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In Heavy Waters: Iran’s Nuclear Program, the Risk of War and Lessons from Turkey
In Heavy Waters: Iran’s Nuclear Program, the Risk of War and Lessons from Turkey
Table of Contents
  1. Executive Summary
Report 116 / Middle East & North Africa

In Heavy Waters: Iran’s Nuclear Program, the Risk of War and Lessons from Turkey

As the standoff over Iran’s nuclear program edges closer to military confrontation, talks may be a way out but require mutual compromise and Western abandonment of the notion that a mix of threats and crippling sanctions will force Iran to back down.

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Executive Summary

The dramatic escalation in Israel’s rhetoric aimed at Iran could well be sheer bluff, a twin message to Tehran to halt its nuclear activities and to the international community to heighten its pressure to that end. Or not. As Israel sees it, the nuclear program represents a serious threat; the time when Iran’s putative efforts to build a bomb will become immune to a strike is fast approaching; and military action in the near future – perhaps as early as this year – therefore is a real possibility. While it is widely acknowledged in the West that war could have devastating consequences, and while U.S. and European efforts to restrain Israel are welcome, their current approach – ever-tightening economic sanctions designed to make Tehran bend – has almost no chance of producing an Iranian climb­down anytime soon. Far from a substitute to war, it could end up being a conduit to it. As 2012 begins, prospects of a military confrontation, although still unlikely, appear higher than ever.

The nuclear talks that appear set to resume could offer a chance to avoid that fate. For that to happen, however, a world community in desperate need of fresh thinking could do worse than learn from Turkey’s experience and test its assumptions: that Iran must be vigorously engaged at all levels; that those engaging it ought to include a larger variety of countries, including emerging powers with which it feels greater affinity; that economic pressure is at best futile, at worse counterproductive; and that Tehran ought to be presented with a realistic proposal. If it is either sanctions, whose success is hard to imagine, or military action, whose consequences are terrifying to contemplate, that is not a choice. It is an abject failure.

The picture surrounding Iran, rarely transparent, seldom has been more confusing or worrying. One day Israel issues ominous threats, hinting at imminent action; the next it announces that a decision is far off. Some of its officials speak approvingly of a military strike; others (generally retired) call it the dumbest idea on earth. At times, it appears to be speaking openly of a war it might never wage in order to better remain silent on a war it already seems to be waging – one that involves cyber-attacks, the killing of Iranian nuclear scientists and mysterious explosions. U.S. rhetoric, if anything, zigs and zags even more: the secretary of defense devotes one interview to listing all the catastrophic consequences of war and another to hinting a military confrontation cannot be ruled out. President Barack Obama, among others, appears seriously resistant to the idea of yet another Middle East war, yet keeps reminding us that all options are on the table – the surest way to signal that one particular option is.

Iranian leaders have done their share too: enriching uranium at higher levels; moving their installations deeper underground; threatening to close the straits of Hormuz and take action against Israel; and (if one is to believe Washington) organising a wild plot to assassinate the Saudi ambassador to the U.S. More recent reports of actual or planned Iranian terrorist attacks against Israeli targets in India, Georgia, Thailand and Azerbaijan are equally if not more ominous. Confusion is a form of diplomacy, and all sides no doubt are engaged in an intricate political and psychological game. But confusion spawns uncertainty, and uncertainty is dangerous, for it increases the risk of a miscalculation or misstep that could go terribly wrong.

How perilous is Iran’s nuclear program and how close the regime is to assembling a weapon are matters of opinion, and often substantially divergent opinion at that. Israelis express alarm. Others point to important technical obstacles to Iran’s assumed goal: it has had problems expanding its enrichment program; is at least months away from being able to enrich at bomb-grade level; and is probably years away from the capability to manufacture a deliverable atomic weapon.

