Iran Deal Forecast No. 1: The Best Case Scenario?

This is the first of a series of projections based on the terms of the current Iran deal, if it is ratified by the P5+1 but especially by the United States. The first projection is the best case scenario because it is worth beginning with an idea of what the administration hopes will be accomplished by the deal. Additional scenarios will assume negative factors absent from this scenario.

On the best case scenario, Iran abides by its obligations under the treaty perfectly. In this case, it simply abandons any quest for nuclear weapons for the fifteen-year period covered by the treaty.

As Iran becomes able to sell its oil unfettered on the world market, oil prices come down. This is due to the law of supply and demand. Iran’s oil reserves which have been under interdict for some time. Under the sanctions relief plan included in the treaty, the earliest that the oil sanctions could be removed is December. While oil markets are steady now, that is only a few months away. As sanctions fall away, which under this scenario they should because Iran is obeying its treaty obligations, oil prices will fall. Given that the oil market is already experiencing a glut, this will produce deficits in oil-producing nations worldwide, including Sunni powers near Iran such as Saudi Arabia and Kuwait. Iran has the capacity to put several hundred thousand barrels a day on the market, but has tens of millions of barrels of oil stored. If it pushes all that oil out quickly, it will gain massive revenue while driving down national incomes for all of its regional competitors.

Iran will instantly receive access to frozen funds and gain the ability to move money and goods on international markets. The US alone is planning to release $50 billion as a “signing bonus” for Iran’s agreement to the treaty. Indeed, we have been paying them all along through the talks. We released $490 million to them in January as part of an overall $11.9 billion series of payments to keep them involved in the talks. Overall the new funds expected to come available are about $100 billion, more or less immediately.

What will Iran do with that money? The administration’s own predictions are not encouraging.

The State Department official said that “the U.S. sees Iran clearly for what it is: the world’s foremost state sponsor of terrorism; a supporter of terrorist groups such as Hezbollah and Hamas; a backer of the Assad regime’s brutality in Syria; and a force for instability in Yemen.”

Indeed the President himself has said that there is reason to worry about “destabilizing” actions by Iran in the event that it is awarded tens of billions of dollars, as has the US Air Force general standing for the post of Vice Chairman of the Joint Chiefs of Staff. At a time when Iran is expanding its reach across Iraq via the formation of ideologically-aligned Shia militias, we can be sure that some portion of the released funds will go to expansionist efforts for Iranian hegemony.

How much? Defenders of the deal are relying on the claim that the percentage will be less than 100%. Joseph Cirincione of the Ploughshares Fund – an advocate for disarmament as in Isaiah’s prophecy that nations will one day ‘beat their swords into ploughshares’ – says that “The idea that an agreement will result in $100 billion terrorist fund is without factual foundation.” And, indeed, it is almost certain that Iran will spend a great deal of the money on things besides terrorism.

Support for these regional militias, both in Iraq and in Syria, will not be considered “support for terrorism” given that at the moment those militias are chiefly devoted to an anti-ISIS campaign. Those militias will, in fact, have American air support and weapons, such as this US Abrams tank draped in an Hezbollah flag. Yet they are clearly about expanding Iran’s control of the region. Currently Iran is spending at least $2 billion a year on militias.

Another use for the money will be propping up the Assad regime, which the Iranian government considers an existential interest. Its existing support has been quite cheap. Much more can be done with significant funds. Iran is likely to help Assad turn the corner and survive, albeit as a power even more indebted to Iran than ever before, and host to a vast number of Shiite militia and Hezbollah members to help insure his loyalty.

This growth of Iranian power under the best case scenario is certain to prompt regional instability, as Saudi and other Sunni powers begin to look for ways to resist Iranian hegemony. This will play out over the course of years, but after five years Iran will be freed from arms embargoes and capable of purchasing Russian and Chinese weapons in mass quantities. Indeed, it is likely they will begin before the five year term – Russia has announced it intends to sell advanced anti-aircraft missiles to Iran in spite of international sanctions – but for the sake of the best case scenario we will assume they abide by the terms. This will spark at least a conventional arms race in the region. It may be a nuclear arms race if the Sunni powers do not happen to believe that Iran is abiding by the terms of the treaty, as well they may not even if Iran happens to be.

So, under the best case scenario, we should expect to see Iran emerge as the dominant power in the Middle East. It will have physical control of everything from the borders of Afghanistan to the Levant. It will be far richer and stronger, better armed, and controlling a vast network of militia fighters across the region. The Middle East will suffer an arms race as Sunni powers attempt to protect themselves from this rising power.

And, of course, in fifteen years the treaty allows Iran to resume building a nuclear bomb. Even under the best case scenario, under which Iran obeys its treaty obligations perfectly, the breakout period for a nuclear weapon is one year. Thus, sixteen years from the signing, we will welcome a nuclear Iran onto the world stage. These powerful weapons will ensure that its new regional hegemony goes unchallenged by the West.