The U.S. president’s decision to quit the Joint Comprehensive Plan of Action (JCPOA) on May 8th and to resume sanctions against the Iranian Regime, was just the beginning of a dark phase for Iran’s already poor economy.
On May14th, the president of the United States released a statement on global oil resources and gave the green light for more sanctions against Iran.
His statement stemmed from the responsibility that the National Defense Authorization Act of 2012 had placed on his shoulders. According to which, the buyers of Iran’s oil would be punished by the United States unless they agree to reduce their purchases by 18 to 20 percent every 6 months. A decision that saw the resistance of the European Union, Canada, Russia, and China. Their disagreement was due to two reasons: they would no longer benefit from their trades with Iran, and from a political standpoint, the sanctions could also cause a potential disturbance in the Middle East.
Despite this resistance however, the sanctions did end up forcing the Iranian regime’s economy into a dangerous stage. This danger mainly pertains to Iran’s own fragile economy than to the sanctions themselves.
According to some of the regime-dependent analysts, such as Masoud Nili (i.e., the former economic advisor of Hassan Rouhani), Iran’s economy is faced with 6 “super challenges”:
2. severe water shortage and consequent lack of drinking water.
3. irreparable damage to country’s environment.
4. bankruptcy of most banks.
5. a dead-end in retirement accounts.
6. and government’s inability to support the country’s budget.
One more factor must be added to this list, and that is Iran’s financial support of warmongering and terrorism in the Middle East. There is no need to come up with theoretical explanations in this regard, as the regime’s own actions are evident of the fact that the last remaining bits of its sovereignty in Tehran is mostly intertwined with its support of terror and war in the Middle East; which weighs quite heavily on Iran’s economy.
Most of Iran’s financial resources are spent towards the IRGC war activities in Syria, provision of weapon, backing of Houthi’s insurgency in Yemen, and the support of dozens of other semi-military groups across Middle Eastern countries.
The Iranian regime deliberately avoids publishing its expenses on these groups.
Even the estimates provided by the western resources, such as the Congressional Research Service report from 2015, are not accurate reflections of the actual costs involved in this area. According to them, Iran’s regime has spent 3.6 billion dollars on the aforementioned groups including the Assad Regime, $300 million of which reportedly belongs to the semi-military groups whilst they continue to take part in various kinds of terrorist activities in the region.
For a more realistic view, we’ve broken down the costs in three parts, as below:
Regarding the money spent on Syria, various reports have been published to date. According to the spokesman for the Office of Staffan de Mistura (i.e., the United Nations’ Special emissary on Syrian affairs), Iran spends approximately 6 billion dollars per year on Syria.
The International Monetary Fund estimates that between 2011 and 2015, Iran has spent a whopping 5.87 billion dollars on Syria’s Line of Credit; with an emphasis on this amount being its “only official form of financial help” over the past years.
According to Reuters’ news from December 2014, Iran gave more than 4.5 billion dollars’ Line of Credit to Syria’s government in June 2014, with most of it being in the form of oil purchase.
Several other reports have been released about Iran’s support of Assad’s government; such as that of the French newspaper “Le Figaro” (September 4, 2014) which estimated a 4-billion-dollar Line of Credit from Tehran to Syria. The well-known reformist newspaper of Iran, “Shargh”, also revealed (May 7, 2015) that in 2013, Russia, China and Iran, “gave Syria around 500 million dollars per month, in the form of oil purchase and other Lines of Credits, towards the reduction of issues such as the challenges that arose from their sanctions”.
It’s obvious that the weight of this $500 million dollars has only been on Iran’s economy.
Overall, all these reported figures are very close to that of the United Nations, which is 5 million dollars per annum.
Whether these numbers are accurate or not, we must not forget that most of the annual budget of Assad’s Regime is supplied by the Iranian Regime.
A big part of the Iranian Regime’s support goes towards the war-related activities of its Revolutionary Guard Corps.
On October 11, 2017, the National Council of Resistance of Iran announced: “there are currently more than 100 thousand people in the mercenary paramilitaries of Syria. Majority of whom are from Afghanistan, Iraq, Lebanon, and Pakistan; with only one third from Syria itself”.
Given such high number, one can imagine the considerable amount of money spent on their income, moving expenses (for e.g., the replacing forces who are sent to Syria from the airports of Southern Iran), weapons and munitions, not to mention Iran’s defense centers in Syria. In total, Iran spends around 1 to 1.5 billion dollars per month, on Syria alone.
The intensity and spread of the current war has significantly contributed to this country’s expenses.
Reuters reports (March 21, 2017), that on top of financial support, Iran sends a lot of advanced weapons to Houthis movement in Yemen, to fight against this country; such as unmanned aerial vehicles, long-range missiles, Kornet anti-tank missiles, the ballistic missile unit of Ansar Allah (affiliated with IRGC) [which can deliver weapons to targets with no pilot on], and so forth. On October 27, 2016, the head of the United States Naval Forces Central Command also stated: “within the past 19 months, 4 ships which were carrying weapons from Iran to Yemen, have been seized”. And of course, Iran’s ongoing supply of money and weapon to Yemen, is only continuing to take away a huge chunk of its own income and consequently put more pressure on its own economy.
Paramilitary forces consist of different types, such as Hezbollah in Lebanon, several groups in Iraq (including Badr, Asa’ib Ahl Al-Haq, and Kata’ib Hezbollah), February 14 Coalition and Tayyar al-amal al-eslami in Bahrain, Islamic Jihad Movement in Palestine, Al-Saberin Movement in Egypt, and several others in Pakistan and Afghanistan.
Around a decade ago, the National Council of Resistance of Iran revealed that the monthly incomes of Iraqi paramilitary forces, which are affiliated with IRGC and made up of approximately 31690 people, come from Iran, covered under the labels of “technical and developmental” causes and “charities”.
The former head of “Khatam al-anbiya” (which also belongs to IRGC), General Rostam Qasemi, made a statement in 2014: “to this day, Iran has provided the Iraqi government with 5 billion-dollar worth of technical services”.
According to the current leader of Lebanon’s Hezbollah (June 24, 2016 via Hezbollah’s Al-Manar Media Centre), whose name is Hassan Nasrallah, this party receives all its money and weapons from Iran. In a public speech from 2012 (broadcasted on February 7, 2012 via Iran’s Arabic news channel Al-Alam) he reiterated that “the Islamic republic of Iran is the reason why we are self-sufficient today. Whether their support is halal or haram, it is helping us so we need no one else’s help but theirs”.
This was a few days after Ali Khamenei’s statement (Iran’s news, February 3, 2012): “It is our religious duty to support the Islamic revolution by helping Shia movements such as those of Hamas and Hezbollah”
On October 8, 2012, the French newspaper “Le Figaro” also released a quote from Lebanese resources, which pointed out to the fact that Iran has spent a whopping 30 billion dollars on Hezbollah over the past 30 years.
It’s estimated that every month, between 2 to 2.5 billion dollars of Iran’s budget is spent on IRGC’s war and terror in the Middle East.
With the return of sanctions, it only makes sense for the Iranian Regime’s mullahs to halt their warmongering activities across the Middle East and put their focus back on their own country’s economy. Because otherwise, they’d have to continue facing intense protests such as those witnessed earlier this year in January. However, they fear that an end to war will bring about an end to their strength too. So, they’re left stuck between two dangerous points: their inability to continue with their war in the Middle East or dealing with even more protests in Iran.