Too, there is disagreement regarding intent. Few still believe Tehran’s motivations are purely innocent, but whereas some are convinced it is intent on building a bomb, others hold the view that it wishes to become a “threshold state” – one with breakout capacity, even if it does not plan to act on it. There also is disagreement as to what the critical redline is. Israelis speak of a “zone of immunity”, namely the point after which nothing could be done to halt Iran’s advance because its facilities would be impervious to military attack, and say that point is only months away. Again, others – Americans in particular – dispute this; the divergence reflects different military capacities (immunity to an Israeli attack is not the same as immunity to an American one) but also differences in how one defines immunity.

Israelis, not for the first time, could be exaggerating the threat and its imminence, a reflection of their intense fear of a regime that has brazenly proclaimed its unending hostility. But they almost certainly are right in one respect: that sanctions could work and nonetheless fail, inflicting harsh economic pain yet unable to produce a genuine policy change. There is no evidence that Iran’s leadership has succumbed or will succumb to economic hardship; the outlook of its Supreme Leader, Ayatollah Khamenei, rests on the core principle that yielding to pressure only invites more. Seen through the regime’s eyes, such apparent stubbornness is easy to understand. The measures taken by its foes – including attacks on its territory, physical and cyber sabotage, U.S. bolstering of the military arsenals of its Gulf enemies and, perhaps most damaging, economic warfare – can only mean one thing: that Washington and its allies are dead set on toppling it. Under such conditions, why would the regime volunteer a concession that arguably would leave it weaker in a hostile neighbourhood?

Europeans and Americans offer a retort: that only now have sanctions with real bite been adopted; that their impact will be felt within the next six to eighteen months; and that faced with an economic meltdown – and thus with its survival at stake – the Islamic Republic will have no choice but to finally engage in serious negotiations on the nuclear agenda. Perhaps.

But so much could go wrong. Confronting what it can only view as a form of economic warfare and feeling it has little to lose, Iran could lash out. Its provocative actions, in turn, could trigger retaliatory steps; the situation could well veer out of control, particularly in the absence of any meaningful channel of communication. Israel’s and the West’s clocks might not be synchronised: the West’s sanctions timetable extends beyond the point when Iran will have entered Jerusalem’s notional zone of immunity, and Israel might not have the patience to stand still.

Placing one’s eggs almost exclusively in the sanctions basket is risky business. There is a good chance they will not persuade Iran to slow its nuclear efforts, and so – in the absence of a serious diplomatic option including a more far-reaching proposal – the U.S. might well corner itself into waging a war with high costs (such as possible Iranian retaliatory moves in Iraq, Afghanistan and, through proxies, against Israel) for uncertain gains (a delay in Iran’s nuclear progress countered by the likely expulsion of International Atomic Energy Agency (IAEA) inspectors, intensified determination to acquire a bomb and accelerated efforts to do so).

Among countries uneasy with this approach, Turkey notably has stood for something different. It is highly sceptical about sanctions and rules out any military action. It believes in direct, energetic diplomatic engagement with a variety of Iranian officials. It is of the view that Tehran’s right to enrich on its soil ought to be acknowledged outright – a nod to its sense of dignity. And it is convinced that small steps that even marginally move the ball forward, even if far from the finish line, are better than nothing.

Ankara is not a central player, and its opposition to broad sanctions and support of dialogue are not dissimilar to the views of key actors such as Russia and China. But Turkey knows Iran well – an outgrowth of its long, complex relationship with a powerful neighbour. As a non-traditional power, anchored in Western institutions but part of the Muslim world, it can play to Tehran’s rejection of a two-tiered world order. This is not to say that Turkey is amenable to a nuclear-armed Iran. But it is far more sympathetic to the view that the West cannot dictate who can have a nuclear capacity and who cannot; is less alarmist when it comes to the status of Iran’s program; and believes that the prospect of a nuclear-armed Iran is both distant and unsure.

