July 6 saw Masoud Pezeshkian announced as the new president of Iran, following the death in a helicopter crash of his predecessor Ebrahim Raisi on 19 May. The surprise new president won on a campaign based on the idea of resuscitating the ‘Joint Comprehensive Plan of Action’ (JCPOA, or colloquially ‘the nuclear deal’) to prompt the removal of international sanctions against Iran. It is the same idea that won former President Hassan Rouhani the top job in 2013 and again in 2017, during which the JCPOA was created and then destroyed, for the very same reasons that are likely to hamper any efforts by Pezeshkian to do revive the long-stalled deal.
Back on 3 August 2013, a stunning shift towards a seemingly more Western-friendly leadership in Iran occurred with Rouhani’s election to the presidency. Although he was often referred to as a ‘moderate’, that was not really the case in the truest sense of the word. Certainly, he was keen to re-engage with the West, but this was founded on economic and financial considerations for Iran and not on some deeper ideological basis that might have included embracing anything other than the notion of Iran as a true Islamic state. In this sense, there was no difference between Rouhani and his group of supporters and the more overtly Islamic elements in Iran’s political and religious architecture, including the Islamic Revolutionary Guards Corps (IRGC), who are commonly referred to as ‘hardliners’. All these groups – political, religious and military – are firmly rooted in and supportive of the Islamic and revolutionary ideals that were the foundation stone for the creation of the Islamic Republic of Iran in 1979. The only difference between them was the nature of their engagement with the West, which itself is a function of how willing any of these groups are to ‘play the game’ with the U.S. and its core allies, as analysed in full in my new book on the new global oil market order. Nonetheless, Rouhani had secured the agreement at that point of Supreme Leader Ali Khamenei to play this game. Consequently, he had the support of the IRGC to do make deals with the West in exchange for the then-existing sanctions to be dropped and major new investment from the West to be secured for the benefit of Iran. The apotheosis of this agreement between all parties in Iran was the adoption on 20 July 2015 of the JCPOA between Iran and the P5+1 group of nations (the U.S., U.K., France, Russia and China plus Germany).
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Following this, sanctions began to be scaled back and hundreds of billions of dollars’ worth of new deals flooded in from Western firms, mainly focused on the oil and gas sectors, given the huge reserves of each possessed by Iran. These deals were contingent on the continued adherence of the Islamic Republic to strict guidelines surrounding its nuclear industry, most notably including limits on uranium enrichment and regular inspections of nuclear sites by Western-approved inspectors. The guidelines also crucially included action points aimed at reducing the vast network of business and financial interests held by the IRGC across all major sectors of Iran’s economy. These were used then as they are to this day to spread Iran’s own brand of Islamic faith across the world through whatever means necessary, including the bankrolling of multiple military and political proxies around the globe. Estimates at the time were that the IRGC has placed top commanders at the heart of more than 200 Iranian companies.
Although the U.S. had not forcefully followed through on these anti-IRGC guidelines in the early days of the JCPOA coming into effect, as the huge Western deals continued to roll in, Washington started to increase its pressure on Rouhani to begin to implement some of them, as also detailed in my latest book. One of these was that Iran sign up to the rules and regulations of the Financial Action Task Force (FATF) and then to becoming a fully-regulated and constantly-monitored FATF member. The FATF has 40 active criteria and mechanisms in place to prevent money laundering - an activity that is vital to the IRGC’s activities across the world. It also has nine criteria and mechanisms in place to do the same for the financing of terrorism and related activities - again, a core of the IRGC’s role in promoting Iran’s brand of Islam around the globe. The FATF additionally has swingeing powers to wield against individuals, companies, or countries who transgress any of its standards and is extremely aggressive in using them by degrees, depending on whether the sanctioned entity is on its ‘grey’ or ‘black’ list. In sum from the U.S.’s perspective, either progress was made by Rouhani’s government on moving towards eventual FATF membership (which were aimed at the gradual destruction of the broader power of the IRGC), or the sanctions reduction elements of the JCPOA would be frozen and perhaps reversed (which were aimed at the gradual destruction of Iran’s economy). Ultimately, the choice was removed from Rouhani, as the IRGC began a series of very high-profile ballistic missile tests in September 2017, and then between February and August 2018 conducted another seven high-profile missile test flights that infuriated the U.S. and its allies, as also analysed in my latest book on the new global oil market order. The idea being publicly floated in Washington late in 2017 as an additional step to censuring Iran over the new missile testing was to officially designate the IRGC as a foreign terrorist organisation (FTO). This increased the domestic pressure on Rouhani from the IRGC, effectively neutralising his ability to move the JCPOA any further forward before the U.S. unilaterally withdrew from the deal in May 2018.
Consequently, new President Pezeshkian’s options from here look highly limited, given the two U.S. presidential possibilities for the next few years. It was former President Donald Trump who was instrumental in the U.S. pulling out of the JCPOA in 2018, so the chances of any new administration of his favouring any re-entry to that deal look exceptionally remote. Similarly, it was President Biden’s administration that made Iran’s signing up to the FATF a rigid pre-condition for any consideration of a re-formulated JCPOA being undertaken, even when the U.S. government was desperate to get new oil and gas flows into the market to reduce prices following Russia’s invasion of Ukraine. Finally, neither Supreme Leader Khamenei nor the IRGC have shown any sign of wanting to downsize Iran’s ability to spread its own brand of Islam across the world through whatever means necessary, which requires the IRGC’s web of business and financial interests in Iran to remain unbroken.
By Simon Watkins for Oilprice.com
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