A year after unilaterally pulling out of the Iran nuclear deal, the Trump administration has Iran right where it wanted the Persian state to be: in the midst of hyper-inflation and disillusionment. Iran’s economy is reportedly in a shambles, pressed hard under the weight of US sanctions on Iranian oil and banking. Careful not to violate US sanctions, even European companies have fled from Iran, exposing the limited influence an otherwise-influential EU has on the global financial system.
While it is unclear what ultimate objective the US has in mind for squeezing Iran into a depression, its hawks are unrelenting, opening new fronts in recent weeks. On the economic side, after annulling waivers for Iranian crude exports, the US has now sanctioned Iran’s metal exports as well. On the diplomatic front, the US has classified Iran’s Revolutionary Guards – a government branch – as a terrorist organisation. The US is also flexing its military muscle by deploying an aircraft carrier and B-52 bombers close to the strategic Strait of Hormuz.
Amid an economic squeeze served with provocative US gestures, observers are worried about a military escalation going out of control in a volatile region. Might may be right, but America must carry most of the blame for any chaos that may follow. President Trump pulled out of the nuclear deal citing Iran’s alleged subversive behaviour in the Middle East – but that behaviour and a permanent ban on Iran’s nuclear programme could have been addressed by staying in the deal, not by breaking it.
A year later, a frustrated Iran is hinting that it might resume its nuclear programme. The fact that US sanctions were imposed even though Iran had been compliant has emboldened Tehran hardliners and weakened the case for global engagement. Iran is in a tough spot – sanctions are hitting hard whether or not it complies with a deal that is half-dead and honoured by the remaining partners in name only.
Although a full-scale US military intervention into Iran looks unlikely at the moment, events less than that may also affect Pakistan. Even a limited US-Iran military engagement along the Hormuz, through which a third of global crude-oil tanker traffic passes, is bound to shoot up the crude oil prices. That will negatively affect Pakistan’s external finances at a time when imports are being curbed to save precious forex.
If a civil war broke inside Iran due to US economic and military pressure, it may force some Iranians to seek refuge in neighbouring countries, of which Turkey and Pakistan are among the more stable ones. This influx may create complications for Pakistan, which is friendlier with (nay, financially beholden to) the anti-Iran Gulf States. Pakistan will also need to ensure that it is not caught in the middle of a proxy war.
The sky hasn’t fallen yet, but it doesn’t look good down Southeast. The US hostilities towards Iran are one area where Pakistan should hope that Trump’s isolationist tendency stops the hawks in his administration from launching a fresh military intervention.
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