Even if a relative newcomer to the nuclear issue, Turkey also has useful experience. In 2010, together with Brazil – another rising new power – it engaged in intensive talks with Iranian officials and, much to the West’s surprise, reached a deal on the Tehran Research Reactor. Iran would deposit 1,200kg of low enriched uranium (LEU) in Turkey and, in return, would receive 120kg of 20 per cent enriched fuel for its reactor. The deal was far from perfect; al­though it mirrored almost exactly an earlier proposal from the P5+1 (the five permanent UN Security Council members plus Germany), time had passed; Iran’s LEU stockpile had grown, and it had begun to enrich at 20 per cent itself, an important though not definitive stage toward possibly enriching to weapons-grade. But it could have been an important start; had it been accepted, Iran presently would have 1,200kg less of LEU and a step would have been taken towards building trust. However, the P5+1 quickly dismissed the agreement and turned to tougher sanctions instead.

Today, with news that Iran has responded to the P5+1’s offer of talks, a new opportunity for diplomacy might have arisen. It should not be squandered. That means breaking with the pattern of the past: tough sanctions interrupted by episodic, fleeting meetings with Iran which, when they fail to produce the desired Iranian concession, are followed by ratcheted-up economic penalties. Instead, the parties would be well inspired to take a page out of Turkey’s playbook and pursue a meaningful and realistic initiative, possibly along the following lines:

  • Iran’s ratification and renewed implementation of the Nuclear Non-Proliferation Treaty (NPT) Additional Protocol to its comprehensive safeguards agreement, thereby accepting a more rigorous monitoring system; enhanced IAEA inspection rights for non-nuclear alleged weaponisation testing sites (Additional Protocol Plus); and resumed implementation of the IAEA’s modified Code 3.1, ensuring that the decision to build any new nuclear facility is immediately made public;
     
  • Iran’s decision to clear up outstanding issues regarding alleged pre-2003 nuclear weaponisation experiments referred to in IAEA reports;
     
  • recognition by the P5+1 of Iran’s right in principle to nuclear research, enrichment, production and use of nuclear energy for peaceful purposes in conformity with its NPT obligations, subject to its having settled outstanding issues with the IAEA;
     
  • agreement by the P5+1 and Iran to a revised Tehran Research Reactor deal, pursuant to which Iran would trade its current stockpile of 20 per cent uranium for fuel rods and temporarily cap its enrichment at the 5 per cent level, while the P5+1 would agree to freeze implementation of new EU and U.S. sanctions. In return for some sanctions relief, Iran could agree to limit enrichment activities to its actual fuel needs (one-year backup for the Bushehr reactor). Any excess amount could be sold on the international market at competitive prices. Broader sanctions relief would be tied to Iran’s cooperation with the IAEA regarding its presumed past weaponisation efforts, implementation of the rigorous IAEA inspections regime and other steps described here; and
     
  • in parallel to nuclear negotiations, the U.S. and Iran would enter into discussions on other issues of mutual concern and interest, such as Afghanistan and Iraq.

Of course, this would have to be accompanied by an end by all parties to the kind of hostile behaviour and provocative rhetoric, including threats to attack and involvement in bombings or assassinations, that risk derailing the entire process.

There are more than enough reasons to be sceptical about a diplomatic solution. Mutual trust is at an all-time low. Political pressures on all sides make compromise a difficult sell. The West seems intent on trying its new, harsher-than-ever sanctions regime. Israel is growing impatient. Tit for tat acts of violence appear to be escalating. And Iran might well be on an unyielding path to militarisation. One can imagine Khamenei’s advisers highlighting three instructive precedents: Saddam Hussein’s regime in Iraq, which had no nuclear weapon and the U.S. overthrew; Muammar Qadhafi’s regime in Libya, which relinquished its weapons of mass destruction and NATO attacked; and North Korea, which possesses nuclear weapons and whose regime still stands. There remains time to test whether Tehran is determined to acquire a bomb at all costs and to consider whether a military option – with all the dramatic implications it would entail – truly would be the best way to deal with it. For now, the goal ought to be to maximise chances that diplomacy can succeed and minimise odds that an alternative path will be considered.

