The U.S. Treasury Department had given its first shock to President Masoud Pezeshkian who is aiming to make Iran sanction free.
Treasury announced sanctions against individuals and entities that have helped Iran develop and procure ballistic missiles. These sanctions target five individuals and seven entities based in Iran, China, and Hong Kong. The U.S. is responding to Iran’s efforts to advance its missile capabilities through its Ministry of Defense and Armed Forces Logistics.
The Treasury Department’s Office of Foreign Assets Control (OFAC) explained that those sanctioned have procured various components, including accelerometers and gyroscopes. These components are crucial for Iran’s ballistic missile and unmanned aerial vehicle (UAV) programs. One of the sanctioned Iranian companies, Electro Optic Sairan Industries Company, also contributed to the development of Shahed-series UAVs. These drones are reportedly being used by Russian forces in Ukraine.
Background and Statements
The Iranian Ministry of Defense and Armed Forces Logistics was designated by the U.S. in 2007 due to its involvement in weapons of mass destruction and their delivery. The Ministry is connected to Iran’s ballistic missile program. The U.S. Treasury Undersecretary for Terrorism and Financial Intelligence, Brian Nelson, stated that Iran’s proliferation of ballistic missiles and UAVs poses risks to stability and endangers civilian lives.
Nelson emphasized that the U.S. will continue to impose costs on those facilitating Iran’s production of these deadly weapons.
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The announcement coincided with the swearing-in of Iran’s new President, Masud Pezeshkian, a moderate reformist and former heart surgeon. Pezeshkian won a snap election following the death of the previous president. U.S. Secretary of State Antony Blinken noted that despite Pezeshkian’s moderate stance, the supreme leader of Iran remains the primary decision-maker. Blinken affirmed that the U.S. policy remains firm: Iran must not be allowed to develop a nuclear weapon. He highlighted that the U.S. has imposed more than 600 sanctions on Iranian people and entities to maximize pressure.
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Economic Impact and Challenges
Iran’s economy has been severely impacted by sanctions reimposed by Washington in 2018. These sanctions were a result of the U.S. withdrawing from the Joint Comprehensive Plan of Action nuclear deal. This deal had provided relief to Tehran in exchange for limiting its nuclear program. The sanctions have remained in place under President Joe Biden’s administration. As a result, Iran has faced significant economic challenges, with the inflation rate rising from 8% in 2017 to 44.5% in 2023. The country’s economy has also been affected by the COVID-19 pandemic.
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Analysts believe that the new Iranian president, Pezeshkian, must focus on reducing inflation and easing the impact of sanctions. Iran’s real gross domestic product (GDP) growth is expected to slow down, with forecasts indicating a decrease from 4.7% last year to 3.3% this year, and 3.1% in 2025. The new administration faces significant domestic and international challenges. Domestically, the elite of the Revolutionary Guards wield considerable influence, posing a hurdle to economic reforms. Internationally, sanctions continue to limit Iran’s economic potential.
Boosting local economic growth is seen as a priority for Pezeshkian’s administration. Over the past decade, Iran’s domestic policies have focused more on political advances than on generating growth and employment. Addressing the challenges of high youth unemployment, especially among women, and increasing investment rates are critical tasks for the new president. Higher economic growth requires the lifting of sanctions, which remains a key prerequisite.
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Iran is also looking to strengthen trade and economic ties internationally. The country is seeking investment in sectors like renewable energy. Recently, Iran and the UAE held their first Joint Economic Committee session in Abu Dhabi, where they agreed to boost cooperation in tourism, transport, renewable energy, and logistics. Saudi Arabia and Iran are also working to improve ties after signing a deal in 2023 to re-establish relations.
Iran’s Energy Ministry aims to add 10,000 megawatts of energy to its grid by August 2025. The country has significant potential in solar and wind energy production due to its geographical location. Iran’s efforts to develop its renewable energy sector represent an opportunity for investment and economic growth, despite the ongoing challenges posed by international sanctions.
