The recent expansion of US sanctions on Iran aims to cripple its shadow economy by targeting key sectors such as digital assets, gold, and shipping. This strategy not only affects Iranian institutions but also pressures international entities that facilitate illicit financial activities. As these sanctions tighten, the cost of doing business for Iranian companies is expected to rise, leading to further economic strain on ordinary citizens.
In Iran, inflation has soared, with food prices reportedly increasing by 128% year-on-year. Many businesses are struggling to maintain operations, with some opting to hoard goods rather than sell them, anticipating that prices will continue to climb. This behaviour reflects a growing uncertainty in the market, where even basic transactions are increasingly conducted in US dollars due to the devaluation of the Iranian currency.
The impact of these sanctions extends beyond Iran’s borders, affecting Iranian entrepreneurs abroad who face difficulties in conducting business due to their nationality. The perception of risk associated with Iranian passports is leading to hesitance from banks and suppliers, further isolating Iranian businesses from global markets.
While some analysts believe these measures may not lead to significant political change, they could exacerbate existing economic hardships and deepen societal divisions. The sanctions may inadvertently strengthen informal economic networks, making it harder to track and control financial flows, ultimately entrenching the very shadow economy they aim to dismantle.
Source: DW News
