Is there enough bite to the snapback sanctions on Iran?

A visitor at the Iran Oil Show in Tehran, on May 8. Reuters

Iran’s diplomacy suffered another setback on Saturday, when France, Germany and the UK triggered the snapback mechanism over Tehran’s “significant non-performance” under the 2015 Joint Comprehensive Plan of Action.

The move reinstates all pre-2015 UN sanctions, freezing assets, imposing travel bans, permitting inspections of Iranian air and sea cargo, including oil tankers, while prohibiting uranium enrichment, missile launches with nuclear potential, technology transfers, and reimposing an arms embargo. Yet the key question remains: will these measures inflict enough economic pain to alter Iran’s strategic calculus?

The real constraint on Iran’s economy does not emanate from New York but from Washington. Since the Donald Trump administration’s “maximum pressure” campaign of 2018, American sanctions have been enforced with extraterritorial reach. European and Asian banks, shipping companies, insurers and energy firms have avoided Iranian business not out of fear of UN resolutions, but because of the consequences of falling afoul of the US treasury department. The dollar’s dominance in global finance, combined with Washington’s willingness to punish violators, has created a chilling effect far more potent than anything the Security Council could achieve.

The Islamic Republic already operates under near-total financial isolation

Thus, while “snapback” sanctions generate symbolic headlines, their material effect is marginal. The Islamic Republic already operates under near-total financial isolation. Its access to global capital markets is negligible. Oil exports are restricted to a handful of buyers, mostly through covert channels. Reactivation of UN sanctions will not close avenues of commerce that US measures long ago shut.

A second factor limiting the efficacy of “snapback” sanctions is the stance of key global players. China and Russia have disregarded US restrictions when it suited their national interests, building mechanisms such as barter, local currencies and shell companies to shield trade with Iran from American scrutiny.

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While these arrangements do not normalise Iran’s commerce, they provide enough oxygen to prevent collapse. More importantly, Beijing and Moscow now treat Iran less as a pariah and more as a junior partner in a wider Eurasian order. Their joint declaration with Tehran under the Shanghai Co-operation Organisation categorically rejecting the European initiative was not mere rhetoric but a strategic signal to Washington that the West can no longer dictate terms unilaterally.

Apart from strategic signalling, the Iran–China relationship is probably also propelled by the economic interests of Chinese energy companies. Because Iranian oil carries substantial legal and political risk, it is marketed at steep discounts compared to global prices. Chinese refiners, operating with tacit state approval, keep the margin and, in doing so, have evolved into an influential lobbying constituency within China. Their vested interest in maintaining access to inexpensive Iranian crude not only sustains commercial ties but also reinforces Beijing’s broader willingness to shield Tehran from western pressure.

It is also worth noting that US policymakers, for all their proclamations, have often tolerated Chinese and Russian circumvention. Washington knows that full enforcement could worsen relations with Beijing. The US therefore pressures Tehran enough to weaken the Iranian government, but refrains from pushing China or Russia into open confrontation. The result is a sanctions order riddled with loopholes, which Tehran has learned to exploit.

This asymmetry highlights Tehran’s paradox. The country proclaims independence from western domination, yet its survival hinges on dependence upon Beijing. China continues to buy Iranian oil less out of solidarity and more because it secures a low-priced supply. The moment costs outweigh benefits, Beijing is likely to scale back. Until then, Iran remains a convenient junior partner whose desperation allows Chinese actors to dictate terms.

For Iran’s neighbours, the limited effect of “snapback” sanctions is a mixed blessing. Gulf Arab states recognise that Iran’s lifeline through China and Russia reduces the risk of Iranian government collapse and the chaos it would unleash. But continued Iranian resilience, and the constant threat of renewed Israeli strikes against an economically battered, diplomatically isolated and militarily vulnerable Iran, also raises risks. Facing existential threats, Tehran could lash out at regional oil infrastructure to compel exporters and importers to pressure Israel to stop striking Iran, or, if technically feasible, dash for a nuclear weapon.

Domestically, the leadership has long managed scarcity, but inequality now fuels public anger. On Sunday, Donya-e Eqtesad, Iran’s premier economic daily, reported 45.3 per cent inflation, the highest in 28 months, and a doubling of bread prices over the past year, warning of growing pressure on low-income groups. Meanwhile, the country’s elites flaunt their privileges on social media, enraging the 30 per cent of the population living under the poverty line. US sanctions, far more than UN measures, combined with corruption and mismanagement, increasingly risk provoking bread riots. And government officials, better prepared to suppress the poor at home than to deter Israel abroad, may respond with repression.

Western policymakers should therefore temper expectations. The “snapback” mechanism was conceived in an era when multilateral consensus on Iran was still possible. That era has ended. The global order is increasingly fragmented, with China and Russia openly contesting western initiatives.