Biden’s $90 Billion Bailout to Tehran
Rejoining the Iran deal could undo years of progress in the Middle East.
Rushing back into the 2015 Joint Comprehensive Plan of Action (JCPOA), also called the Iran nuclear deal, would be a singularly seismic event leading to chaos and instability in the Middle East.
U.S. President Joe Biden has inherited a relatively peaceful Middle East—not without its challenges—but one marked by historic peace agreements between several Arab countries and Israel after decades without movement on the recognition of Israel. Conversely, through U.S. sanctions and Iran’s own ineptitude and mismanagement of the COVID-19 pandemic, Iran’s economy has been left paralyzed and vulnerable. From a negotiating perspective, Biden has plenty of leverage.
Yet last week, the Wall Street Journal reported the Biden administration is considering lifting terrorism-related sanctions on the Central Bank of Iran. In other words, after promising in congressional testimony for a longer and stronger deal with Iran, Biden’s diplomatic team is instead rushing toward accommodation. Although returning to the JCPOA will not happen overnight, it could easily happen this year. And if Biden returns the United States to a JCPOA 2.0, it could reverse positive momentum in the Middle East by destabilizing the peaceful balance of power Biden inherited.
The JCPOA infused Iran with cash. Right before the United States reimposed sanctions in 2018, Iran’s central bank controlled more than $120 billion in foreign exchange reserves. U.S. sanctions locked tens of those billions away in escrow accounts, and financial pressure forced Iran to draw down the accounts that remained open. After only two years of the maximum pressure campaign, Iran was down to a meager $4 billion in reserves. Meanwhile, U.S. energy sanctions cut Iran’s oil exports by more than 2 million barrels per day, depriving the regime of $70 billion that typically funds its budget.
The massive reversal of fortunes left Iran with barely any economic options, and the regime was forced to cut payments to its regional terror proxies. While Iran fended off collapse, much of the rest of the Middle East breathed a sigh of relief. Several countries in the region made historic peace with one another. Progress made by the Abraham Accords—which were struck in August 2020 by Israel, the United Arab Emirates, and the United States—were contagious.
Alliances with Iran threaten to undo much of the progress made.
Right away, the regime could receive a payday of around $90 billion the moment Biden ends sanctions. After all, U.S. sanctions tied up $40 billion of oil and condensate sales in Asia and the Middle East while another $50 billion in funds remain inaccessible to the regime. Meanwhile, the restoration of the JCPOA would likely reinvigorate Iran’s oil exports, adding nearly $50 billion per year to the regime’s coffers at today’s market rate. Other economic sanctions would be lifted as well, bolstering the regime’s metals and petrochemicals sectors that are crucial to funding the Islamic Revolutionary Guard Corps’ (IRGC) foreign adventures. Iran’s economy will start to grow again, and it will not take any time for the suitcases of cash to find their way to Hamas or Hezbollah.
Those billions of dollars would go a long way for the leading state sponsor of terrorism. Iran’s entire military budget has been reduced to less than $20 billion a year. But historically, Iran spent more than $16 billion supporting allies in Syria, Iraq, and Yemen since 2012 and sent $700 million a year to Hezbollah.
There’s not much need for speculation regarding what Iran would use its sanctions relief for. Instead, just look to six years ago. Instead of spending funds on cancer research or infrastructure like promised, the regime’s defense budget reached record highs. The IRGC spread mayhem and death across the region, and the same thing could happen again.
Only this time, under the terms of the original JCPOA, nuclear restrictions on Iran are almost up. Within the decade, Iran will have no cap on nuclear enrichment quantity or quality, no cap on the number of centrifuge sophistication, no ban on the import and export of ballistic missiles, and the expiration of more than a dozen other prohibitions.
A revived JCPOA will start an arms race in the region, but Iran will have a running start. The enormous and difficult progress the United States has made will be undone. Despite this clear and present danger, Biden is rushing toward this fate.
Under the Iran Nuclear Agreement Review Act of 2015, signed into law by then-U.S. President Barack Obama, the executive branch must submit the text of any deal relating to Iran’s nuclear program to Congress. Congress would then have 30 days to review and vote on the deal. Biden’s State Department is preparing a legal maneuver around these rules though. If it succeeds in brokering a deal, the State Department may claim the United States is simply reentering the same deal Congress reviewed (and the U.S. House of Representatives rejected on a bipartisan basis) in 2015. Never mind Iran’s nuclear program and the U.S. sanctions’ infrastructure is far different from that of 2015.
But the review act also provides an opportunity for the majority or minority leader in either chamber to submit legislation that would block the sanctions relief Biden is seeking to negotiate, and that legislation is guaranteed an automatic vote on the floor of the Senate and House of Representatives. Senate minority leader Mitch McConnell and House minority leader Kevin McCarthy should exercise this right and put members of Congress on record whether they support sending billions of dollars to the largest state sponsor of terrorism.
Negotiations with Iran could be worthwhile, but members of Congress and the American people deserve to have transparency in this process and should hold the Biden administration accountable to what it promised: a better deal.
Lindsey O. Graham is the senior senator from South Carolina.
Morgan D. Ortagus is a political advisor who was the spokesperson for the U.S. State Department from 2019 to 2021.