The cash crises continues, despite the July 14
peace deal. The problem is that it will take several months for the deal to be approved by the United States and the other nations imposing the sanctions. At that point it will take years to fully lift all the sanctions. There is some risk that the treaty will not be approved, as many in the West see the deal as fatally flawed. For example, the treaty allows inspectors to be kept out (for over three weeks) of any facilities Iran declares “military”, allowing the Iranians to move anything that is not supposed to be there. Moreover, none of the IAEA inspectors can be Americans, or from any country that does not have diplomatic relations. The treaty also ignored issues like Iranian support of Islamic terrorism, Americans and other Westerners held prisoner in Iran and so on. These items were left out at the insistence of the Iranians who took advantage of the fact that many Western leaders, especially the Americans, were eager to have a deal and willing to give in to Iranian demands. The sanctions have been costly to the West in terms of lost sales and the local jobs that creates. European nations supporting the sanctions need the jobs renewed trade with Iran would provide. The sanctions will be lifted gradually, over many (up to 15) years as Iran is verified to have done what it agreed to in dismantling its nuclear program. But the immediate benefit it the unfreezing of over $100 billion in foreign assets and the ability to freely export oil. Thus the most immediate benefits of the treaty (if approved by all parties) would be the Iranian economy and the average Iranian. More cash also means more money for Iran to quietly use to support terrorism abroad and bribe people in places like Iraq, Afghanistan and Pakistan.
Critics of the new treaty point out that two similar, and recent, deals failed. The 1994 deal with North Korea was simply ignored by the North Koreans who went on to create their primitive but very real nukes. A few years before that there was a deal with Iraq, which had an even more peculiar outcome. Saddam Hussein admitted, after he was captured, that he had shut down his “weapons of mass destruction” programs in the 1990s (because of the expense) but kept that secret from the outside world and all but a few Iraqis. He wanted the Iranians to believe that Iraq was still actively working on nuclear and chemical weapons. To make the deception convincing he ordered that UN inspectors be deceived and interfered with at every opportunity. Some UN inspectors believed that, despite what the rest of the world (including most major intel agencies) believed the Iraqi nuclear and chemical weapons programs were just not there anymore. It wasn’t until after the 2003 invasion and the capture of Saddam that the truth was known. Saddam also revealed that he still had key personnel and technical knowledge safely hidden away and ready to get back to work once sanctions were lifted. The Israelis and Gulf Arabs agree that Iran is more likely to behave like North Korea or Saddam ruled Iraq than really pull back on getting nukes. Inside Iran the new treaty is seen as a great victory and on the streets (and on the Internet) the average Iranian sees this as their well-deserved opportunity to get their nukes.
The treaty shows that the Iranian leadership was willing to risk having to slow down their nuclear weapons development a bit (which is one thing the current treaty probably will do) in order to get economic relief for most Iranians. The religious dictatorship that rules Iran is unpopular and needs a healthier economy to prevent the unhappy Iranians from betting violent. While most Iranians back the idea of Iran getting nuclear weapons their more immediate desire is for employment and a healthy economy. The sanctions definitely contributed to the current economic problems inside Iran. But sanctions were not the only reason for the economic depression. The major cause was the price of oil dropping 50 percent from 2013 to late 2014. While the 2012 economic sanctions cut oil income sharply and resulted in more inflation and unemployment this was more easily dealt with than the drop in the oil price. This falling oil price was the work of Saudi Arabia, the largest exporter of oil in the world and thus able to keep the oil price low to weaken Iran and hurt the American oil companies that are using fracking to threaten Saudi dominance in the oil export market. Because the Saudis see the Iran treaty as a defeat, and enabling Iran to become militarily stronger and still get its nukes, the oil price will probably remain low. Most countries import oil and see the low oil prices as a major economic benefit. The low oil price only hurts the oil exporters, especially those whose economies are very dependent on oil income. This includes, most notably, Iran, Russia, Venezuela and Nigeria. The conflict over low oil prices is still a hot issue that is not even being actively negotiated.
