The effect of the Iranian turbulence on the region
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The nuclear deal is facing a deadlock. Iran has raised the bar and made a return to the nuclear deal impossible, so there is little chance that money will flow into Iran anytime soon. At the same time, the economic crunch has reached its peak and people are protesting in the cities of Iran due to a sharp increase in food prices. How will Iran behave facing domestic popular discontent and increasing regional failure?
Financially, Iran is exhausted and needs to consolidate its efforts internally. Not that the regime has reached breaking point, but the system is exhausted. The financial system, similar to the Lebanese system where people used to put their money in the bank in return for a high interest rate, is no longer working. People are no longer putting their money in the bank, an Iranian source of mine told me, and Iran is technically still under maximum pressure.
Regionally, the Iranian project has reached its peak. There is not much that can be invested anymore. What happened in Lebanon is a continuation of what happened in Iraq and what will happen in Lebanon will be similar to what is happening in Iraq. Iran lost the majority and, since it cannot have a government it can control, it will push toward a deadlock. Through Hezbollah and its Shiite ally, the Amal movement, the pro-Iran camp has claimed the 27 Shiite seats.
However, Iran and the Assad regime lost allies in other denominations. Hence, Iran is more isolated inside Lebanon. The US dollar exchange rate to the Lebanese pound increased immediately after the election, as everyone expected the country was heading toward a caretaker government that would not be able to conduct any reforms or enter into a deal with the International Monetary Fund.
However, this policy is not sustainable. Iran, now facing financial strain and political exhaustion of proxies, is in a time-buying mode.
The nuclear deal can save the regime. It needs the money although the nuclear deal is not sustainable. There is no way a nuclear deal can get ratified by the US Congress even if the Joe Biden administration enters the nuclear deal, which is becoming more and more unlikely. There are no guarantees that it will not be reneged on by the next administration, and the chances are that the next administration will be Republican.
The best scenario for Iran is to sign the nuclear deal and try to get as much money as possible.
Dr. Dania Koleilat Khatib
The best scenario for Iran is to sign the nuclear deal and try to get as much money as possible in the next two years and prepare for a possible reversal. But the condition that Iran has put, which is to remove the Revolutionary Guard Corps from the terrorist list, makes the negotiations impossible. Face-saving is very important for both parties.
The US cannot look like it has bowed to Iran, and Iran cannot look like it has traded its “principles” for some perks. So it is difficult for Iran to back down on the conditions it has put forward. Since it cannot invest any more in its proxies, it will try to consolidate political gains. Given that it has lost majorities in Lebanon and Iraq, it will block the formation of governments there over which it has no control.
On the other hand, it has more space to operate in Syria due to Russian retrenchment. However, this will make it more prone to strikes from Israel. Israel had an agreement with Russia in which Israel could hit Iranian targets and keep Iran contained inside Syria.
With their guarantor now almost absent, the Israelis will need to get more aggressive with Iran in Syria. With Russia gone, the Bashar Assad regime is in jeopardy, and so is the Iranian presence, especially since Turkey is gaining more leverage. The war in Ukraine gave Turkish President Recep Tayyip Erdogan the role of the mediator that NATO and the US needed as well as Russia. If Turkey pressures Russian President Vladimir Putin to give up on Assad, what will that make of the Iranian presence in the Levant? What will that make of Hezbollah?
Hezbollah is the flagship proxy of Iran. Hence, Iran is in a precarious situation at home and abroad and needs to make careful calculations. It is not the time to pick a fight with anyone. It will most likely try to consolidate political gains by using the veto power to block any political process unless the pro-Iran groups have some level of control. However, the deadlock is a dangerous game as it can lead to chaos. Iran is cornered. It has diminishing leverage and hence needs to act skillfully.
Is it the end of the regime? Not really, but the Iranian project has reached its peak and is starting its downfall. The influence is slowly diminishing and Iran is unlikely, if all factors are the same, to be able to supplement its proxies with more funds. Assad visited Iran recently to ask for more support. It is unlikely that Iran will be able to commit to more funds if the nuclear deal is not signed.
If signed, the nuclear deal can help the regime in Iran. But, as mentioned previously, Iran has shot itself in the foot by setting conditions it cannot retract. Hence, in the coming period, we will see more political deadlock and a deteriorating economic situation, namely in Lebanon. The Arab-Turkish reconciliation is also not in Tehran’s interest.
Facing this pressure and the economic crunch, Iran will most likely try to maintain the status quo. In the countries where it has influence, like in Yemen, Syria, Iraq and Lebanon, we will see stagnation. Unless there is some sort of disruption, it is unlikely to see a government formation in Lebanon and Iraq, and unlikely we will reach a solution in Syria and Yemen anytime soon.
• Dr. Dania Koleilat Khatib is a specialist in US-Arab relations with a focus on lobbying. She is co-founder of the Research Center for Cooperation and Peace Building, a Lebanese NGO focused on Track II.
