Sanctions Relief Can't Revive Iran's Economy

Now that we have our sailors back from Iran's regime, it seems like we can expect economic sanctions on Tehran's nuclear program to be lifted soon, provided Iran continues to fulfill its obligations under the Joint Comprehensive Plan of Action.

The release of billions of dollars of Iran's frozen assets was one of the centerpieces of the nuclear pact, but the agreement does not specify who will receive this money.

The overwhelming proportion of the funds will probably go straight to Iran's Islamic Revolutionary Guards, the very people whose images were broadcast on Iranian state TV parading our sailors with their hands behind their heads.

Critics of the deal rightly worry that sanctions relief will only reinvigorate Iran's war machine in Syria and elsewhere at a time when pressure could have limited Iran's regional influence.

Whatever benefits the West hopes to achieve from new investments in the Islamic Republic, they don't justify the blood that will stain our hands when we feed such a narrow and dangerous segment of the Iranian economy.

Some Western companies are eager to invest in Iran, as evidenced by President Hassan Rouhani's forthcoming, trade-oriented trip to Italy and France. But for Iranians, the prospects seem dim, since three years under Rouhani have led to no improvement in economic conditions.

According to the Paris-based Middle East Studies Foundation, more than 50% of Iran's gross domestic product is controlled by 14 entities, all of which are affiliated with the military and security apparatus and controlled by Supreme Leader Ali Khamenei.

Virtually all Western businesses that invest in Iran will be dealing with these entities and contributing to the expenses of the Revolutionary Guards, including financial aid to the Assad regime in Syria.

In September, the French Accor hotel chain signed a contract with the Iranian company Aria Ziggurat on the management of two 4- and 5-star hotels, Ibis and Novotel. Aria Ziggurat is 100% owned by the Segma tourism investment group, the Persian abbreviation for Iran Cultural Heritage & Tourism Investment Group, a branch of the Revolutionary Guards' companies.

The deferral of Iranian wealth to the Syrian and Iraqi battlefields is obligatory for the Iranian government. The supreme leader has outlined his "6th Economic Plan," which will be implemented on March 21, calling for a portion of the country's oil income to be placed on deposit to provide support for "revolutionary entities," i.e. the Guards and foreign militias.

Any such siphoning of Iran's new revenue streams is sure to have a negative impact on the domestic economy, since the prospective recovery is already severely limited.

According to Arab Oil Capital Co., Iran can be expected to add only 400,000 barrels per day to its production by the end of 2016 from a starting point of 2.8 million bpd. It will then gain only an additional 300,000 bpd in 2017, falling well short of its pre-sanction levels of 4 million bpd.

The Iranian Oil Ministry's assessment of the past five years indicates recovery of the oil and gas sector requires more than $100 billion in investment. But Iranian officials have not designed a plan for attracting this capital or overcoming the financial and technical problems that might cause international companies to delay their return to Iran for over a decade.

Furthermore, those initial assessments didn't take into account the steep decline in the price of oil, which dipped below $30 a barrel this week.

All these factors point to the persistence of the recession that has been suffocating Iran's economy. On Oct. 7, the International Monetary Fund forecast Iran's economic growth at 0%. Iranian economists believe the economy will emerge from its crisis only when it has an annual growth of at least 6%.

The money to be released from sanctions won't seriously boost that economy or improve the lives of everyday Iranians. It will be at the disposal of the Guards and other entities that dominate Iran's economic infrastructure.

Its real effect will be to provide for the expenses of this regime's terrorism, export of fundamentalism and suppression of the Iranian people, including dissidents such as members of the People's Mojahedin Organization of Iran.

When Rouhani visits Italy and France later this month, he'll try to entice European entities into doing more business with Iran. Even if he's successful, Iran's economy will remain engulfed in such crises that there's no prospect for serious changes without major political alterations, which seems as unlikely as ever.

• Blackwell is a former U.S. ambassador to the United Nations' Human Rights Commission and treasurer of Ohio.

Source: http://news.investors.com/ibd-editorials-on-the-right/011316-789679-sanctions-relief-cannot-revive-irans-economy.htm?fromcampaign=1&p=2