Some 13,000 COVID-19 patients might have survived without sanctions: US residing economist

New York, Sept 29, IRNA – An Iranian economist residing in the US wrote in Brookings think tank that without the US sanctions, “about 13,000 deaths might have been avoided” during the time of the COVID-19 pandemic.

Iran was one of the first countries to open its economy back up to avoid bankruptcy and economic catastrophe, and, predictably, by mid-May fatalities were climbing back up, wrote Djavad Salehi-Isfahani.

“The second wave has so far proven more deadly than the first, adding that Iran’s contrast with neighboring Turkey is “instructive” and can provide “a rough idea of the human cost of the sanctions,” Salehi Isfahani wrote.

“Assuming that Iran could have followed the path of Turkey after mid-May, when the fatality rates of the two countries started to diverge, about 13,000 deaths might have been avoided.”

Djavad Salehi‐Isfahani received his PhD in Economics from Harvard University and taught at the University of Pennsylvania (1977–1984) before joining the faculty at Virginia Tech, where he is currently Professor of Economics. He is a Non-resident Senior Fellow at the Global Economy and Development, the Brookings Institution, and a Research Fellow at the Economic Research Forum (ERF) in Cairo, Brookings writes, adding that he has held visiting positions at the University of Oxford (1991–1992), the Brookings Institution (2007–2008), and Harvard Kennedy School (2009–2010, and 2013, and 2016-2017). 

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In March 2020, Iran became the epicenter of the coronavirus pandemic outside China. In late February the government admitted to two deaths from the disease in the holy city of Qom. However, by then the pandemic had spread to other parts of the country. Suddenly, Iran’s leaders found themselves fighting on two separate fronts: one to save the economy from US sanctions and the other to save lives and the economy from the pandemic.

Iran was barely coping with challenges from US President Donald Trump’s “maximum pressure” campaign. In May 2018, the Trump administration withdrew the US from the Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), and imposed the harshest sanctions ever imposed on a country. Since then Iran’s economy has been in a tailspin. Oil exports nosedived and the currency lost two-thirds of its value, triggering rapid inflation and general macroeconomic chaos. Iran was totally unprepared for Trump’s election and his determination to undo Barack Obama’s singular foreign policy achievement with the JCPOA.

Meanwhile, the Trump administration and its allies in the Persian Gulf and Israel have been waiting anxiously for more than two years for sanctions to bear fruit, expecting a collapsing economy followed by rising social unrest to force Iran’s leaders to capitulate. Their anxiety is justified. A disastrous US record of military intervention in the Middle East—in Afghanistan, Iraq, Libya, and Syria—has made Trump come to see a win without war as the only way for the US to assert its hegemony in the region.

THE PANDEMIC

Then came the pandemic, which caught Iran at its weakest economic state since the end of the war with Iraq three decades ago. Since US’s withdrawal from JCPOA in 2018, Iran’s GDP has declined by 11 percent and average living standards (measured by real household per capita expenditure) have declined by 13 percent. This deterioration is easy to trace to the maximum pressure campaign because in 2016, when the JCPOA was in partial operation and sanctions had eased, the economy grew by 13 percent. The sanctions cut oil exports, thereby reducing the supply of foreign exchange, which caused the currency to collapse and inflation to run rampant (in 2019 prices rose by 41 percent).

More importantly, the loss of oil exports, which in the past accounted for about half of government revenues, tied the government’s hands in any economic rescue effort. As in the rest of the world, the pandemic had disrupted production and put millions out of work in Iran, but, unlike in richer countries, its government lacked the resources to help its people weather the pandemic.

Rather than easing sanctions to help Iran manage the pandemic better, if only to stop the spread of the virus in the region, the US piled on more sanctions, and chose to ignore calls from world leaders, former U.S. diplomats, and the United Nations to ease sanctions. The thinking behind a tougher stance on Iran was summed up in a March 2020 Wall Street Journal editorial titled, “No Time to End Iran Sanctions.”

Despite a shortage of medical supplies, however, between April and May 2020 Iran was able to cut the number of daily deaths by half, avoiding the humanitarian disaster that many had predicted. As the graph below shows, within weeks Iran was able to bring down the fatality rate from COVID-19 from about 1.6 per million per day to about 0.6. The rate stayed low for about a month before the economic cost started to rise, forcing the government in Iran to reconsider its social distancing measures.

As far as deaths are concerned, the first wave of the pandemic in Iran and Turkey were quite similar, as death rates first increased as cases mounted and the health system came under pressure and then declined. However, Iran’s experience diverged and a second wave hit the country in late May, whereas so far Turkey appears to have avoided a fierce resurgence.

SOCIAL PROTECTION

Revolutionary Iran has been relatively successful in keeping poverty low. It has an assortment of charities, large and small, as well as a welfare ministry that provides income assistance for about 10 percent of the population…. The pandemic appears to have added to the misery. Data for the last month of the Iranian year 1398 (21 March 2019 to 20 March 2020), shows that real per capita household expenditure fell on average by an unprecedented one-third in the first month after COVID-19’s arrival in Iran, three times faster than for the year as a whole.

It is worth noting that in addition to income assistance, Iran has a fairly extensive health insurance program, which prevents the public health crisis from sending millions more into poverty. About 90 percent of rural and 75 percent of urban residents are covered by some form of government subsidized health insurance.

More financial assistance is on its way thanks to …. “Justice Shares.” The current value or each justice share is about six months’ worth of the minimum wage, which can help a low-income family of four to survive for about a year. For many who choose to sell their shares this is only a one-time solution.

THE SECOND WAVE

Iran was one of the first countries to open its economy back up to avoid bankruptcy and economic catastrophe, and, predictably, by mid-May fatalities were climbing back up. The second wave has so far proven more deadly than the first. The contrast with neighboring Turkey, which has very similar health indicators to Iran (in 2019 life expectancy was 77 years in Turkey vs 76 in Iran and their HDI values were, respectively, 0.81. and 0.80), is instructive. It provides a rough idea of the human cost of the sanctions. Assuming that Iran could have followed the path of Turkey after mid-May, when the fatality rates of the two countries started to diverge, about 13,000 deaths might have been avoided. Given that Iran had shown that it can flatten the curve like other countries by shutting down the economy, it is not entirely unrealistic to conclude that had sanctions eased when the pandemic hit Iran, thousands of Iranian lives could have been saved.

Many critics of the Islamic Republic insist that Iran is hiding the real coronavirus death toll. If that is the case, the 13,000 death toll from sanctions is an under-estimate.

To put Iran’s fatality rates in perspective, adjusted for population size, it is much higher than Iran’s neighbors but lower than the rate in the more advanced countries like the US and Sweden.

Although the early predictions that the virus would kill between 250,000 and 500,000 Iranians by August 2020 have failed to materialize, and the second wave is slowly flattening, Iran is by no means out of the woods. Its economy is still in tatters, its currency is depreciating, and inflation is still above 30 percent. Given how far apart the positions of Iran’s leaders and the Trump administration are, there is little hope for any improvement in the near future. The situation could change significantly if the Democrats win the White House in November and decide to return the US to the JCPOA. 

Reporting by: Hossein Abolqassemi

Edited by: Safar Sarabi

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