How the Nuclear Deal Can Benefit Both Iran and Israel

Iran’s anticipated integration into the global system will present Tehran with a different kind of economic pressure, which can work to the world’s advantage.

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German Minister Frank-Walter Steinmeier, Federica Mogherini, Mohammad Javad Zarif, Iranian ambassador to IAEA Ali Akbar Salehi and Russian Foreign Minister Sergey Lavrov (L-R) Vienna, 14 July, 2015.Credit: Reuters

Israelis overwhelmingly believe the Iran deal endangers them, but speak less about the world powers’ arrangements for Iranian nuclear facilities and more about Iran reaping an economic windfall – over $100 billion to increase regional mischief, according to Prime Minister Benjamin Netanyahu and his American-Jewish allies.

Even now, after the Senate failed to block the deal, AIPAC still insists that sanctions should have been increased along with military intimidation; that ambient economic pressures, causing suffering in the street and bazaar, would have inevitably forced the regime to capitulate. Implicitly, the deal’s opponents have depicted Iran’s economy as something like a drug cartel under a criminal kingpin that’s currently boxed-in by the cops – and as soon as the heat is off and profits roll in, the neighborhood will be doomed. (Netanyahu even suggested, colorfully, that Iranian officials could foil inspectors who ask to examine suspected sites the same way that drug dealers, if tipped off, could “flush a lot of meth down the toilet.”)

Prime Minister Benjamin Netanyahu illustrates his concerns over Iran's nuclear ambitions during a UNGA address, Sept. 27, 2012.Credit: AP

President Barack Obama has not said much to counter this image, except to insist that the Iranian government has tens of billions in infrastructural investments to make. In rallying Democratic legislators to support him, he has insisted that the deal’s safeguards will work. In fact, though, the president’s most important motive – and the reason he considers this a signature diplomatic victory – is something he can’t really talk about publicly: namely, the transformative power of Iran’s anticipated integration into the global system.

Iran is a country with its own politics, including an election in February, and reformers like President Hassan Rohani are counting on commercial advances to put the wind at their back. In time, Iran’s emergence from economic isolation will almost certainly undermine the regime’s hard-liners and theocratic radicals, not strengthen them – and not because of what is unique to Iran but what is universal in the global economy.

Obama’s Iranian interlocutors, not only Rohani but the U.S.-educated Foreign Minister Mohammad Javad Zarif and leaders of a burgeoning Iranian civil society such as political science professor Sadegh Zibakalam, have been daringly frank about the deal working to their advantage. Zarif wrote in a New York Times column last April that his government’s desire to reduce regional tensions is “not due to habit or preference,” but because “globalization has rendered all alternatives obsolete.” The assets of big global players used to be 20 percent knowledge and 80 percent stuff. That ratio is now reversed. As MK Erel Margalit (Zionist Union) put it recently, a commercially successful country must be a hub, not a fort.

"Mash Donald's" fast food restaurant, a knock-off version of McDonald's in Iran.Credit: AP

Rohani and Zarif are struggling with a country of some 80 million people, with a large middle class and many highly educated young people who never lived under the Shah, but do live on less than a third of the OECD average salary. Sanctions, and the falling price of oil, are only part of the story: Industrial production has been shrinking many times faster than the economy as a whole over the past decade, including oil refining. What is thought of as “skilled labor” is urgently lacking, because skills in a global knowledge economy presume integration into the customer and supplier networks of global companies, where the most important technical knowledge actually resides.

An estimated 150,000 Iranians with college educations leave the country every year. Nor, from the point of view of investors, is Iran simply a place to buy oil. It is a huge market. Even something as simple as a McDonald’s restaurant would require a vertically integrated system of beef and potato producers, working to new standards; a fleet of refrigerated trucks kept on the road without stoppages; and a whole new generation of managers who know their way around a profit-and-loss statement. Imagine Iranian companies joining with foreign companies to make pharmaceuticals or refrigerators. Joining means learning, and learning means building relationships and mutual dependencies.

Iran's Quds Force, Qassem Soleimani, right, greets Supreme Leader Ayatollah Ali Khamenei. March 27, 2015.Credit: AP

Iran’s Revolutionary Guard profits from many enterprises, from construction to car manufacturing, mining to clothing – even online shopping – in much the same way China’s Red Army did in the late 1970s, a decade after the Cultural Revolution. Hard-liners in the regime, such as Qassem Soleimani, who commands the Quds force, may gain new resources to support Syria’s President Bashar Assad, Hezbollah, and support the Iraqi fight against Islamic State (and related Shi’ite insurgencies). But as the former head of the U.S. State Department’s terrorism desk, Amb. Daniel Benjamin, argues in Foreign Policy, the regime is not likely to support terror in the way ISIS does. And how does that regional meddling shape Iran over the next generation as compared with direct investments by thousands of regional and global companies – bringing to Iranian businesses cosmopolitan technological and management innovations?

Netanyahu is eager to quote Iranian supreme religious leader Ayatollah Ali Khamenei, who said recently that “God willing, there will be no such thing as a Zionist regime in 25 years.” But it is the cancer-ridden Khamenei who will be gone in 25 years. What Netanyahu did not tell us is that Khamenei’s own second thoughts about the deal were driven precisely by his plausible fear of losing a culture war. “In their understanding of the deal, of which its fate is not clear since it is not clear if will be approved here or there,” Khamenei said of the United States to an Iranian media conference last month, “their intention was to find a way to penetrate into the country.”

If Netanyahu is right that economic pressures matter, imagine tens of thousands of Iranian entrepreneurs, agents and professionals, increasingly engaged with foreign companies and investors, driven by technological learning imported from abroad. In 10 to 15 years, they will almost certainly create an economic dependency on commercial integration, which will be even harder for the regime to disengage the country from than in past years – and for what? To produce a nuclear weapon aimed at deterring attack by a “West” that has flooded the country with managers, scholars and tourists?

Obama and Secretary of State John Kerry were right to assume how, tactically, the deal would have to be defended as an exercise in nonproliferation and judged on those grounds. The downside of this narrow defense is that it keeps all eyes – Israeli eyes, the eyes of the world’s press – on the most immediate horizon, not on generational shifts. It makes the deal’s implementation hostage to claims – say, Israeli intelligence services – that the Iranian state is in violation. It allows us to ignore how Iranian society is in transition. Their inspired diplomacy is about the long-term. And if Obama can’t speak about it, we must.

The writer teaches political economy at Dartmouth College and business planning at Hebrew University. He is author of “The Tragedy of Zionism,” “A New Israel” and “The Hebrew Republic,” and writes regularly for The New Yorker online, Harper’s Magazine and The Nation.

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