Iran Unrest Raises a Question: Is ‘Maximum Pressure’ Working?

(Bloomberg) -- Anti-government protests in Iran have left buses and banks burned, hundreds under arrest, the Internet blocked and an unconfirmed number of people dead. That raises the question of whether the Trump administration’s “maximum pressure’’ campaign is starting to deliver.

The unrest was sparked by Tehran’s decision last week to both ration and raise the price of gasoline. But there was ready tinder to be lit, consisting of the sorts of frustrations that have stoked violence around the globe in recent months, from Bolivia, Chile and Venezuela, to Hong Kong, Iraq and Lebanon.

Iran Unrest Raises a Question: Is ‘Maximum Pressure’ Working?
Iran Unrest Raises a Question: Is ‘Maximum Pressure’ Working?

The protests, according to Afshin Molavi, a senior fellow at the Foreign Policy Institute at Johns Hopkins School of Advanced International Studies, “are the culmination of rising anger at what is perceived to be a corrupt, out-of-touch ruling class that has consistently failed to deliver on the economy or jobs amid allegations of billions of dollars of corruption.’’

In Washington and Tehran, officials view the protests through the prism of tensions over Iran’s growing influence in the Shiite populated nations of the Middle East. Those frictions have picked up since President Donald Trump pulled the U.S. out of the 2015 nuclear deal, a pact which had traded limits on Iran’s nuclear fuel program for a relaxation of international sanctions.

On Sunday, a spokesman for Iran’s foreign ministry blamed the protests on U.S.-backed “saboteurs.’’ Supreme Leader Ayatollah Khamenei said that “all the centers of the world’s wickedness against us’’ were cheering at the scenes of violence.

Iran Unrest Raises a Question: Is ‘Maximum Pressure’ Working?

The White House issued a statement in support of the protests, which it said were caused by the regime’s diversion of funds from the domestic economy to pay for the “fanatical’’ pursuit of an alleged nuclear weapons program and for terrorism.

Yet this isn’t the first time that a reduction in subsidies has caused demonstrations in Iran, and none to date toppled the government. What made last weekend different, according to Ali Vaez of the Brussels-based International Crisis Group, was just how quickly authorities in Tehran moved to use extreme force – including live ammunition – to suppress them.

That was because the regime feels under siege from U.S sanctions as well as protests which are challenging Iranian interests in Iraq and Lebanon. Leaders in Tehran fear the U.S. and its allies in the region would interpret any sign of Iranian compromise as weakness, according to Vaez.

Iran Unrest Raises a Question: Is ‘Maximum Pressure’ Working?

“The system still has the will to survive and a fearsome capacity to quell opposition,’’ he said. “I have serious doubts as to whether this will produce the outcomes that the Trump administration wants.’’

Iran Unrest Raises a Question: Is ‘Maximum Pressure’ Working?

Secretary of State Michael Pompeo said on Monday the U.S. would end the sanctions waiver it had continued to issue for Iran’s Fordow reactor, a move he said was the result of Tehran’s continuing enrichment in violation of the 2015 deal.

"The Islamic Republic must cease violence against its own people and should immediately restore the ability of all Iranians to access a free and open Internet," Pompeo said. "The world’s watching."

Iranian government spokesman Ali Rabiei said on Tuesday that Internet access would be restored when officials were confident the unrest had ceased and that the access would not be "misused."

The U.S. has been ambiguous about whether the ultimate goal of its policy is to force regime change or a shift in Iran’s behavior. Currently it supports Hezbollah and Hamas against Israel, supplies militias in Iraq, Syria and Yemen, and pursues uranium enrichment and ballistic missile capabilities.

But there’s little doubt that Trump’s “maximum pressure’’ strategy has hurt the Iranian economy. The crude oil exports on which Iran relies for much of its hard currency earnings have fallen to about 250,000 barrels per day, from a peak of 2.5 million barrels per day in April last year. That has made unaffordable the $69 billion that, according to the Paris-based International Energy Agency, Iran spent on energy subsidies in 2018.

The International Monetary Fund has forecast a 9.5% contraction for Iran this year, amid 36% inflation that’s eating away at incomes.

Before the government blocked Internet connections at the weekend, protesters were captured on social media complaining about a lack of job prospects and chanting slogans such as “down with the dictator.’’

Unlike Bolivia, however, where then-President Evo Morales fled to Mexico after the army chief called on him to resign, there is no sign that Iran’s rulers are losing the support of the Iranian Revolutionary Guard Corps, or of the Basij militias that were deployed to crush much wider anti-government demonstrations in 2009.

And instead of reining in its foreign policy ambitions, Iran has responded to U.S. pressure by trying to strengthen its hand, reviving the stalled nuclear fuel program, attacking tanker traffic in the Strait of Hormuz and conducting a drone and missile strike on Saudi Arabia that temporarily halted 5% of global oil supply. Iran denies responsibility for the missile attack.

A recent study by the London-based International Institute for Strategic Studies detailed the extraordinary success Iran has had in extending its regional influence, by enlisting Shiite militias -- from Afghanistan to Iraq -- to help fight for its interests against much better armed and resourced opponents.

Equally, hundreds of pages of Iranian intelligence agency documents published by The Intercept and New York Times on Monday shed light on the extent to which Iran penetrated Iraq’s state institutions since its U.S. occupation, triggering the recent Iraqi nationalist backlash even among fellow Shiites.

Sanctions alone are unlikely to deter Iran, according to John Raine, a senior adviser to the IISS who worked on the study. While it is difficult to calculate exactly how much policies in Iraq, Lebanon, Syria, and Yemen have cost the Iranian budget, there’s little evidence of any sudden change in activity or funding either before, during or after the 2015 nuclear deal briefly lifted sanctions.

By now, collaborating with militias has probably become more useful to the government than its ballistic missile or nuclear programs, Raine said. “That has been possible only because there was no push back, no consequences” from the West.

©2019 Bloomberg L.P.

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