Teaching Comparative Government and Politics

Friday, October 04, 2013

A little systems analysis

Here's a good example of one of those pesky external inputs that limits the capacity of a government to freely make policy (i.e. sovereignty).

Iran Staggers as Sanctions Hit Economy

For years, Iran’s leaders have scoffed at Western economic sanctions, boasting that they could evade anything that came their way. Now, as they seek to negotiate a deal on their nuclear program, the leaders are acknowledging that sanctions, particularly those applied in 2010 on international financial transactions, are creating a hard-currency shortage that is bringing the country’s economy to its knees…

In repeated meetings during the week [in New York], Mr. Rouhani and his foreign minister, Mohammad Javad Zarif, said the government’s financial condition was far more dire than the previous president, Mahmoud Ahmadinejad, had let on…

Western economists believe the crisis point may be much closer than previously thought, perhaps a matter of months. Iran news outlets have reported that the government owes billions of dollars to private contractors, banks and municipalities.

Because of the sanctions, oil sales, which account for 80 percent of the government’s revenue, have been cut in half…

The sanctions have introduced numerous distortions into everyday life. For example, Iran is allowed to use money it earns from oil sales only to buy products from the purchasing country. As a result, Iranian supermarkets are filled with low-quality Chinese products, while several infrastructure projects are being built by Chinese companies, rather than Iranian…