Belmont Club

Was This Ben Rhodes' Plan for Iran All Along?

Iranian protesters chant slogans at a rally in Tehran, Iran, Saturday, Dec. 30, 2017. (AP Photo/Ebrahim Noroozi)

Understanding the rage on Iran’s streets begins with grasping the structure of its economy. “The economy of Iran is a mixed and transition economy with a large public sector. Some 60 percent of the economy is centrally planned. It is dominated by oil and gas production.” It’s an economy where the “commanding heights” are dominated by a relative few.

If managed poorly enough it had the potential to be another Venezuela. To the credit of the Iranians, it was much more functional. Still, their economy had long been in the doldrums due to a depressed oil market and sanctions arising from a confrontation with America. Per capita GDP had dropped from a high of $6,428 in 2011 to a dismal $5,758 in 2015. It was this weakness the Obama administration sought to exploit.

His nuclear deal lifted the sanctions and poured billions of dollars into Iran’s economy with the goal of coaxing it into the community of normal nations. But that’s not what happened. Crucially, Iranian nuclear deal benefits were concentrated in the oil sector. As a World Bank study notes, it’s effect “was muted in non-oil sectors”.

The Achilles’ heel of the Obama deal was that the mullahs got the moolah. The rest got nothing. That fact would be crucial in the  Iranian unrest of December 2017.

The Brookings Institution dryly observed: “to date, the nuclear diplomacy has provided no meaningful ‘trickle-down’ effect on Iran’s economy or its population at large. Expectations have been elevated by the maximalist rhetoric that Iranian leaders have utilized in describing the benefits of the JCPOA.”

The short verdict of the Brookings piece is captured by its title: “Major beneficiaries of the Iran deal: The IRGC and Hezbollah.”

Politically this had the effect of pouring gasoline on a fire, the gasoline, in this case, being money. Begin with desperation: per capita GDP was down due to the oil downturn and sanctions.  Then throw in a match: the Obama bonanza captured by the Iranian Republican Guard and the Hezbollah.

The result: ka-boom. It’s easy to understand why the average Iranian is so angry. He’s been sent to war and driven to poverty by a theocratic elite living high off bacon from Washington. Obama’s JCPOA had the ironic effect of destabilizing Iran by fueling the corruption of the ayatollahs and their retainers. Instead of uplifting the whole Iranian nation it sowed envy, resentment, greed, and corruption. Ultimately that spelled unrest.

That unrest may cancel the nuclear deal itself. If the Iranian regime falls, then one side of the agreement will have disappeared through the trapdoor of history. But its effects will linger. Although JCPOA may not stop Iran from obtaining nuclear weapons, in the long run, it may succeed in rearranging the chairs of power in Tehran.

Did Obama intend it to work this way? Probably not. Yet the effects are what count. His policies dropped a chaos bomb on the Sunni powers, wrecking many of Israel’s enemies. Now his nuclear deal appears to have thrown the apple of discord into Iran. These actions may be unintentional. But deliberate or accidental, they are consequential.

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