The Impact of Sanctions Imposed by the European Union against Iran on their Bilateral Trade: General versus Targeted Sanctions

Abstract The European Union (EU) has been using economic sanctions both as a foreign policy tool and liberal alternative to military action. Since 2006, it implementing general against the whole economy of Iran, affecting their trade relations, since 2007, following imposition by UN Security Council, also smart targeting Iranian entities natural persons associated with country's activities. In nonlinear autoregressive distributed lag (NARDL) model, this paper investigates impact targeted EU Iran on quarterly bilateral values between 19 members euro area (EA19) first quarter 1999 fourth 2018. robustness NARDL specification, 28 is analysed. addition, gravity model member states run in check. results indicate that EU's have strongly hampered flows two trading partners almost all sectors, except for primary sectors. Furthermore, our study finds much smaller than total many Smart affect exports most sectors from EA19 EU28 while they are statistically insignificant imports Iran. Thus, provides evidence motivations behind sanctions, which target specific individuals rather economy, unlike negative ordinary people.