Going nuclear: It’s Iran’s shadow economy that’s the danger

Makram Rabah
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The ongoing talks in Vienna to restore the nuclear deal between the United States and the Iranian regime has been no short of a rollercoaster ride. Both sides have declared an imminent positive outcome before back stepping. The United States Secretary of State Anthony Blinken announced that he is “not overly optimistic at actually getting an agreement to a conclusion, despite all the efforts.”

Be that as it may, the long waiting game that all sides involved have grown accustomed to does not change the fact that Iran’s regional expansion and its negative behavior will not modify, nor its reliance on its proxy militias and, more importantly, its sinister network of covert and illicit finance networks which it uses to avoid sanctions.


According to a recent feature published in the Wall Street Journal, Iran runs an elaborate scheme that involves shell companies scattered around the globe that have been able to bypass sanctions in what amounts to a huge money laundering operation. It allows the Iranian Revolutionary Guards Corps (IRGC) and the Supreme Leader Ali Khamenei funnel funds into their ongoing project of regional domination.

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This particular revelation at this moment in time is crucial as it will help the Western nations who seem adamant about further sanctioning Russia to learn how these rogue nations such as Iran use and abuse the financial world to finance their criminal enterprise. While the Iranian revolution has invited sanctions since its inception in 1979, it has over the years acquired the ability and the gift to turn these sanctions to its advantage by telling the Iranian people that their economic predicament has nothing to do with the Iranian revolution’s kleptocracy or its lack of planning. Still, instead, it is due to the western sanctions.

Coincidently, the Iranian regime has transformed fighting sanctions into a legitimate act of resistance or Jihad, which all of its citizens ought to abide by. This is even if these actions come at the expense of other countries where Iran’s proxy arms are present, such as Syria, Iraq and beyond. By establishing this shadow economy, Iran has been able to gain access to over $80 billion a year; a figure projected to grow if the nuclear talks in Vienna are successful.

 Iranian top negotiator Ali Bagheri Kani on Sunday March 27th held a meeting with the European Union’s coordinator of the Vienna talks Enrique Mora in Tehran and discussed the latest Vienna talks developments.
Iranian top negotiator Ali Bagheri Kani on Sunday March 27th held a meeting with the European Union’s coordinator of the Vienna talks Enrique Mora in Tehran and discussed the latest Vienna talks developments.

Iran has fallen back on the old-world barter system where it uses exchange houses and money carriers to fly under the radar of sanctions. To acquire these much-needed dollars, Iran sells its crude oil to intermediaries who open accounts in various banks worldwide and then uses the money they deposit there to pay for many of the imports that Iran needs. These black-market venues provide Iran with discretion and profit.

If one takes Lebanon as an example, Hezbollah, Iran’s enforcers in the Levant, has boasted time and again that it is immune to any form of sanctions and that it does not need to use the Lebanese banking system. Its budget comes directly from Iran and thus it is not part of the corrupt political establishment that has led Lebanon to its collapse, it claims.

Hezbollah, which leads Iran’s proxies, has allegedly set up shell companies and accounts through a number of its business people and firms in Europe and Africa, which it effectively uses for money laundering. Despite the United States treasury’s ongoing quest to shut them down, they have always succeeded in evading total closure.

In reality, the crux of the problem does not lie in Iran’s creative methods of evading sanctions but rather in the docile and unimaginative response of the United States in fielding an effective and airtight array of sanctions that ensures a dismantling of Iran’s shadow economy.

The real threat of Iran is not in its diehard pursuit of nuclear weapons but rather its commitment to maintaining its aggressive expansionist behavior and its shadow economy, which it uses to feed this habit. As it stands, with the ongoing Russian invasion of Ukraine, Iran will try to capitalize on the world’s need for cheaper oil and will use its shadow economy to sell its crude oil and consequently profit from the plight of Ukraine. The Biden administration cannot be zealous about containing and sanctioning Russia and Vladimir Putin while allowing the Iranian regime to keep investing and developing its shadow economy.

Thus, if the United States is serious about containing Russia, it must start by fully understanding the dangerous implications of reinstating the JCPOA while still allowing Iran to roam around freely. Suppose Iran and those like it genuinely want to commit to peace and stability. In that case, they, in turn, need to refrain from running their economy like a criminal enterprise and, once and for all, act like an actual state that respects other people’s sovereignty.

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