1. There is a tendency to assume that sanctions must be causing exceptional economic hardship in Iran. But the irony is that the global financial crisis led to 5-10% contractions in a bunch of countries back in 2009 while Iran was left on the sidelines. ft.com/content/706bfc…
2. Had Iran's economy been as integrated with the global financial system as some of its frontier/emerging market peers, it may have still have experienced a contraction around the year 2009 of the same magnitude as it experienced in 2012 (7.5%) due to sanctions.
3. The same thing may be happening again. We can look at the 9% contraction predicted for 2019 and think that it's a devastating blow to Iran's economy. But it isn't exceptional when considering that the coming financial crisis will cause similar contractions in many countries.
4. Iran's current contraction may reflect the same readjustment that the economy went through in 2012 at the peak of the multilateral sanctions campaign. The following year Iran rebounded to zero growth. The question is whether the fundamentals today suggest history will repeat.
5. This context matters when evaluating the claim that Iran's government will either A) capitulate to US demands or B) collapse altogether because of the max pressure campaign. The claim is postulating an extraordinary political outcome on the basis of ordinary economic malaise.
6. The average GDP growth of upper middle income countries from 2006 to 2016 was 5.4%. Under sanctions, Iran averaged 2.9% growth in that decade. The real story is that Iran is falling behind among its peers (relative decline), not that it's headed to collapse (absolute decline).
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1. I learned today that the mountains of South Tyrol are dotted with "Venetian sawmills," which were set up in the 16th century to fuel the insatiable lumber demand of Venice, more than 150km away.
Learning about the sawmills totally changed the way I see Venice.
2. No city has depended on wood more than Venice.
Karl Appuhn wrote a book explaining how Venice's extensive use of lumber to build foundations, wharfs, warehouses, and boats, forced the rulers of "La Serenissima" to get serious about forest management.
3. I knew that Venice and its buildings were built on timber piles driven into the bottom of the lagoon, but I never really thought about the massive industrial infrastructure that was necessary to supply millions of mature trees to Venice over the course of centuries.
1. Once again, a state funeral in Iran has led to a debate about how much political support the Islamic Republic enjoys.
Here's the thing...
Participation in collective mourning is a deeply embedded cultural custom in Iran.
It's not an *inherently* political act.
2. The motivation to participate in a funeral, whether for Soleimani or Raisi, is far less about the individual that has died and far more about the shared social custom.
Authorities take advantage of this cultural impulse and imbue state funerals with political iconography.
3. It's worth recalling the crowds that came out for Rafsanjani's funeral in 2017.
Did all those people take to the streets to express their political loyalty to a president whose second term ended way back in 1997?
1. Sanctions have had a very significant negative effect on aviation safety in Iran.
But the idea that they contributed to the recent crash and the deaths of Raisi and Abdollahian makes little sense.
Recent reports by FT, NYT, and others taking that line miss some key details.
2. Old aircraft are not *necessarily* unsafe. The helicopter carrying Raisi was built in 1994.
Until a few years ago, the fleet of Marine Helicopter Squadron One, which transports the US president, included old Sikorsky VH-3Ds, including one from late 1970s.
3. The maintenance and refurbishment of the aircraft are what really matter.
Here, sanctions may have had an impact by making it more difficult for Iran to procure parts for the Bell 212, which is an American-made helicopter.
1. Russia and Iran have adopted "war economies" in response to sanctions. But the aims differ.
In Iran, the aim is to boost the military by allowing it to expand its economic activities.
In Russia, the aim is to boost the economy by smartly leveraging military spending.
2. Iran has faced tougher sanctions and a more acute security dilemma.
In turn, Iranian leaders were eager to give the military (namely the IRGC) a larger piece of a shrinking pie, sustaining military spending and enabling rentierism while otherwise embracing fiscal austerity.
3. Iran's military has been the great winner in the distributional conflict that began when sanctions thrust the country into a period of economic malaise.
To win the battle over resources, the IRGC became more politically active and began to take charge of Iran's technocracy.
1. Today, President Biden issued an executive order authorizing sanctions to block foreign banks that facilitate transactions related to Russian "technology, defense... construction, aerospace, or manufacturing."
Will these new secondary sanctions hobble Putin's war economy?
2. Coinciding with the new executive order, @wallyadeyemo has an op-ed in the @FinancialTimes explaining what Treasury aims to achieve.
Banks that are found to be supporting Russia's "war machine" will "risk losing access to the US financial system." ft.com/content/f1fe5e…
3. This is a big deal because the US is finally set to use its most powerful sanctions authorities to try to hurt Russia's war effort. There remains a widespread impressions that the Russia sanctions are the strongest ever imposed. That's not quite right!