The removal of sanctions means the Iranian government can rely less on using terror and other forms of official suppression to keep popular discontent under control. More cash in the economy means most Iranians will be less angry at the government. Still, the basic problem, for all the things that bother Iranians, is that an Islamic conservative minority has veto power over any attempts at reform from within. Independent reformers are considered enemies of the state by the clerics. Most Iranians just want a better life. The supply of peaceful solutions is drying up. After that comes another revolution. There are some more complications. Half the population consists of ethnic minorities (mainly Turks and Arabs), and some of these groups (Arabs, Kurds and Baluchis) are getting more restive and violent (for different reasons). These minorities oppose the treaty as well. Meanwhile, the Islamic conservatives are determined to support terrorism overseas and build a stronger military (including nuclear weapons) at home, rather than concentrating on improving the economy and living standards. The new treaty shows that the government is looking out for the people while still preserving its power to mess with the neighbors and the West.
The new prosperity will be shared with pro-Iran groups in Syria, Yemen, Iraq and Lebanon. Keeping these efforts going had come at the cost of popular support inside Iran. Before the 2012 sanctions and the low oil price the government saw these foreign adventures as a way to distract an unhappy population but with the economic crunch after 2012 many Iranians came to see these foreign adventures as an unfair burden.
Iran sees the only solution to Saudi control of the world oil price as a more powerful Iran that could coerce the Saudis to cooperate and cut shipments so the oil price will go up. This won’t do anything about stalled global demand and the resurgence of North American production (because of fracking) but it’s a start. Iran sees their nuclear weapons program as the ultimate solution to this and many other problems. The nuclear program is popular inside Iran because nearly all Iranians feel they are a great and powerful people who need nukes to prove it once more. The nukes are also important because Iran has been increasingly vocal about how Iran should be the leader of the Islamic world and the guardian of the major Islamic shrines (Mecca and Medina) in Saudi Arabia. Iranians believe that having nukes would motivate the Arabs to bow down. The Arabs have been kicked around by the Iranians for thousands of years and take this latest threat very seriously. Because of the new treaty Saudis are seeking to buy nukes.
Iranian allies see the recently announced peace deal as a major victory. This was especially true in Syria. Since 2011 Iran has spent some $50 billion to help keep the Assads in power and protect the Shia minority there. The lifting of the sanctions means that aid will continue and even increase. While the cash has been important, Iran also paid (recruited, organized, trained and led) over 10,000 Shia volunteers to come and fight for the Assads in Syria. The sanctions and lower oil prices had reduced the Iranian aid to Syria and made that aid very unpopular within Iran. But that has all changed. Of course, if Iran gets their nukes anyway, the Assads have an even more powerful patron and protector. Meanwhile the largely Sunni rebels were dismayed and demoralized by the Iranian peace deal.
Meanwhile more Iraqis (Shia or otherwise) are uneasy about the growing power of the Iran backed Shia militias. While technically subordinate to the Iraqi Interior Ministry, the Shia militiamen are more inclined to just take orders from their Iranian advisors. This is leading to more confrontations and clashes between Iraqi security forces and the militias. These disputes are most frequently over Shia militias seizing property (often unoccupied) for their own use. Some militias have demanded supplies (even ammo and weapons) from the military. News of the few such incidents has spread widely and Iraqi officials often have to appeal to their Iranian counterparts for help. The word from Iran sometimes is that the advisors are from the Revolutionary Guard (the Quds Forces) and these guys will even defy Iranian officials on occasion. For Iran, one major advantage of a Shia run government in Iraq was that unlike Syria, Yemeni rebels and Lebanese Hezbollah the Iraqis can pay for the Iranian help. It is believed that Iraq has quietly (and illegally) paid Iran over $10 billion so far for Iranian help in fighting ISIL (al Qaeda in Syria and the Levant).
