Sanctions Strangle the People While the IRGC Thrives
The Wall Street Journalreports that the Islamic Revolutionary Guard Corps (IRGC) is doing just fine while the U.S. strangles Iran’s economy with sanctions:
Iran’s government has struggled to support an economy under pressure from U.S. sanctions, but its elite defense force has found new sources of revenue, including recently-signed infrastructure contracts in Syria and Iraq as well as expanded smuggling networks, according to advisers to the Guard and the U.S. government.
The clout of the Islamic Revolutionary Guard Corps, a group founded to protect the nation’s security but which has expanded to include construction, banking and smuggling, appears to be growing in Iran as it helps to prop up the economy and keeps more powerful adversaries off balance.
One of the ostensible goals of the “maximum pressure” campaign is to deprive Iran’s government of revenues so that it will be unable to support its proxies around the region. It hasn’t worked out that way. As opponents of the reimposed sanctions warned many months ago, the IRGC was not going to suffer under sanctions, but would exploit the situation to their advantage just as they did in the pre-JCPOA years. Back in October, Esfandyar Batmanghelidj talked specifically about how the IRGC in particular would take advantage of smuggling to enrich themselves:
The Trump administration is certainly aware of the IRGC’s role in smuggling, having targeted the actors behind several specific smuggling operations with sanctions. But the targeted operations are those where the IRGC is engaged in illicit activities beyond Iran’s borders. What U.S. policymakers fail to grasp is the reality that sanctions create market conditions within Iran that see both private sector and governmental actors cede portions of the economy to IRGC control [bold mine-DL]—both out of the practical necessity of trying to maintain solvency under sanctions but also out of the political reality of being weakened in the face of internal rivals.
Importantly, the evidence that sanctions line the pockets of the IRGC is stronger than the evidence that sanctions relief benefits Iran’s proxies. In his May 2017 testimony before the Senate Committee on Armed Services, Lt. Gen. Vince Stewart, then-director of the Defense Intelligence Agency, gave his assessment of Iran’s use of its proceeds from sanctions relief, telling the committee that “the preponderance of the money [has] gone to economic development and infrastructure.”
Iran hawks have made many dishonest attacks on the nuclear deal, but none has been so common or so misleading as the idea that sanctions relief would be a “windfall” that would fund their regional activities. That isn’t what happened. Sanctions relief wasn’t a “windfall” for hard-liners in Iran. It offered the possibility of Iran’s reintegration into the global economy. By contrast, the reimposition of sanctions has been a huge boon for hard-liners politically and it has allowed them to grow richer and more powerful because of smuggling.
I commented on Batmanghelidj’s article at the time:
It should come as no surprise that reimposed sanctions will work to the IRGC’s benefit, because this is just what happened before the nuclear deal. Regime insiders are able to take advantage of the difficulties created by sanctions and use their connections to enrich themselves while the rest of the country is impoverished. When legal trade is restricted or cut off, those that profit from illicit trade are in a position to gain the most.
Ever since the U.S. reimposed sanctions without justification, the IRGC has been thriving and the Iranian people have been suffering for nothing. As Batmanghelidj concluded last year, we should assume that this result is exactly what the supporters of “maximum pressure” have been wanting all along.