Iran will use sanctions relief to escalate its destabilizing foreign operations
Iran's regime is dedicated to spreading its revolutionary ideology and has a well-established network of terrorist proxies that it funds. If the nuclear deal is completed without addressing Iran's aggressive foreign policy, then it will only add fuel to this fire by giving Iran access to over $100 billion in sanctions relief as well as billions of dollars more in potential foreign direct investment and trade.
But there are serious problems with these assumptions. Start with the impact of sanctions relief. There is as yet little to suggest that the Iranian regime intends to spend the resulting windfall on making life better for ordinary citizens. This is, let us remind ourselves, a government that has long deprived its people while fattening those closest to the regime, like the Revolutionary Guard. It is a safe bet that corrupt officials and generals will take the largest share of any windfall.
A great deal of the fresh money will also go to expanding Iran’s ambitions in its neighborhood. Proxy groups like Lebanon’s Hezbollah, Gaza’s Hamas and Yemen’s Houthis will all receive larger injections of money and weapons, with which to further destabilize their countries. Syria’s Bashar Assad, Iran’s preferred Shia dictator, will also be needing more support as he is squeezed between ISIL and a resurgent Nusra Front. Expect more Iranian money to flow into Afghanistan and Pakistan, where Shia minorities face Sunni persecution.
If there’s money left over, some of it will go to buying the Revolutionary Guards a new arsenal of conventional weapons, to make up for long years of neglect because of the sanctions. That might work out very nicely for European, Russian and Chinese arms manufacturers, but not great for ordinary Iranians.
Iranian officials have, however, expressed their intent to develop the regime’s military capacity, with or without a deal. The sixth five-year development plan [FYDP] announced by Khamenei on June 30 is meant to guide government policy from 2016-2021 and, in particular, to frame (without controlling in detail) the annual budgetary process. Its call for developing the regime’s missile arsenal is very concerning. Analysts already assess Iran to have the largest strategic missile force in the Middle East, with an estimated 800 short and medium range missiles. Even without nuclear payloads, Iran’s missiles threaten neighboring countries, U.S. forces in the Middle East, and maritime trade in the Gulf. An expanded Iranian missile arsenal incentivizes neighboring states to develop both offensive and defensive countermeasure capabilities, furthering a regional arms race that is already under way. One report has assessed that Iran has invested at least one billion dollars in its missile program so far. Just one percent of Iran’s cash infusion from the nuclear deal could double that figure in a short time.
Khamenei’s plan would also increase Iran’s “defense capability in the regional power balance [teraze qodrate manteqi]” and allocate five percent of the general budget to do so. Khamenei also calls for boosting the capacity to produce weaponry and defense equipment “to deter and in accordance with different threats.” Iran’s conventional military remains relatively weak today despite its advanced asymmetrical capabilities. The Iranian air force fields largely outdated aircraft, while Iran’s land forces lack advanced equipment, despite numbers that are large by regional standards. With the cash flowing from sanctions removal—to say nothing of the removal of the arms embargo now being floated by negotiators—Iran would be poised to develop its military forces dramatically. It could use these resources both to purchase advanced weapons from China and Russia and to develop its indigenous military industry, as the plan mandates.
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[CON] An agreement that doesn’t address these other issues, such as Iran’s ballistic missile program and support for terrorism, will make the overall Iranian threat even worse. As sanctions are lifted, the Iranian regime will have more resources to invest in a military build up and expand its influence in the region. More- over, once an agreement is in place, the U.S. and the other P5+1 countries will be more reluctant to challenge Iran’s destabilizing behavior in the region for fear of jeopardizing the nuclear deal.
Previous research conducted by AEI’s Critical Threats Project and Norse Corporation has highlighted the growing cyberthreat posed by Iran and suggested that the regime might exploit the nuclear deal to increase investment in its cyber infrastructure and gain access to more effective technology.18 The sixth FYDP confirms this assessment. Khamenei calls for aggressively investing in Iran’s cyber infrastructure so that “Iran will become a top regional country.”19 Khamenei also calls for increasing technology cooperation with other states, “gaining technology,” and transforming Iran into “the regional leader in electronic government.”20 These are not new proposals articulated in the FYDP, but they echo comments made by numerous other senior officials.21 They also reflect realities in the regime’s existing security strategy. A robust cyber capability protects Iran’s critical infrastructure against attack while supporting the regime’s deterrence against the United States and its regional allies.22
A nuclear deal won’t alter the fundamental drivers of Iran’s efforts to extend its influence across the Middle East and it won’t sever Tehran’s relationships with the violent, often destabilizing proxy groups it supports and directs in Yemen, Iraq, Syria and beyond. Nor, for that matter, would a nuclear deal have much immediate positive effect on the Iranian government’s treatment of its own people or its handling of judicial cases against Iranian-Americans, several of whom are currently held in Iranian prisons on trumped up charges.