Istanbul/Washington/Brussels, 23 February 2012

A man exchanges Iranian Rials against US Dollars at an exchange shop in the Iranian capital Tehran on 8 August 2018. AFP/Atta Kenare

The Illogic of the U.S. Sanctions Snapback on Iran

The Trump administration believes that ratcheting up economic pressure on Iran will compel the Islamic Republic to curtail its disruptive Middle East policies. History suggests otherwise. Both Washington and Tehran should step off their current escalatory path.

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What’s new? A 40-year analysis of Iran’s economic performance and regional policy reveals little to no correlation between the two, as Tehran has continued to pursue policies it deems central to its national security no matter its degree of economic wellbeing at home.

Why does it matter? The Trump administration hopes that sanctions will force Iran to curb its regional activities. But data shows that outcome is uncertain as changes in Iran’s wealth have had little impact on the direction or capabilities of its regional policy. Sanctions risk empowering harder-line officials in the Islamic Republic and prompting them to lash out, exacerbating regional tensions.

What should be done? The U.S. optimally should leverage its sanctions to de-escalate regional tensions. That requires acknowledging Iran’s legitimate security concerns as long as Iran acknowledges those of its regional rivals. However unlikely at this time, the U.S., Iran and Gulf Arab states should take steps to build a more stable regional security architecture.

I. Overview

The intuitive presumption at the heart of the Trump administration’s policy toward Iran is that, by reducing its resources, economic sanctions on Iran will diminish its disruptive activities abroad. The sanctions that the U.S. Treasury Department will re-impose on Iran on 5 November are, in the words of Secretary of State Mike Pompeo, intended to push Iran into making a choice: “either fight to keep its economy off life support at home or keep squandering precious wealth on fights abroad. It won’t have the resources to do both”.

But historical data shows little, if any, correlation between the resources at Iran’s command and its regional behaviour. Rather, the extent to which the Islamic Republic feels threatened or senses opportunity in its neighbourhood largely defines its conduct. Measured against that standard, the Trump administration’s aggressive policy is likelier to spur Iran’s regional activism than to curb it. A better alternative exists. It would require the Trump administration not to ignore Iran’s regional interests, but to acknowledge that it has legitimate security concerns, and for Iran to acknowledge that as long as it pursues policies that its neighbours and others perceive as aggressive, tensions will persist and the risk of direct military confrontation will rise. A more stable region is possible only if the U.S. moves to provide Iran with viable security assurances, in return requiring that Tehran allow its non-state allies to integrate into their countries’ security and political systems and halt proliferation of ballistic missile technology across the region. Though currently a remote aim, both sides should work with other regional actors toward an inclusive security architecture.

Video: The Fallacy of U.S. Sanctions on Iran

II. Contrasting Eras of Iranian Regional Policy

Studying how Iran has devised its regional policies over the last four decades reveals that its choices have rarely been a function of its economic performance or resource availability.

A. “Forward Defence”

Iran’s regional defence policy was defined and shaped at a time of economic scarcity. Its “forward defence” policy – an effort to exploit weak states, such as Lebanon and post-2003 Iraq, where it can expand its influence and fight through proxies without direct harm or threat to itself – originated in the 1980s.[fn]For more background on Iran’s defence doctrine, see Crisis Group Middle East Report N°184, Iran’s Priorities in a Turbulent Middle East, 13 April 2018.Hide Footnote Then, the newly established order in Tehran, which aspired to export its revolution abroad, simultaneously felt besieged by foreign and domestic enemies seeking to undermine it and isolated in the face of invasion by Saddam Hussein’s Iraq, armed to the teeth by Arab and Western states.

At the time, Iran suffered extreme economic hardship due to revolutionary turmoil, the devastating war with Iraq and falling global oil prices. Yet as shown in Graph 1, Iran’s creation of Hizbollah in Lebanon in 1982, the bombing of the U.S. Marine barracks in Beirut the following year, and a series of targeted terrorist attacks in Europe (in which Europeans saw Iran’s hand) occurred amid falling oil revenues and economic downturn.[fn]“Outlaw Regime: A Chronicle of Iran’s Destructive Activities”, Iran Action Group, U.S. State Department, September 2018.Hide Footnote A wealthy Iran may well have acted even more aggressively insofar as it would have had more resources at its disposal. But the point is that economic deprivation did not moderate the Islamic Republic’s conduct, make it more inwardly focused or lead it to rein in its regional proxies.

