Concerns Persist over the Effects of Enriching Iran

Most recently, the US Treasury Department announced that international banks would be permitted to conduct transactions with Iran in US dollars, provided that the transactions do not directly involve entities in the US. It also announced that transactions would be considered legal with any Iranian business in which currently-sanctioned individuals or groups are only minority shareholders.

These changes and the underlying controversy over White House policy were taken up in an editorial that appeared in the Canada Free Press on Wednesday. The author, an activist and supporter of regime change in Iran named Heshmat Alavi, suggested that the pattern of apparent concessions from Washington have been driven by unfounded optimism about the prospective effects of economic revitalization in the Islamic Republic.

Western supporters of rapprochement have tended to put forth a narrative whereby increased contact between Iran and Western countries would encourage a moderating trend inside the Islamic theocracy. But Alavi argues that this is virtually impossible, given the structure of political and economic interests in the country.

Alavi first claims that the Iranian economy is “so sick that a few injections cannot bring it back to life.” He goes on to blame this upon leaders who have systematically “usurped” the country’s wealth for the sake of personal enrichment. Dissident groups like the National Council of Resistance of Iran have repeatedly pointed out that the Iranian Revolutionary Guard Corps controls the vast majority of Iran’s GDP. Meanwhile, much of the rest is indirectly owned by hardline authorities including Supreme Leader Ali Khamenei, who controls such multi-sector organizations as SETAD, which is valued at approximately 100 billion dollars.

The implementation of the Iran nuclear deal, or Joint Comprehensive Plan of Action has demonstrated how difficult it is to wrest Iran’s economy from the hands of such hardline individuals and organizations. Despite blaming the US for making it difficult for them to reintegrate into the global economy, the Iranians have refused to make changes that would bring them into line with international banking standards, as by establishing protocols to prevent money laundering and the financing of terrorism.

At the same time, Tehran has left lingering questions about the profitability of that reintegration for would be foreign investors, regardless of the persistent threat of US-led sanctions. Long-anticipated oil contract templates were revealed last month, which failed to remove requirements that foreign investors partner with local entities that are generally controlled by the IRGC. This may further justify criticisms levied against the Obama administration regarding the possibility of sanctions relief and newfound investment being channeled into the IRGC’s militant and terrorist proxies.

This criticism in turn raises questions about the value of sanctions relief from the perspective of Western interests. But the Free Press editorial puts more focus on the lack of value for the Iranian people, whom Alavi says are unlikely to see any of the increased wealth that is channeled into the hands of the leadership. Urging Western entities to pick a side in the conflict between the regime’s and the people’s interests, Alavi says, “No investor is successful as long as he ignores the people, who are the real owners of the country.”

This sort of argument has become familiar in the 15 months since the conclusion of nuclear negotiations and especially in the 10 months since implementation of the JCPOA. But it has not stopped Western business and their government representatives from reaching out to the Islamic Republic. In fact, on Wednesday Customs Today reported that Danish exports to Iran had risen to a level two-thirds greater than the previous year, signifying mutual enjoyment of a more open trade environment after a number of European countries had expanded imports of Iranian oil.

The previous day, Hellenic Shipping News indicated that Portugal and Hungary had loaded their first shipments of Iranian oil, following suit with such nations as Greece, Spain, and Italy.

Meanwhile, at the same time that Tehran is accusing the US of standing in the way of open trade relations, some Europe-based businesses are successfully entering into collaborative arrangements with newfound Iranian partners. Previous reports have detailed such developments in the aviation and automobile industries. But now the Wall Street Journal has provided an example from the telecommunications sector, reporting that the UK’s Vodafone had entered into a deal to help a local company provide additional internet service to Iran’s expanding market.

This potentially raises additional questions about the effects of Western investments in light of Iran’s widespread state control over economic interests. On one hand, expanded internet access could be a tool for helping to realize the promises that supporters of the nuclear deal put forward regarding improved contacts between the Iranian people and the West. But on the other hand, Iran attempts to maintain tight controls over the internet, and is still seeking to dramatically expand those plans by cutting off Iranian web service from the rest of the world.

Last week, the International Campaign for Human Rights in Iran published a report on the current status of the proposed “National Information Network,” into which the regime has poured billions of dollars over the years. Although still far from being complete or overtaking alternative sources of internet service, the government’s plans remain as ambitious and ever. And in the meantime, hardline authorities continue to crack down on internet users and carry out sting operations against those accused of disseminating undesirable content.

It is not immediately clear from the Wall Street Journal’s report whether the Vodafone deal will present another challenge to the National Information Network, or whether it will provide state-affiliated entities with technologies and infrastructural development that could ultimately be used to further the regime’s obstruction of public access to information.