The economic news from Tehran is good—good, that is, if you are a state sponsor of terror moving toward a nuclear weapon program. If you were hoping that sanctions might persuade the Iranians to cease and desist, the news is disastrous. Since the obama adm relaxed sanctions on Iran, oil sales are up 25% from 1.06 million barrels per day to 1.32 million and the white house reportedly has no intention of preventing the rise ins sales and consequent swelling of Revolutionary Guard bank accounts. Indicators show an Iranian economy on the mend, thanks to the interim nuclear agreement struck in NOV. Inflation has decreased form 40%-plus to 20% and falling. The rial-to-dollar exchange rate is steadily recovering. And where Iran’s GDP fell 3% in 2012, the IMF now projects modest increases for 2014 and 2015.
With sanctions regime eroding, Iran’s business climate has been transformed, and trade delegations are exploring investment options in Iran’s petrochemical and automobile industries. The regime was getting only $7 billion in sanctions relief was way off. The figure is far closer to those estimates of $20 billion that adm officials scoffed at.
Sanction relief was never about rewarding the regime with relatively small sums of money in exchange for steep concessions on the nuclear program. The plan rather was to get Iranians president Rouhani lots of cash.
The white house idea is that once Rouhani understands how much easier his life is with lots of money pouring into the economy, it will be in his interest to petition Supreme Leader Ali Khamenei for more concessions on he nuclear file. The problem with the strategy is that it shows how badly the White house has misunderstood not only the regimes behavior but also Routhani’s role and how sanctions affect it. Mark Dubowitz director of the Foundation for Defense of Democracies, whose work has been central in building the Iran sanctions regime. According to Dubowitz the white house wanted to empower Rouhani while weakening figures like Quds Force commander Qassem Soleimani. The more Rouhani becomes ‘addicted’ to cash, the better he’ll be able to make the case to Khamenei that they need to make more concessions.
What was significant about sanctions relief was not merely the exact amount of money. Any realizations of sanctions would give rise to an international lobby with a vital interest in making sure the white house never made good on its threats to reimpose stiff sanctions on the Tehran regime.
A European corporation doing business in Tehran means jobs back home. What politician gladly turns his back on thousands of jobs or potential jobs to agree to observe the restoration of a sanctions regime that the Obama white house wasn’t serious about in the first place?
The adm strategy, says Dubowitz, “has nothing to do with rational economic models. Rather it’s a psychological profile of the regime based on its assessment of Rouhani as a pragmatist who was elected to secure sanctions relief and will be further strengthened if he can deliver’.
Rouhani uses the sanctions regime, and the threat of new sanctions, as a stick in his fight with the IRGC and Khamenei. Rouhani was elected to win sanctions relief for a beleaguered Iranian economy. Khamenei has long seen Rouhani as a useful asset in his dealings with the West. The Iranian president often boasts of his role in duping his American and European counterparts as lead negotiator when he held the regimes nuclear file form 2003-5.
Now the Western businessmen and politicians are pecking away at the sanctions regime, Rouhani has already served his purpose. Khamenei has a deal he’s perfectly happy with. He’s getting paid for doing nothing and if the interim agreement is renewed after six months more money to spend on whatever he likes—backing Assad in the Syrian civil war, or building the bomb. What’s peculiar is that the white house seems just a pleased with the agreement.
Source==weekly standard, lee smith