If anything, a nuclear deal might well exacerbate all the other concerns about Iran’s behavior in the region and at home. Iranian hard-liners, who view any compromise with the United States as a capitulation, will be eager to reinforce their reach, especially on the battlefield. A comprehensive deal will end the severe multilateral sanctions regime that has been erected over the course of the past five years, slowly returning as much as one hundred billion dollars in frozen assets to Tehran and reopening the spigots of international trade and investment.
To be clear, Iran’s regional policies have never been primarily resource-driven; in fact, its most destabilizing policies have persisted and even worsened during times of economic pressure. Still, the prospect of the regime’s exorbitant windfall after a nuclear deal will surely not help in constraining its support for Syria’s murderous leader Bashar al-Assad or its tendency for troublemaking in other contested arenas in the Arab world.
The investment in Iran’s domestic economy outlined by the plan is also aimed to support its regional activities and aspirations. The “resistance economy” doctrine, one of the “central pillars” of the sixth FYDP, provides the framework for how Iran’s leadership will view economic policy in the wake of any agreement. The key objective of the resistance economy, a doctrine first developed by President Hassan Rouhani and promulgated by Khamenei in February 2014, is to harden the economy against any future re-imposition of Western sanctions. It is designed, in other words, to protect Iran from any “snap-back” of sanctions.
It also reflects a securitized view of Iran’s domestic economy that places military and strategic priorities over economic growth. The overall goal of the resistance economy is to lower the costs of an aggressive foreign policy through insulating the state from Western sanctions. Rather than “creating an Iran with a real stake in the international order,” as some contend a deal will do, the relaxation of sanctions coupled with the economic doctrines articulated by Khamenei will only create a more confident, but still expansionist, Iran.
A nuclear deal will transform an isolated, economically-stricken Iran into an even more powerful and potentially aggressive regional state. Anticipating that economic growth would moderate the regime’s strategic calculus in the short-term is unrealistic and not supported by the evidence. Increased revenues would certainly raise the economic prospects for a good number of Iranian citizens. But any cash inflow would be carefully controlled by Iran’s leaders in order to achieve the goals of its “resistance economy doctrine” and enhance Iran’s military capabilities as well.
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The further relaxation of sanctions on Iran as a consequence of any nuclear deal will dramatically assist Iran in these preparations. Iran’s leaders have articulated in great detail how they would use additional post-sanctions funding to address major structural problems in their economy. The Supreme Leader and President Rouhani have described an economic doctrine they call “Resistance Economy,” which aims to ensure that Iran will never be vulnerable to sanctions again in the future.1 An influx of money and investment at this stage will also fuel Iran’s ability to sustain the military and paramilitary forces it has deployed around the region and to fund its violent and sectarian proxies. A nuclear deal without some sort of real rapprochement, therefore, will actually increase the Iranian military threat to America’s interests and allies in the Middle East and possibly beyond.
In a bid to prop up its valued allies in Syria, Iran has dispatched 6,000 to 8,000 Hezbollah fighters to fend off the Sunni militants seeking to topple the Bashar al-Assad regime. The war has taken its toll on Hezbollah, as body bags draped in the group's yellow flags continue to stream back from the front. An estimated 1,000 Hezbollahis have fallen since the group first began fighting there in 2013.
The Iran deal may soon give Hezbollah an exit strategy. Tehran is set to receive upwards of $100-$150 billion in cash (frozen funds plus funds released from escrow accounts holding oil proceeds that were only to be spent on approved foreign goods). Even more is coming to Iran in the form of increased oil, petrochemical, auto and gold revenues. The Assad regime could become a major beneficiary. This means that the regime could soon have more cash to pay its fighters and to buy more weapons to target the Sunni rebels waging war against it.
In that event, Hezbollah's services may no longer be in demand and the group could redeploy its troops fighting in Syria. How long that takes depends on how quickly Iranian cash and weapons help the Assad regime consolidate. But once its fighters are safely home, Hezbollah will soon benefit from the same Iranian sanctions relief windfall. As Iran's most important non-state proxy, Hezbollah stands to gain considerably -- from advanced weaponry to cash and training.
But even without a withdrawal from Syria, Hezbollah's battle-hardened fighters may not be content with quiet on their southern front. The group's rhetoric certainly has not mellowed; Hezbollah has been bruising for a fight with Israel since the guns fell silent from the last encounter in 2006. More importantly, Hezbollah views the nuclear deal (like the rest of the region) as a sign that its patron Iran is a burgeoning regional power, and that the military advantage is shifting away from Israel in the Middle East. It may not take long before the first provocation on the border.
