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Russians look to Iran for lessons on life under long-term sanctions

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Independent Russian journalist Alexey Pivovarov wondered what life under years of economic sanctions could come to look like. So he went to Iran to find out.

He found sky-high inflation, a bewildering system of multiple exchange rates, an expansive black market and entrepreneurs developing apps and alternatives for nearly everything. The resulting 80-minute episode for his Russian YouTube channel, Redaktsiya, posted last month, racking up more than 8.3 million views.

It’s not hard to see why Russians are interested: In a matter of months, Russia has outstripped Iran as the country under the most sanctions. Moscow appears to be on track to keep that title, barring any radical change in its ongoing invasion of Ukraine.

“The question is not whether one can survive under sanctions for long. Of course, one can!” Pivovarov told his Russian-speaking audience. “The main question is, 'What for?’”

What are economic sanctions, and how did they become Washington’s foreign policy tool of choice?

Iran offers a cautionary case study of what happens when sanctions become a long-standing facet of life for ordinary people.

There are, as Pivovarov notes at the start of his show, few “direct parallels” between the two countries. Russia is a nuclear power with a permanent seat on the U.N. Security Council, a globally critical wheat and oil producer, and has many allies, or at least partners, in the Global South, said Ellie Geranmayeh, deputy director of Middle East and North Africa programs at the European Council on Foreign Relations. “The geopolitics of sanctions on Russia are very different to that of Iran, which I think makes it more difficult in terms of a pan-global enforcement.”

Tehran, to some degree, has been on Western black lists for nearly 45 years. Former president Donald Trump ramped up U.S. sanctions on Tehran after leaving the Iran nuclear deal in 2018. Nevertheless, Iran — along with its comrades-in-sanctions in Cuba, Venezuela, North Korea and Venezuela — has built a well-stocked toolbox for busting out.

There is some history of distrust between Tehran and Moscow — but common ground is expanding. The two have discussed swapping oil and gas supplies, Russian Deputy Prime Minister Alexander Novak told Russian state TV during a visit to Iran on Wednesday, Reuters reported. “Iran has lived [under sanctions] for years, and we have discussed the Iranian experience.”

In late March, Russia’s transportation minister said Moscow “was studying the case of Iran” for insight into maintaining its fleet of foreign aircraft, Russian state-owned news outlet TASS reported. The following week, Russian Foreign Minister Sergei Lavrov told Russian outlets that Moscow and Tehran could work together to circumvent Western restrictions. In early May, Iran’s car parts syndicate said a Russian carmaker had reached out.

The real sanction evasion, thought, takes place under the radar. Governments and their cronies create front companies to obtain and trade goods, use criminal groups as middlemen and money launderers, and transfer embargoed oil off-the-grid, said Richard Nephew, who in January left his position as a U.S. deputy special envoy for Iran.

Iran has perfected the art: Oil tankers meet on the high seas, where other countries are loath to intervene, turn off their tracking radar, transfer Iranian oil and cover their tracks. In early May, Iran said it had doubled its oil exports since August. As one Iranian told Pivovarov, “it has become harder” for him since Trump imposed his maximalist policy, but “the sanctions introduced have become a business for many people.” All the while, Iran has continued its repressive policies and grown its nuclear program.

How isolated is Russia, really?

Gray and black markets are already abound in Russia, although Russian energy still has many legal routes to market. Despite Washington’s efforts, key Asian, African and Middle Eastern countries won’t join the Western crackdown.

But the model is in place, should Russia need it. An estimated 8 percent of the world’s tankers carry illicit oil, mainly from Iran and Venezuela, said Cormac McGarry, a maritime analyst with the global risk consultancy Control Risks. “History tells us that [Russia] will likely bend and find ways around those sanctions and learn to live with them,” he said. “Iran is a perfect example of that.”

Some in Washington see the flourishing of illicit activity, and broad refusal to capitulate, as a sign sanctions aren’t strong enough, or enforced sufficiently. Others say it is evidence that stacks of sanctions do not force a country to change, as intended.

Washington “should never grant leniency based on hope that rogue states will mend their ways,” Mark Dubowitz and Matthew Zweig of the Foundation for Defense of Democracies, a neoconservative think thank that is known for its harsh stance on Iran, wrote recently in the Wall Street Journal.

Others argue that the evitability of long-term sanctions reflects how “stubborn autocracies — particularly those rich in energy reserves and with allies prepared to give them economic lifelines at times of crisis — cannot be disciplined with economic sanctions,” as Iranian journalist Kourosh Ziabari wrote in Foreign Policy magazine.

Much remains at stake for both Iran and Russia in the coming months, as negotiators mull a return to the nuclear deal and a path to peace in Ukraine.

Negotiators were at the cusp of reviving the Iran nuclear deal when in March, Moscow threw a curveball: It demanded the U.S. sanctions relief extend to Russia’s future business dealings with Iran. Negotiations, for a number of reasons, are now stalled.

Iranians are braving arrest and worse to protest inflation and rising prices. Russia, meanwhile, must learn to live with sanctions if it will not acquiesce to demands it end its invasion and agree to an “irreversible” peace process with Ukraine. In the nearer term, Russia’s poor and middle class will feel the heat.

Adlan Margoev, a Russian expert on Iran, told Pivovarov that he fears Russia under sanctions will lose its “creative class” — just as Iran did in waves of emigration since 1979.

“Then the domestic economy will suffer pretty strongly, which is what happened with Iran,” he said.

Annabelle Chapman in Paris contributed to this report.

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