A key tactic when playing poker is that when your opponent is on the offensive, and plays one strong hand after another, you bide your time and don’t make any risky moves. You remain patient and wait until you have a strong hand – then you attack. The same is true in chess; when your opponent is strong you wait until he makes a mistake and then you attack.
It appears that Iran’s Supreme Leader Ali Khamenei is also biding his time. But what hand does he hold and what he is after? Which winning card he is waiting for when he uses expressions such as “neutralizing sanctions” or when he talks about taking more time to review joining the Palermo Convention against transnational organized crime, or the FATF – the Financial Action Task Force – to combat money laundering?
Is the Islamic Republic really exploring ways to join these conventions, or is it simply buying time to prepare for its next move?
On December 16, in a meeting with the family of the late General Ghasem Soleimani, Khamenei once again talked about American sanctions. His remarks on Iran trying to “neutralize sanctions” was yet another sign that he is aware the economy of the Islamic Republic is falling apart and, according to experts, is in the worst possible shape. “Lifting sanctions is in the hands of the enemy and neutralizing sanctions is in our hands,” he said. “The enemy must lift the sanctions, but we can neutralize them by ourselves.”
Khamenei has spoken about neutralizing sanctions before. In a November 24 meeting with the Supreme Council of Economic Coordination, alongside the heads of the three branches of the government, Khamenei said lifting sanctions had not worked after several years of negotiations but neutralizing them would have a “happy ending”.
How to achieve this “neutralization” is the subject of a compilation of recent statements by Khamenei published on his official website on December 20. In this collection there several key means are cited for “neutralizing” and reviving the shattered Iranian economy. But Khamenei has had nothing to say about how exactly these tools are to be used when the infrastructure for using them has been destroyed.
The Engine Refuses to Start
Khamenei's plans include “stopping the fall of the national currency,” plugging “holes” such as smuggling, ending unnecessary imports and financial corruption, “investments,” “strong management” and “strengthening and boosting production” by emphasizing “the driving forces of the economy” such as housing construction, agriculture and car manufacturing.
Four days after Khamenei made these statements, the automaker Iran Khodro unveiled its new model, “Tara”. At its first public demonstration, the engine failed to start.
The incident is an allegory for Iran’s situation. After the United States withdrew from the nuclear agreement and imposed new sanctions, and after the withdrawal of foreign partners from Iran’s automotive industry and the rise in the cost of foreign currency, car production fell and prices jumped a hundred percent. The substandard technologies used by automakers Iran Khodro and SAIPA led to worse air pollution and an increase in respiratory diseases.
This is just one example. But there are many others, of policies put forward by Khamenei that ignore reality and are just repeated like mantras that can magically save Iran from its dire economic situation. In other articles published on Khamenei’s website, which are meant to provide “content” to support his statements, there is one piece that promotes his slogan of “neutralizing” sanctions. The article argues that public opinion must abandon the dichotomy of “negotiations” or “resistance and war” to overcome the current economic situation; instead, people have to help “neutralize” the situation.
Khamenei’s statements should be seen in the context of new reports of his agreement to the extended review of bills that must be passed for Iran to join the Financial Action Task Force (FATF) against money laundering and terrorist financing. On December 14, Laya Joneydi, President Rouhani’s vice president for legal affairs, reported Khamenei had given his permission to the government to extend the deadline to review these would-be Acts of Parliament. Khamenei himself had previously obstructed the passage of these bills, raising the question as to whether or not he will ever accept them at all.
The economist Jamshid Asadi tells IranWire that the term “neutralizing sanctions” is like the others, such as “resistance economy” and “heroic flexibility”, that Khamenei has relied on for years to advance his political agenda but which have remained basically meaningless and have failed to materialize – much like the Tara car. much like that Tara automobile that refused to start up.
Ideological Goals vs. Interaction with the World Community
Khamenei knows, Asadi says, that to interact with the world he must take some actions that will hinder the Islamic Republic from pursuing its ideological goals. “To benefit from a world-oriented economy, Iran must join FATF and its agenda of fighting terrorism and money laundering,” Asadi told IranWire. “It must also join the Palermo Convention in its fight against transnational organized crime, the smuggling of arms and human trafficking.
