Will coronavirus help the Islamic Republic’s chief Ali Khamenei alleviate his ramshackle regime’s cash flow problem? Pictured: A ballistic missile is paraded past a stand bearing the photo of Iran’s “Supreme Leader” Ayatollah Ali Khamenei, on April 18, 2018, in Tehran. (Photo by Atta Kenare/AFP via Getty Images)
Will coronavirus help the Islamic Republic’s chief Ali Khamenei alleviate his ramshackle regime’s cash flow problem? This is certainly what the so-called “moderate” faction in Tehran hopes would happen to enable it to maintain some relevance in an emerging power struggle that favors the more hardline Khomeinists.
According to President Hassan Rouhani’s team, the Islamic Republic needs a minimum of $60 billion a year to cover “basic expenses”. This is made up of cash needed to pay the salaries of key military, security and civil services, pension payments to an estimated 1.2 million veterans, stipends for families of martyrs and semi-martyrs, money needed to keep the Assad regime in Damascus afloat, and cash to keep client groups such as Hezbollah in Lebanon, the Popular Mobilization Forces in Iraq and the Islamic Jihad and Hamas in Gaza going.
The Rouhani team has calculated that of the sums needed, Tehran itself can secure at least half by exporting some oil despite sanctions imposed by the Trump administration. A further $5 billion could be raised through tripling the price of fuel inside Iran itself. To avoid further nationwide riots of the kind that shook the country last winter, increases in the price of other utilities such as water and electricity have been postponed. According to a proposal submitted to French authorities by Foreign Minister Mohammad Javad Zarif last year, the European Union would help by opening an annual $15 billion credit line for Iran pending the lifting of sanctions. The balance, according to Tehran sources, was supposed to be covered by a $5 billion credit line furnished by Russia and a series of loans negotiated with European banks. There is, however, still no sign of the Russian money and Moscow has started talking of providing only one billion rubles to buy Russian goods while Tehran is interested only in cash.
To raise the cash needed, Zarif has toured several Asian and European capitals, obtaining little more than promises. The advent of coronavirus, however, may modify the negative attitude adopted by Japan, China, Germany and France. The new message from Tehran is that Iran is in need of humanitarian aid to curb the coronavirus and prevent the death of large numbers of Iranians.
The first sign that the message may be working came last Monday when Germany announced that it has arranged a $5 million cash line through the European Union for Iran to secure medical supplies needed to fight the pandemic. The German initiative, through a mechanism called Instex and designed to bypass sanctions, is clearly meant to test the waters.
Will Washington object and impose retaliatory measures against banks involved in the Instex system, as President Trump had threatened to do on a number of occasions?
Since the sum involved is small and meant to be restricted to medical supplies, which in any case are not subject to any sanctions, Washington may choose to whistle and walk away.
Not in a mood to pick a quarrel with European allies at this confusing moment, Washington also renewed waivers for sanctions that forbid cooperation with Iran on some nuclear issues. That measure, envisaged in the so-called “nuclear deal” or JCPOA, is of largely symbolic value. Under it, Moscow is supposed to arrange for the transfer of half of Iran’s reserves of enriched uranium above five percent to facilities in Russian territory, something that President Vladimir Putin is reluctant to do. The proviso in JCPOA also commits China to redesigning Iran’s heavy water nuclear plant in Arak which, almost four years later, has not happened because of Beijing’s reluctance.
Nevertheless, the acceptance of the first Instex operation and the renewal of waivers might have two outcomes that may not please Washington. The first is that Khamenei may able to claim that his policy of “resistance at any cost” is producing positive results in the form of mini-retreats by the US and its allies. Then, it may also provide the so-called “moderate” faction with a new justification for its continued existence even if, after the recent elections, it will not have more than a side chair, not at the high table, but on the way to the kitchen. The result could be a sham show of unity by the regime with a new message to Iranians, as German Foreign Minister Heiko Maas believes that change within the regime may be better than regime change.
The trouble with all this is that we have already been there, done that and bought the t-shirt. Europe and the United States have repeatedly tried to bring the Islamic Republic in from the cold by playing the accommodation, not to say appeasement, card, each time ending up as the cuckold in the story.
The latest reminder of this came last week in a four-hour filmed interview with Mohsen Kangarloo, the deputy prime minister of the Islamic Republic for national security in the 1980s. Kangarloo offered little of importance that was not known to students of the episode. (My own book Nest of Spies: America’s Journey to Disaster in Iran, offered a detailed account in 1988). Nevertheless, Kangarloo offered some juicy tidbits about the shenanigans with the Reagan administration that led to the “Irangate” scandal.
The tidbits offer an insight into the mindset of the weird clique dominating Iran since 1979 and why those who believe they are dealing with a normal government would need to have their heads examined. The Reagan administration, helped by Israel, smuggled over 1,000 anti-tanks missiles to Iran to help it stop the advance of the Iraqi invasion in the eight-year Iran-Iraq war. The mullahs paid half the cost of the missiles as down payment but refused to pay the second half after they had received all consignments. There was no need to pay “the Crusaders” the price.
On a smaller scale, Kangarloo relates the fate of a huge “key-shaped” cake bought in Tel Aviv as a Ramadan present from Reagan to Khomeini, regime godfather at the time. By the time Kangarloo arrived at the airport, the Revolutionary Guards had eaten the cake for Ramadan breakfast as Reagan’s envoys, former Security Adviser Robert MacFarlane and his aide Col. Oliver North, and Mossad’s special envoy Amiram Nir watched with a mixture amusement and amazement.
Even in those early days it was clear who eats the cake in the Islamic Republic. Heiko Maas take note!
Amir Taheri was the executive editor-in-chief of the daily Kayhan in Iran from 1972 to 1979. He has worked at or written for innumerable publications, published eleven books, and has been a columnist for Asharq Al-Awsat since 1987. He is the Chairman of Gatestone Europe.
This article was originally published by Asharq al-Awsat and is reprinted by kind permission of the author.