A couple of months ago, I published an article on the ExPatt Magazine blog detailing why I thought Iran’s 100 billion dollar windfall from the end of sanctions was not quite as dangerous as it was being made out to be by some commentators opposed to the deal.
The Obama Administration has publicly stated that Iran needs a “half-trillion dollars to meet domestic investment requirements: $170 billion to develop oil and gas potential; $100 billion for agricultural projects; $100 billion for infrastructure; $50 billion to increase energy capacity; and $100 billion to pay for unfunded state and military pensions, government debts, and funding shortfalls.” Even if overstated, these numbers are relatively fantastic when considered next to Iran’s GDP of $415 billion and provide a sketch of the domestic interests that will be fighting over those unfrozen assets. In addition to material and measurable needs, Iran has social problems and internal security issues that need to be addressed as well. Drug addiction is a plague that has infected up to 2% of the country’s population, with some reports putting addiction rates as high as 6%. The main culprit, opium coming across the border from Afghanistan, has claimed the lives of 4,000 Iranian security personnel attempting to stem the flow since 1979, according to official sources. In addition to these societal issues, there are experts that believe that much of the $100 billion will be eaten up by mismanagement and corruption within the Iranian government itself.
Later on in the piece
While an injection of $100 billion to the Iranian economy will be a significant windfall, if the historical data is used as an indicator, it might not have too great of an effect on Iran’s overall military spending, given its domestic economic and security priorities as well as its obligations to servicing its relatively large population’s expectations. Instead of complaining about what $100 billion (and future revenue) might do for the Iranian sponsorship of terrorism, policy makers and wonks should look at the real considerations that Iran will face as that money becomes available in the context of Iranian priorities, based on the country’s internal politics and economic and social needs. Critics should also check their expectations.
It would be far more cost efficient for the United States to counter the negative effects of overt and covert Iranian defense spending through the US’s own substantial asymmetric and conventional capabilities (along with those of its allies) than attempt to contain and curtail the proliferation of nuclear weapons in the Middle East, with all the nightmare scenarios that could evolve out of the regional state and non-state dynamics. The US faces quantitatively and qualitatively more threatening states in other regions, and with higher stakes for long-term global peace.
I believe the article is still relevant and my assumptions about Iranian spending were somewhat confirmed by the intelligence chiefs’ testimony to Congress last week. The following excerpt is from Foreign Policy:
Iran’s financial windfall isn’t going to terror — yet
Critics of the nuclear deal with Iran, which traded expansive sanctions relief in exchange for harsh restrictions on the country’s nuclear program, often argue that the money made available to the Middle Eastern nation will go to fund terror.
At least so far, Brennan said, that’s not the case. Most of the money, he said, was going towards what he called “encumbrances” – paying off debts and making investments in the oil industry, he said. The amount that has flowed to the Quds Force – the overseas arm of the Iranian Revolutionary Guard – has “not been very much.”
That said, Brennan cautioned that the Quds Force found a way to finance their activities when sanctions were in place – and they’ll likely to continue doing so as sanctions are lifted.
What I failed to imagine or comment on in the ExPatt article was the uptick in slightly irritating provocations from Iran aimed at the United States.
While I still believe that American conventional and unconventional military power serves as a strong deterrent to truly disruptive Iranian actions, I also wonder if the United States should respond to incidents like Iran’s drone flyovers and the seizure of American sailors and what would be proportional.
Ultimately though, the real question about Iran’s actions should be about what type of real consequences they hold for the regional reputation of the United States. For, in fact, it was a US led, UN backed coalition of nations that forced Iran to suspend and dismantle its nuclear program through economic pressure brought on by sanctions. Whether Iran was enriching uranium for civilian or military use does not matter in this context. Simply the fact that it stopped, dismantled its capacity to do so, and opened itself up to inspection does.
The US also carried out its policy in the face of opposition from its regional allies, putting its long term strategic interests (and arguably the long term strategic interests of the entire Middle East) before the short and medium term anxieties of its peers. That type of action, in concert with the great powers of the world, is the gauge of American strength in the region and within the current global system. The response from Iran is juvenile and desperate at the moment and may be more the impotent outward manifestation of internal political wrangling rather than a coherent policy.
Now, if presidential hopefuls were a little more aware of the schoolyard aspects of these petty confrontations, I’d feel a lot more comfortable.