Despite the current impasse in negotiations with the Islamic Republic of Iran over the fate of its once-clandestine military-nuclear program, U.S. officials remain hopeful that a final accord is within reach. An agreement that is verifiable, enforceable and that prevents Iran from pursuing both a uranium and a plutonium pathway to a nuclear weapon would be a tremendous achievement. But we may not get there if American negotiators continue to insist upon weakening their leverage.

Economic sanctions are Washington’s preferred instrument of coercive statecraft for confronting challenges to the international order, including from Iran’s revolutionary regime. While there is an understandable focus on the legal architecture of sanctions, their psychological impact should never be underestimated. Too rapid a shift from fear to greed in the international business community, and from despair to hope in the Iranian market, can blunt the effectiveness of sanctions. And, unfortunately, the sanctions environment for Iran has changed in the past year.

Tehran has been on a modest recovery path since its annus horribilis of 2012 and the first half of 2013, when the Islamic Republic’s economy was hit with an asymmetric shock from sanctions, including those targeting the Central Bank of Iran, Iranian oil exports, access to the SWIFT international banking system, and trade in precious metals. The poor economic management of the economy by the Mahmoud Ahmadinejad government had further exacerbated these sanctions-induced shocks.

Read the article in full at The Foundation for Defence of Democracies.