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Hard Times In Iran

Large crowd at the funeral of Qassem Soleimani, Tehran, Iran.
Funeral of Qassem Soleimani, Tehran, Iran, Jan. 6, 2020. Photo by Hossein Mersadi,
courtesy Tasnim News Agency, licensed under Creative Commons.

Six months after the architect of its military adventurism was cut down, the Iranian regime is so impotent that it apparently has all but mortgaged the country to China.

This is arguably the Trump administration’s most impressive foreign policy accomplishment, even if it has passed almost unnoticed in an America preoccupied with other matters. It has assuredly been noticed, however, across the Middle East and in capitals far beyond.

Between May and December last year, Iran kept busy. It launched a damaging drone attack against a major Saudi Arabian oil installation. It seized several oil tankers, including the British-flagged Stena Impero (which was released after two months) and attacked several others. It shot down an unmanned U.S. surveillance aircraft. And the Pentagon accused it of coordinating an assault on the U.S. embassy in Baghdad. Members of the militias that carried out this final attack scrawled graffiti on embassy walls claiming that they were under the direction of the Islamic Revolutionary Guard Corps commander Maj. Gen. Qassem Soleimani.

Soleimani arrived in Iraq on Jan. 3 at the invitation of that country’s government, according to a recent report by a United Nations human rights investigator. In that report, she declared his killing by a U.S. drone strike as “unlawful and arbitrary under international law.” The United States has maintained that Soleimani was in Baghdad to direct imminent further attacks against American interests. Assaulting a U.S. embassy is the first entry in the Islamic Republic’s playbook – there was a hostage situation in Tehran from 1979 to 1981, you may recall – but perhaps the U.N.’s Agnes Callamard believed Soleimani was in Baghdad to arrange a surprise birthday party for the American ambassador.

Soleimani’s death was a game-changer. Five days later, Iran launched a volley of missiles against American military positions in Iraq, which caused around 100 injuries – including some traumatic brain injuries – but no U.S. fatalities. In the hours that followed, the retaliation boomeranged. In a hair-trigger reaction mere hours later, the late major general’s own IRGC forces mistakenly shot down a Ukraine International Airlines flight departing Tehran. It killed all 176 aboard, the majority of whom were Iranian nationals. Three days of cover-up ensued before video emerged showing that the plane had been shot down by anti-aircraft missiles.

Since then, crickets. Iran soon became one of the first global focal points of the pandemic. Its economy, already battered, took another heavy blow. President Trump chose not to respond to the Iranian missile barrage, which has avoided further casualties. In the meantime, Iranian assaults in the Persian Gulf, the Gulf of Oman and the Arabian Peninsula have essentially stopped.

But Iranian misfortune has continued. A recent explosion at the country’s main disclosed nuclear site at Natanz, which some attribute to Israeli intelligence, has set back the country’s uranium enrichment program by a year or two, according to published estimates. There have been mysterious accidents at other sensitive installations elsewhere in the country. The economy is, by some accounts, almost in ruins, although the impending collapse of the regime has been oversold by opponents in the past. Iran's military-theocratic complex has always found a way to hang on to power.

China may provide that lifeline this time. Iran disclosed last week that it is negotiating a 25-year “strategic accord” with Beijing. Terms were not publicly announced. However, the website Oilprice.com reported that they were based on a proposal Iran offered last year, as American financial sanctions reimposed after Trump withdrew from the 2015 nuclear accord began to bite.

Those terms reportedly include $280 billion of Chinese investment in Iran’s energy sector and $120 billion for other infrastructure, both front-loaded into the first five years. In return, Chinese firms would secure first option to build or complete any fossil fuels or petrochemical projects in Iran. China would also receive large discounts from global market prices on Iranian fuel exports, with easy payment terms that include using “soft” currencies from developing countries. This could be a useful hedge for China if its own companies become subject to U.S. banking restrictions.

The website further reported that the agreement has been broadened to include a military component allowing unrestricted access to Iranian air bases for Chinese and Russian bombers, fighters and military transport aircraft. It also reportedly includes air and naval cooperation between Iranian and Chinese forces. This would, at least in theory, offer the increasingly far-ranging Chinese navy a platform to operate freely in the Persian Gulf region, where it could challenge U.S. and allied military operations.

In the near term, though, it seems more likely that China would send civilian contractors to Iran as part of its “Belt and Road” initiative, while leaving the provision of any combat forces to Russia, which already operates in the region in coordination with Iran.

China’s steadily more far-ranging and assertive military posture, and Russia’s propensity to cause trouble for the West just to prove it still matters, are long-term strategic problems that will not go away, regardless of what happens in Tehran. The recent difficulties in Iran do not necessarily portend any lasting change in its regime’s behavior, either. But the mullahs’ no-good, very bad year – bought at the cost of a single targeted airstrike against a man whose expertise was at creating carnage – has at least produced six months of relative quiet in a combustible corner of the world. And unlike the deal the Obama administration struck five years ago, this was not purchased with massive financial relief that Tehran could, and did, use to finance later aggression.

It’s a win, at least for now, whether anyone wants to credit the administration or not. I can cite no better authority for this than Joe Biden. Trump’s opponent in this year’s election denounced Soleimani’s killing at the time, but he hasn’t mentioned it in months. His silence says it all.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s most recent book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book, Looking Ahead: Life, Family, Wealth and Business After 55.

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