Put simply, the US government’s industrial market strength – and the nature of interconnected capitalism – is compelling foreign companies to abandon the Islamic Republic of Iran.
This past week saw the German sports manufacturer Adidas and the French auto company Renault withdraw business activity from Iran. Renault Chief Operating Officer Thierry Bollore said, “We are looking to new business opportunities, particularly in Africa, with strong growth to offset the missed opportunities in Iran.”
What is particularly telling about Renault pulling the plug on business in Iran is that the company has no business presence in the US.
However, Nissan Motors Co., of which Renault is the majority shareholder, sells a large number of automobiles to American consumers. The US market is a $19 trillion enterprise zone, in contrast to Iran’s $400 billion market. In short, capitalism votes with its feet.
Two punishing rounds of re-imposed economic sanctions will hit Iran in early August and November because of Tehran’s hyper-destabilizing foreign policy. Trump dissolved US participation in the Iran nuclear deal because the mullah regime failed to stop its malign activities in the region. The Joint Comprehensive Plan of Action, the formal name for the nuclear deal, also did not permanently block Iran’s path to building an atomic weapon, according to the US government.
It is worth recalling that both US Democratic and Republican administrations have designated Iran’s regime as a leading state-sponsor of terrorism.
Trump’s policy is undoubtedly winning the economic war – and the call-for-democracy transformation battle – against Iran’s clerical rulers. On Tuesday, Iranian protesters in Isfahan chanted “No to Gaza! No Lebanon! I give my life for Iran.”
The chant has been frequently heard in Iran to oppose the regime’s enormous expenditures to the Lebanese terrorist organization Hezbollah and to radical Islamic organizations in the Hamas-controlled Gaza Strip.
On the economic front, Iran’s currency skidded to a painfully new low on Monday, dropping to 122,000 rial to the dollar.
To further ostracize Iran’s regime, the ability to disconnect Tehran’s financial system from the Swift interbank messaging network needs to be part of the US sanctions tool kit, according to Iran experts. Yet the German government seeks to toss an economic wrench into the US sanctions process vis-a-vis Iran.
As my Foundation for Defense of Democracies colleagues Mark Dubowitz and Richard Goldberg noted in a June Wall Street Journal commentary, “German officials have indicated their goal: to ensure that Iran remains connected to the Swift system – formally called the Society for Worldwide Interbank Financial Telecommunication – that facilitates global financial transactions.”
They added that “By protecting Iran’s access to the Swift network, Germany hopes to preserve Europe’s ability to pay for Iranian oil and receive payment for European exports, in contravention of US sanctions. The Germans know that any maximum-pressure campaign against Iran cannot succeed if Iran remains connected to Swift.”
Yigal Carmon, the founder and president of the Middle East Media Research Institute (MEMRI), described Germany’s policy as “legitimizing Iran – even championing it.” He added that “Unfortunately, Germany’s grand government coalition and the opposition parties are united in defense of Iran and against the US. This shows the depths of Germany’s moral eclipse and its ideological blinders.”
Labor unrest – traditionally a solid indicator of the lack of stability in middle eastern countries – broke out last week in the teacher’s sector. Iranian teachers demonstrated against low salaries and a woefully inadequate pay increase. Radio Farda reported, based on a Khabar Online news story, that “Teachers Trade Union activists believe that the increase does not correspond with the current inflation rate and the quality of teachers’ livelihood.”
The ethos of democracy promotion, an improved livelihood and the desire for regime change are in the air and on the streets of Iran.
The escalating US economic pressure-point campaign against Iran’s economy appears to have spilled over in positive ways into the military sector.
On the military front, Iran’s bellicose activities – with the use of its small boats against US navy vessels in the Gulf – have come to a halt this year.
The opening salvo in Iran’s jingoistic rhetoric was launched by Iran’s allegedly pragmatic president Hassan Rouhani who said on July 22: “America should know that peace with Iran is the ‘Mother of all Peace,’ and war with Iran is the ‘Mother of all Wars.’”
Trump responded in a Tweet composed all in caps: “NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!”
The US administration seeks an improved nuclear and regional deal with Tehran. To build on economic sanctions, the role of credible military threats against Iran can influence a change in the behavior of the ayatollahs.
Take the example of Israel in 2010. When Iran announced it would send a vessel to aid the US- and EU-classified terrorist entity Hamas in the Gaza Strip, the IDF said it would intercept the ship. Iran quickly capitulated, and the ship did not depart.
Iran’s economy will continue to crater into a bottomless pit of misery if the US maintains its campaign of maximum economic pressure. Economic warfare without military intervention has a solid chance to contribute to the demise of Iran’s regime – or, at a minimum, the reversal of Iranian warmongering in the region.
This article was originally published by The Jerusalem Post. Benjamin Weinthal is a fellow for the Foundation for Defense of Democracies.