From the U.S. Government Accountability Office, www.gao.gov Transcript for: The Effects of Sanctions Targeting Iran Description: Audio interview by GAO staff with Tom Melito, Director, International Affairs and Trade Related GAO Work: GAO-13-326: Iranian Economy Adversely Affected by US and International Sanctions Released: February 2013 [ Background Music ] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. It's February 2013. Recent U.S. and international sanctions have targeted Iran in an effort to deter it from developing its nuclear program supporting terrorism and continuing its human rights abuses. A group led by Tom Melito, a director in GAO's International Affairs and Trade team, recently reviewed the effect of these sanctions on Iran's economy. GAO's Jeremy Cluchey sat down with Tom to talk about what they found. [ Jeremy Cluchey: ] Can you give a quick history of the U.S.'s approach to sanctions targeting Iran, and particularly how that approach has evolved in recent years? [ Tom Melito: ] Sure. The U.S. government has been sanctioning Iran since the mid-1980's. These sanctions have been designed to inhibit Iran's pursuit of nuclear weapons, its support of terrorism, and its abuse of human rights. Most recently the U.S. has been focusing on financial sanctions in order to try to prevent Iran from using the International Financial System. In addition, the Europeans have also implemented their own set of sanctions recently. [ Jeremy Cluchey: ] And how does the U.S. go about enforcing these sanctions? [ Tom Melito: ] There’s array of both federal and state agencies which are responsible for this. The two primary agencies on the federal side are our State Department and our Treasury. The State Department has the ultimate responsibility for determining that an entity should be sanctioned and that actually gets published in Federal Register. Treasury is responsible for monitoring transactions and coming out with regulations on how to ensure that our sanctions aren't violated. The two agencies obviously work together. [ Jeremy Cluchey: ] Your team looked, in this report in particular, at the effect that these sanctions have been having on the Iranian economy. First of all, how do you go about assessing something like this? [ Tom Melito: ] We looked at two questions. The first was what has been the impact on Iran's economy over the most recent set of sanctions? The second was what…how have forecasts of Iran's future performance changed do to the sanctions? Our answer to the first question is that Iran's economy has performed poorly compared to peer countries. For example, we found that between 2010 and 2012 its oil revenue fell by 18 percent while the oil revenue of peer countries rose by 50 percent. In the answer to the second question, we found that three different sets of forecasts all have shown deterioration in the expected performance of Iran's economy. [ Jeremy Cluchey: ] I understand there's also a concern with respect to the effects of these sanctions on exports of humanitarian goods. Can you talk a little bit about this concern? [ Tom Melito: ] Sure. While the sanctions are designed to impact Iran's economic performance, the law carves out exceptions for the exports of food and medical devices and other humanitarian items. And we found that between 2012 and 2011, exports of humanitarian items by both U.S. and the EU have gone up. However, there have been reports in the Iranian press that there are shortages of certain medical devices. However, it's possible this is due to mismanagement by the Iranian government. [ Jeremy Cluchey: ] Finally for taxpayers interested in understanding the impact of the U.S.'s efforts in this area, what's the bottom line here? [ Tom Melito: ] U.S. has implemented a broad and rigorous set of sanctions on Iran and they are adversely affecting Iran's economy. However, we don't have information on the impact on the larger goals of thwarting their nuclear ambitions or on supporting terrorism. [ Background Music ] [ Narrator: ] To learn more, visit GAO.gov and be sure to tune in to the next episode of GAO's Watchdog Report for more from the congressional Watchdog, the U.S. Government Accountability Office.