“The world is telling Iran that if it wants be a member of international financial and banking networks, it must accept these two conventions. But the Islamic Republic cannot because, for instance, it wants to support Lebanese Hezbollah. To join these conventions, Iran must stop providing financial support to groups that the international community believes are terrorists. So, even if sanctions are lifted, Iran cannot trade with the world without accepting these conventions.”
The most recent example of this impasse is the issue of purchasing a vaccine to put an end to the coronavirus nightmare. When the question of buying a vaccine was raised, Islamic Republic officials, senior and low-ranking, claimed sanctions have prevented them from doing so. But Ali Motahari, a member of parliament, recently revealed that “because we are on FATF’s blacklist, we were unable to transfer $50 million to pay for Iran’s share of the World Health Organization’s vaccine for eight million Iranians. Iran’s share was revoked.”
Asadi, the economist, believes that Khamenei cannot accept joining FATF and the Palermo Convention. “He has opted,” he told IranWire, “for a ‘neutral’ economy, the same thing he first called a ‘resistance economy’, and now for ‘neutralizing’ sanctions. Khamenei’s wants a powerful economy independent of the world economy, but this is an impossible proposition because any economy in the world that has experienced growth has been a transnational one. Khamenei talks about boosting production but even the production that exists [in Iran] uses raw materials from outside Iran. And to support a population of 80 million, Iran must be able to sell its production to other countries, so that it can make more money. Iran needs to interact with the international community.”
A Cold War Mentality
Asadi has drawn parallels between Khamenei’s behavior and the Cold War between the US and the defunct Soviet Union. “The long and the short of Khamenei’s thinking is this: ‘Let us not go to war against each other. We do not accept your system either. Don’t pressure us and let us accept each other’s camps.’ A situation that is neither war nor peace. He cannot accept joining the world because it would mean abandoning many of his ideas.”
But then why has Iran’s government said Khamenei has agreed to extend the deadline to review the bills related to these two conventions? Asadi believes this is more a of a ruse than a solution. “The Islamic Republic has learned a trick or two from the process that led to the nuclear treaty,” he told IranWire. “By pretending to approve of FATF and the Palermo Convention, Khamenei is trying to buy time and create a divide on the Western side. He wants to say ‘We are negotiating for the lifting of sanctions and we will even go as far joining FATF. You lift sanctions so that we can push these bills through parliament.’
“But this is not going to get them anywhere. No economy in the world can secure the welfare of its citizens within the confines of its borders. To whom are they going to sell their oil? How they are going to import industrial equipment? Where they are going to export these cars to? Which country is even willing to import these cars?”
The livelihoods of the Iranian people will continue to deteriorate in Khamenei’s game of attrition, although many believe that when President-elect Joe Biden’s administration takes over in the US, the changeover will benefit Khamenei and the Islamic Republic and the lifting of the sanctions will shore up the regime’s stability.
But Asadi expressed a different view. “It is possible that the US will give the Islamic Republic a break of some kind. But the nuclear treaty is over and done with,” he said. “Today, European states such as Poland, Germany, the United Kingdom and, in the near future, even France, share President Donald Trump's stance on the nuclear treaty. The sanctions will not be lifted immediately; some symbolic, mostly trivial, actions may improve the situation for Islamic Republic in the short term. But Iran is now in its worst economic situation [ever] and this situation is going to get even worst. A glance at next year’s budget confirms this. They [the government] keep talking about hiring people while they are suffering from a severe budget deficit.”
On December 20, the last day of autumn, which was also the Nurses Day in Iran, Khamenei announced that the government must hire 30,000 new nurses and, on the same day, President Rouhani said his government was going to hire 12,000 adult children of “martyrs and war veterans”.
Asadi emphasized that the government has no budget for these new hires but it wants “to appeal to the families of war martyrs and veterans so as to count on, at least, its minimal base. Nevertheless, next year’s budget shows that the situation of the Islamic Republic is going to get worse than at any time before in its history.”
Khamenei might not be in good health – but it appears that he is pursuing dual tactics in dealing with the disintegration of the Iranian economy. On the one hand, he gives orders to Iranian officials on how to improve the situation while ignoring the destruction of economic infrastructure; on the other hand, he wants to buy time so that Iran may find a chance to recover. He wants to wait until his opponents make a mistake or until he is dealt a new hand that helps him win. But it is more likely that these tactics will score a goal against the home team. And the cost of this own goal will be paid by an Iranian nation that is more enfeebled than ever.
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