Monday, June 22, 2020

US Sanctions versus Iran’s fight against COVID-19 pandemic

This article is by

Share this article

Article Contributor(s)

Aditi Mohta

Article Title

US Sanctions versus Iran’s fight against COVID-19 pandemic

Publisher

Global Views 360

Publication Date

June 22, 2020

URL

Coronavirus patients at Imam Khomeini Hospital, Tehran

Coronavirus patients at Imam Khomeini Hospital, Tehran | Source: Mohsen Atayi via Wikimedia

Iran is the hardest-hit country by the coronavirus pandemic in the middle east. The contagion was first detected on 19 February 2020 in the holy city of Qom, and thereafter spread quickly across the country. As of 18th June 2020, it had over 9000 coronavirus related fatalities. The virus attacked all the 31 provinces of the country not discriminating between the common man and the people at high places including the members of the Parliament, religious leaders and senior ministers. The crisis touched most parts of the country, but it most severely impacted working and the poor class. 

The Iranian government has been criticized for its response towards the pandemic. The health care policy, which has been politicized, has preferred denial and misinformation as a response to the crisis the pandemic brought with it. Questions have also been raised about the role of US sanctions in crippling Iran’s economy, public health facilities and public health facilities. All these factors, when combined, have disabled Tehran (the capital of Iran) from providing the best response to the pandemic. 

What do the sanction laws say?

According to the Office of Foreign Assets Control, the US has “consistently maintained broad exceptions and authorizations to support humanitarian transactions with Iran.” The first significant sanctions were imposed in 1995 by Bill Clinton, and in 2001 exemptions for medical goods and medicine first came into effect. These sanctions have periodically widened the scope of products for exemption, and by 2012, the exclusions included agricultural products and most foods. After the world powers, including the US, reached a deal with Iran on its nuclear programme in 2015, the sanctions were lowered against Iran. This approach was abandoned after Trump withdrew the US from the deal and sought to force Iran’s leaders to change their anti-US policy. .

The US sanctions are enforced through a wide array of instruments. Financial sanctions prohibit US banks from transacting with Iran, which limits Iran’s access to dollar-denominated transactions. Secondary sanctions measures also target non-US entities that have dealings with Iran, thus at a risk of facing prosecution in the US. These sanctions make transactions with Iran lengthy and complicated, and even impossible in some cases

There are some exemptions from sanctions for humanitarian assistance (sale of agricultural commodities, food, medicine and agricultural services). Despite these exemptions, sanctions have severely impaired Iran’s ability to be able to finance humanitarian imports. Given the volume of complexity and due diligence involved, most banks are reluctant to deal with Iran. This makes it difficult to find a way to pay for purchases difficult for Iran. Also many items require additional authorization because the US considers them as “dual-use” (the things might also be used for defence- for example, the sort of oxygen generators that are needed in life support machines used to treat coronavirus cases). Lastly, the sanctions on Iran’s oil exports led to a decline in revenue, further weakening Iran’s currency, which has left the country vulnerable and with fewer resources to pay for non-sanctioned items as well. 

All these put together have directly caused shortages of medical equipment and impacted Iran’s health sector negatively. This has also impacted the capability of Iranian healthcare sector to effectively manage the COVID-19 situation.

Support us to bring the world closer

To keep our content accessible we don't charge anything from our readers and rely on donations to continue working. Your support is critical in keeping Global Views 360 independent and helps us to present a well-rounded world view on different international issues for you. Every contribution, however big or small, is valuable for us to keep on delivering in future as well.

Support Us

Share this article

Read More

February 4, 2021 4:48 PM

Kenyans turning to mobile loans in times of COVID-19

The economic impact of COVID-19 is felt on the personal finance of people across the world who are looking for ways to tide over the situation. In Kenya, people are lapping the short-term credit in the form of digital loans by mobile money operators. The number of people taking digital loans has doubled during the COVId-19 induced lockdown period.

Boston Consulting Group's Consumer Sentiments Survey conducted in April and May 2020 reported that "In May, 29 percent responded that they had taken out a short-term loan, compared to 16 percent in April. Mobile money operators were the most common sources of this credit”

Kenya is a pioneer in using mobile money transfer services as the key tool for providing financial inclusion to its citizens. A simple money transfer service, M-PESA launched in 2007 has transformed the financial service industry in Kenya. Today mobile money operators are providing multiple services like digital loans, marketplace for small businesses and farmers.

Digital loans are easy to process and disbursed but there are concerns of shaming the defaulters and compromising the data security of clients. The Digital Lenders Association of Kenya (DLAK) which is a body representing the digital lenders of Kenya has distanced from two of their members, Okash and Opesa over unethical practices. These mobile apps have shared the details of defaulting customers with the moneylenders and asking them to recover the money.

DLAK also stated that Opesa and Okash are known for attacking a client's data privacy which is against the Kenyan data protection laws and has additionally spoiled the reputation of digital leaders in Kenya.

In April 2020, Central Bank of Kenya barred unregulated digital mobile lenders from forwarding the names of loan defaulters to credit reference bureaus. A huge number of Kenyans have been recorded on Credit Reference Bureaus by digital money lenders for loans as little as $5.

Central Bank of Kenya governor Patrick Njoroge told during a press conference in May 2020 that the central bank in consultation with the mobile money operators and digital lenders is presently working to develop a model where the borrowers are protected from mistreatment of online moneylenders.

The borrowers are looking up to the regulatory authorities and the industry bodies to come up with a mechanism which will protect their interest in times of such a health and economic emergency.

Read More