, 2019, OFAC published a four-page document called “Financial Channels to Facilitate Humanitarian Trade with Iran and Related Due Diligence and Reporting Expectations” (the “Mechanism”), which purports to provide further guidance and set forth OFAC’s expectations concerning humanitarian trade with Iran. OFAC clarifies that the Mechanism is “designed solely for the purpose of commercial exports of agricultural commodities, food, medicine, and medical devices to Iran” (i.e., humanitarian, sanctions-exempt trade). According to OFAC, the Mechanism “will provide unprecedented transparency into humanitarian trade to Iran.” The Mechanism specifically applies to foreign governments and foreign financial institutions, the near-totality of which have withdrawn or abstained from humanitarian trade with Iran out of fear of reprisal from U.S. secondary sanctions. 

The Mechanism was issued as part of the concurrent designation of Iran as a “jurisdiction of primary money laundering concern” under Section 311 of the USA PATRIOT ACT. This designation was not made by OFAC, but by a separate bureau of the U.S. Treasury Department, the Financial Crimes Enforcement Network (“FinCEN”), which collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes. The designation prohibits correspondent accounts in the U.S. on behalf of Iranian financial institutions, and prohibits foreign financial institutions from processing transactions involving Iranian banks.

Under the terms of the Mechanism, “participating governments and financial institutions must commit to conducting enhanced due diligence to mitigate the higher risks associated with transactions involving Iran.” It contains an “illustrative list” of comprehensive enhanced due diligence protocols that OFAC says it “may require” depending on the nature of the transaction. As OFAC explains: “this framework will enable foreign governments and foreign financial institutions to seek written confirmation from Treasury that the proposed financial channel will not be exposed to U.S. sanctions in exchange for foreign governments and financial institutions committing to provide to Treasury robust information on the use of this mechanism on a monthly basis.” 

In short, by committing to develop and implement enhanced due diligence procedures, and provide to OFAC a copious volume of information on a monthly basis, foreign governments and foreign financial institutions may be able to obtain written confirmation from OFAC that their intended humanitarian trade activities will not be exposed to U.S. secondary sanctions. 

Practical Considerations of OFAC’s “Enhanced Due Diligence and Reporting Expectations”

OFAC indicates that it has issued the Mechanism to bar against illegitimate trade under the guise of humanitarian trade, to ensure transparency, and to promote greater understanding of U.S. sanctions laws and regulations. The “illustrative list” contained at pages three and four of the Mechanism provides much greater clarity as to the depth of OFAC’s due diligence expectations. The list is profoundly comprehensive, and observes a wide range of due diligence and Know Your Customer principles. Sanctions compliance experts will recognize many familiar themes in the Mechanism, from identity verification to designated persons to transactional logistics. 

For the most part, none of this material should be surprising, particularly for large, sophisticated entities that have due diligence experience, sanctions-specific software methodologies, strong compliance programs, and budgetary resources to expend on due diligence of this nature. This being said, one of the counterintuitive and unintended consequences of long-term, broad economic sanctions is the erosion of a legitimate economic engine; this is because over time, sanctions push market forces into the willing arms of the black market, which in turn, stifles the development of transparent, sound business record-keeping practices. Thus, participants in heavily sanctioned economies such as Iran may struggle to meet the level of detail outlined in the Mechanism’s “illustrative list.”

OFAC acknowledges that the Mechanism includes a “great deal of information” to convey on a monthly basis. As noted above, much of it is information that generally would – and should – result from comprehensive, well-effectuated due diligence. But updating this amount of information and certifying its continued appropriateness and accuracy on a monthly basis is extremely costly and time-consuming. Thus far, OFAC’s monthly reporting requirements are proving to be the greatest source of concern for foreign governments and foreign financial institutions. Additionally, the proximity between OFAC’s October release of the Mechanism and Europe’s official launch of INSTEX in June 2019 has led some observers to opine that the Mechanism may be more of a deterrent to INSTEX and humanitarian trade, rather than – as suggested in the document’s title – to “facilitate” humanitarian trade with Iran. 

