The Hollow Order
Rebuilding an International System That Works
As the United States and Iran prepare for talks to revive the nuclear agreement that Washington abandoned in 2018, the leadership in Tehran is laying the groundwork for a newly assertive foreign policy. Iran believes Washington has treated the Islamic Republic with deception and disrespect, and it is focused on building economic and military leverage against its longtime antagonist.
Iran’s chief nuclear negotiator recently announced that talks to revive the nuclear deal, known as the Joint Comprehensive Plan of Action, would resume in Vienna before the end of November. Former President Hassan Rouhani’s administration participated in six rounds of negotiations intended to return both sides to “mutual compliance” with the JCPOA. Diplomacy came to a halt, however, after Ebrahim Raisi, a conservative, was inaugurated as Iran’s president in August.
Although the Raisi administration may be willing to participate in negotiations, the resurrection of the JCPOA does not constitute a central pillar of its foreign policy. Under the new president, Iran has developed a new nuclear posture that revolves around two principles: enhancing its capability to swiftly retaliate against the United States in case it reneges on its agreements and delinking Iran’s economic fortunes from the JCPOA by building a self-reliant and Asia-focused economy.
As Iran’s nuclear program nears its breakout point, some in Washington are already calling for a “Plan B” of coercive economic measures and threats of the use of force should Tehran refuse to return to full compliance with the nuclear deal. Raisi is already facing massive economic problems at home—with potentially explosive consequences for the regime—and such measures would aim to pressure him into reviving the JCPOA, which could ameliorate those difficulties.
Iran is unlikely to give in to such coercion. Tehran’s conservative leaders were underwhelmed by the benefits supposedly accorded to Iran by the JCPOA and now seek to nurture a sanctions-resistant economy by bolstering its domestic industries and forging new ties with rising powers in Asia. Raisi is also convinced that the United States remains committed to keeping Iran boxed in even if the JCPOA is revived, and he is therefore focused on amplifying Iran’s military and economic leverage to protect not only the Islamic Republic but the broader Shiite Persian nation from what he views as an existential threat.
In Washington, the conversation about Plan B against Iran has been gaining currency. But to the Islamic Republic, Plan B was in fact Plan A from the outset.
The Islamic Republic perceives an asymmetry in the JCPOA’s framework. Iran’s obligations to limit its nuclear activities have clear technical benchmarks verifiable by the International Atomic Energy Agency (IAEA). There is no formula, however, that sets out the economic benefits Iran will receive in return from sanctions relief. Additionally, although Tehran faces the quick reimposition of sanctions if it leaves the agreement, Washington encountered no serious punishment when it did not honor its end of the bargain.
As a result, Iran worries that it could lose its nuclear leverage without obtaining the promised benefits if it returns to full compliance with the JCPOA. This is exactly what happened in 2015, when the deal was announced. Iran rapidly scaled back its nuclear program in accordance with the agreement, shipped 98 percent of its enriched uranium abroad, and accepted enhanced IAEA surveillance. However, international companies and financial institutions still largely stayed away from the Iranian market due to uncertainty about whether the sanctions had been permanently lifted. Their hesitation about doing business with Iran was vindicated after President Donald Trump’s election and his subsequent withdrawal from the JCPOA.
Iran is facing a similar situation again. It fears that its return to full compliance will bring no tangible benefits except inviting more pressure after it gives up its nuclear bargaining chip. U.S. officials say they are willing to discuss ways to address these concerns, but they cannot guarantee that the United States will not withdraw from the agreement again after President Joe Biden leaves office. British, French, and German leaders seemingly tried to assuage Iran’s concerns by lining up behind the agreement in a recent statement at the G-20 summit, saying that they supported Biden’s commitment to maintain full compliance with the agreement “so long as Iran does the same.”
Iran is already signaling its readiness to promptly retaliate against any pressure, sabotage, or attack.
U.S. Special Envoy for Iran Robert Malley has expressed a willingness to “quickly lift all sanctions inconsistent with the JCPOA” if Iran cooperates to restore the agreement. But for Iranian officials, these kinds of statements are cheap talk—or as Foreign Minister Hossein Amir-Abdollahian described them, “speech therapy.” Iranian officials question how the Biden administration will determine which sanctions are inconsistent with the nuclear deal. Many of the Trump-era sanctions, after all, were labeled as restrictions imposed due to Iran’s dismal human rights record and its support for “terrorist entities” in order to prevent the incoming administration from rejoining the agreement.
The first principle of Raisi’s foreign policy is thus to generate and maintain leverage to disincentivize Washington from reneging on any deal and thus once again causing an economic shock that plunges millions of Iranians into poverty. The Islamic Republic is already signaling its readiness to promptly retaliate against any pressure, sabotage, or attack. For instance, it has reduced cooperation with the IAEA in protest of the organization’s refusal to condemn the latest assassination of an Iranian nuclear scientist and sabotage against Iran’s monitored facilities, both allegedly done by Israel.
Iran is also focused on bolstering its allies and clients across the Middle East. Three months before his assassination by the United States, General Qasem Soleimani, the head of the Islamic Revolutionary Guard Corps’ Quds Force, reportedly stated that he created six formidable ideological and popular armies throughout the Middle East to protect Iran from any attacks by its adversaries. According to a senior IRGC commander who recently revealed Soleimani’s statement, these forces include Lebanon’s Hezbollah, Hamas and Palestinian Islamic Jihad, Yemen’s Houthis, pro-Iran Syrian forces, and the Iraqi Popular Mobilization Forces. Together, they constitute what Tehran calls the “axis of resistance.” As Iran expects more pressure from the United States, with or without an agreement, these moves signal its resolve to stay the course.