Graph 1: Iran's GDP growth and oil revenue (1980-1988) IMF

The ensuing decade (1988-1998) was marked by post-war reconstruction amid rising oil revenues (due in part to heightened global oil prices in the aftermath of the first Gulf War) and runaway inflation. None of this, however, appears to have produced any tangible change in Iran’s backing for Hizbollah in Lebanon or Hamas and Islamic Jihad in Palestine. Nor did the 1997 Asian financial crisis that caused oil prices to collapse and Iran’s oil revenue to fall from $16.7 billion in 1997 to $9.7 billion in 1998. In other words, the trajectory of Iranian foreign policy was essentially impervious to the fluctuations in its economic wellbeing.

B. Pragmatism and Diplomacy

Iran’s destabilising activities declined in the early 2000s when, as shown in Graph 2, both oil proceeds and gross domestic product (GDP) were on the rise. During this period Iran significantly improved its relations with its Arab neighbours, helped the U.S. in working on the post-Taliban order in Afghanistan, and briefly suspended its nuclear program in negotiations with the Europeans – though it admittedly continued to support Hizbollah and other non-state actors in the Levant.[fn]Howard Schneider, “Saudi pact with Iran is sign of growing trust”, Washington Post, 17 April 2001; James Dobbins, “Negotiating with Iran: Reflections from Personal Experience”, The Washington Quarterly (2010), pp. 149-162; Crisis Group Middle East Report N°18, Dealing with Iran’s Nuclear Program, 27 October 2003.Hide Footnote

Again, this hardly demonstrates that Tehran acts more responsibly when its economy performs better; non-economic reasons – notably the more pragmatic perspective of Iran’s reformist government at the time and concerns about a possible U.S. attack after its 2003 invasion of Iraq – can help explain Iran’s behaviour. But it underscores that realities other than the resources at its disposal determine Iran’s policy choices.

Graph 2: Iran’s GDP growth and oil revenue (1998-2003) IMF, Central Bank of Iran

Between 2003 and 2011, Iran had two key priorities. First, it worked to ensure that in the aftermath of the U.S. invasion of Iraq a central government would emerge in Baghdad that, while strong enough to keep the country together and secure its borders with Iran, was not so strong as to once again pose a threat. Second, it aimed to push U.S. forces out of its western neighbour’s territory. To achieve the former, it relied on relationships it had cultivated for decades with Iraqi leaders (particularly Shiite Islamists and Kurds); for the latter, it trained and equipped several Shiite militias that targeted U.S. forces in Iraq. This period coincided with the nuclear standoff and imposition of a panoply of unilateral, multilateral and international sanctions. But Tehran was nevertheless flush with money thanks to high oil prices. Again, this shows that its policy of backing non-state actors has remained largely consistent in good economic times as well as bad. As a senior Iranian official put it, “when you rely on a [‘forward defence’] strategy for your survival, you rely on it come hell or high water”.[fn]Crisis Group interview, Tehran, February 2018.Hide Footnote

C. Regional Escalation

As evidence that economic downturns do not necessarily curb Iranian regional activism, the most telling period is 2011-2015 (see Graph 3). A stifling web of multilateral and international sanctions inflicted maximal harm on the country’s economy, which shrank at the rate of 7.7 per cent in 2012 as oil exports declined by half, the currency fell by 200 per cent and inflation rose to almost 40 per cent. Yet this period coincided with what many consider the most significant expansion of Iran’s military intervention in the region, a product of the uprising in Syria, Tehran’s growing rivalry with Riyadh and the fight against the Islamic State.