The Mechanism provides some much needed clarity as to OFAC’s due diligence expectations and reporting requirements for foreign governments and foreign financial institutions engaging in humanitarian trade with Iran. However, the Mechanism may be prohibitive in terms of its monthly reporting requirements. As foreign governments and foreign financial institutions consider and perhaps attempt to implement the Mechanism’s criteria, they should remain alert for additional guidance and clarifications from OFAC, or seek interpretive guidance from the agency. In the midst of procedures being developed in the wake of the U.S. withdrawal from the JCPOA, whether it be INSTEX or OFAC’s recent publications, one thing appears certain: the humanitarian crisis in Iran has no meaningful end in sight for ordinary Iranians.

By Fiona Yang

Persian Artifacts Loaned to the U.S. in the 1930s Returned to Iran after Legal Dispute

The National Museum of Iran received – and now displays – ancient clay tablets, which recently arrived from the United States. The ancient Persian artifacts are part of the “Persepolis Collection,” previously borrowed by the United States. Iran’s Minister of Cultural Heritage, Handicrafts and Tourism Ali Asghar Mounesan reported that hundreds of ancient tablets, dating back to the Achaemenid Empire were returned on September 30, 2019. The Oriental Institute at the University of Chicago last held the artifacts, where extensive research was conducted on their origins and historical significance.

Mr. Christopher Woods, the head of the Oriental Institute, stated that as a result of their historical research on the artifacts, the world knows more about the organization and institutions in Achaemenid societies of ancient Persia. These tablets were excavated from the site of Persepolis, the capital of what was once a politically and culturally advanced Achaemenid Empire approximately 2500 years ago. Iran loaned artifacts to the University of Chicago’s Oriental Institute more than 80 years ago for research, translation and cataloging, after university archaeologists uncovered them in the 1930s at the site of the ancient city of Persepolis.

This collection was caught in the crossfires of a lengthy legal dispute that lasted over 14 years, and went all the way to the U.S. Supreme Court. A February 2018 decision came down in favor of a return of the collection to Iran. Rubin v. Islamic Republic of Iran showcased a stunning instance of legal consensus between the governments of the United States and Iran. The unanimous decision by the U.S. Supreme Court ruled that clay tablets are exempt from seizure under the Foreign Sovereign Immunities Act. The U.S. administration at the time expressed that a ruling to seize the artifacts could significantly disturb the observance of international reciprocity for the exchange of historical antiques.     

Mr. Woods and Mr. Mohammad Reza Kargar, a director of museums in Iran, both hope that the remainder of the collection still in the United States, which has been held up by bureaucratic delays due in part to the reimposition of U.S. sanctions, shall be returned to Iran in the near future. Another 17,000 artifacts from the initial loan remain in the United States. Tourists flock to Iran every year to visit both historical sites and museums to study and witness the stunning remnants of a once expansive and sophisticated Persian empire. 

by Mohsen Zarkesh

Recognizing the 2019 Recipients of the Iranian American Bar Association Foundation Scholarship

A central tenet of the Iranian-American Chamber of Commerce is to engage with and recognize other Iranian-American organizations that serve and support the Iranian-American community. To that end, this month the Chamber is pleased to recognize this year’s recipients of the Iranian American Bar Association Foundation Scholarship.

By way of background, the Iranian American Bar Association (IABA) is a nationwide organization for Iranian Americans in the legal profession. The IABA Foundation is an affiliated, but separate, non-profit organization that oversees the scholarship process. The Chamber is pleased to recognize the 2019 Scholarship recipients, Daniel Barlava and Fatemah Shahkolahi, and took a moment to chat with both of them about their scholarship awards:

Daniel Barlava (pictured at left) is a third-year law student at Columbia University Law School. He received a B.A. in History and Economics from Northwestern University, and followed his graduation by working for the U.S. Treasury Department. There, he supported law enforcement agencies’ efforts to conduct complex financial investigations. During his time at Columbia University, Daniel has focused on immigration defense, criminal convictions, and environmental litigation. Following law school, he will be working as an associate at the Irell & Maniella law firm in Los Angeles, focusing on public services. Daniel is excited about his involvement with the IABA because he wants to become more involved with Iranian-American lawyers in the community. He is interested in continuing his career by working with the government. He said that this would give him “the opportunity in the role of building bridges and taking down the barriers between Iranians in the U.S. and Iranians in Iran.” Daniel is honored and very proud to accept the IABA Foundation Scholarship.

