The Iranian regime can live without its nuclear program. But it can’t live without its economy, and the recently imposed sanctions, if continued, could turn into an existential danger for the Iranian regime by precipitating an economic collapse.
The sanctions imposed against Iran’s central bank in December 2011, which have started to dissuade an increasing number of countries from buying oil from Iran as they have to deal with the bank, are proving particularly damaging. These sanctions came in addition to a move by the EU that prompted the Society for Worldwide Interbank Financial Telecommunication (SWIFT) to discontinue offering service to Iranian banks. This means that from now on, Iranian banks won’t be able to send and receive money to and from the vast majority of banks abroad. Ultimately, this could mean Iranian businesses having to send suitcases full of banknotes to suppliers or abroad – or even to stop trading altogether.
A $900 billion economy simply can’t be run like this.
If there’s one thing we know about Iranian Supreme Leader Ali Khamenei it’s that nothing is more important to him than the stability of his regime. The West must therefore use the current economic weakness and diplomatic isolation of the regime as a tool with which to change Khamenei’s current nuclear policies.
First, though, it’s worth looking at what’s missing from the West’s approach to Iran: a clear message to Iran’s supreme leader that even if he does build a bomb, or just reaches a breakout capability, the sanctions and isolation won’t end. In fact, the opposite should be true: they will continue or even get worst.
Although Western intelligence agencies have suggested that Khamenei hasn’t actually made the decision to make a bomb, the price that he’s already paying for the nuclear program seems to suggest that he wants to reserve this option. Otherwise, why go through all this pain? His calculation appears to be that Iran can continue along its current path, paying a price for doing so, but that the costs of its continued defiance will end once he has made his decision and the country produces a bomb. After all, why would sanctions aimed at deterrence continue once Iran has secured a bomb? What would be the point? And with the end of the sanctions, Khamenei could recover by doing business with the rest of the world again.
But by making clear that sanctions will be continued even if Iran manages to build a bomb, the West will be sending a message to Iran’s leader that the sooner he reaches a deal with the West, the lower the economic cost will be. Similarly, if he decides to continue, the longer he waits, the more the country’s economy will pay. The regime can’t continue with the economic status quo indefinitely. If the economy collapses, nothing will be able to save it or stave off the regime-threatening instability that would come with it.
Sending this clear message could also encourage other influential players in Iranian politics, notably the Islamic Revolutionary Guard (IRGC), to pressure Khamenei now, rather than later. More than ever, the IRGC is these days very much about its business interests. It runs a huge business empire, which includes the real estate and construction sector, manufacturing, and a massive import empire reportedly worth around $20 billion annually.