News : Sanctions
- Published: Wednesday, 25 February 2015
The International Business Times reported on Tuesday that Australian Foreign Minister Julie Bishop had been invited to Tehran by Iranian Foreign Minister Mohammad Javad Zarif, potentially making her the first senior Australian official to visit the Islamic Republic in 10 years.
The foreign ministers are expected to discuss possible trade agreements, and Bishop’s visit was reportedly greenlit by US President Barack Obama, apparently in hopes that closer relations with a longtime US ally will help to facilitate more constructive diplomacy. But the possibility of trade between Iran and Western democracies is viewed as a threat by critics of the Obama administration’s approach to Iran policy.
Tehran has been angling for European investment for months and by some reports, certain European entities have expressed interest, fearing that a nuclear agreement is imminent and that the US will have positioned itself to benefit ahead of its allies from the removal of sanctions. This has led to worries by opponents of the Iranian regime that newfound investments would diminish the international support for the continuation or expansion of sanctions in the event that talks fail.
Furthermore, trade with or investment from Europe or Australia could provide Iran with even more capital than it has already received from the limited sanctions relief that has accompanied nuclear negotiations. This could in turn be used to further advance the Iranian nuclear program, to expand a military buildup and intervention in other countries in the region, and to develop Iran’s domestic economy so as to diminish the impact of sanctions after they are re-imposed.
Iran has made no secret of its intentions to circumvent or break US-led sanctions, which Tehran has described as “illegal,” according to Reuters. Various reports have emerged over the course of the last several months indicating some of the ways that Iran has gone about this. Most recently, it has been determined that more than one billion dollars in cash have been illegally smuggled into Iran via a range of front companies. Nearly half of these funds were channeled through Iraq.
In absence of these illicitly-obtained funds, Iran would almost certainly have to put some projects on hold. The latest Iranian budget, with its unflagging investment in the Revolutionary Guards, indicates that military and security projects would likely be among the last things to be cut. The budget for the Iranian year that begins next month has been revised at least twice to reduce the anticipated average price of oil, which accounts for about half of the national budget. Yet despite these changes, the Revolutionary Guards had apparently always been slated to receive a 33 percent increase in funding.
But what might be cut in absence of illicit funding is certain investments in development, like the 4.8 billion dollar project to expand Iranian oil and gas fields, which was recently announced by Iran and reported on by Thomson Reuters. While the effects of such projects are ostensibly constrained by sanctions enforcement, such development may nevertheless be leveraged by the Islamic Republic to further entice interested Western investors to risk defying those sanctions.
Such enticements are reportedly important to the current Iranian government – so much so that it has shown willingness to risk short-term public unrest in order to more effectively bust sanction and solicit foreign investment. This may explain the Rouhani administration’s commitment to increased funding for the IRGC, which has a hand in both foreign interventionism and domestic security.
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