The Joint Comprehensive Plan of Action, or JCPOA, signed this month by the six world powers with Iran lifts a UN arms embargo by 2020, sanctions against Iran’s ballistic missile program by 2023, most nuclear restrictions by 2025, and a cap on low-enriched uranium stockpile by 2030. Most sanctions will be lifted immediately, with some residual measures left until 2023. The Obama administration often suggests that the deal may transform the Iranian regime from a revolutionary theocracy to a more moderate government that adheres to international norms. If that is the aim, why did the Obama administration agree to lift U.S. sanctions against the very hardliners the deal is supposed to marginalize?
A case in point is the Headquarters for the Execution of Imam Khomeini’s Order – also known as EIKO or Setad. In June 2013 the U.S. Treasury designated EIKO – which functions as the personal business empire of Iran’s supreme leader Ali Khamenei – and 37 of its subsidiaries, noting that its purpose is “to generate and control massive, off-the-books investments, shielded from the view of the Iranian people and international regulators.”
If, or when, the nuclear deal is implemented, all sanctions against EIKO will be lifted. It will be the supreme leader’s inner circle, and not the moderates, who will reap the dividends.
Khamenei, of course, has final say on all important decisions in Iran. A revolutionary Islamist, he openly declares his intention to meddle in regional countries’ affairs through Iran’s active support for terror organizations and Islamic revolutionary movements. He is the ideological gatekeeper of Iran’s Islamic Revolution, its enduring anti-Americanism and its burning hatred for Israel.
But Khamenei’s power is not only rooted in his constitutionally endorsed authority as the leader of a clerical-authoritarian regime, or his tight control over the military. Ultimately, Khamenei relies on his vast financial empire to exert influence and pressure, both inside the country and abroad. A 2013 Reuters investigation put its real-estate portfolio at about $52 billion, its holdings in publicly traded companies at $3.4 billion, and its overall worth at $95 billion.
Khamenei has used this exclusively controlled financial-industrial conglomerate to pursue Tehran’s adventurism abroad and repression at home. In 2012 the United States even sought, unsuccessfully, to extradite a manager of this vast global holding for arms procurement. Delisting these entities guarantees such policies will continue – only with better funding.
The Obama administration has insisted that the agreement, and the U.S. sanctions lifted, only apply to the nuclear file. Why then is it lifting sanctions on EIKO? The U.S. should keep the supreme leader and his business empire under sanctions, making it clear that anyone doing business with EIKO will be the target of U.S. secondary sanctions. The U.S. should also argue for an exclusion clause against EIKO in all contracts that Western companies will now sign with Iran after sanctions are lifted. A necessary condition for any political transformation in Iran is a weakened Khamenei, not a stronger one. A richer supreme leader, after all, will only redouble Iran’s harmful behavior at home and abroad. By heaping financial rewards on Khamenei’s office, the JCPOA has diminished the prospect of genuinely moderating Iran’s regime, and increased the chances of regional war in the future.
Otherwise, Obama will have given the ayatollah the ability to consolidate his grip over Iran now, and to build a bomb later.
Emanuele Ottolenghi is a senior fellow at the Foundation for Defense of Democracies, where Saeed Ghasseminejad is an associate fellow.