The Raisi administration’s second principle is to untether the country’s economy from the JCPOA negotiations. Although its predecessor hoped to use the JCPOA as a vehicle to open Iran’s vast market to Western companies, the Raisi team is determined to insulate Iran from the effects of sanctions by enhancing its economic ties with China, Russia, and its neighbors. The new government claims that it is dedicating 40 percent of its foreign policy activities to economic diplomacy and foreign trade—a departure from the Rouhani administration, which the ruling conservatives assert turned the Ministry of Foreign Affairs into the Ministry of the JCPOA.
A revived JCPOA could further facilitate Iran’s economic and security ties with the East, particularly in the aftermath of its recent admission to the Shanghai Cooperation Organization. But even without the nuclear deal, Iran sees non-U.S. allies as more reliable business partners.
The Raisi administration is also committed to strengthening the capacity of the country’s domestic industries. The president’s team of relatively young economic advisers believes that in response to sanctions, Iranian entrepreneurs have stepped up to manufacture high-quality goods for domestic markets. They are concerned that if sanctions are lifted, major international companies could once again push local manufacturers out of business. In a recent decree, Supreme Leader Ayatollah Ali Khamenei banned the import of home appliances from South Korea. The order was not just retaliation against Seoul’s unpaid $7 billion debt to Iran due to U.S. sanctions; it was also one step in a larger campaign to protect Iranian businesses against an unregulated open-market economy.
With or without the JCPOA, Iran is tying its economic fate to Asia and the Middle East.
In addition to moving toward a self-sufficient economy, Iran is now looking to wield greater economic influence in the Middle East, particularly in those countries where it already holds political sway. The Rouhani administration perceived the IRGC’s regional activities as not entirely aligned with Iran’s national interests, but its successor is resolved to demonstrate that the IRGC’s regional power offers tangible political and economic benefits. The government seeks to cash in on the IRGC’s military influence by “institutionalizing the achievements of the axis of resistance” in Iraq, Lebanon, Syria, and beyond, as Amir-Abdollahian has stated.
In response to Lebanon’s ongoing energy crisis, Iran has sent several shipments of fuel products through Syria to be distributed via its ally, Hezbollah. In addition to the promises of more shipments, Amir-Abdollahian has proposed the construction of two power plants in Lebanon within 18 months. He has also met with Syrian President Bashar al-Assad specifically to discuss Iran’s role in the economic reconstruction of the war-torn nation.
It is unclear how Iran can benefit from trading with cash-strapped countries that have their own economic and financial problems. Lebanon and other Arab countries also fear the imposition of U.S. sanctions if they do business with Iran. Nevertheless, Iran’s long-term regional goal is to form a dollar-free economic zone that can resist U.S. economic warfare.
Raisi’s foreign policy team has also worked to appropriate Rouhani’s nonideological reputation. Amir-Abdollahian’s buzzwords are “pragmatism” and “national interest,” and his position is that Iran is ready to work with any country. Accordingly, the administration is careful not to close any doors to future cooperation: Amir-Abdollahian claimed that Iran’s economic pivot does not mean “we are putting aside the West,” pointing to his recent meetings with 18 European foreign ministers during the UN General Assembly in September. But actions speak louder than words. With or without the JCPOA, Iran is tying its economic fate to Asia and the Middle East.
The Raisi administration’s strategy is based on a fundamental assumption about Iran’s relationship with the United States that the country’s ruling conservative elites have held since the establishment of the Islamic Republic. According to this view, Iran’s size, history, geostrategic location, and economic resources make it a natural regional hegemon and a potential threat to U.S. allies in the Middle East. The United States is therefore determined to keep Iran under economic and military pressure. Consequently, even if there is a nuclear agreement, Washington will undoubtedly find other ways to weaken and isolate Iran.
Iranian officials say that this is reflected in the way American and European diplomats negotiate with their Iranian counterparts. According to Amir-Abdollahian, although Iranian negotiators have enough authority to discuss whatever issue is at hand, their counterparts have limited leeway and receive instructions to bring up other matters, such as the IRGC’s regional role and Iran’s missile program.
Iranian officials perceive this as a tactic intended not to genuinely resolve any issue but instead to pocket concessions from Iran without reciprocating. In their view, this explains how President George H. W. Bush secured the release of American hostages in Lebanon without honoring his “goodwill begets goodwill” pledge in the 1990s, how President George W. Bush benefited from Iran’s collaboration to overthrow the Taliban in 2001 only to include Tehran in the “axis of evil” a few months later, and how President Barack Obama lured Iran into the JCPOA without meaningfully removing U.S. sanctions.
Consequently, the Raisi administration expects a new agreement to spark a dramatic increase in the U.S. pressure campaign for the precise purpose of denying Iran any tangible benefits from sanctions relief. Iranian officials claim that they are willing to discuss other issues of mutual concern provided the United States agrees to engage on one issue at a time, but they do not foresee any willingness by Washington to accept an agreement that could strengthen the Islamic Republic. Tehran’s strategy is to resist American influence at every turn and respond to coercion with coercion. Even as it prepares to resume negotiations over the nuclear deal, it is setting the stage for all eventualities—including conflict with the United States.