The new treaty won’t do much for Iran in Yemen, mainly because there is still a blockade (by Arab and Western warships and warplanes) around Yemen. Meanwhile AQAP (Al Qaeda in the Arabian Peninsula) is openly allied with some of the Sunni tribal militias in eastern Yemen and this makes it possible for the Islamic terrorists to regularly carry out suicide bombing attacks in the capital and even in the far north homeland of the Iran-backed Shia tribes. AQAP and pro-government tribesmen have also been assassinating Shia troops and low-ranking leaders in the capital and even firing on checkpoints throughout the capital. ISIL Islamic terrorists also take credit for some of the attacks in the capital. ISIL and AQAP are technically at war with each other but that seems to have been put aside for the moment because of the Shia threat and the open involvement of Shia Iran. These Sunni Islamic terrorists are particularly eager to take any Iranian operatives alive. Because of this de facto Islamic terrorist help against the Shia rebels the counter-terrorism efforts by government forces (mostly in disarray anyway) and various Sunni tribal militias (who outnumber the Shia but are not united and often at odds with each other) has largely lapsed. The only ones fighting the Sunni Islamic terrorists are the Iran-backed Shia rebels and the Americans.
Senior American military leaders are also not happy with the new treaty, some of them going so far to point out that Quds backed Islamic terrorists killed over 500 American troops in Iraq and Afghanistan. It was made clear that Iranian propaganda still praises and encourages that sort of thing. Israel reminds everyone that Iran still holds national holidays where millions of Iranians are urged (sometimes coerced) to gather and chant their hatred for the United States and Israel and call for the destruction of these two enemy states. None of this was addressed in the new treaty.
While ISIL is seen as a problem the Sunni Arabs see Iran has a more dangerous threat. So for most of the last decade the Arab Persian Gulf states have altogether had annual arms averaging over $60 billion a year and most of it has gone to the six oil-rich members of the GCC (Gulf Cooperation Council). Saudi Arabia, the UAE, and Kuwait are the big buyers and the main reason for that is fear of Iran. On the face of it all those purchases appear to be overkill because Iran must smuggle in its arms imports, as legitimate purchases are banned by international embargoes. Iranian military procurement is less than 10 percent of what their Arab neighbors are spending. But the Iranians have a long tradition of doing much with little when it comes to military equipment. In addition, the Arabs have a much less impressive combat record, especially in the last century. So the oil-rich Arabs are trying to equip their troops with a lot of the best stuff available and hope for the best. That will change with the new treaty because Iran will be able to freely import new weapons and military technology. China, Russia and the West are all eager to get these sales. Or at least that’s what the new treaty says to Sunni Arabs.
The Bizarre ISIL Angle
On the bright side ISIL sees the treaty as further evidence that the West is allied with the hated (and heretical) Shias, led by archenemy Iran, who are determined to conquer or destroy all Sunni Moslems. This is another bizarre aspect to the current situation in the Middle East. The only thing the West, Iran and the Sunni Arab states can agree on is the need to destroy ISIL. Yet ISIL is nothing more than another bunch of self-righteous Sunni “more Islamic than thou” zealots out to defend Islam and kill anyone (including other Moslems) who disagrees with them. Moslems don’t like to dwell on this angle but it is very real and at the center of so much of the turmoil in the Middle East and the Islamic world. Most Moslems support or tolerate Islamic terrorism unless it threatens them personally. That’s why Islamic terror attacks in non-Moslem countries are so popular. It’s also why the war between Shia and Sunni is so bitter and unending. Sunni and Shia disagree on who the “true Moslems” are and that is made more intense by the fact that the leader of the Shia is Iran, a nation of non-Semites who are ethnically related to the hated Hindus (pagans to Moslems) and the West (also largely Indo-European and mainly non Moslem). The Arabs have an annoying (to non-Arab Moslems) sense of superiority because the founder of Islam and the early scriptures are all written in Arabic. The most dangerous foes if Islam have always been non-Arabs, especially the Indo-Europeans. These ethnic and religious differences still matter a great deal in the Middle East and are what drives most of the violence and the endless feuds and wars. The Iranian treaty does nothing for any of that.