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A nuclear deal with Iran will bring in hundreds of billions of dollars as Iran recoups frozen assets, exports more oil, takes in foreign direct investment, enters into trade agreements, and starts to shrug off its pariah status. Yet, the strategic calculus of the Supreme Leader and much of the ruling conservative establishment is the same today as it was when the Islamic Revolution began: preserving the regime at home and deterring threats from abroad, while externalizing the revolution and resistance. The Iran Threat Network, free of budgetary constraints and emboldened as a newly-minted nuclear power, is the engine of the regime and will resume Iran’s pursuit of broader goals in the region. Look for a return to past levels of activity by elements of the Iran Threat Network, including units of the Qods Force, whose budgets have been cut back as a result of Iran’s economic downturn. This means more operations in Syria, where Iran will continue to work closely with the Assad regime and Iran-trained, equipped, and guided militant networks; further attempts to support Shia activism in Bahrain, where Iran has attempted several times to create the conditions for regime change; continued use of Iraq as a transit point for illicit commerce coming from the Gulf, and the movement of men, money, and illicit materiel across the Levant; deeper support to Hezbollah and the newly-formed Palestinian coalition government; and likely increases in training, weapons, and funding to the Houthi rebels in Yemen and pariah states such as the Sudan.
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It is against this backdrop that Iran sanctions relief will take place. Whatever the amount of money Iran receives from sanctions relief—Treasury officials now put the number around $50 billion2 , but the President himself referred to "$150 billion parked outside the country"3 —Iran will gain access to at least tens of billions of dollars, at first from blocked accounts and later from additional oil sales. And while administration officials have acknowledged that Iran engages in a wide range of nefarious activities, Treasury Secretary Jack Lew opined that "Most of the money Iran receives from sanctions relief will not be used to support those activities."4
Presumably, Tehran will indeed spend the vast bulk of these monies on pressing domestic needs. But it will undoubtedly also direct substantial funding to foreign adventures, proxies and allies in keeping with its longstanding track record.5 That is indeed the expectation of Iran's allies in the region. Hezbollah Secretary General Hassan Nasrallah noted that even under sanctions Iran funded its allies, and anticipated that a now "rich and powerful Iran, which will be open to the world" would be able to do even more: "I say that in the next phase Iran will be able to stand by its allies, friends, the people in the region, and especially the resistance in Palestine and the Palestinian people more than any time in the past, and this is what the others are afraid of."6
Even a small percentage of the lower end estimates of Iran's sanction relief windfall would enable Tehran to underwrite a significant increase in what Secretary Lew correctly referred to as "Iran's menacing behavior." In fact, in all likelihood Iranian support for such behaviors will only increase in the wake of a deal over Iran's nuclear program. Iranian leaders who backed the deal will likely feel the need to prove their anti-American and pro-revolutionary bona fides, especially since the deal is widely seen in Iran as a victory for Rouhani and his allies over the Islamic Revolutionary Guard Corp (IRGC) and other hardliners. The Supreme Leader himself may also feel the need—or it may simply be in his interest—to give the IRGC and the Qods Force greater latitude to behave aggressively in the region as a means of balancing domestic bases of power within Iran at a time when Rouhani would be riding high in the wake of the Iran deal.
Iran is using the billions in cash resources provided under the landmark nuclear deal to engage in an unprecedented military buildup meant to transform the Islamic Republic's fighting force into an "offensive" juggernaut, according to a largely unreported announcement by Iranian military leaders.
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The Iranian regime and military appear united in a determination to use the easing of sanctions to expand the Islamic Republic’s conventional and unconventional military power, including its ballistic missile program. The finely-reasoned arguments of some supporters of the deal that Tehran will prioritize economic growth over military spending require ignoring almost everything Iran’s leaders are telling each other and their people.
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The author argues that the sanctions relief that Iran will gain from successful completion of the nuclear deal is comparable to the Marshall Plan in that it "matches or exceeds America’s entire post-World War II plan for the reconstruction of Europe."
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The authors argue that aside from the benefit they will recieve from sanctions relief, Iran will also benefit from being readmitted to a global financial network that had previously restrained their support for terrorism and money laundering.
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The author argues that based on Iran's foreign policy objectives and stated goals for securing their economy against further sanctions, they will likely direct the majority of sanctions relief towards strategic and military goals.
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A diplomatic deal with Iran to limit its nuclear program could inadvertently jumpstart the country’s cyber warfare efforts. Experts say Tehran might use the economic sanctions relief from the nuclear pact to buttress its growing cyber program, which has already infiltrated critical networks in over a dozen countries, including the U.S.
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