Iran's Nuclear Deal: Sanctioning Instability?
On 14 July, almost two years of negotiations came to fruition as Iran signed an agreement with Western states that attempts to curtail the country’s attempts to acquire a nuclear weapon and see an end to years of economic isolation. While celebrations on the streets of the Iranian capital, Tehran, continued long into the evening, divisions have become evident amongst global observers over Iran’s future role in the Middle East. Expectations of the lifting of sanctions vary widely: while there is hope that sanctions relief will transform Iran into a new regional economic hub and create more allowance for democratic reforms, some have expressed scepticism and anticipate that increased financial flows will empower Iran to accelerate its involvement in the region’s conflicts.
Although the focus of the negotiations has been on those sanctions imposed on Iran over nuclear proliferation issues, other sanctions relate to Iran’s human rights record and support for regional militant organisations. The US first levied sanctions on Iran during the Iranian hostage crisis in 1979, with additional sanctions being imposed following the bombing of a US Marine base in 1984 in Lebanon by Hezbollah. During the same period, suspicions that Iran was actively seeking to acquire a nuclear weapon became more pronounced, and by the early 2000s, Iran faced a range of international sanctions aimed at restricting its access to nuclear-related materials. After 2010, the US moved to restrict Iran’s access to the global financial sector and implemented new sanctions on the country’s petrochemical industry, having connected Iran’s oil revenue to nuclear proliferation efforts. The United Nations (UN) and European Union (EU) had followed suit by 2012, as EU member states adopted comprehensive measures banning the import of oil and petrochemical products from Iran.
The impact of these sanctions on Iran’s economy has been profound, where by April 2015, the US Treasury estimated that the cost to Iran of sanctions on oil exports alone since 2011 totalled USD 160 billion in lost revenue. Correspondingly, for Iran, the dropping of sanctions offers substantial prospects for recovery. With the world’s fourth largest recorded oil reserves, the economic benefits that Iran stands to gain from the lifting of restrictions on its petrochemical industry are immense. In addition, the opening up of Iran’s financial sector is expected to generate an estimated USD 100 billion from frozen funds. In return, Iran is to accept restrictions on its nuclear development programme aimed at reducing the amount of time required for Iran to produce sufficient weapons-grade uranium or plutonium for a nuclear device to one year.
However, the possible impact of sanctions relief on the wider Middle East remains uncertain. For many critics of the deal, it effectively side-steps Iran’s record of antagonistic involvement in the Middle East’s trouble-spots. While the US’s designation of Iran as a state sponsor of terrorism remains in place, negotiators have been quick to separate Iran’s human rights issues and regional policies from the nuclear proliferation concerns. Similarly, despite an increased willingness in recent years to compromise over the nuclear issue, Iran’s support for regional militant organisations has continued unabated and largely unchecked.
The US’s allies in the Middle East, such as Israel and Saudi Arabia, have been especially vocal in protesting any deal with Iran on this basis, as Iran’s activities are perceived as empowering their opponents in the region. Fears over growing Iranian influence prompted Saudi Arabia to conduct a military intervention against the Iran-backed Houthi rebels in Yemen in March 2015, and concerns persist amongst Gulf states regarding Iran’s ongoing support for the Syrian regime under Bashar Al Assad. Iranian military advisors are also active alongside Shi’a militias in Iraq, and the Hezbollah militant group in Lebanon receives a substantial amount of Iranian financial aid. In this light, economically empowering Iran through sanctions relief is viewed as a potential path towards greater instability in the region, as increased direct investment is likely to find its way to Iran’s proxies, thereby serving to maintain current conflicts.
Problematically, Iran has done little to allay these concerns. Hard-line elements in Iranian politics have expressed discontent over the nuclear deal, including the Iranian Revolutionary Guard Corps (IRGC), an ideologically-driven branch of Iran’s military, which remains the most committed to Iran’s involvement in regional conflicts. In the wake of a signed agreement, these elements are likely to emphasise their dissatisfaction with what they see as a submission to the West in order to extract concessions from the Iranian government and are unlikely to alter their anti-Western and exclusionary outlook. Instead, the IRGC is likely to exploit any benefits that Iran accrues through the deal while simultaneously pushing to expand its role, as well as Iran’s influence, in the Middle East.
With the world’s fourth largest recorded oil reserves, the economic benefits that Iran stands to gain from the lifting of restrictions on its petrochemical industry are immense.
However, the IRGC’s influence is contrasted with the growing strength of Iranian civil society, which strongly supports more moderate elements in Iranian politics that do not share the IRGC’s exclusionary ideology. For instance, the Iranian Reformist movement, a group of political parties and organisations, while in part supportive of Iran’s foreign policy ambitions, has demonstrated growing receptiveness to public demand and principles of democratic governance. In response to public pressure in this vein, Iranian President Hassan Rouhani has promised increased engagement with civil society on the back of the nuclear deal. Correspondingly, human rights advocate groups inside Iran are overwhelmingly positive about the implications for democracy following the country’s re-entry into the global marketplace. Bringing Iran back into the international fold may serve to strengthen these moderate elements and discourage their support for an antagonistic foreign policy as the benefits of increased diplomatic engagement and foreign trade with the West become more apparent.
As it stands, however, it is unlikely that Iran will reduce its involvement in regional conflicts in the near future, but a dramatic increase in support to the country’s foreign proxies is also doubtful. Practicality constrains the latter course of action; while the Syrian regime may benefit from increased financial flows, many of Iran’s military beneficiaries, such as Hezbollah, are unlikely to transform the kind of boost in support that Iran’s critics anticipate into meaningful military gains. In addition, domestically, Rouhani has to carefully mediate between many competing interest groups to ensure that political stability is preserved. Iran’s immediate economic needs after years of sanctions are high, and Rouhani’s political survival may depend on how quickly sanctions relief can be transformed into economic growth. As such, any increases in aid to Iran’s proxies are likely to be gradual.
Uncertainty over possible outcomes has not restrained many Western states from viewing the lifting of sanctions as broadly positive. However, the country’s opponents in the Gulf are not likely to be as optimistic in their assessments of Iran’s future ambitions, and, in the absence of a concerted US-driven plan to address their concerns, are likely to remain sceptical of the proposed benefits of the agreement. While a nuclear deal may well indicate a brighter chapter in Iran’s future, for the wider region a light at the end of the tunnel still seems to be a distant prospect.