New Economic Opportunities
The new treaty, if it gets ratified and implemented, means lots of new economic opportunities. Many of these are simply older projects than can now be accelerated and expanded. That includes the deal with India to expand the port of Chabahar in southeastern Iran. Work here, on the port and new roads and railroads to Afghanistan and Central Asia, are already underway. With the economic freedom of the new treaty Iran has already asked India to expand its investment. While this project hurts Pakistan (which now monopolizes the movement of most Afghan imports and exports) the new treaty enables Iran to go forward with a long-delayed (by sanctions) project to build a natural gas pipeline to Pakistan, as well as electrical power transmission lines. Pakistan is suffering debilitating power shortages and Iran is the most immediate source of help. Iran is particularly eager to help Pakistan because Pakistan is the only Moslem country where a majority (57 percent) of the people (over 70 percent Sunni) have a positive view of Iran.
Iran has made it clear that one of its first purchases will be foreign commercial aircraft. Iran has 250 commercial aircraft but nearly half of them are inoperable because of age and difficulties in getting spare parts. While Iran spends a lot of money smuggling in aviation parts a lot of the stuff obtained (especially items made in Russia and China) are counterfeit and dangerous. This, plus the age of most aircraft, means Iranian airliners have one of the highest accident rates in the world. In the last decade the U.S. has been successful in shutting down nearly all Iranian access to American airliners and parts. This came after a number of embarrassing incidents in which Iran managed to obtain second-hand B-747s. In 2008, for example, Iran got three 747s via a British broker (who was later prosecuted and fined). Over the years Iran has obtained a dozen 747s but only five are still operational. Iran prefers AirBus aircraft these days because smugglers find these easier to obtain and slip into Iran. Parts for AirBus aircraft are also easier to come by on the black marker. Despite all these efforts many of these airliners are still sidelined for years at a time for lack of key spare parts (like engines). Iranian aviation officials admit that once sanctions are lifted Iran will go shopping for at least 400 new airliners. AirBus expects to get most of that business. After the airliner purchases are made Iran is spending a lot on upgrading its oil production facilities and China expects to get a lot of that business for services rendered (like assisting Iranian smuggling efforts).
July 17, 2015: In Yemen Iran backed Shia rebels were defeated by Saudi-backed pro-government forces. This gave the Sunni dominated government full control of the largest city, and port, in Yemen.
July 16, 2015: Despite the new treaty to halt the Iran nuclear program a recent poll in Israel found that 47 percent of Israelis still backed an attacks on Iranian nuclear development facilities. At the same time 35 percent of Israelis opposed such a move. Some 80 percent of Israelis agreed that the new treaty was bad for Israel.
July 14, 2015: After twenty months of negotiations between Iran and a UN backed coalition (Britain, China, France, Germany, Russia, United States) a treaty was agreed on. This came because of a growing willingness among many coalition members to trust Iranian pledges to abide by any treaty. Many in the West (and the Arab world) don’t trust Iran and demand a deal with strict monitoring. Iran rules this out as a violation of their sovereignty, an affront to their honor and so on. Iran appears to have won.
July 13, 2015: In Syria rebels report that in the last few days three Iranian advisors (all colonels in the Quds Force) were killed in combat. Two of them were identified by name. Inside Iran it is admitted that in the last few years over 400 Iranians have been killed fighting in Syria and nearly a hundred in Iraq. No mention of losses in Yemen although Iran recently admitted that it had Quds Force operatives there.
June 26, 2015: Iran has agreed to provide a $500 million line of credit, which Venezuela needs to buy items (like food) it must import but which must be used (according to the deal) for economic investments.