Fatemah Shahkolahi (picture on right) is a third-year law student at the George Washington University Law School. She earned a B.A. with honors in English from Notre Dame of Maryland University and an M.A. in International Communication from American University. After receiving her M.A., Fatemah worked at an international NGO on addressing the refugee crisis in Lebanon. Throughout her time at law school, she has worked as a judicial intern to Judge Robert McDonald in the Maryland Court of Appeals, the state’s highest court. On receiving the scholarship, Fatemah noted that she “felt very happy and very fortunate,” saying, “it’s definitely a privilege to be provided with resources to fund my legal education and so I feel very honored that I was provided this opportunity.” Overall, she is excited about her future in the legal profession, and plans to focus on helping underserved populations. She explained, “it is an honor to use my legal education and law degree to help serve Iranian-Americans…I want to use my legal skills to help serve Iranian-Americans and any other underserved communities in the U.S.”

by Ariane Sharifi

Human Rights Watch Issues New Report on the Devastating Impact of Sanctions on Healthcare in Iran

On October 29, Human Rights Watch (HRW) issued a new, 47-page report titled “‘Maximum Pressure’: US Economic Sanctions Harm Iranians’ Right to Health.”

The report finds that the Trump Administration’s exceedingly broad sanctions on Iran have dramatically impaired the country’s ability to finance humanitarian imports, such as medicines. The report explains that this impediment is causing serious hardships for ordinary Iranians and threatening their right to health. HRW encourages the Trump Administration to take immediate steps to ensure that a viable channel exists for trade in humanitarian goods with Iran.

Specifically, the report outlines how the broad financial restrictions on Iran, coupled with increasingly aggressive rhetoric from United States officials, have radically slashed the ability of Iranian entities to finance humanitarian imports, including vital medicines and medical equipment. Although there are exemptions for humanitarian imports in the U.S. sanctions regime on Iran, HRW concluded that in reality, these exemptions have failed to offset the strong reluctance of US and European companies and banks to risk incurring sanctions and legal action. The result has been to deny Iranians access to essential medicines and to impair their right to health. HRW urges that under international law, the U.S. should monitor the impact of its sanctions on Iranians’ rights and address any violations sanctions cause.

Read HRW’s full article discussing the report. The report is available here.

by USIRCC Staff

Policy Controversy: Proposal Seeks to Rein In Big Tech Amid Murmurs of a Big Tech Break-Up

This article examines one of the most bold, controversial, and progressive policy proposals currently cycling through the political corridors of Washington: the proposal to “break up” big technology companies, chief among them Facebook, Google, and Amazon. This proposal has stoked controversy in legal and economic policy circles since its introduction in March. In leaked audio from an employee meeting, Mark Zuckerberg, CEO of Facebook, said the company will fight any such measure.

One of the current proposals is twofold. The first pillar of the proposal is to pass new legislation requiring large tech platforms to be designated as “Platform Utilities” and broken apart from participants on that platform. “Platform Utilities” are defined as companies with annual global revenue of $25 billion or more, and which offer to the public an online marketplace, an exchange, or a platform for connecting third parties. Specifically, Amazon Marketplace, Google’s ad exchange, and Google Search are mentioned as platforms that would fall under its scope. In other words, Amazon Marketplace would be split apart from Amazon Basics, which offers products for sale on the marketplace. Similarly, Google’s ad exchange and businesses on the exchange would be split apart. The idea behind this proposal is that it is fundamentally unfair for a company that operates such a platform to also compete on its own platform with other (smaller) companies.

The second pillar of this policy proposal involves blocking mergers, which would lead to more consolidation of an already concentrated tech sector. Some variations of this policy even call for unwinding previously consummated transactions, which has the potential to impact the acquisitions of Whole Foods and Zappos by Amazon, WhatsApp and Instagram by Facebook, and Waze, Nest and DoubleClick by Google. Rather than legislation, effectuating this prong of the proposal centers on the appointment of government officials in the relevant agencies who are committed to this agenda.

Along the same vein, the Antitrust Division of the Department of Justice in the Trump Administration, under the leadership of Assistant Attorney General Makan Delrahim, an Iranian-American lawyer, announced in July that it will launch a wide-ranging antitrust review of “Market-Leading Online Platforms.” The announcement refers to “search, social media, and some retail services online.” This is generally understood to apply to the same big tech companies and also Apple, even though the Department’s announcement does not call out any particular company by name. “Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” said Mr. Delrahim. Thus, the Division is reviewing “whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers.”

