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Sanctions Have Crippled Iran’s Economy and Fueled Nationwide Resistance. What Is the Endgame?

Since the U.S. withdrawal from the Joint Cooperative Plan of Action (JCPOA) in May 2018, sanctions have caused considerable damage to the Iranian economy.

In terms of crude oil, Iranian exports in May 2019 fell to a historic low of less than 500,000 barrels per day and possibly as few as 250,000 per day (an enormous decrease from the 2.4 million per day that Tehran was averaging under the terms of the JCPOA in early 2018). The inability to sell oil for dollars or euros has proven particularly detrimental to the country’s currency reserves.

As reported in Russia’s Независимая Газета (Independent Newspaper), international sanctions have limited Iran to only 10% of its aforementioned reserves. To complicate matters further, in October the International Monetary Fund (IMF) noted that Iran’s economy by the end of the year would be 90% of its size just two years ago, a number on par with failed states like Libya and Venezuela. Based upon such need for revenue, Tehran has raised gasoline prices by as much as 200% and imposed a strict rationing system. Following President Hassan Rouhani’s announcement concerning reduction of oil subsidies, mass protests erupted across the country.

The government crackdown on non-violent protesters has been draconian in nature. In addition to removing Internet access as a means to reduce the possibility of coordinated actions, Iranian leadership may be responsible for more than one thousand civilian deaths in three weeks of protests. Moreover, the regime has sought to cover up its violence by stealing corpses from the morgue and abducting injured demonstrators from hospitals.

In sum, the U.S. has helped to push Iran into what is arguably its greatest crisis since the revolution of 1979. In spite of such reality, this does not imply that the West can afford to stand by and hope that economic woes and civilian resistance will inevitably lead to some form of lasting change in the country. If the ultimate goal is to prevent Tehran from acquiring a nuclear weapon and to end its funding of terrorist groups including Hamas and Hezbollah, the United States and its allies must formulate an endgame based on geopolitical realities.

In my previous piece here, I discuss the fatal flaws in the JCPOA along with the inability of the Iranian government to moderate based on its core principles. Such evidence, however, does not mean that war with Iran is imminent. There are several means by which to isolate (and potentially break) the government of Ayatollah Ali Khamenei and thus open the door to substantive change.

To begin, the U.S. should work to strengthen ongoing sanctions in order to further inhibit Tehran’s ability to function. One way in which to do so is through the sanctioning of intermediate and capital goods (inputs in finished products or ingredients of finished goods), which would prevent Iran from being able to purchase these even if the regime comes up with the money. As Rouhani admitted in November, the current situation “is not normal” and that “Without money, we cannot run the affairs of the state.” By further tightening sanctions, the U.S. will continue to destabilize the government and provide greater opportunity for opposition leaders seeking to overturn the leadership of the Islamic Republic.

In addition to such actions, the U.S. and its allies must consider the need for renewed equilibrium among Sunni-majority Gulf states including Saudi Arabia, Turkey, Egypt, and Jordan. According to the Shia beliefs of Iran’s ayatollahs, the first step toward the creation of a genuinely legitimate world order would be the overthrow of the taghut, i.e. the illegitimate political powers that now rule the entire Islamic world. As a result, a nuclear Iran would be unnerving to these states and prompt them to develop their own weapons of mass destruction, all of which would exacerbate an already precarious regional order. Considering their greater emphasis on national interests rather than the overthrow of the existing order, these Sunni-majority Gulf states have a great incentive to maintain stability (and thus to contain Iran) in the Middle East.

Lastly, ending Iran’s decades-long threat to regional and global security will require the U.S. to recognize the roles of Russia and China in the balance of power. Unlike Iran, neither of these countries can truly be isolated due to their sheer size and military capabilities. In terms of trade, Washington has far more to offer Moscow and Beijing than Tehran. While the U.S. and China have made significant strides in renegotiating a trade agreement the Kremlin’s relations with Washington have continued to deteriorate. Given Russia’s ties to Iran, it is critical to pursue common interests with Moscow in order to weaken its connection to Tehran and to further stabilize the post-Cold War order. If this happens, the confinement of Iran will have reached its apogee and will create the greatest possibility for principal change in the country.

In seeking to eliminate Iran’s nuclear potential and funding of terrorism abroad, the U.S. and the regional/great powers noted here cannot afford to remain silent in the hope that increased protests will accelerate the advent of democracy. Weakening and ultimately eradicating the threat posed by the Iranian government will require coordinated efforts that place a premium on national interests and global security rather than appeals to nationalism and assessments of power. Such a framework will not (and cannot) abolish war, but it may limit its impact if equilibrium, rather than conquest, is the ultimate goal.