Graph 3: Iran’s GDP growth and oil revenue (2011-2015) IMF, Central Bank of Iran

According to the Stockholm International Peace Research Institute, Iran’s arm transfers to allies in Syria and Iraq peaked in this period.[fn]SIPRI Arms Transfers Database, available at https://www.sipri.org/databases/armstransfers.Hide Footnote Resource scarcity at home neither prevented Iran from extending a multibillion line of credit to Damascus nor from mobilising Shiite militias from Afghanistan, Pakistan and Iraq to fight in Syria. Iran also stepped up its support for Yemen’s Huthi rebels, training and equipping them.

D. Post-Nuclear Deal Boon?

Critics of the 2015 Joint Comprehensive Plan of Action (JCPOA) contend that Iran grew more belligerent in the aftermath of the nuclear accord, which provided it with billions of dollars in unfrozen assets. Yet it is hard to point to anything Iran did after the deal – from supporting Yemen’s Huthi rebels to propping up the Syrian regime – that it was not undertaking prior to the agreement.

There was one notable change: a nearly 30 per cent increase in the country’s military budget.[fn]Clare Foran and Nicole Gaouette, “Trump repeats misleading claim on Iran's military budget”, CNN, 13 May 2018.Hide Footnote Even that should be assessed in the right context. As shown in Graph 4, the 2016 bump brought spending back to 2009 levels – not to a new high. More importantly, Iran was broadening its regional involvement at a time when it was spending less on its military (2011-2015), suggesting that this expansion is a product of opportunity or perceived necessity, not economics, and that the increase in defence spending does not necessarily have a discernible impact on the ground.

Graph 4: Iran’s Military Expenditure per GDP Percentage (2007-2017) World Bank

Besides, Tehran’s military expenditure likely is not in and of itself a main U.S. concern. In 2017, Iran’s annual defence spending of $16 billion paled in comparison to Saudi Arabia’s $76.7 billion.[fn]SIPRI Military Expenditure Database, available at https://www.sipri.org/databases/milex.Hide Footnote Iran spent less than 3 per cent of its GDP on defence (where sectoral spending ranks fourth in per capita terms after social insurance, education and health), not excessive for a country of its size.[fn]راستی‌آزمایی: بودجه نهادهای نظامی در ایران چقدر است؟” [“Fact checking: What is the budget of Iran’s military institutions”], BBC Persian, 13 August 2017; Mark Perry, “Putting America’s enormous $19.4 trillion economy into perspective by comparing US state GDPs to entire countries”, American Enterprise Institute, 8 May 2018.Hide Footnote

Iran’s activities in the region are inherently – and deliberately – inexpensive and thus largely impervious to economic fluctuations. The Trump administration contends that Iran has spent $16 billion to project power in the region since 2012. If accurate – though the figure is likely inflated – that makes for an average of $2.6 billion per year. This is not an onerous expense for a country that, even under sanctions, will reap more than $25 billion in oil revenues in 2019 and holds more than $100 billion in foreign reserves.

III. The Perils of a Sanctions Backlash

Iran may well choose to tactically retreat or halt certain activities, as it has in the past. It is likewise logical that when it has additional resources it can continue expanding its regional footprint. But nothing in the history of the Islamic Republic suggests that sanctions will prompt a substantive shift in its foreign policy. To believe otherwise is to misunderstand the sources of Tehran’s conduct, predicated on the notion that strategic depth, achieved through backing allies, partners and proxies, is vital for its national security. Israel’s invasion of Lebanon in 1982, the U.S. invasion of Iraq in 2003 and the Saudi-led war in Yemen since 2015 allowed Iran to exploit chaos and deepen its clout. In all these cases, it took advantage of its adversaries’ mistakes and filled security vacuums created by failing states.

