Iranian regime’s oil revenues linked to its military adventurism

Iranian regime’s oil revenues linked to its military adventurism

Iranian regime’s oil revenues linked to its military adventurism
An Iranian oil worker walks at Tehran’s oil refinery south of the capital in Iran. (AP/File)
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The lifting of sanctions on Iran, particularly on its energy sector, will significantly boost the regime’s oil and gas revenues, which will have severe repercussions for stability, peace and security in the Middle East.
Without any sanctions on Iran’s oil industry, the regime will be able to ramp up exports to pre-sanctions levels, roughly quadrupling its sales. This will bring billions of dollars of additional revenues to the Iranian government. For example, after the implementation of the Joint Comprehensive Plan of Action nuclear deal in 2015, crippling sanctions were lifted and Iran rejoined the global financial system. Iran’s oil and gas industries had a fresh start as the regime increased its oil exports from 1 million barrels per day to about 4 million bpd.
Oil revenues are critical for the Iranian regime, which reportedly has the second-largest natural gas reserves and the fourth-largest proven crude oil reserves after Saudi Arabia, Canada and Venezuela. The sale of oil accounts for almost 60 percent of the government’s total revenues and more than 80 percent of its export earnings. In fact, several Iranian leaders have hinted at the country’s major dependence on oil exports. Former President Hassan Rouhani acknowledged in 2019 that “although we have some other incomes, the only revenue that can keep the country going is the oil money.”
But it is important to point out that the removal of sanctions will also assist the Iranian regime in attracting foreign investment in its energy sector and other industries. For instance, after the 2015 nuclear agreement, Tehran succeeded in signing major agreements with some of the world’s largest aviation, oil and gas corporations. The energy producer Total signed an agreement with the National Iranian Oil Company “for the development of Phase 11 of South Pars, the world’s largest gas field.”
Another agreement was sealed with Royal Dutch Shell, which signed a provisional deal with the Iranian oil giant “to further explore areas of potential cooperation.” Furthermore, the regime signed a historic deal with Boeing, the first business agreement Tehran had concluded with a US aviation corporation since the 1970s. Iran also began negotiating to buy planes from the European manufacturer Airbus.
The lifting of sanctions will not only help the regime to substantially increase its revenues, but will also help Iranian leaders to improve relationships with the West through potential economic and business agreements. As a result, this will give a leverage and cushion to the regime against potential future pressure from the West, or against the possibility of the US attempting to walk away from the nuclear agreement once again. This is due to the fact that Western and Asian governments will be less inclined to jeopardize their investments in Iran by going back to the era of sanctions and heightened political tensions.

The regime’s extra revenues from oil and foreign investments will more likely heighten tensions between Iran and other countries in the region.

Dr. Majid Rafizadeh

On the other hand, from a geopolitical perspective, the increased revenues from oil and foreign investments will grant the theocratic establishment the necessary financial relief and global legitimacy to pursue more forcefully its military adventurism and regional hegemonic ambitions.
The main beneficiaries of the increased revenues will most likely be the office of the Supreme Leader Ali Khamenei, the Islamic Revolutionary Guard Corps and, more importantly the IRGC’s elite branch — the Quds Force — which carries out extraterritorial operations to advance the revolutionary principles of the regime abroad.
It is worth noting that a considerable part of the economy and Iran’s financial systems are owned and controlled by the IRGC and the office of the supreme leader. The IRGC alone controls between a third and half of Iran’s gross domestic product. It owns several major economic powerhouses and religious endowments, such as Astan Quds Razavi in the northeastern city of Mashhad. This means that state and non-state actors, such as the Houthis, Hezbollah, and the Shiite militias in Iraq and Bashar Assad’s Syria, will be the next major beneficiaries of any sanctions relief.
The IRGC and Quds Force continue to interfere in other countries and display their power in the region. The Tehran regime’s extra revenues from oil and foreign investments will more likely heighten tensions between Iran and other countries in the region, and lead to further regional insecurity, destabilization, conflicts and probably humanitarian tragedies.
With the lifting of sanctions against the Iranian regime helping it to increase its oil revenues and rejoin the global financial system, Iran’s hard-liners and ultraconservatives will prevail, and the regime will feel less pressured to fundamentally alter the core pillars of its regional and foreign policies. This will allow Iran’s supreme leader and the IRGC to expand their hard power, use the nation’s wealth for military adventurism, and suppress opposition to the regime.

Dr. Majid Rafizadeh is a Harvard-educated Iranian-American political scientist.
Twitter: @Dr_Rafizadeh

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