Analysis

Iran Still Wants Revenge for Soleimani's Killing. But Does It Have the Cash for It?

Tehran has the weapons, the pride, and the righteous indignation, but nobody really knows if it can afford an all-out fight with the U.S.

A photo of Dr. Zvi Bar'el.
Zvi Bar'el
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Iran's Revolutionary Guards march in a military parade in front of the mausoleum of the late Ayatollah Khomeini, outside Tehran, Iran, September 21, 2012
Iran's Revolutionary Guards march in a military parade in front of the mausoleum of the late Ayatollah Khomeini, outside Tehran, Iran, September 21, 2012Credit: AP
A photo of Dr. Zvi Bar'el.
Zvi Bar'el

The scenarios for a potential U.S.-Iran war weren’t written this month with the assassination of Qassem Soleimani by the United States. They have just become more colorful and more current.

The website Small Wars Journal offers what is possibly the most thorough dissection of possible scenarios, suggesting a long list of actions Iran might take to defend itself and take revenge on American and regional targets. Among other things, the study suggests a possible naval war in the Persian Gulf involving missile fire from Iran against ships sailing the Strait of Hormuz, and possibly also “suicide boats” that would sail up to ships and blow themselves up.

READ MORE: Can America win an unconventional war against Iran? ■ A leaked letter revealed Trump's plan to leave the Middle East

Other horrifying outcomes could see Iran trying to hit strategic targets in neighboring countries, such as Saudi Arabia, Bahrain, Israel and Azerbaijan. The Iranians could also use their ballistic capability, as proven this week, and perhaps even ignite a ground war in territories where American forces are present, from Afghanistan to Iraq.

The report is structured like a military document in that it divides the options among the possible, the preferable and the most reasonable. However, it does not satisfactorily answer the million dollar question: Why hasn’t Iran used these means up to now? And a follow-up question – Could there be a diplomatic alternative?

U.S. bases in Iraq.

Reams of paper have been consumed writing about the strategic factors constraining conflict between Iran and the United States, explaining the Iranian interest in going up to, but not crossing, the line beyond which Iran could be destroyed. Any such conflict would not only test Iran’s military capabilities and civil defense infrastructure against the massive attacks that would surely come; mainly, it would force Iran to carefully look at its financial situation, whether it can afford to finance a quick war, let alone a long one.

Brian Hook, the U.S. special representative for Iran, reported in May that American sanctions had forced Iran to slash its military spending by 28 percent, and that's on top of the 10 percent that it had shaved off the budget the year before. The Stockholm International Peace Research Institute, which is considered the most credible monitor of military spending in the world, estimates that Iran’s military expenditure was $13 billion in 2018, down 9.5 percent from 2017.

In over a decade, Iran is reported to have spent more than $140 billion on its military, but the figures may be misleading. Spending on the standing army and the Defense Ministry did go down. But prior to the imposition of new sanctions after the U.S. withdrawal from the Iranian nuclear agreement, military procurement just grew. More importantly, the Revolutionary Guard Corps’ share of the official budget was more than triple the army's budget in 2017, and more than double in 2018.

The Stockholm institute's information doesn’t detail exactly how much of the Revolutionary Guards' budget went to the Quds force, which Soleimani headed. Beyond ordinary spending, the budget was used to maintain Iranian forces in Syria, Iraq and Yemen. It provides Hezbollah a whopping $700 million a year; and, in addition, the Revolutionary Guards invest in developing infrastructure, manufacturing and services, giving it effective control over more than half of the Iranian economy.

A Hezbollah fighter holding an Iranian-made anti-aircraft missile on the border with Israel, April 20, 2017
A Hezbollah fighter holding an Iranian-made anti-aircraft missile on the border with Israel, April 20, 2017Credit: Hussein Malla/AP

Iranian President Hassan Rohani’s efforts to restrain this uncontrolled flow of money to the IRGC haven't worked. Soleimani’s standing with Supreme Leader Ayatollah Ali Khamenei enabled him to dictate demands on behalf of his organization, almost without condition, to the point of sometimes irritating the commander of the IRGC, who theoretically controls the Quds force.

Beyond public funding, the IRGC also gets a constant injection of other income, the size of which is impossible to estimate. It controls many of the oil terminals in the Persian Gulf. Its people run the Khodro car manufacturing plant, and the international airport, the income from which is split between the state and the IRGC.

It is also unclear how much there is in Khameini’s kitty, run through his son Mojtaba. The United States recently estimated that the supreme leader’s private purse has around $100 billion sitting in it, although how reliable that assessment might be is anybody’s guess. But data published over the years indicate that the Iranian parallel economy in which charitable organizations function has amassed hundreds of billions of dollars. Where that money might be held, or how it is used, is not known.

Iran's Supreme Leader Ayatollah Ali Khameneiduring a gathering of the judiciary in the Islamic republic's capital Tehran, June 26, 2019.Credit: AFP

Could this pile of obscure cash provide enough of a cushion to enable Iran to pursue war, or to sustain the damage that a war would inflict? In fashioning the reaction to Soleimani’s assassination, the Iranian leaders will have to consider not only the country’s military prowess, but its budgetary constraints.

And there is another consideration that can’t be measured in terms of money or military might: and that's pride. Military moves motivated by a sense of bruised national honor can often end in catastrophic wars, and in humiliating defeat.

The Iranian leadership does not need to whip up public support for a reaction that could lead to escalation. But the regime cannot ignore the feelings of protest and rage that has brought thousands into the streets. It also cannot ignore the frustration that led to the deaths of over 1,500 demonstrators. An extravagant war could provide Iran’s angry masses with a whole new cause.

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