In sum, there seems to be a growing consensus that there is a need for scrutiny into the competitive conditions of the online and technology marketplace. The main concern among many policy experts is that traditional antitrust frameworks and practices may not be adequate to address the new issues arising in this area, especially since many of these services are offered to customers free of charge. But this lack of price-competition does not exclude the possibility that more competition would lead to better outcomes for consumers on other fronts such as privacy, and also further stimulate innovation. We will know soon what, if any, impact this debate will have on major technology companies and their billions of customers.

by Amin Bahrami, Legal Fellow

Bias, Discrimination and Delays: The Painful Consequences of Delayed and Revoked Visas for Iranian Students Approved to Study in the United States

This month, the Iranian-American Chamber of Commerce is compelled to draw attention to the emerging crisis affecting students of Iranian heritage who seek to study in the United States. Earlier this month, reports began to emerge of Iranian students whose visas to study in the United States were suddenly and inexplicably revoked. The saga began to unfold with the news that roughly one dozen Iranian students were not permitted to board their inbound flights to the United States. Iranian-American organizations are beginning to investigate the underlying reasons for the delays and/or revocations, and the Iranian-American Chamber of Commerce takes time this month to highlight several articles bringing this urgent issue to the forefront.

The Trump Administration’s travel ban (also known as the Muslim ban) bars Iranians and nationals of six other countries from traveling to the U.S., but it does not apply to Iranian students. Nevertheless, the Iranian students at issue find themselves encountering the same hardships as those impacted by by travel ban. A 2012 law passed by the Obama Administration can deny visas to Iranian students whose U.S. education could lead them to work in the fields of energy or nuclear science once they return back to Iran.

However, experts say that this still does not explain the last-second rejection of the latest batch of students.

By mid-September, UC San Diego confirmed that two Iranian students who were scheduled to enroll for the fall quarter were barred from campus. In general, many of the Iranian students facing these visa-related hardships were bound for the University of California school system, in part a reflection of the caliber of the system and the large Iranian diaspora in California. University systems have come to the defense of the Iranian students, with Arizona State University President Michael M. Crow specifically stating that Customs and Border Protection (C.B.P.) is “unevenly and inappropriately making determinations that have no factual basis and that they have no experience making…If C.B.P. and [Department of Homeland Security] do not take this problem seriously, all universities need to seek review by Congress and the courts.”

The visa revocations may be a response to vehement hardline opposition in the U.S. Congress to diplomacy with Iran, with one publication noting that some congressional representatives have admitted that they have sought revocation of visas of relatives of Iranian governmental officials in order to exact revenge for grievances against the Iranian Government. Iranian students may very well be innocent bystanders caught in this political fray.

The Iranian-American Chamber of Commerce will continue to report on the situation and provide updates to any impacted members as appropriate. Until then, the clear losers in this scenario are the U.S. educational system, which recruits Iranian students from world-renowned universities like Sharif University, and the Iranian students who invest thousands of dollars on visa and travel arrangements – two groups that one would think would garner the consideration and care of policymakers.

by USIRCC Staff

The #FemDiplomacy Campaign: Building Bridges Across the Iranian-Arab Divide

Leila Mansouri is an immigration attorney with a U.S. law practice and global migration consulting practice. Leila is active in the Iranian-American community, and serves on the Boards of the Iranian American Bar Association and Persian Women in Tech. Recently, Leila spoke with the Iranian-American Chamber of Commerce regarding her latest project, a bridge-building initiative called #FemDiplomacy.

Leila Mansouri founded the #FemDiplomacy campaign after a conversation among Arab and Iranian friends at a wedding ceremony, motivating the purpose of the campaign to unite the two ethnic communities through arts, culture and discussion. 

“There has been a long history of hatred and racism and stereotypes between Arabs and Iranians. So basically, I founded this as a way to build bridges between the two,” Mansouri explains.

Since launching the grassroots campaign in May 2017 as a volunteer project, Mansouri has organized public events in Washington D.C. and London to showcase art, especially those created by Middle Eastern women. The campaign’s previous event in February collected donations for Syrian refugees through auctioning artwork by Arab and Iranian artists.   

In addition to public art exhibitions, #FemDiplomacy hosts roundtable discussions on more sensitive topics like women’s issues, which are open to interested individuals through inquiry. 

