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The repercussions of nuclear deal on Iran’s policies

Obama administration is wagering on Iranian economic prosperity to empower the moderate camp

Raghida Dergham

Published: Updated:

The lifting of international sanctions on the Islamic Republic of Iran passed as if it were a non-event. The U.N. Security Council bestowed immediate legitimacy on the move in accordance with the nuclear deal it had stamped with its seal of compliance.

Removing the freeze on Iranian assets means Tehran will obtain around $150 billion automatically, and up to $50 billion in promised investments over the next five years. According to experts, this would generate growth of up to 5 percent a year, rescuing the country from an economic crisis and enabling it to pursue internal and external projects despite falling oil prices.

Russia’s direct military intervention in Syria has relieved Iran’s budget, bearing in mind that most of Tehran’s spending on regional expansion in recent years reportedly came from the Iraqi treasury under former Prime Minister Nouri al-Maliki.

Now, after international sanctions are lifted, the Revolutionary Guards (IRGC) will be able to resume their regional plans with a comfortable financial margin and also fight the battle with the moderate camp with equal comfort. The IRGC is the biggest winner, while the moderate camp led by President Rowhani and foreign minister Mohammad Javad Zarif, in partnership with former president Akbar Hashemi Rafsanjani, will be comfortable in the next month’s elections thanks to the détente.

The Obama administration is wagering on Iranian economic prosperity to empower the moderate camp, which rarely defies the mullah-led establishment in Tehran and has hopes it would slow down Iran’s plans for regional dominance led by the IRGC hardliner camp.

There is need to think practically on the impact of lifting of sanctions on regional conflicts and the war against ISIS

Raghida Dergham

However, these wagers will not materialize, at least not in the near future. Thus, they will not impact Iranian-Russian policy in Syria in support of Assad. Nor, I believe, will they lead to the dismantlement of Shiite militias in Syria and Iraq, or the wooing of Sunni support that is crucial for defeating ISIS and similar groups in both countries.

Hence, there is a need for thinking practically regarding the impact of lifting of sanctions on regional conflicts and the war against ISIS. If Washington has chosen not to undertake any action that could undermine the new relationship with Tehran, then the price to pay is much higher than it will imagine, and it might realize this only when it is too late.

The new page in U.S.-Iranian relations has become a reality that requires constructive scrutiny so that this relationship would be beneficial for both sides and the world. Caving in and complacency would otherwise be an investment in the forces of Sunni and Shiite extremism. Instead, there is now an opportunity for balance in Saudi-Iranian relations and regional balances.

Leveler called oil

Saudi-Iranian relations are not currently in a phase of accord and reconciliation. Rather, I believe, escalation reigns supreme. The new common denominator between the two countries is being affected by the drop in oil prices to below $30 per barrel.

Some believe Riyadh is against cutting production for reasons of national interests, and that there is no need to cut production to benefit Russia and Iran. Others believe one of the key reasons Riyadh insists on maintaining the same level of production is actually to undermine Iran and Russia economically, to prevent them from having a free hand in Syria.

However, oil policies are not just about Saudi-Iranian relations or the new rivalry in the oil world with the shale revolution in the United States. There are other factors in play, including China’s slowdown and the spending by oil-producing countries on direct and proxy conflicts.

Yet some oil experts believe that the collapse in oil prices will push traditional foes to set their differences aside and rescue their economies. These experts say there is no escape from accord because this is what interests require. The margin of accord will not stop at oil prices but will probably include outstanding political disputes in the region.

This logic may not apply to the IRGC in Iran, however, because its thinking is constrained by projects for regional dominance and the “export” of the Islamic revolution. The IRGC believes that given that it was able to double down at the time of isolation and sanctions, it could do much more after the sanctions have been lifted and money is flowing again.

The IRGC could come down hard on moderate forces that want to focus on economic growth and prosperity rather than military intervention, the creation of militias, and imposing costly dominance.

The battle within

The conflict in Iran between the moderates and the hardliners is not marginal, particularly on the eve of the elections scheduled for February 26. It would be crucial to slow down the unfreezing of Iranian assets and investment projects, given what’s at stake.

