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Author
Associate Professor of Economics Imam Sadegh University, Thran, Iran
Abstract
This paper examines how nuclear-related sanctions have shaped an adaptive political economy in Iran. While existing research has documented the macroeconomic, welfare, and financial consequences of sanctions and assessed their coercive effectiveness, less attention has been paid to the mechanisms through which sanctions-generated pressure is absorbed, redistributed, and reorganized within the target economy. Addressing this gap, the paper develops an endogenous-equilibrium perspective that treats sanctions as forces reshaping domestic institutions, firm behavior, household adjustment, and transnational commercial networks. The study employs theory-guided structured comparison and mechanism tracing across three episodes: the 2006–2013 multilateral sanctions regime, the 2015–2016 JCPOA implementation period, and the post-2018 maximum-pressure campaign. It triangulates macroeconomic, welfare, firm-level, financial-market, trade, and labor-market evidence. The analysis identifies four interrelated mechanisms: macroeconomic contraction, reallocation of access to scarce resources, institutional adaptation, and sanctions-induced uncertainty. The findings show that sanctions imposed severe costs, including output losses, weaker investment, exchange-rate instability, erosion of the middle class, and greater labor-market vulnerability. Yet these costs were distributed unevenly. Scarcity increased the value of access to finance, foreign exchange, imports, institutional coordination, and external commercial networks. Better-connected firms adapted through liquidity management, supply-chain restructuring, alternative payments, and trade rerouting, whereas less-connected firms and households bore disproportionate costs. The paper concludes that repeated sanctions generated a constrained and unequal adaptive equilibrium in which external pressure became embedded in domestic institutions, business strategies, and expectations. It contributes to sanctions research by showing that long-term outcomes depend not only on pressure intensity but also on the mechanisms through which pressure is mediated and sustained.
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