Why US sanctions won’t ‘starve’ Iran of means to pursue its regional policy

Al Manitor | : As the Trump administration unveiled its strategy to “confront Iran” in the aftermath of its withdrawal from the Joint Comprehensive Plan of Action (JCPOA), Secretary of State Mike Pompeo in October outlined a “campaign to crush the Iranian regime’s terrorist financing.”

To assess the likely efficacy of stated US policy, it is important to grasp the nature and scale of Iranian military expenditures and also understand how economic adversity impacts such spending.

Available data suggest that sanctions have had a negative impact on Iran’s military spending. For instance, Iranian academics Sajjad Dizaji and Mohammad Farzanegan point out that military spending dropped by almost one-third between 2006 and 2015 — “one of the highest percentage decreases in military spending globally.” In this vein, military expenditures increased by 30% after the lifting of nuclear-related sanctions in 2016, a development that President Donald Trump emphasized when declaring the US withdrawal from the JCPOA back in May.

Yet, while there has been a jump in military spending over the past two years, the contraction of such expenditures over the previous decade has meant that the increase has only brought spending back to 2009 levels. Moreover, even after the surge, military expenditures only constitute 3% of the gross domestic product. Here, Dizaji and Farzanegan separate the respective impact of unilateral and multilateral sanctions, and posit that the present US penalties are likely to have a “statistically insignificant” effect on Iran’s military spending “in both the short and long run.”

Historical context provides further understanding of how the Islamic Republic approaches defense expenditures. For instance, while Iran’s present regional interventions and influence are likely at their peak in centuries, military spending is still below that of the shah. Indeed, in constant 2016 US dollars, military expenditures under the Pahlavi regime peaked at $17.5 billion in 1976. Four decades later — and after the post-JCPOA boost — defense spending stands at an estimated $16 billion.