Unlike other healthcare companies, and despite difficulties in receiving payments, Novartis did not cut off ties with Iran in response to US sanctions.

A spokesperson for Novartis told The Intercept that the company is willing to send medical supplies to Iran and has done so since the imposition of the “maximum pressure” sanctions, including through the use of a humanitarian trade channel created by the Swiss government in 2020.

The problem created by sanctions, according to the company, is less an unwillingness to do business with Iran over legal fears than an inability of Iranian officials to access their own foreign currency reserves to make payments. The sanctions, while not eliminating Iran’s foreign reserves, have frozen Iran’s access to them, sending the country’s accessible reserves from $122.5 billion down to a mere $4 billion between 2018 and 2020, according to International Monetary Fund figures.

The collapse of accessible reserves has made it impossible for the Iranian government to carry out basic economic functions like stabilising its currency or engaging in foreign trade, even with willing parties.

“Since the imposition of certain sanctions in 2018, the most significant challenge observed by many pharmaceutical companies has been a shortfall of foreign exchange made available by the Iranian government for the import of humanitarian goods, such as medicines,” said Michael Meo, the Novartis spokesperson. “With respect to thalassemia medicines specifically, Novartis has supplied these medicines continuously since 2019. We have been – and remain – ready to satisfy orders for these medicines.”

“However,” Meo’s statement continued, “for our medicines to reach thalassemia patients in Iran, Novartis relies on the action and collaboration of the Iran Ministry of Health and Food and Drug Authority in allocating sufficient foreign currency resources to import these medicines through regular commercial channels.”

The Iranian Ministry of Health and Iranian Ministry of Foreign Affairs did not reply to requests for comment.

For Arab, whether sanctions are creating difficulties importing medicines due to companies’ reticence or a lack of foreign currency reserves, the results are the same: Patients under the care of his organisation are dying.

“We don’t want money,” he said, “what we need is medicine for these patients.”

The Trump-era economic sanctions were considered a crowning achievement of the “maximum pressure” campaign against Iran. Some of the economic sanctions against Iran targeted specific individuals and institutions involved in human-rights abuses, but many others went after entire sectors of the Iranian economy, including its financial sector.

The blanket sanctions on Iranian banks essentially severed the country from trade with the rest of the world by cutting its financial arteries, including access to Iran’s own reserves held in foreign banks. The US government has also imposed so-called secondary sanctions on Iran, meaning that any foreign entity that still dares to engage in trade with Iranian banks or companies puts itself at risk of being sanctioned and being cut off from doing business in the US – a risk that few businesses are willing to take.

Although the US government repeatedly insisted that humanitarian trade with Iran would not be affected by its “maximum pressure” campaign, economic sanctions experts said the claim is misleading. Assurances that ordinary Iranians will still be able to purchase food and medicine are meaningless, they say, when the sanctions in place are so broad that banks and foreign countries view any dealings at all with the country as a looming violation.

“The banking issue is the real crux of the problem. There is a general blocking authority on all of Iran’s financial institutions, some on which have been designated for terrorism-related reasons, some for WMD reasons, and some for human rights reasons,” said Tyler Cullis, an attorney at Ferrari & Associates, a DC-based law firm specialising in economic sanctions. “The Trump administration then came and imposed sanctions on Iran’s entire financial sector, and that has targeted any remaining Iranian institutions that were not covered by those measures.”

Although President Joe Biden campaigned in part on restoring the Obama-era nuclear deal, his administration effectively maintained the maximum pressure policy. The banking sanctions that made Iranian business anathema to foreign financial institutions remain in place, making the prospect of doing any trade with Iran too legally and financially risky to be worth it for any foreign company.

Those risks are augmented by hawkish activist groups like United Against Nuclear Iran, which maintains public lists of companies accused of engaging in trade with Iran. The blacklists – on which UANI has in the past included companies engaged in legal trade, including for medicines, with Iran – create a potential for reputational risk that makes doing business with Iran an even more unsavoury prospect.

“At the end of the Obama administration, we had ideas in front of the administration calling for a direct financial channel between the US and Iran that would be able to facilitate licensed and exempt trade between the two countries. To be frank, the Obama administration rejected creating such a channel on multiple occasions,” said Cullis. “The US has now hit a dead end where they have used up all their levers of pressure other than military force.”

He went on, “I sympathise with folks in Iran, as there are a lot of people there who are nonpolitical and simply trying to find solutions. But it’s really hard to find a solution when US government itself is not interested in one.”

While US sanctions succeeded at wrecking Iran’s middle class and preventing Iranians from accessing necessities like food and medicine, they failed to achieve the aims of Washington: forcing Iran to change its foreign policy or renegotiate the 2015 Iran nuclear deal on less favourable terms.

Instead, the Iranian government has survived waves of popular anger by doubling down on repression – including through executions and imprisonment of political dissenters – against an increasingly impoverished population.

Despite growing misery in the country, the Islamic Republic of Iran seems to be as firmly in charge as ever. The hardening narrative echoes the story of US economic sanctions on countries like Iraq, Cuba, and Venezuela that succeeded in harming civilians but never resulted in regime change.

“The original idea of such sanctions is that they will cause people to rise up and overthrow their government, but there is not much evidence of that while there is a lot of evidence that they harm ordinary people,” said Amir Handjani, a non-resident senior fellow at the Quincy Institute and a security fellow with the Truman National Security Project. “When you consider regular Iranians living under sanctions with rare diseases, who need specialized drugs that can only be imported from the West, they are facing a very dark future.”

“We’re talking about little children who need medical dressings and didn’t get them.”

The lawsuit currently filed in US federal court in Oregon on behalf of Iranians with thalassemia calls on the US government and the Office of Foreign Assets Control or OFAC, which administers sanctions and trade licenses, to “permit the reintroduction of life-saving medicines and medical devices into Iran through normal business channels.”

The suit was recently dismissed by the court on grounds of proving standing by the plaintiffs; an appeal of the ruling was filed in May. Lawyers working on the case say that they will continue pressing the matter in US courts to compel the government to create a solution that will allow critical medicines to reach patients inside Iran. Neither the Office of Foreign Assets Control nor the Biden White House responded to requests for comment.

“On a visceral level, people are suffering and dying. We’re talking about little children who need medical dressings and didn’t get them,” said Thomas Nelson, the attorney for the plaintiffs in the case. “No one is willing to stand up to the impunity and bullying of the US government on this subject, and particularly OFAC. It ought to be brought to the public’s attention that these types of things are happening.”

• The Intercept report