Iran’s $300 Billion Shakedown
Sanctions relief should be a reward for ending Iran’s nuke program. But the current deal is a massive payment to temporarily put it on hold.
It is one thing to relieve sanctions on Iran in exchange for the country giving up its nuclear weapons program. That was the purpose of imposing the sanctions in the first place. But Barack Obama’s administration and the other parties to the interim nuclear deal with Iran now seem to be saying they are willing to release to Iran between a third and a half a trillion dollars over the next 15 years in order for Iran not to give up the program, but to freeze it. In other words, we are not restoring Iran’s assets and income sources in exchange for permanently and irreversibly accepting international standards; we are just renting the country’s restraint, offering it access to hundreds of billions of dollars to make any future nuclear program development the problem of the next U.S. president — or the one after that.
How much Iran actually will make off sanctions relief is unclear. But based on the calculation that its overseas assets (which will likely be unfrozen) will total north of $120 billion, and the equally reasonable estimate that Iran may gain in excess of $20 billion a year in oil revenues, you end up with a 15-year deal that would result in a relative gain of $420 billion.
To put this in perspective, Iran’s GDP in 2013 was roughly $370 billion. Or, to put it another way — relevant in the context of the kind of influence the cash might buy Iran in the region — its Syrian client state had a GDP of about $65 billion in 2011 before the crisis there heated up and devastated the country. Its would-be client Yemen has a GDP of about $36 billion. So the amounts in question would give Iran the means to not only shore up its own weak economy, but also to extend its influence, buy weapons, and underwrite terrorist groups to an even greater extent than it has been doing throughout the period the country has felt the squeeze of sanctions. (Iran is estimated to have given tens of billions of dollars to Syria during the period in question, despite the financial pressures on its own people and economy.)
Few would debate that Iran would be entitled to the restoration of funds and normal economic status should it end its nuclear program. Were Iran to do that, then clearly the sanctions program would be seen as a success. But the question the world is now confronted with is: Should Iran then also be entitled to economic normalization and the boon it would entail simply by putting its program on hold for a specified period of time? Such a deal — in that light — sets a new standard. The underlying message effectively says that the United States and other major powers will only impose sanctions on countries that get very, very close to having nuclear weapons — say less than a year away. But so long as those countries’ nuclear weapons programs remain in the state at which we are willing to freeze Iran’s, then those countries are still free to go about their business and run their economies in ways that enable them to better fund those programs in the future.
The problem is compounded by the fact that Iran’s nuclear program is not viewed by its neighbors as the main threat the country poses. A systematic, 35-year campaign of regional meddling, destabilization, and extension of Iranian influence is seen as a much bigger issue. And restoring cash flows and assets to Iran, as well as giving the country greater international standing, clearly exacerbates that threat. It gives Tehran the wherewithal to continue to underwrite terrorists like Hezbollah and Hamas, prop up dictators like Syria’s Bashar al-Assad, and buy ever greater influence in places like Iraq and Yemen.
The consequences of Iran’s regional strategy were on display this week in Washington when Iraqi Prime Minister Haider al-Abadi essentially read from Iranian talking points when addressing the conflict in Yemen. He took a stance against Saudi intervention to stop Iranian-backed Houthis, suggested Iran’s role in Yemen was overstated, and even went so far as to suggest Obama had told him that he was not supportive of the Saudis. The White House immediately denied the last accusation but can’t have been too happy with the rest of the statement that came from the leader of a country the United States had spent hundreds of billions to “liberate.”
In fact, in talking with other Arab leaders, it is absolutely clear that today they view the government in Baghdad not as an ally but as an adversary. And despite decades of acrimonious and bloody conflict, they see this adversary as now being closer to Iran than to the United States or any other state in the neighborhood. Say what you will about the power of Iraqi nationalism to undo or overcome such political expediency in the long run, but right now the Iraqi government’s current closeness to Tehran represents a remarkable turn of events — and these changes are a stinging indictment of the policies of not one, but two, consecutive U.S. presidents.
