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The Collapse of Sanctions on Iran

The White House gets what it wants.

Mar 3, 2014, Vol. 19, No. 24 • By LEE SMITH
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John Kerry chastised a French business delegation for visiting Tehran, but other State Department officials saw it differently. “We hope people don’t go to Tehran,” said undersecretary of state for political affairs Wendy Sherman, the administration’s lead Iran negotiator. “That is our preference. But those who go raise hopes that the Rouhani administration’s going to have to deliver on.”

The administration’s strategy, says Dubowitz, “has nothing to do with rational economic models. Rather, it’s a psychological profile of the regime based on its assessment of Rouhani as a pragmatist who was elected to secure sanctions relief and will be further strengthened if he can deliver.”

But that’s a misreading of Rouhani’s position. The last thing he wants is more sanctions relief, says Iran specialist Ali Alfoneh. “Rouhani uses the sanctions regime, and the threat of new sanctions, as a stick in his fight with the IRGC and Khamenei. It may seem counterintuitive, but the fact is that sanctions relief and Obama’s threat to veto additional sanctions are only likely to weaken Rouhani in Iran’s political power structure.”

To be sure, Rouhani was elected to win sanctions relief for a beleaguered Iranian economy—and perhaps more importantly for the Revolutionary Guards. “The IRGC was initially a beneficiary of the international sanctions regime,” says Alfoneh, a senior fellow at FDD. Sanctions eliminated competition, especially in Iran’s energy sector, and further concentrated economic power in the IRGC’s hands. “However, as the sanctions regime continued,” Alfoneh explains, “the IRGC suffered because of the overall deterioration of the Iranian economy and shrinking oil revenues.” Contrary to the White House’s understanding, sanctions relief not only enriches the IRGC but also weakens Rouhani.

Khamenei has long seen Rouhani as a useful asset in his dealings with the West. The Iranian president often boasts of his role in duping his American and European counterparts as lead negotiator when he held the regime’s nuclear file from 2003-05. But that was after the U.S.-led coalition invaded Iraq, and Khamenei was terrified the Bush administration might move on Iran next. Rouhani was the regime’s happy face. When Khamenei saw that the Americans were tied down in Iraq, says Alfoneh, he got rid of Rouhani and moved back to hardball tactics.

The same is likely to happen here. Now that Western businessmen and politicians are pecking away at the sanctions regime, Rouhani has already served his purpose. Khamenei has a deal he’s perfectly happy with. He’s getting paid for doing nothing, and if the interim agreement is renewed after six months, as many anticipate, then it’s just more money to spend on whatever he likes—backing Bashar al-Assad in the Syrian civil war, or building the bomb. What’s peculiar is that the White House seems just as pleased with the agreement.

Lee Smith is a senior editor at The Weekly Standard.

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