For now, banking on the remaining signatories to the JCPOA’s effort to provide it with an economic lifeline in the face of unilateral U.S. sanctions, Tehran appears to be pursuing a relatively cautious path in the region.[fn]In May, Crisis Group published a list of recommendations aimed at preserving a certain degree of trade between Europe and Iran as means of preserving the JCPOA. Some of those suggestions, including the development of “specially purposed vehicle” to conduct financial transactions, are close to materialising. Crisis Group Middle East Report N°185, How Europe Can Save the Iran Nuclear Deal, 2 May 2018; “EU mechanism for Iran trade to be symbolically ready on Nov. 4: Diplomats”, Reuters, 24 October 2018.Hide Footnote It has largely refrained from responding militarily to more than 200 Israeli strikes on its assets in Syria and engaging in skirmishes with the U.S. Navy in the Strait of Hormuz.[fn]“Israel says struck Iranian targets in Syria 200 times in last two years”, Reuters, 4 September 2018; “Iranian boats mysteriously stop harassing U.S. Navy”, Daily Beast, 8 October 2018.Hide Footnote

Paradoxically, however, Tehran could become less risk-averse if Washington were to succeed in crippling its economy. As a senior Iranian official put it, “if the economy spirals out of control, the leadership in Tehran will welcome a crisis that could change the subject domestically and rally the population round the flag”.[fn]Crisis Group interview, New York, September 2018.Hide Footnote Given the high level of friction between Iran, the U.S. and their respective allies in the region, such a clash could easily spiral into a disastrous conflict.[fn]These flashpoints can be monitored on Crisis Group’s Iran-U.S. Trigger List.Hide Footnote

If its goal is to constrain Iran’s regional reach, the Trump administration would be wiser to address the political drivers of conflict.

Indeed, there are early signs that the U.S. approach might be backfiring. The Trump administration has accused Iran of targeting U.S. diplomatic facilities in Baghdad and Basra through its allied Shiite paramilitary groups. If true, these attacks would constitute an escalation unseen in Iraq since 2011 and indicate that tightening the noose of sanctions has made Iran more, not less, aggressive. Equally risky is a scenario in which Iran’s economy stays afloat and U.S. sanctions fail to curb Iran’s regional policy. This could prompt U.S. allies in the region to provoke a confrontation between Washington and Tehran that would significantly weaken their regional foe on their behalf. As an Israeli official put it, “my distinct impression is that [Prime Minister Benjamin] Netanyahu is pushing toward actual use of force by the U.S. against Iran. Unclear of what scope – a single attack, a broader move?”[fn]Crisis Group interview, Tel Aviv, October 2018.Hide Footnote

If past is prelude, the Islamic Revolutionary Guard Corps, which is primarily responsible for implementing Iran’s regional policies, will again benefit – both politically and economically – from sanctions. Its influence expanded markedly amid the nuclear standoff and mounting pressure of sanctions (from 2006 to 2013). It controls the smuggling networks and embezzles billions in public funds through complex shell games purportedly aimed at skirting U.S. sanctions. At the same time, the middle class, which tends to drive social protests and exerts a countervailing pressure on the state, will shrink and suffer from critical shortages of food and medicine.

If its goal is to constrain Iran’s regional reach, the Trump administration would be wiser to address the political drivers of conflict, which are informed by local factors. To leverage the pressure it has managed to accumulate against Iran to produce a shift in Tehran’s policy, it would need to acknowledge Iran’s legitimate security concerns, namely its comparatively inferior conventional military capabilities. Tehran is unlikely to agree to compromise its national security assets for economic incentives. The U.S. optimally would signal its willingness to address these concerns and provide viable security assurances to Iran’s leaders. In parallel, it would work with other regional actors toward a broader security architecture that includes Iran. That said, such a policy shift is hard to envision given the administration’s current posture toward Tehran.

For its part, and regardless of what Washington does, Tehran should take steps to address its neighbours’ concerns – most importantly to recognise that the more its security doctrine promotes expeditionary warfighting, the more it will provoke aggressive pushback by its adversaries. In the same vein, Iran should encourage the integration of its non-state allies into their countries’ security bodies under the direct and effective control of their central governments, and it should stop proliferating ballistic missile technology around the region.

The alternative to both sides taking a step back from their escalatory path is a sanctions regime that penalises Iran and the Iranian people, but does not enhance peace and security in the region and could well lead to war.

Washington/Brussels, 2 November 2018