United States sanctions undermine Iran’s ability to import critical agricultural products, especially wheat. Despite long-standing exemptions for humanitarian trade, sanctions have fragmented Iran’s wheat-supply chain, deterring major commodities traders, interrupting payment channels, and delaying shipments. While Iran does continue to import wheat to meet its food security needs, commodities traders can extract a higher price from Iranian importers, citing the unique challenges of exporting to the country. In this way, sanctions contribute to structurally higher prices for wheat in Iran. The country’s growing dependence on wheat imports, driven by demographic changes and worsening climate conditions, has made these disruptions more acute. Efforts to mitigate these effects, such as humanitarian trade arrangements launched by multiple US administrations, have largely failed due to bureaucratic inefficiencies and financial sector overcompliance. As a result, Iranian households have had to contend with significant food inflation, even for staples such as bread. Considering that the negative humanitarian effects of sanctions are both persistent and systemic and have been long known to US officials, it is difficult to conclude that the effects are truly unintended.

This chapter frames the adverse consequences of sanctions as a product of the interplay between government policy and commercial decision-making. It argues that corporate decision making about economic sanctions is an important factor behind the efficacy of sanctions. Commercial actors also play a central role in causing or amplifying the adverse consequences of sanctions. The chapter presents sanctions from a legal perspective, treating sanctions as legal rules that are limited by traditional notions of jurisdiction. At the same time, these rules contain significant ambiguities and are accompanied by heavy enforcement. Commercial actors respond by adopting risk avoidance strategies such as de-risking and overcompliance. These strategies produce adverse consequences for innocent populations, NGOs, and others that are not the stated targets of sanctions. The tendency for commercial actors to terminate trade relations beyond the actual terms of sanctions regulations is worth studying because it reveals a gap between the expectations of government policymakers and business practices. It can also make sanctions weaker and incentivize the creation of “unsanctioned” trade channels. The chapter concludes with a call for governments to clarify expectations about sanctions so that commercial actors do not face a dilemma between crippling compliance costs or crippling enforcement.

This chapter discusses the disruptions to the world food and fertilizer supply arising in the wake of Russia’s invasion of Ukraine. This chapter discusses the humanitarian impacts of sanctions, both in terms of the sanctions against Russia and with respect to the use of sanctions more generally.