Iran's Deadly Ambition. Ilan Berman
Authorization Act, which mandated that the White House “block and prohibit” Iranian assets if those funds “come within the United States, or are or come within the possession or control of a United States person,”13 conspired to thwart the administration’s initial plan. Nevertheless, the administration appears to be actively examining workarounds that would allow Iran the ability to exploit the strength of the U.S. dollar, possibly through the creation of an offshore clearing facility for facilitating previously prohibited U-turn transactions utilizing the dollar.14 The White House is doing so, moreover, even though such a step would fundamentally compromise the integrity of the global sanctions regime by allowing Iran’s tainted money to permeate U.S. financial institutions.
The Obama administration has even become a direct investor in Iran’s nuclear program. As part of an agreement hammered out between Washington and Tehran in late April, the United States has committed to purchasing 32 tons of heavy water—a key byproduct of nuclear development—from Iran. The $8.6 million deal will help Iran fulfill one of the conditions of the JCPOA, which stipulates that Iran gets rid of the substance as a way of ensuring that it is not later used to help create nuclear weapons. But the agreement isn’t simply a security measure. It is also intended as an economic signal to other potential economic partners of the Islamic Republic that it is acceptable to invest in the regime’s nuclear program. “The idea is: Okay, we tested it, it’s perfectly good heavy water. It meets spec. We’ll buy a little of this,” Energy Secretary Ernest Moniz explained to the Wall Street Journal.15 “That will be a statement to the world: ‘You want to buy heavy water from Iran, you can buy heavy water from Iran. It’s been done. Even the United States did it.’”
THE LIMITS OF NORMALIZATION
For the moment, relief has yet to kick in in earnest. That is at least partly because Iran’s rickety economy suffers from serious structural problems. The International Monetary Fund concluded after a May 2016 visit to the Islamic Republic that the country will need to undertake significant internal reforms on issues such as money laundering and terror financing in order to alleviate investor jitters and facilitate full integration into the global economy.16 But, over the long term, the cumulative impact of these measures will be nothing short of transformational.
Slowly but surely, Iran’s trading partners are beginning to reengage with Iran. In early 2016, Chinese president Xi Jinping visited Tehran and concluded a sweeping 25-year plan to broaden bilateral relations, including a strategy to expand trade between the two countries to $600 billion over the next decade.17 More decisive still was the May 2016 state visit to Iran of Indian prime minister Narendra Modi, which netted a dozen new pacts on trade, telecommunications, and transportation—including a multiyear, $500 million deal to build and administer two cargo terminals at the southern Iranian port of Chabahar, a project that will effectively make the Islamic Republic a key player in India’s future export strategy.18 And, during a whirlwind spring 2016 trip to Tehran, European Union foreign policy chief Federica Mogherini made clear that Europe, which once ranked as Iran’s most substantial trade partner, accounting for 38 percent of Iran’s exports and 31 percent of its imports, is eager to reclaim that mantle once again now that sanctions have been lifted.19
Eager corporations are starting to do the same. In June 2016, in what represents the first major Western deal with post-sanctions Iran, Boeing concluded a “historic” $25 billion agreement to provide Iran Air, the country’s national carrier, with 100 new commercial airplanes.20 While congressional pressure so far has helped stall implementation of this agreement, it nonetheless represents a sign of the times, as hungry multinational firms begin to dip their toes back into the Iranian market in earnest.
All this has unmistakably placed Iran on the road to sustained recovery. As evidence of this fact, the World Bank now estimates that Iran’s GDP—which constricted by nearly 7 percent in 2012 and a further 3 percent in 2013 as a result of Western sanctions—will grow by nearly 6 percent this year alone.21 Further into the future, Iran’s economic horizons look brighter still.
The JCPOA has not, however, yielded a fundamental change in Iran’s political outlook. Contrary to the fervent wishes of the Obama administration, the agreement has not fostered a kinder, gentler polity in Iran. While the White House lobbied heavily in favor of the agreement based on the argument that it would help empower moderate forces within Iran, nothing of the sort has happened.
This was evident in Iran’s parallel elections in February 2016. The first of these was to appoint representatives to the country’s unicameral legislature, commonly known as the Majles. The second was to select officials for the Assembly of Experts, the powerful clerical body that selects and oversees the performance of the country’s top religious authority, its supreme leader.
Ahead of the elections, conventional wisdom held that the twin outcomes would be resounding victories for Iran’s reformists.22 In truth, however, the results were far less than met the eye. Mass disqualifications of progressive candidates in the weeks leading up to the vote ensured that those “reformists” who could still stand in the elections were not true moderates—they were overwhelmingly compliant to the regime. In the final calculus, observers were forced to concede that the election results amounted to nothing short of a rout of Iranian president Hassan Rouhani’s political allies and a resounding reaffirmation of the conservative status quo in Iranian politics.23
The Iranian regime’s core anti-American animus, too, remains intact. Iran’s supreme leader, Ayatollah Ali Khamenei, recently warned that the United States was using the nuclear deal as a strategic tool in order “to be able to reinstate their previous hegemony” over the Islamic Republic.24 And in mid-May, Iran’s parliament voted overwhelmingly to approve a bill demanding compensation from the United States for “spiritual and material damage” inflicted on Iran over the past six decades as a result of its policies.25 The message of these and myriad other signals is unmistakable: Iran may have profited handsomely from the nuclear deal, but it has no interest in a more pacific relationship with the country principally responsible for making it possible.
What the JCPOA has succeeded in doing, however, is reinvigorate Iran’s global appetite. After laboring for years under international sanctions and with limited means to make its foreign policy vision a reality, the Islamic Republic is now positioned for a landmark global expansion. The pages that follow sketch what that expansion will look like and why a rising Iran represents a major and enduring threat to American interests and the safety and security of U.S. allies abroad.
It is a danger that has only grown more acute since this book was first written.
What makes Tehran tick? More than three and a half decades after Ayatollah Ruhollah Khomeini swept to power in Tehran on a wave of revolutionary fervor, transforming an erstwhile ally of the United States into a mortal enemy practically overnight, policy makers in Washington still understand precious little about the inner workings of his Islamic Republic. As a result, they consistently misjudge, misunderstand, and misinterpret what the Iranian regime says and does and what its leaders truly believe.
Today, this failure is seen most clearly in the Obama administration’s growing calls for normalization with the Iranian regime. During its time in office, the current White House has gravitated steadily toward the notion that Iran is a troublesome yet ultimately benign regional actor. Although President Obama has promised strong action against Iranian rogue behavior, his administration made repeated diplomatic overtures toward the Islamic Republic, propelled by the notion that with the proper mix of diplomatic dialogue and strategic incentives it will be possible to “domesticate” the Iranian regime.1
To be fair, the Obama administration is hardly the only one to harbor this hope. More and more, Western observers have embraced the idea that Iran is a nation with which it is possible to do business. Thus, an extensive special