The golden days return for Iran

by Gabriel Noronha

2019 was a tough year for the payroll professionals serving in Iran's terrorist groups across the Middle East. One distraught Iranian-backed fighter in Syria who had lost a third of his salary and other benefits lamented to the New York Times in March of that year that "the golden days are gone and will never return ... Iran doesn’t have enough money to give us."

The State Department’s Iran Action Group — of which I was a member — was so fond of the fighter’s swan song that we printed team T-shirts emblazoned with his quote.

An administrator with the Hezbollah terror group told the Washington Post two months later that they had been forced to make "draconian" spending cuts and had imposed austerity measures that included furloughing fighters and canceling propaganda programs. The terror group’s leader, Hassan Nasrallah, started making fundraising appeals on television and radio programs.

Fast-forward four years, and the golden days for Iran’s foreign fighters have returned.

Syrian media reported on July 13 that Iran’s Islamic Revolutionary Guard Corps had increased salaries for its militia fighters in Syria by 13%. This was not an isolated incident, as the budgets for the regime’s various terror and repression arms increased by double digits this year.

The culprit behind the 2019 spending cuts was clear to all involved: the "maximum pressure campaign" orchestrated by the Trump administration that imposed strict sanctions on Iran’s oil exports had wreaked havoc on Tehran’s balance sheet. It left little money for foreign dalliances.

At the end of 2019, Iranian President Hassan Rouhani estimated United States sanctions had deprived the regime of $200 billion in oil revenue and investment.

And while China still flouted U.S. sanctions on the margins, they imported less than $7 billion worth of Iran’s oil in 2020. With rising inflation, a massive cut to revenue, and domestic turmoil caused by the regime’s corruption and repression, Iran’s leaders simply could not afford to fund their major efforts to destabilize the region — their weekly sales of debt bonds in 2020 would often fail to even sell on domestic markets.

Yet in 2021, salvation was delivered almost immediately upon the accession of Rob Malley. He had served as the Biden administration’s top official on Iran until his security clearance was suspended this spring during an ongoing investigation by the FBI and Diplomatic Security Service into his alleged mishandling of classified information.

Malley and other Biden officials suspended enforcement of most Iran sanctions in a bid to have them rejoin the 2015 nuclear deal.

The results of this gambit have been disastrous. Not only did Malley fail to coax Iran back into the Obama-era nuclear deal — or any nuclear deal — but over the past 30 months, his policies led to Iran’s oil exports soaring massively.

In a July 14 letter, eight U.S. Senators wrote to Secretary of State Antony Blinken and Secretary of Treasury Janet Yellen that Iran’s "ghost fleet" of tankers evading U.S. sanctions has grown from 60 vessels in 2021 to 338 today. Most of these tankers are ferrying illicit oil from Iran to China, helping the regime reach its highest level of exports in five years, with the proceeds flowing directly to Hezbollah and the IRGC.

Yet this administration has sanctioned a grand total of six of the tankers.

As a result, Iran’s foreign currency reserves have skyrocketed from their $4 billion low in 2020 to an estimated $43 billion in 2023. It should come as no surprise then that Tehran has not agreed to ink any nuclear deal with the West.

Even without sanctions relief, Iran is able to enjoy most of the economic benefits it would have found in that deal without giving up or even pausing its nuclear enrichment activities.

The Biden administration failed to achieve its strategy of a mutual return to a nuclear deal, but the attempt massively enriched Iran’s terror programs and proxies in the process.

Now that Malley, the chief architect of these failures, has been placed on unpaid leave, President Biden and Secretary Blinken should take this opportunity to forge a new path. Ideally, one that places the terrorist human resource administrators of Tehran, Beirut, and Damascus back in a pickle.

To start, the administration can sanction every tanker carrying Iranian oil, limiting the vessels’ ability to refuel or receive repairs in most ports. Those sanctions should be extended to the ships’ owners, their captains, and crews.

In 2020, the U.S. government successfully offered sanctions relief and financial rewards to these groups in exchange for their illicit cargoes. In one case, the Department of Justice sold $40 million worth of illicit oil and gave the proceeds to victims of Iranian terrorism.

Those are the golden days I’d like to return to!

Gabriel Noronha is the Executive Director of Polaris National Security and a Fellow at the Jewish Institute for National Security of America. He previously served as the Special Advisor for Iran at the Department of State under Secretary Mike Pompeo.