The Jerusalem festival that took place Thursday in the United Nations General Assembly once again left Israel without a recognized capital city. Threats by U.S. President Donald Trump and his UN ambassador, Nikki Haley, not only did not help, they placed the American administration in a narrow trench with room for only two fighters: Israel and the United States.
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This was a worldwide vote of no confidence in the U.S. president, from which Israel will suffer the next time it seeks to draft the international community to some joint effort against Iran or any other enemy.
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But at least the struggle at the United Nations made some forget the target date of December 12, by which Congress was to have presented a bill calling for new sanctions on Iran. January 15 is the next date by which the president must decide whether to renew the sanctions on Iran (which were lifted as part of the nuclear deal) and thus breach the agreement, or renew the waver required to continue to apply it. Congress seems in no hurry to catch the hot potato that the president threw its way in October, when he refused to confirm Iran’s compliance with the nuclear deal. If Congress had wanted to support Israel on a matter so important to Israel’s security, as Netanyahu wants to persuade people, that body would have had enough time to formulate appropriate legislation by now. But it seems that not only has Trump’s charm dissipated on Capitol Hill, so has Netanyahu’s.
Hostility between the European Union, Russia and China and the United States regarding the sanctions and fear over a major breach in the nuclear agreement also impacted the vote on Jerusalem’s status, generating negative momentum in which any new American proposal on Iran could encounter international opposition just by the fact that it was Trump who proposed it, and that’s the danger to Israel. From Iran’s perspective (and that of the Arab countries), there could be no happier outcome, despite the vote’s declarative and non-binding nature. Iran’s foreign policy had relied for decades on the polarization between Europe, Russia and the United States, until the UN Security Council united them when it decided on a series of draconian sanctions on Iran between 2006 and 2012.
Over all those years Iran and the International Atomic Energy Agency held fruitless talks, and Iran adopted its “resistance economy” to survive the sanctions. Only after Hassan Rohani was elected did Iran’s supreme leader Ali Khamenei approve negotiations with the five permanent members of the Security Council plus Germany toward an agreement that would extricate Iran from the crisis. Although Khamenei framed the agreement as a victory of the regime and a historic achievement of the Islamic revolution and fully backed it as well as President Rohani, it was and still is widely criticized in Iran by conservative and radical elements. The agreement has also disappointed reformists, who say it has produced so far no real change in the economy or in the state of human rights in Iran.
But the macro figures as calculated by the World Bank actually show a significant improvement in the Iranian economy. Inflation is down to less than 9 percent (from 35 percent in 2013). Economic growth stands at about 9 percent for the first half of 2017. Economic reforms have saved billions of dollars in subsidies and government income has risen precipitously due to international trade. Iran’s trade balance is more than 30 billion dollars in the black. This prosperity is due to several developments. Iran made agreements on investments with South Korea to the tune of some 8 billion euros; the Italian government train company is ready to invest 1.8 billion euros; China signed a memorandum to build infrastructure at a cost of more than $25 billion; and trade with the European Union has doubled over the past year to $10 billion. All of this builds a protective wall against renewed sanctions, at least for countries that are not the United States.
Iran has also chalked up foreign policy successes. These include the Syrian regime’s rebound and Iran’s participation in all the diplomatic moves surrounding resolution of the civil war in Syria; its economic and political influence in Iraq; Saudi Arabia’s failure to win the war in Yemen and its presence in Lebanon. All have made Iran a regional power that can decide strategic moves even in countries where it is not involved militarily. It ascribes to itself success in rooting out the Islamic State from Iraq thanks to the 44 pro-Iranian militias it supports in the area out of a total of 66 militias, while the United States has only granted Iraq $5.3 billion in aid.
Iran has ties with Turkey and Qatar, and even with the Emirates, which are partners with Saudi Arabia in the effort to limit Iran’s regional influence. The chief of staff of the Pakistani army, who visited Iran recently, declared that his country would be expanding ties with Iran. Tehran wants to establish an Iranian-Pakistani-Chinese axis that India also might join. These ties with central Asian countries will provide Iran with an economic and military hinterland in the unlikely event that Trump manages to impose sanctions.
But Tehran is still having trouble persuading its people that a better economic future awaits it thanks to the agreement. Unemployment is holding fast at 12 percent, new industry is slow to be established, the cost of living is high and grumbling over subsidy cuts threatens Rohani’s regime. A study by the American Carnegie Institute reveals failure in administration of the welfare system and poor utilization of skilled labor. Natural increase has fallen from 4 percent to 1 percent and more than 150,000 Iranians, mostly academics, are leaving the country every year. Within two decades, one out of every five Iranians will be of retirement age, an eventuality for which the Iranian treasury is unprepared.
But these demographic changes could actually ensure that Iran will stick to the agreement. Thus, if the practical part of the agreement runs out in less than a decade, and oversight remains in place at least until 2030, Iran will probably not want to risk an agreement that now makes possible long-term economic planning. Sanctions can always be threatened, but they will probably not be needed in light of domestic developments in Iran.