The recent expansion of US sanctions on Iran is set to have significant implications for the country’s shadow economy, which has thrived amid existing restrictions. By targeting financial networks involved in cryptocurrency, gold, and shipping, the US aims to disrupt Iran’s ability to conduct trade and access foreign currency. However, analysts warn that these measures may inadvertently strengthen informal markets rather than change Tehran’s behaviour.
As inflation in Iran skyrockets, with food prices reportedly rising by 128% year-on-year, the sanctions are placing additional pressure on ordinary citizens and businesses. Many companies are struggling to maintain operations, leading to widespread layoffs and a reliance on increasingly expensive informal channels for transactions. This situation is exacerbated by the fact that many Iranians are now conducting business in US dollars due to the devaluation of their currency.
The sanctions could also have a psychological impact, intensifying inflationary expectations and potentially polarising the political landscape further. As the middle class faces economic strain, there is a risk that the government may cut social assistance, which could lead to increased unrest.
Ultimately, while the US sanctions are designed to weaken Iran’s economic networks, they may also push the country further into a complex web of informal transactions, making it harder to track and control economic activity. The long-term effects could be a more entrenched underground economy, complicating any future diplomatic efforts to resolve tensions.
Source: DW News
