One of the new talking points for defenders of the Obama White House’s Iran deal is that lifting sanctions will hurt the regime’s hardliners, in particular the Revolutionary Guard. It may be true, the argument goes, that some of the $150 billion “signing bonus” in immediate sanctions relief will fund the clerical regime’s military adventures around the Middle East and its terrorist activities elsewhere around the world, but ignore that big cash windfall. The real story, they argue, is that since the IRGC benefited more than anyone else in Iran, the end of sanctions will hurt them more than anyone else.
Unfortunately, this is not true. It sounds good, but it’s just a flaw in logical reasoning. Yes, it may be the case that the IRGC benefited from the sanctions regime. However, it is not necessarily true that the lifting of sanctions will hurt the IRGC. In fact, the absence of the sanctions regime will further strengthen the IRGC.
Insofar as the sanctions regime strengthened the IRGC’s hold on the Iranian economy, it merely underscores the privileged place of the IRGC. Sanctions remind us of basic economic facts—namely, that nations, like individuals, prioritize their needs, like guns and butter, for instance. Nothing focuses the mind like economic hardship, since it compels us to make stark decisions regarding the allocation of vital resources. Our choices reveal our priorities.
The reason that the IRGC got stronger under sanctions is because Iranian decision-makers cared less about the health and survival of other institutions than this one. The growing economic power of the IRGC is key evidence that this is the institution that the regime believes it can least allow to suffer. After all, the IRGC is not only in charge of the nuclear file, it is also the organization that defends the clerical regime against potential popular unrest, like the 2009 Green Revolution that may have toppled Ali Khamenei had the IRGC and its Basij auxiliaries not put it down violently.
Those same instruments—i.e., guns and proximity to state power—are also what put the IRGC in position to take advantage of a bad economy. Who was capable of challenging what amounts to an organized crime racket that, thanks to the regime’s support, also enjoys the legitimate monopoly on violence? It is doubtful the bazaaris and other businessmen were tempted to risk conflict with the IRGC since it would have meant almost certain imprisonment or death, and at best an open war that the IRGC would invariably win.
Now that the IRGC has so much control of the economy, it is hard to see what will change the equation. Even if say, German, Italian and Japanese investors would prefer a more competitive Iranian market, there is little they can do about it.
It is possible that the relative economic strength of the IRGC could be attenuated if other unexploited or yet to be created sectors of the Iranian economy began to blossom and the economy expanded. However, Iranian society has none of the basic features that would drive a vital and dynamic economy like Israel’s or America’s. The Iranian educational system is famous for graduating clerics, not IT innovators. Where Silicon Valley and Tel Aviv produce software and apps, Qom produces fatwas. Talented Iranian students tend to go abroad for their advanced degrees. If they return home, it’s to an economy that has little room for what they learned—unless it’s to serve the regime. A country like Iran that jails its dissidents is incapable of nurturing a culture of entrepreneurship.
Obama may believe that Iran has the makings of a very impressive regional power, but the reality is that Iran’s economy is one of the least dynamic in the world. It produces very little the world wants, except oil, and of course weapons, which it can now sell on the open market with the U.N. arms embargo due to be lifted in five years’ time, or less, with the IRGC chiefly enjoying the income.
The belief that lifting sanctions will hurt the IRGC also misrepresents the purpose of sanctions. Remember that the goal of sanctions was not simply to choke the Iranian economy and force Tehran to make choices. Sanctions also denied the clerical regime access to the Western and Asian industrial base without which the Iranians cannot build a nuclear program.