(Persia Digest) - What’s wrong with this picture?
British Prime Minister Boris Johnson meets with Iranian President Hassan Rouhani at the United Nations in New York on Sept. 24. (Stefan Rousseau/AP)
Officials in the Trump administration say their maximum pressure campaign against the Islamic republic of Iran is working. They claim the economy is in free fall, with inflation soaring and Iran’s oil exports nearing zero.
But at the annual U.N. General Assembly session in New York, Iran’s President Hassan Rouhani appeared decidedly unfazed by the American measures against his country, signaling that Tehran may be more comfortable with the current circumstances than anyone previously thought.
Jason Rezaian writes in The Washington Post that U.S. officials this week said President Trump is prepared to meet with Rouhani — without preconditions. You’d think — if Iran were on the verge of collapse, as the Americans keep saying — that Rouhani would be desperate to accept.
Yet he declined the offer, both publicly and privately. The British and the French, U.S. allies and co-signers of the Iran nuclear deal, urged Rouhani to accept. In what were possibly his most coherent comments during his visit to New York, British Prime Minister Boris Johnson jokingly nudged the Iranian president to take a leap of faith. “You need to be on the side of the swimming pool and jump at the same time,” Johnson said. Rouhani just laughed.
The gap between Iranian and American narratives tells you everything you need to know about the relationship between the two countries. The entire maximum-pressure campaign is predicated on the promise that Iran’s leaders will soon be hurting so badly that they will beg to re-enter negotiations. Yet the Iranians aren’t biting. “This will get a lot worse before it gets better” was a refrain heard often in New York this week both from Iranian and American stakeholders.
Trump’s foreign policy advisers believe U.S. sanctions have brought Iran’s economy to the brink, privately predicting a budget crisis before the end of 2019. But Iran’s notoriously opaque financial system, along with its proclivity for nontraditional banking and debt-settling — forced on the country by years of isolation from international financial networks — makes it very difficult to have a clear understanding of how much money Tehran actually has.
Kenneth Katzman, the Congressional Research Service’s Iran analyst, told me that predictions of the imminent meltdown of Iran’s economy are unfounded. Katzman estimates that Iran still currently has about $100 billion in reserves. Under current conditions, he says, that would last the Iranians at least another two years.
There’s no doubt that the economy is suffering. But even in the face of mounting sanctions vastly limiting Iran’s ability to sell oil on international markets, Katzman notes, “Iran is still selling a lot of products in its neighborhood.” Iranian companies are pursuing construction projects in Afghanistan, producing and exporting cars, and selling natural gas to countries with which it shares borders. And those are the activities we know about.
Over the years, Iran has turned survival on a shoestring into a high art. And when it wants to strike out, it can do so at low cost. Its proxies around the region — such as the Houthis in Yemen, the Shiite militias in Iraq and Hezbollah in Lebanon — are largely self-sustaining. The recent strikes on Saudi oil facilities in Abqaiq, which took up to half of that country’s oil production offline, used a handful of cruise missiles and cheap drones.
This helps explain why Iran’s leaders appear more confident than the Trump administration assessment would have us believe.
Yet Iran’s public posturing belies an incredibly tense moment, as the United States and its allies consider ways to punish Iran for the attack on the Saudi oil facilities.
While the threat of military confrontation is always looming, all parties — the United States, its allies and Iran — agree negotiations are inevitable. But the challenge will be bridging the immense divide in expectations.
Iran’s leadership says it won’t talk until sanctions are completely lifted. The Trump administration believes it can force the leaders of the Islamic republic back to the negotiating table by ratcheting up the economic pain.
So far, maximum pressure is being met my maximum resistance, as Iran’s leaders bank on their population’s well-established tolerance for abuse meted out on them by foreign and domestic powers.
It’s worth recalling the end of the 1970s, when the U.S. foreign policy establishment completely missed the coming collapse of the shah’s regime in Iran — even though the U.S. diplomatic presence in Iran was one of our biggest in the world at the time.
Given that we have no official presence on the ground today, nor have had one for nearly the past 40 years, it’s hard to believe that we fully understand what’s happening there now.
Here’s what we do know: When both Tehran and Washington say they support a diplomatic end to this impasse, we should not be talking them seriously. At least not this week.
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