When Donald Trump withdrew the US from the Iran nuclear deal in May 2018 and imposed new sanctions against its regime, he said the objective was to secure a better agreement. That was always an ambitious goal but, thanks to the strategic and political crisis facing Tehran due to recent ongoing protests in the region, Washington and its Gulf allies may have an opportunity to secure a new understanding with Tehran.
US-led sanctions have no doubt had a hugely adverse effect on Iran's economy. Its petroleum exports are at a fraction of their previous levels. Few multinational corporations are willing to do business with Iran and risk the wrath of the US treasury department. In their attempts to salvage the nuclear agreement, European governments have sought to find a special purpose vehicle to bypass sanctions, largely to no avail. As a result, the country is experiencing a severe financial crisis, projected to contract the economy by 9.6 per cent this year, with only Venezuela and Syria having suffered worse declines.
However, sanctions against a country can make its citizens even more dependent on the regime that runs it, and encourage competing factions within it to circle the wagons against outside pressure, often by rallying around hardliners. This was certainly Tehran's initial response, with the regime deciding its best option was to endure the fallout of the sanctions – just as North Korea, Cuba and Iraq under Saddam Hussein have done in the past. And with Iran determined to develop its sizeable internal market, economic warfare alone was unlikely to radically alter its calculations and return it to the negotiating table.
As I argued at the outset of the sanctions, for Tehran to change its behaviour it would have to experience significant strategic and political setbacks in the region in addition to economic distress. Only such pressure could press regime leaders to try to protect as many of their assets as possible through a new understanding rather than facing continuing losses. Yet the Trump administration has no appetite for the kind of bold steps in regional battlegrounds like Syria and Iraq that would have generated such alarm in Iran. Attacks on pro-Iranian militia groups in Iraq, unclaimed but widely attributed to Israel, are only one example of the kind of pushback, which should also include political and soft-power engagement, that can undermine Iran's destabilising encroachments in the Arab world.
Shadi Ghanim's take on the protests Iran
In response to Washington's "maximum pressure" policy, Tehran also initiated a campaign of "maximum resistance" which included low-intensity military attacks on Gulf- and US-related interests. It carefully calibrated and steadily increased the intensity of these attacks in an effort, thus far without success, to provoke a military response from the US and its Arab allies and generate a diplomatic crisis. Tehran knows it has no leverage with Washington but hoped that a military crisis could prompt European, Arab and Asian powers to convince the United States to ease the sanctions in order to restore calm, thereby loosening the financial noose. Meanwhile, Tehran has also gradually resumed its nuclear enrichment activities, losing the sympathy of European states as well as multilateral agencies. All this produced an impasse that persisted for months.
However, a major strategic and political crisis for the Iranian regime has suddenly erupted on the streets of Lebanon and Iraq. Protests in both countries are driven largely by socioeconomic and governance issues, with constituencies lashing out at their own nominal leaders, only some of whom are beholden to Tehran. But in both countries, demonstrators have become increasingly convinced that their grievances cannot be addressed by the existing political systems.
The problem for Iran is that it has nothing to gain and everything to lose from major changes to the political power structures in Iraq and Lebanon. Consequently, the regime and its proxies in both countries have dropped any pretence of sympathy for the protests and relied on threats, intimidation and deadly force – particularly in Iraq – against unarmed civilians to try to crush the uprisings.
As demonstrations continue undaunted, Tehran is increasingly being associated with the corrupt establishments and the brutality being deployed to defend them. So even if Iranian proxies such as Hezbollah in Lebanon and the Popular Mobilisation Forces in Iraq are able to avoid the structural reforms that would inevitably weaken their respective positions, anger and resentment towards the Iranian regime among populations in those countries could lead to a decline in its influence in the long run.
To make matters worse for Tehran, protests have erupted in Iran itself. Demonstrations have rocked more than 100 cities, with the public rejecting a 50 per cent hike in petrol prices – no doubt a symptom of more deep-seated dissatisfaction among ordinary Iranians. The uprising is partly driven by economic pain from sanctions and partly by long-standing discontent with theocratic despotism. In all likelihood, it has also been partly inspired by the protests in Iraq and Lebanon.
While regime change in Tehran remains unlikely, prolonged unrest across the region has produced precisely the kind of strategic crisis that sanctions alone could not achieve. Sanctions might have been a factor in the uprisings – particularly in Iran – but they are not the fundamental cause. Tehran is over-extended and the ruthless and corrupt orders it has propped up at home and abroad are buckling under the weight of their own contradictions.
The regime's response in all three cases has included repression, threats and force while painting demonstrators as thugs controlled by nefarious foreign manipulators. And in Iran its alarm is demonstrated by a total shutdown of the internet – a drastic step that borders on panic. It is likely to be similarly obdurate and defiant in its diplomatic reaction as well. However, it now faces precisely the combination of economic misery and strategic and political crisis that might induce it to talk seriously to its adversaries. It must, after all, staunch the bleeding and prevent even more serious damage.
Purposive negotiations are, and should be, the strategic choice in such circumstances. The US and Arab countries should use whatever positive and negative inducements they can to encourage Iran to reach this conclusion. Given the regional strategic crisis Tehran faces, it might at last be willing to seriously discuss not only its nuclear and missile programmes but also its support for armed militias and terrorist groups in the Middle East.
Tehran increasingly needs a new deal, which means that the negotiations that Mr Trump called for 18 months ago no longer seem implausible.
Hussein Ibish is a senior resident scholar at the Arab Gulf States Institute in Washington