Instead, decision-makers such as U.S. Secretary of State John Kerry and Russia’s Foreign Minister Sergei Lavrov must take advantage of the Saudi and Iranian need for accord to ease their disputes practically and realistically, to the benefit of both Russia and the US, who are also oil producers.

But if the U.S. and Russia have decided low oil prices are in their interest in the years ahead, things would be completely different, and there would be no need for sponsoring Saudi-Iranian accord. In that case, the Middle Eastern oil-producing nations must think about their options, whether in terms of de-escalating proxy conflicts, or in terms of thinking to alternatives to their reliance on oil.

Some economists and experts in investment and technology have an interesting view: they believe lower oil prices can accelerate necessary reforms that would ensure oil is no longer the only factor in Middle East politics and policies, especially in the Gulf.

Sobriety and realism are essential in assessing the repercussions of the Iranian nuclear deal and the impact of the lifting of sanctions on Iran, internally as well as with respect to the ambitions of regional expansion adopted by the IRGC-led hardliner camp, if not the Iranian government itself under the leadership of supreme leader Ayatollah Khomeini.

Limiting oneself to wailing and astonishment, no matter how justified, is going to be pointless: it is noteworthy how Obama marketed his audacious deal with the mullahs in Tehran while Iran pressed ahead with its regional meddling, imposing its views on Iraq and creating militias, inciting in Yemen, and intervening in Syria alongside Assad in his civil war.

Realistic strategies

There is no alternative to adopting realistic strategies either to coexist with the new reality or to upend it patiently and prudently. Relying on a new U.S. president to find the magic recipe for undoing the problem is delusional and wishful thinking. Republican candidates are criticizing Obama for the nuclear deal and claim it to be a threat to U.S. interests and security.

However, they will not rush to overturn the deal or the new rapprochement with Iran, as it is now a reality. What they could do is pressure Tehran to curb its expansionist policies but this will not happen at least for a year and things could change completely by then.

Therefore, what is needed is not just de-escalation in conflicts like Syria and Yemen, but also de-escalation of tension in the media, politics, and diplomacy between Saudi and Iran. It is unacceptable to burn embassies and it is not acceptable for Iran’s foreign minister to use a tone like the one he resorted to in The New York Times, whatever his calculations may be.

It is not useful to revisit Iran’s involvement in the Khobar bombing. It is too late for this.

What all parties should focus on is how to stop the war in Syria and Yemen, and stop the descent to chaos in Libya, Iraq, and Lebanon. ISIS is an enemy of Saudi Arabia just as it is an enemy of Iran.

Iran’s upcoming elections may generate a momentum of moderation, but this moderation requires engagement by the Iranian public to voice their opposition to Iranian extremism and meddling in Arab countries, while calling for an end to sectarian escalation and economic attrition through warfare or oil prices.

Let there be a political discourse that hits a chord with people’s consciences and desire for prosperity. The pictures of men, women, and children of Madaya is a living snapshot of war crimes committed by the countries backing the regime in Damascus, which starves its people as a weapon of war, and this must awaken the consciences of the public opinion in Iran. The Iranian public wants prosperity after living in austerity imposed by sanctions and the country’s expansionist policies from Syria to Yemen and Iraq.

Perhaps the cost of proxy wars and the collapse in oil prices will drain Saudi Arabia and Iran forcing them to pursue balanced and conciliatory relations instead of confrontation. Perhaps this would bring good tidings for the Middle East and its people who aspire to have a normal life instead of an endless cycle of violence and attrition.

This article was first published in al-Hayat on Jan. 22, 2016 and translated by Karim Traboulsi.


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Raghida Dergham is Columnist, Senior Diplomatic Correspondent, and New York Bureau Chief for the London-based Al Hayat newspaper since 1989. She is dean of the international media at the United Nations. Dergham is Founder and Executive Chairman of Beirut Institute, an indigenous, independent, inter-generational think tank for the Arab region with a global reach. An authority on strategic international relations, Dergham is a member of the Council on Foreign Relations, and an Honorary Fellow at the Foreign Policy Association. She served on the International Media Council of the World Economic Forum, and is a member of the Development Advisory Committee of the IAP- the Global Network of Science Academies. She can be reached on Twitter @RaghidaDergham.

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