On Sunday, the Iranian regime’s Foreign Minister Hossein Amir-Abdollahian made a fresh attempt to dictate U.S. conduct amidst efforts to restore the 2015 Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action. “If there is a serious will in Washington to return to the deal, there is no need for all these negotiations at all,” Amir-Abdollahian said in reference to the discussions that have been stalled in Vienna since June.
But despite Tehran’s efforts to show strength, claiming there is no haste to return to negotiations, it desperately needs sanctions relief to save its collapsing economy, to avoid mass uprisings, and feed its proxies in the Middle East that have become unprecedently unpopular. Reviewing the previous attempts by Iranian officials reveal the latter.
Amir-Abdollahian’s latest remarks come less than a month after the Raisi administration demanded the release of 10 billion dollars in frozen Iranian assets as another supposed gesture of goodwill from the U.S. On August 22, during the Japanese foreign minister’s visit to Tehran, Ebrahim Raisi asked Japan to release Iranian funds frozen in the country because of U.S. sanctions.
In January 2021, the Iranian Revolutionary Guards Naval forces seized a South Korean vessel and triggered an international fiasco in order to press Seoul to release $7 billion in funds frozen. For almost 20 months, Tehran has been pleading with the International Monetary Fund to get a $5 billion loan, allegedly counterfeiting the Covid-19 virus. On all fronts, Tehran has failed to get access to the frozen funds, and even a close ally, Baghdad, has not been quite helpful with releasing the funds and circumventing U.S. sanctions.
Some of the latest analyses indicate that Iran is capable of producing about 800,000 barrels of gasoline per day, leaving a surplus of only about 250,000 barrels after the country’s current domestic needs are met. What’s more, these needs are sure to increase sharply as autumn progresses into winter, and some Iranian experts have already taken to publicly warning about looming energy shortages. The country’s inability to keep up with demand for power generation during the summer caused lengthy blackouts, which sparked widespread protests.
Those shortages were reportedly exacerbated by the fact that government-linked entities, especially the Revolutionary Guards, had begun relying on the energy-intensive process of bitcoin mining as a means of evading U.S. sanctions and continuing to pursue their own enrichment.
That phenomenon speaks to the broader effects of corruption and self-dealing, which by some accounts have allowed the IRGC to consolidate a financial empire that accounts for well over half of Iran’s entire gross domestic product. This has also helped to assure that very little wealth returned to public infrastructure or investments aimed at improving the broader economy over the long term. And naturally, the prospect of such investment has only diminished in recent years as the GDP has shrunk. That decline has been estimated at 57 percent between 2017 and 2020, turning Iran from the world’s 26th largest economy into the 50th.
Meanwhile, government expenditures have increased by 40 percent, driven largely by the regime’s refusal to halt or downgrade its support of Shiite militant groups or its involvement in regional conflicts. In September, Iran’s Arman daily newspaper confirmed that those activities “have not decreased” and that this fact represents a complication to the regime’s goal of escaping from US-led sanctions. As long as Tehran remains unwilling to step its direct payments of 700 million dollars annually to Hezbollah or its export of increasingly scarce petroleum resources to this and other proxies, then it appears as if the regime has little other choices but to attempt to strong-arm the West into granting concessions.
Meanwhile, Iran is losing oil refining capacity due to the industry’s deterioration of infrastructure. While Iran possesses one of the largest reserves of the world’s crude oil, its share of the global refining is only 2 percent. The neglected industry has also suffered several fire breakouts in recent months. Whether due to worn-out gear or sabotage, it’s clear that the Iranian oil installations are not at their best.
At least one Iranian oil official recently estimated that if the regime does not make 50 billion dollars worth of investments in the country’s foremost industry, it will become a net importer of petroleum products within just a few years.
Iran is also losing on the market. In September, an old client of the Iranian regime, the French oil giant Total, signed several contracts worth $27bn with Iraq to develop oil fields, natural gas, and a crucial water project. Even China, an increasingly close friend to Tehran, has been taking ever-larger quantities of petroleum products from Iran’s chief regional rival, Saudi Arabia.
With skyrocketing inflation, Iranians from all walks of life are having difficulty balancing income with the ever-rising prices. This has caused another major problem for the state’s income as nationwide strikes in the oil and petrochemical industry have time and again almost crippled the production of oil and its derivations. Even though the regime was forced to appease some of the thousands of striking forces, many remain off the job while the rest are destined to sooner or later join them again.
Another looming crisis for the regime is the global shift from crude oil to green technologies, which is doomed to reduce fossil fuel consumption. Bijan Zanganeh, the former Oil Minister, said in May: “My advice to the upcoming government is to prioritize oil output increase to a total 6.5 million b/d. It wouldn’t take long that conventions will come to restrict oil production and will not allow countries and governments to produce oil. Therefore, until we have time, we should raise oil production capacity because international restrictions will become problematic for us.”
If the regime had the slightest interest in saving the economy to improve people’s lives, it could and should let go of nuclear and missile ambitions as well as its regional adventures, the very reasons why it’s been sanctioned for. But the ruling clerics in Iran strongly believe that waiving those “power elements” will render the regime vulnerable to change from all sides.
Though sanctions are certainly weakening the regime. Raisi was inaugurated in August, and since then he has repeatedly offered vague assurances that the Vienna talks would restart “soon,” though his administration has also doubled down on hardline talking points and recently insisted upon separate talks in Brussels with the European Union, trying to signal that Iran is calling the shots, that the new negotiation team will have a different viewpoint and also widen the gap between the European countries and the United States.
Understanding that in the usual ‘give and take approach’, the regime must give away strategic “leverage”, the regime’s Supreme Leader Khamenei has truly appointed a new team, hoping that it might be able to achieve what the previous one didn’t; he wants to have sanctions relief without offering any serious concessions in return.
In order to pretend Iran is not suffering under sanctions, the regime and its mouthpieces in the West keep bragging about the regime’s capacities to circumvent sanctions and sell oil. Ebrahim Raisi claimed in August that Iran is not concerned about finding customers for its oil, and it has different options to continue the export of crude and oil derivatives. Javad Owji, the new oil minister, argued that Iran would help solve the current global energy crisis if the sanctions were removed.
But what will actually happen if those sanctions are truly lifted, and the funds are released? Many critics of the JCPOA characterized it as being highly favorable to Tehran and providing much-needed relief from economic sanctions without placing many restrictions on the ways in which Iranian entities would be able to spend the resulting windfall.
As Iran’s opportunity narrows, the opportunity for its Western adversaries will expand, revealing the vulnerabilities that Iranian authorities have been trying desperately to hide while hoping to convince Europe and the U.S. that they should restore the JCPOA with no questions asked.
To their credit, Western leaders have uniformly rejected this demand so far. But even in the wake of Tehran’s latest demands, President Biden still declared that the U.S. would only quit the nuclear deal if Tehran fully reneged first. His critics are sure to point out that by halting any compliance with the JCPOA in early 2020, the regime has already done just that.
The sanctions have crippled the Iranian state’s oil and finance, highlighted the regime’s vulnerabilities, and weakened the IRGC inside and outside the country. Unlike the regime’s propaganda, sanctions have never targeted the people’s interests, and the Iranian people have made it clear while they chant: “Our enemy is right here; they lie when they say it’s America!”
A weakened regime is now facing a nation sick and tired of decades’ long oppression and discrimination. Tens of thousands who dared to say ‘no’ to the dictator have already lost their lives. If the West listens to the Iranian people instead of the regime’s officials or their mouthpieces, it might gain some courage to stand tall, ignore the regime’s extortion and sustain self-respect by abandoning the table that is set by the Iranian regime.