The Best Way of Dealing with Iran: Capitalism

by James Spencer

Like many previous US administrations over the past four decades, the Trump presidency’s Middle Eastern policy seems to be coalescing into the trusty “pro-Israel and anti-Iran” channel. That’s hardly surprising, given that it has been the comfortable Washington consensus—indeed almost the only idea in town—for so long.

Yet no one seems to have asked if the policy has worked. If it has not so far, then a disruptive, innovative strategy is more likely to prevail—and achieve the desired end state—than “one last heave.”

Bombastic Iran is on many people’s minds: Sen. John McCain (R-AZ) would famously like to “Bomb, bomb, bomb Iran,” while the recently resigned National Security Advisor Michael Flynn was so obsessed about the malevolent influence of Iran that he allegedly directed his staff to find evidence of Iranian involvement in the sack of the US consulate in Benghazi. Recently, the US sanctioned various IRGC members and Iranian entities for violating the spirit if not the letter of the Iran nuclear agreement.

The world has been here before; twice: with Iraq and previously with Iran. Neither regime collapsed. Indeed the regimes became stronger—and internal dissent weaker—under external pressure. Even the idea of bringing democracy to Iraq at bayonet point has not been an unqualified success.

Sanctions are unlikely to work since Iran diversified its economy under war and previous sanctions, thus making it less vulnerable to oil shocks. Further, UN Security Council member China is Iran’s largest trading partner, buying 48% of Iran’s exports and providing 45% of its imports.

So, if getting tough doesn’t work, what will?

Minorities and Markets

Iran is geopolitically weak. It is the only Persian country (except for little Tajikistan). It is also the only 12’er Shi’a state. On both counts, it has no natural allies within the region. Although Persians may be proud of their culture, often this pride comes across to other peoples of the region as alienating arrogance. Iran is thus able to make mischief mostly where minorities are ill-treated and looking for outside help. The best and cheapest way for the US to dislocate Iran’s malign outreach is to encourage regional states to treat their ethnic or religious minorities well.

It also worth considering employing and empowering the invisible hand of the market to give the Islamic Republic the finger.

The Islamic Republic is rotten to the core. The religious regime is disliked by many, even among the orthodox 12’er Shi’a clergy. The economy is deeply corrupt and inefficient (with many regime-insiders and the Iranian Revolutionary Guard Corps benefitting from sweet-heart deals). And the people—whose Green Movement preceded the Arab Spring by two years—have to be kept subdued by legions of professional and amateur thugs. A healthy dose of capitalism is likely to bring an end to the mullah-ocracy in a way that no kinetic campaign will.

The regime know this. They regularly warn the Iranian people against it and have been arresting émigrés and dual nationals who have returned to try to breathe new life into Iran’s rotting carcass. Even President Hassan Rouhani realises this—he is trying to save the regime by reforming it. It won’t work: the love of money is the root of all evil, as the Bible says. Instead, Iran will undergo a slow collapse and an eventual return to normality and the world stage. It will just be quicker and less messy with the market’s help: far from closing Iran down, the US should be opening it up.

Two Other Considerations

If Iran implodes, it risks ending up like present-day Iraq or Afghanistan. Those countries, however, are of limited geo-strategic importance. Iran not only has major reserves of oil but also dominates the Gulf basin, where much oil and gas is produced, and the Straits through which most of that oil is exported.

The second issue relates to the other countries of the region, particularly Israel and Saudi Arabia. Currently, both are fixated by the threat they each claim the Islamic Republic poses to them.

After the immolation of Iraq and Syria, the destruction of Iran will achieve Israel’s long-cherished plan for a clean break from the US. A nuclear-armed state whose population is rapidly becoming more religious and intolerant is a concern in its own right. Remove its major regional constraint, and Israel would be free to act as it wishes. Although many Israelis speak English, Israel is a very Middle Eastern country. It has a tiny plutocracy, oppressed minorities, a security-heavy political establishment, very high military spending, and a national myth of Greater Israel that would contain the main watersheds and several locations of past Israeli invasions. Additionally, the Plain of Megiddo—the site of Armageddon in the Bible—is in Israel.

If the US removes the Iranian threat, it will also liberate Saudi Arabia—which has already spent up to $100 billion on exporting its own Islamic revolution—to pour its vast resources into further radicalisation of the Islamic World, with results that we can only imagine. Vision 2030—the Saudi version of what needs to happen domestically as well as in Iran—may achieve the necessary results, but the same kind of clerical, corrupt, and oligarchic interests in Saudi Arabia are trying to resist these reforms.

Decisive kinetic action can be alluring. Unfortunately, the second-order effects can be devastating. Capitalism is as potent a weapon as any: it brought down the Soviet Union. In the right hands, it’s as incisive as a scalpel. Restraint, constraint, and controlled, co-ordinated capitalism is the best way forward.

James Spencer is a retired British infantry commander who specialized in low-intensity conflict. He is an independent strategic analyst on political, security and trade issues of the Middle East and North Africa and a specialist on Yemen. Photo: Shopkeeper in Iran by Kamyar Adl via Flickr.

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  1. I suppose this article is not aimed at people who know much more than yourself about Iran, it’s people, culture, history & geography. Anyway you need to correct some misinformation you are propagating:
    1- Iran, Tajikistan AND Afghanistan speak Persian.
    2- Azerbaijan is %98 Muslim of those over %90 are 12er Shias, Iraq is %65 12er Shia, not to mention other Shia populations in Afghanistan, Bahrain, Saudi Arabia, Lebanon & Syria.
    3- Iran is culturally linked to all counties around it & has been for centuries, so it is naive of you to think it is isolated.

    This analysis speaks the same language as that of Trump & his confidants.

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