With the final terms of the Iran nuclear deal announced, there has been much speculation about what Iran will do with its newfound fortune. As part of the agreement, the P5+1 has agreed to unfreeze tens of billions of dollars in Iranian assets, with some estimates reaching $140 billion. In all likelihood, this will enable Iran to continue propping up the Assad regime in Syria, further entrenching its regional hegemony and perpetuating the brutal role of Iranian-backed forces in the Syrian civil war.
The Obama administration has written off Iranian regional interference as inevitable, sanctions or no sanctions. In April, U.S. Secretary of Treasury Jack Lew downplayed the expense to Iran, stating, “unfortunately, the cost of Iran’s support for terrorism and regional interventions is relatively small. Those activities have continued over the last several years, even while Iran’s domestic economy has suffered badly.” Lew insinuated that there is not much the West can do to prevent Iranian interference because Iran has managed to fund its regional operations even after the West sanctioned it and froze billions of dollars’ worth of assets.
But this is not necessarily the case. As Mike Singh of the Washington Institute notes, Iranian interference in Syria is not cheap. Compared to the trillions that the U.S. has spent on recent wars in the region, the estimated $6 billion annual tab that Iran runs up supporting the Assad regime looks like pocket change, or about 12 days’ worth of U.S. war expenses from its previous war in Iraq. But it is not reasonable to judge Iranian expenses based on the U.S. metric, as America’s GDP is about 50 times the size of Iran’s.
Though Iran has made tremendous strategic gains in Syria, there is no doubt that keeping Assad afloat puts added pressure on an already strained Iranian economy. The $6 billion necessary to do that is between 20% to 40% of Iran’s total defense budget and more than 1% of its 2014 GDP.
Meanwhile, the citizens of the Islamic Republic are feeling squeezed economically as incomes plummet and the cost of living continues to increase. Iran saw its GDP per capita fall by more than 44% between 2011 and 2014, while the price of basic necessities like milk, eggs, and chicken rose 15% or more in 2014. It is no wonder that Iranians have grown less supportive of their government’s undertaking in Syria in the face of increasing economic pressure.
Some experts believe that Iran will have no choice but to direct money freed from a nuclear deal to improving the wellbeing of its citizens at home. In his piece “Sanctions Relief Won’t Be a $100 Billion Windfall for Iran’s Terrorist Friends,” Richard Nephew explains that “it is implausible that, after the supreme leader allowed Rouhani to be elected in 2013 on a platform pledging economic recovery — in part, through promises of sanctions relief — he would support initiatives that leave the Iranian population in the cold in order to protect foreign groups and leaders like Assad.” Has Nephew been asleep for the last two years of Rouhani’s rule?
Furthermore, history has shown this idea that domestic crises promote an entirely non-interventionist approach to the region to be wishful thinking. In his book “Nasser’s Gamble,” on the Cold War-era Middle East, Jesse Ferris explains that domestic insecurity, including economic problems, bred aggressive behavior abroad. The Middle Eastern despots in Ferris' book live in glass houses and pelt each other with rocks. There's reason to believe this might be the model Iran is following. Despite its own economic deterioration since 2011, Iran’s presence in Syria has only increased.
While most of the unfrozen assets will probably be directed toward alleviating domestic economic pressure on the regime, Michael Singh, Karim Sadjadpour and others have noted that any nuclear deal with the West will likely be followed by concessions to Iran’s hardliners connected to the Iranian Revolutionary Guard Corps. This means increased repression at home and expending more resources on expanding regional political/military interference and hegemony abroad.
One of Iran's chief foreign policy interests is holding on to Syria. This is due in part because of Syria's strategic location, which allows it to function both as a conduit for Iranian weapons to Hezbollah and as a second front against Israel. Even if Iran were to put 70% of its freed assets towards promoting domestic economic development, at $6 billion a year it could continue to prop up the Assad regime for another five years and capitalize on the strategic gains that it has made in the country. In other words, unfreezing $100 billion in Iranian assets will allow Tehran to achieve its economic and strategic goals in the short term, while lifting sanctions will allow for long-term economic development that can fund its regional ambitions.
The assumption that unfreezing assets worth tens of billions of dollars would have a minimal impact on Iranian regional interference because its cost is “relatively small” ignores the fact that Tehran’s interference is costly both relative to Iran’s budget and politically at a time when the economy and support for the war is sagging. It is entirely possible that Iran could be pushed out Syria by its own domestic political forces if the fighting drags on and Iran’s economy fails to improve. If it signs the nuclear deal, however, Iran will likely avoid both international and domestic pressure to rein in its aggressive regional strategy because of the fragile nature of the deal and the economic benefits that it will usher in. Thus, in all likelihood, signing the nuclear deal will indirectly allow Iran to maintain or even enhance its control over Syria for the foreseeable future.
Ari Heistein is a research associate in the Middle East Program at the Council on Foreign Relations.
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