Uncertain Effects of Money on Iran Deal

On Friday, an article by Reuters claimed that Iran’s need for sanctions relief contributes to a situation in which both sides need a nuclear deal badly enough that the successful conclusion of the talks is likely. While this remains a matter of some debate, there is no denying that Iran’s financial situation is dire. The effect of economic sanctions has been credited with forcing the Islamic Republic to the negotiating table in the first place.

 

But as White House spokesperson Josh Earnest acknowledged in May, the Iranian government’s cash-poor situation has thus far not prompted it to abandon spending on support for terrorist networks and other rogue states such as Bashar al-Assad’s Syria. In June it was reported that the Assad regime had received as much as 15 billion dollars in support from Iran, even as the Iranian government struggled to keep up with welfare payments that are viewed as helping to hold domestic dissent in check.

 

This effect of domestic spending was emphasized by Bloomberg alongside descriptions of Iran’s announced development projects, which contribute to the need for well over 100 billion dollars in investment capital. This arguably provides serious impetus for Iran to conclude a nuclear deal, and it also contributes to the Obama administration’s narrative that, regardless of current spending on terrorism and regional interventions, sanctions relief would be channeled into economic development and further domestic welfare spending.

 

London characterizes this narrative as advancing the view that the acquisition of money under the nuclear deal would lead to moderation within the Iranian regime. “But,” the same article argues, “there isn’t any evidence to support this conclusion. It is a policy stance based on hope.”

 

What’s more, the expected value of post-agreement sanctions relief is in the vicinity of 150 billion dollars, making it more than 50 percent greater than what Iran needs to modernize and develop its oil and gas infrastructure. Critics of the regime suggest that even if Iran devotes the vast majority of these earnings to its domestic needs, a significant remainder will likely be channeled into destabilizing activities across the world.

 

With this in mind, London emphasizes that the question of Iran’s future spending remains open and unresolved, to say the least. Thus he concludes that there is a need to obtain clear answers about how Tehran will spend new capital before any further cash is released to the rulers of the Islamic Republic.