Which is another illustration of why focusing on the Iran nuclear deal without simultaneously addressing Iran’s regional threat is a serious error. The White House’s recent reversal with regard to Egypt, resuming the sales of weapons to that country, is a positive step to address this. So too is the call to convene the Gulf Cooperation Council (GCC) countries next month to discuss America’s mutual interests with those states. Early behind-the-scenes talks preparing for the meeting to be held at Camp David in a few weeks suggest that an effort is afoot to formulate some kind of defense pact that might counteract Iran’s thrusts into the region and provide security in the wake of some change of course, should Iran choose to break out of the nuclear pact. But there are differences of opinion within the GCC about what individual countries may seek from these talks, and there will no doubt be reluctance within the White House to take any step that either obligates the United States to action in any but the most extreme circumstances or might be taken by the Iranians as such a great threat that it upsets the apple cart of rapprochement the president has been pushing.
This last point is especially salient. Just as the critique that the United States has sent a message that it is too eager for an Iran deal has created skepticism about whether the interim deal is really the best that could be struck, so too should the president and his team’s desire to portray the deal as a success concern those who are uneasy about whether the enforcement process will be rigorous enough or the stance against other Iranian abuses will be tough enough.
The recent effort of the Obama administration to portray the Iran negotiations as part of a successful, systematic effort to strengthen America through engagement with once-reviled regimes like those in Myanmar or Cuba only worsens the concerns about how a post-deal Iran may be handled. In the case of Myanmar, the president went there recently and sought to put a good face on the changes there even though the government (and our onetime heroine Aung San Suu Kyi) are taking deeply troubling positions regarding the slaughter of the Rohingya people of northern Myanmar. In Cuba, we are moving forward with normalization of relations without any real signs that the Cuban government is changing its policies regarding repression at home.
Now, as it happens, I support doing the best deal possible with Iran and normalization of relations with Myanmar and Cuba. What I object to is undercutting the good intentions of such measures and their potential for producing long-term changes for the better by failing to develop and enforce appropriate tough, extensive, or well-developed long-term strategies — either for reasons of political expediency, to advance a presidential legacy, or simply out of naiveté.
Relieving Iranian sanctions is an appropriate response for effectively ending the Iranian nuclear threat. Fully lifting sanctions is certainly not the right response for simply putting a program on hold. Not only does it send the wrong message to Iran and other countries considering the development of such programs, but it also enhances Iran’s influence and, by restoring economic and political ties worldwide, will almost certainly make it harder to restore sanctions should that be necessary in the future. (As I noted in my last column, we should drop the use of the term “snap-back.” It is a fiction.) Further, the goal of the negotiations was originally to eliminate the threat of regional proliferation. Certainly sanctions relief would be warranted if the end result of the negotiations did that. But this deal does not. Leaving Iran one year away from a weapon sends a message to every potential adversary without such a weapon that this is precisely where they must be. In other words, this deal is not an antidote to proliferation; it is a road map and an impetus to the spread of near proliferation. Consequently, this deal could actually enhance the risk of proliferation. And if the nuclear threat is not the greatest one Iran poses, then it is extremely risky to prize the preservation and celebration of the nuclear deal so highly that we do not take appropriate steps to blunt the greater regional threats posed by Tehran’s leaders — who seize every opportunity to remind us that neither their ideology nor their regional ambitions are showing any signs of changing.
Can these flaws be addressed in the final stages of negotiation around the nuclear deal? Yes, to a degree — and to the degree to which they can’t, they can be offset in the clear articulation of broader policies, supported by clear actions such as those that might come out of the GCC summit, like a defense pact with meaningful commitments from the United States that would send a message of resolve and strategic clarity. It is still possible for this nuclear deal to be the major triumph the Obama administration and our international partners want it to be — but not without first recognizing the risks that remain unaddressed by the current arrangement and those that may be actually made worse were key weaknesses in the proposed terms to go unaddressed or be handled with inadequate resolve. In other words, the months between now and when a final deal is reached will be vital in determining whether the proposed deal really makes the region safer or whether it will be seen in the future as a successful $300 billion shakedown by Iran that enabled it to expand its influence and bring further insecurity to a region that is already arguably the most dangerous in the world.
BRENDAN SMIALOWSKI/AFP/Getty Images