Iran sanctions: ‘people often adopt sanctions simply because they can’t think of any alternative’

Transcript

For the six world powers in talks with Iran, the goals have always been clear: blocking the Islamic republic’s path to a nuclear weapon, and lifting sanctions on the country that have crippled its economy and had a knock-on effect for the rest of the world. World Finance speaks to Lord Lamont, former Chancellor of the Exchequer and Chairman of the British-Iranian Chamber of Commerce, to ask what an agreement would represent.

World Finance: Lord Lamont, sanctions on Iran have been tightening since 2005, but you’ve always been strongly opposed to these. Why?
Lord Lamont: Well I’m not saying no action has to be taken against Iran’s nuclear programme, but I have pointed out that I think the history of sanctions producing the political results that one wants are few and far between.

For example, American sanctions against Cuba I think have strengthened the communist regime there. Equally, I think one of the effects of sanctions against Iran has been to strengthen the element of the state in the economy, the stake of the revolutionary guards in the economy, and to bankrupt the private sector and drive them into the arms of organisations like the revolutionary guard.

American sanctions against Cuba I think have strengthened the communist regime there

I’m not at all convinced that sanctions, generally, produce the political effects people want.

World Finance: What are the alternatives?
Lord Lamont: People choose sanctions simply as an alternative to war. I’m not suggesting we should go to war, but I think people often adopt sanctions simply because they can’t think of any alternative.

World Finance: How much does a resolution to the Iran talks mean to the world economy?
Lord Lamont: The outcome I think could be profound. Iran is obviously a large, important country. It could play a much more important part in the whole Gulf region, but you have really the last emerging market to have great size, not comparable in size to China, but it’s a major market, and it’s about time that it came back to the world economy and became part of the world community. Of course, that necessitates some changes in Iran’s behaviour as well.

World Finance: Most people expect there to be an extension on the November 24 talks, but how long can this go on for? How long can Iran’s economy sustain itself under these sanctions?
Lord Lamont: You would have thought not long, because the effect of sanctions has been very severe on the Iranian economy. But, very oddly, in the last year I would say, after Rouhani’s election, there’s been such an upsurge in optimism. The mere fact that these talks are taking place has had an effect on confidence.

Even if the talks don’t produce a dramatic solution, a comprehensive solution, but it is obvious that Iran is going to have better relations than in the past, I think some of these good effects will still continue.

Also I don’t think you should underestimate the degree to which Iran can turn more towards Asia, India and China. I don’t think that they want to, I actually think they would like to engage more with the West.

World Finance: Iran has said that the other side’s greediness could scuttle negotiations, are we being greedy?
Lord Lamont: The Iranians I think by that are probably referring to the timescale in which sanctions should be lifted. Obviously from an Iranian point of view, they would like to see sanctions lifted immediately. Obviously from a Western point of view, they would want proof of Iran’s good behaviour over a period of years. So there has to be a compromise.

World Finance: Well it’s no secret that we’re headed for another recession, David Cameron said just as much at the G20. So is Iran the problem it once was? Surely we’ve got bigger fish to fry, is now the time to be limiting trade revenues?
Lord Lamont: Well, you could say that, but this is politics isn’t it. Iran can’t, by opening up, solve the problems of the world economy, even though it would be I think a very welcome development, and of course you’re right.

Sanctions hurt people both ways, people don’t always take that on board that, if you inflict pain by not selling things to Iran, that is at a cost to people who would otherwise have received the revenue from the export. There are no such things as one-way sanctions, but we think we can take it and that Iran can’t take it. But no, this is economically, of relative significance.

I don’t think you should underestimate the degree to which Iran can turn more towards Asia, India and China

But I think politically and diplomatically this is hugely important because Iran is a major player in the Middle East, and I’m not saying that if the nuclear issue is resolved Iran’s relations with the West will become dramatically different, but even if they become a bit different, that could make a profound difference to the politics of the Middle East.

World Finance: So as the Chairman of the British-Iranian Chamber of Commerce, why have you chosen to be so strongly invested in such a controversial country?
Lord Lamont: I got interested in Iran through a couple of businesses I was involved in years ago. I have no direct involvement in Iranian business matters now, but I’ve just become very interested in it as a political problem. My interest is largely political, although I’m Chairman of the Chamber of Commerce.

Over a decade I’ve had the opportunity of meeting quite a lot of Iranian politicians and officials, and I’ve for a long time had this feeling that this country has the capacity to change, this country could be an ally of the West. It’s a remarkable country, full of talent, fully of promise which has been locked out, and I think it would be better for everybody if we could just resolve this difference.

I think there’s caricature on both sides. The Americans and the Iranians just don’t seem capable of understanding each other half the time, and misrepresenting each other, but it shouldn’t be that way and it should be possible to bridge the gap.