Opinion |

Iran, Wannabe Regional Hegemon on the Cheap

Its economy is too small and its technology not advanced enough to support its leaders' ambitions. If Tehran didn’t realize it before, now it knows

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Launch of an Iranian-made drone, 2014Credit: AFP

A funny thing happened on the way to the war between the United States and Iran: Iran realized it couldn’t fight it.

This wasn’t by any means obvious to outsiders, and perhaps not even to the leadership in Tehran. Until a week ago, Iran had been fighting a quasi-war with attacks on tankers and Saudi oil installations with what seemed to be increasing confidence. Analysts were warning that Iran's network of influence in the Mid-East is growing  and “Iran Is Winning the Battle for the Middle East’s Future.” 

What Iran learned in the past week as it found itself face to face with the U.S. is the hard lesson of geopolitics: You can't be a regional power, much less a global power, if you don't have the economy and technology to back it up. Militias, attack speed boats and even armed drones get you only so far.

To be a real power – subsidizing allies and proxies, diverting resources to arms production and developing the high-tech weapons of modern warfare – is something a second-string economy like Iran’s can't sustain for long.

It is true that the "resistance economy" is providing a lot of jobs, because Iran can no longer import things. But it is also creating an inefficient economy and is busting the government's budget in the process.

Reign by remote control

Trump’s sanctions have exacted a terrible cost from the Iranian economy. The International Monetary Fund estimates gross domestic product will shrink 9.5% this year alone and that was before the White House announced on Wednesday it was adding to Iran’s suffering by imposing even more sanctions.

But even if Trump hadn’t acted, Tehran would have struggled to sustain its expansionist drive for much longer and certainly would have had nothing close to the financial and military sources needed to engage in anything more than an occasional pinprick attack on U.S. interests.  

Sanctions or no sanctions, Iran is a second-string economy. The IMF estimates its GDP was just $496 billion in 2019, putting its 28th in the world. Israel and Switzerland, each with a tenth as many people, are No. 33 and No. 20, respectively. The countries with real great power status are the U.S. ($22.2 trillion) and China ($15.5 trillion).

No country with Iran’s economic metrics stands a chance of keeping an empire afloat or engaging in a real war; even Russia (No. 12 at $1.67 trillion) struggles to throw its weight around.

When it comes to technology, Iran is even lower on the world rankings – it's No. 61 on the Global Innovation Index for 2019, just below Moldava and North Macedonia. Iran often boasts of new high-tech weaponry in the form of UAVs, missiles and even a fighter jet, but when these arms have been put to the test in the battlefields in Syria and Yemen they have shown themselves to be less than world class.

Without the economic resources, Iran imagined it could turn itself into a regional hegemon on the cheap, fighting wars and supporting allies in Syria, Iraq, Lebanon and Yemen by remote control with militias. But even this has strained Tehran economically. By one estimate, it is believed to have spent $16 billion just propping up the Bashar Assad regime in Syria in the years 2012-18. Subsidizing Hezbollah costs Tehran $700 million annually. Arming and training militias in Iraq and helping the Houthis in Yemen has added to the bill.

Overall defense spending has been between $11 billion and $13 billion annually in recent years, although that probably understates the amount since the Iranian Revolutionary Guards Council probably has other revenues from its business empire and from smuggling. In great power terms, it isn’t a lot of money (Israel spent $16 billion), but that was all Iran could afford.

And those are the direct military costs. Iran’s allies in Iraq and Lebanon are all in bad shape economically, so even before Gen. Qasem Soleimani departed this world, the empire was coming under pressure. There is nothing Tehran could do to help except encourage local leaders to mow down protestors (Iraq) or hold tight (Lebanon). It has neither the aid money nor the technical ability to solve its allies’ economic woes. 

Iran’s bitter experience would seem to be a lesson for all those with great power pretentions, but megalomania apparently trumps geopolitical reality more often than it should. 

Turkish leader Recep Tayyip Erdogan seems intent on following Iranian footsteps into the regional power abyss. Employing a similar strategy of exploiting regional crises and weak governments, Turkey has expanded its military presence in Syria and is now dispatching troops to Libya in support of the embattled rump government.

Erdogan has a stronger economic foundation on which to pursue his adventures than Iran has. Turkey’s economy is the world’s 18th largest ($810 billion) and, unlike Iran, it has substantial conventional forces as well as the advantage of NATO membership. But its economy is not nearly big or strong enough to pay for a quasi-empire, certainly once comprised of economic disasters like Libya and bits of Syria. In any case, Erdogan is squandering the economic assets he has, not only on military expansionism but on wrong-headed economic policies.

Erdogan hasn’t committed Turkey to empire to the degree Iran has; he can still reverse course. If he can’t or won’t, the Turkish people have the advantage (so far) over Iranians of being able to vote out their leaders.  Hopefully, one of them will come to their senses.