In the next few days President Barack Obama will have to sign a new Executive Order extending the suspension of some sanctions against Iran in the context of an unsigned, implicit, accord aimed at curbing Iran’s nuclear program.
Washington says Iran has fulfilled its end of the bargain within the so-called Joint Comprehensive Plan of Action (JCPOA). However, because this is neither a treaty nor a binding agreement, Obama cannot simply lift the sanctions. All he can do is suspend them for periods of between 90 and 180 days.
Beginning in 1995, Congress passed a series of laws authorizing sanctions but giving the president discretion in how to put them into place. Presidents Clinton, George W. Bush and Obama all signed executive orders ramping up those sanctions but were unable to simply lift them.
Obama administration officials have stressed, however, that those other U.S. sanctions against Iran will remain in place. “We will continue to target sanctionable activities … including those related to Iran’s support for terrorism, regional destabilization, human rights abuses, and ballistic missile development,” Treasury Secretary Jacob Lew said last January.
Obama’s eight-page executive order suspended four previous executive orders and amended a fifth. But eight other executive orders imposing other sanctions on Iran remained in effect.
This has landed Iran into a peculiar situation with the Damoclean sword of snapped-back sanctions hanging above its head for at least 25 more years according to the terms of the JCPOA. As a result few would be ready to invest in Iran, not knowing when and how we could be back to the full resumption of sanctions. Worse still, since neither the US nor any of its P5+1 partners are legally bound by the CJPOA, it is not at all certain that the verbal accord might not be cancelled by the next occupant of the White House or change of policy by European governments. In fact, all candidates for the US presidency this year have either openly said or more than indicated they would cancel a “deal” that binds only Obama.
And, yet, the full lifting of sanctions is precisely what Iran’s President Hassan Rouhani and his team, known as “The New York Boys” promised.
Last July Rouhani declared that Iran wouldn’t sign anything unless “all sanctions are lifted on the same day.” Whether he fell victim to his illusions or was given false promises by the Americans is beside the point. In the end no sanctions were lifted and Iran didn’t sign anything either.
Instead, the Obama administration and the Rafsanjani faction of which Rouhani is a member decided to fudge the issue by inventing the so-called “non-paper” agreement, a document of 179 pages of paper but still regarded as “non-paper” because no one signed it.
Rouhani declared the move as “the greatest diplomatic victory in the history of Islam.”
Obama was equally hyperbolic in praise of the “chance in a lifetime accord”.
The mullahs called CJPOA with its Persian acronym of Barjam. Almost four months later it seems that Rouhani may have seen Barjam as a series of moves on a range of issues rather than a single event focused on the nuclear dispute.This is why he started talking of Barjam II, Barjam III and so on. But what does he mean?
Because mullahs never speak straight, one could only speculate about the answer.
He may have hoped that the “non-paper” deal will help him launch his Barjam II in the form of a concerted effort to win control of the Islamic Consultative Assembly (Majlis) , the ersatz parliament and the Assembly of Experts which can choose and dismiss the “Supreme Guide”. It is clear that Obama gambled on that hope and did what he could to help the Rafsanjani faction.
Obama released $1.7 billion of Iran’s frozen assets close to the Iranian New Year to help Rouhani pay end-of-the-year bonuses and the unpaid salaries of some civil servants almost on the eve of the elections.
Unfortunately for Obama, although the Rafsanjani faction did well in Tehran elections, it failed to win either of the two crucial assemblies. Thus the scenario according to which the “moderates” would close the chapter of revolution and transform Iran into an ordinary nation-state hit a big hurdle.
Yet, Rouhani’s Barjam III was supposed to come in the shape of a turnaround in Iran’s economy which has been on life-support since 2012, partly because of falling oil prices. Iran’s “frozen” assets are estimated at between $50 and $150 billion which, if made available, could help revive the moribund economy. However, that, too, didn’t happen.
Obama was less than sincere in helping the Rafsanjani faction in a way that would tip the balance in its favor in the power struggle in Tehran. The method that Obama used resembled a financial version of water-boarding, the torture in which a prisoner’s head is pushed under water and kept there right up to the point he is about to choke. Then the prisoner’s head is pulled out of water and he is allowed to take a few breaths before his head is once again pushed under water.
Thus, Obama released Iran’s frozen assets in tranches, allowing Rouhani to lift his head from under water and take a few breaths but not enough for his faction to produce a real economic turnaround. The tranches released were mostly absorbed by a 21 per cent increase in Iran’s military budget plus the expenses of the Syrian war and paying the salaries of Hezbollah and kindred fighters.
Some countries like China and India, owing Iran a total of $28 billion offered to pay back in goods and services, effectively inviting Iran to barter trade. But the bulk of the money, held in Western banks, could not be instantly unfrozen because it required complicated measures from Washington and the cooperation of American and European banks.
According to the Iranian Foreign Minister Javad Zarif last February, the US Secretary of State John Kerry had promised to “work hard to remove final hurdles” so that Iran could access its assets. Some analysts believe that Washington dragged its feet on the subject waiting for the results of the Iranian elections in March.
Because the Rafsanjani faction didn’t secure the victory it had promised, there was no reason Washington should speed up Iran’s access to funds that could be used by the radical faction in Tehran to further its revolutionary ambitions.
Barjam III was also designed to diversify Iran’s trade relations, especially with the European Union. The mullahs know that EU nations are in a deep recession and thirsty for juicy contracts. Rouhnai was prepared to oblige.
In a series of visits to European capitals plus hosting a range of European leaders in Tehran he signed contract after contract. By my count, in no way exhaustive, he has signed a total of 85 contracts worth almost $100 billion with 15 countries. His Oil Minister Bizhan Zangeneh has prepared plans that require over $300 billion in investment in Iranian oil and gas resources.
Call it signaturitis, or the disease of just signing contracts, if you like, but the fact is that Iran doesn’t have that kind of money. Islamic Transport Minister Abbas Akhundi, apparently a level-headed man, says Iran will buy the things it has signed contracts for only if the sellers provide the funds needed. In other words, Iran may soon find itself in the global capital market looking for massive loans.
The European and other nations that sign the contracts know that Iran has no money. But they also know that Iran has collateral in the shape of vast oil and gas and many other natural resources, a population of 78 million, a rather comfortable middle class, and plenty of scope for agricultural and industrial development. It may be a long shot, but it’s a shot, after all.
To sum up, Iran needs to become a debtor nation on a large scale in order to join the global system, the strategy adopted by Boris Yeltsin in Russia after the collapse of the Soviet Empire. Once in the debt up to its neck, Iran might think twice before spending vast sums on helping Bashar Al-Assad kill Syrians.
But it is precisely now that the “Supreme Guide” launches his “Resistance Economy” of self-reliance and reduction of foreign trade. We are back to square one. Iran cannot change course on any issue until it has settled its domestic power struggle at the center of which is one question: “Does Iran want to be a nation or a revolution?”