#FemDiplomacy aims to foster understanding between the Arab and Iranian communities through its hosted events and social media presence for those who are unable to travel and explore these different cultures themselves. Mansouri said that her biggest dream and goal with this initiative is to encourage conversation and for people “to start to break down their stereotypes.”

by Maristela Romero

Forecasting a Medical Humanitarian Disaster: When Sanctions Exemptions Exist Only on Paper

In creating its sanctions against Iran, the United States was required to ensure that humanitarian access to food and medicine was in no way impeded. Despite this, in October of 2018 the International Court of Justice ruled that the exemptions the U.S. had in place to protect this access were inadequate, while U.S. officials maintained what was currently in place was sufficient. United States exports of pharmaceutical products to Iran have dropped significantly since recent major policy changes, from an average of $26 million a year to $8.6 million a year according to data provided by the Census Bureau on U.S. Exports of Medical goods to Iran. Ignoring decreases in U.S. exports, the sanctions imposed on Iran by the United States complicate European pharmaceutical exports to Iran as well. 

Iran’s Food and Drug Administration Director General, Akbar Barandegi, asserts that around 100 local pharmaceutical companies are responsible for providing nearly 97% of medicines required by the people of Iran. This considerable production and export of generic pharmaceuticals helps lessen the cost of healthcare in Iran. However, the remaining 3% of pharmaceutical demand for specialized medications cannot be met by local production, making imports of these medications absolutely critical to the survival and wellbeing of the patients who need them. Restrictions on banking due to sanctions on Iran have led to pharmaceutical import shortages and rising costs, thanks to increased difficulty for importers in Iran to pay for exports from suppliers in Asia and Europe.

United States sanctions on Iran also interrupt supply chains, and harm domestic production as a result. The previously mentioned banking restrictions have in some cases made paying for items such as the raw materials required in the production of pharmaceuticals an impossible task, as suppliers are unable to reliably receive payment for raw materials sold to Iran. Medications are quite complex, requiring long lists of ingredients, but the inability to obtain even one ingredient means the whole process cannot continue and patients who require that medication to survive cannot obtain it. On top of this, U.S. sanctions on Iran have brought a decrease in Iran’s government revenues along with a decrease in access to foreign currencies. These respective drops lead to further declines in health care spending, reducing purchasing power of both healthcare providers and patients requiring medication. Data gathered by the Central Bank of Iran shows that healthcare has seen an almost 20% increase in cost between November 2017 and November 2018, and imported drugs are increasingly less attainable due to raised costs making medications unaffordable for those that need them, if they are available at all. 

With the price increases and import shortages of medications, smuggling of counterfeit and low-quality medicines into Iran through routes from Pakistan, Turkey, and the United Arab Emirates has increased. Some fear that if nothing is done to alleviate these issues counterfeit or impure ingredients could eventually end up in domestically-manufactured medications, with the result being drugs produced below quality standards with a slew of public health risks. According to a note in the Lancet, supplies of Asparaginase, Mercaptopurine, and Paracetamol, a chemotherapy medication, leukemia medication, and basic painkiller, respectively, had run out, putting treatment on hold for those who require those medications. 

Iran’s scientific researchers and doctors are bringing the urgency of the crisis into perspective through publications in medical journals specifically addressing the impact of sanctions on medicine and medical research. In a July 2018 article titled, “Impact of Sanctions on Cancer Care in Iran,” in The Archives of Bone & Joint Surgery journal, Dr. Mohammad Hassani explains, “[n]ovel chemotherapy drugs and new biologic anti-cancer agents are too expensive and Iranian public insurance system may not be able to afford it for the increasing number of patients. More than 95% of Iranians are covered by government insurance, but inability of public insurance to cover the cost of these expensive treatments restricts the access of middle and lower economic layers of the population to these agents.” 

Similarly, in the Winter 2019 issue of the Asia Oceania Journal of Nuclear Medicine & Biology, Dr. S. Rasoul Zakavi writes, “the negative effect of sanctions has ranged from death to different complications of disease mainly due to limited access to the drugs. The most critical patients have been affected the worst including children, patients with cancer, hemophilia, cardiovascular disease, asthma and epilepsy.” 

As the months of impasse continue, Iranians have been among the first to realize that the humanitarian exemptions the United States has in place in its current sanctions on Iran do not do enough protect access to pharmaceuticals, as those who require specific medications to survive are in many cases unable to receive the medicine they need. The ongoing situation is unlikely to resolve or improve without specific and concrete action on the part of major trade actors and policymakers.

by Kalyan Emerick