Mises Wire

The 45-Year-Old Cold War with Iran Is a Failure. It’s Time for a New Approach

iran and US flags

Since its establishment in 1979, the Islamic Republic of Iran has become the third-largest threat to United States national security. It may therefore seem like the ideal strategy to combat this threat would be one that is confrontational and aggressive. However, this approach has proven largely ineffective. The truth is that hawkish policies stressing interventionism only escalates tensions with adversarial foreign powers. Moreover, such actions tarnish America’s international image. While we should treat Iran with caution, military action—whether by congressional declaration of war or executive decree—would be futile and counterproductive.

Firstly, military intervention tends to breed resentment within local populations. Secondly, regime-change wars often create power vacuums and reduce living conditions. For example, the US intervention in Libya under Barack Obama led to the collapse of institutions, paving the way for anarchy, gang rule, and black markets, such as Libya’s contemporary “slave exchange.”

While Iran undoubtedly poses a threat to international stability, this threat would be more effectively addressed by adopting a doctrine of entente—a strategy focused on trade, neutrality, and the reduction of power imbalances—rather than war. Reinstating the nuclear deal is critical in this context, as it would mitigate hostilities, promote stability, and foster cooperation rather than conflict.

From the late 1800s through much of the twentieth century, Iran stood as one of America’s most steadfast allies in the Middle East. However, a pivotal moment in this relationship occurred in 1953 when the democratically elected Prime Minister Mohammad Mosaddegh was overthrown in a coup d’état orchestrated by the Central Intelligence Agency and MI6. The motivation behind this coup stemmed from Mosaddegh’s perceived lack of staunch anticommunism; both Winston Churchill and Dwight D. Eisenhower feared that his moderate stance would facilitate the pro-Soviet Tudeh Party’s access to political power. Additionally, Mosaddegh initiated the nationalization of Persian oil, which included reserves belonging to the Anglo-Iranian Oil Company—the largest private corporation in the British Empire. In response to these actions, the US and the United Kingdom orchestrated Mosaddegh’s removal and installed Shah Mohammed Reza Pahlavi in his place.

Fast forward to 1979, when anti-Western revolutionaries deposed the shah and established the so-called Islamic Republic, taking a number of US hostages in the process. This marked the beginning of a tumultuous and often-hostile relationship between the US and Iran. Since 1979, the US has imposed a series of sanctions on Iran, beginning with Executive Order 12170—which froze an estimated $1.02 billion in Persian assets—followed by an embargo on Persian imports a year later and, finally, a comprehensive ban on all trade in 1957.

A significant shift occurred in 2015 with the signing of the Joint Comprehensive Plan of Action (JCPOA), which saw the US start to lift some of these sanctions. However, this reprieve was short-lived. Upon assuming office in 2017, President Donald Trump reinstated most of these sanctions. Trump’s tenure was marked by harsh language and rhetoric toward Iran, which reignited certain hostilities that President Obama had previously tempered. Tensions reached a new peak in January 2020 when Trump ordered the extrajudicial assassination of General Qasem Soleimani, an action that drew severe ire from the Iranian government.

Despite these stringent measures, US sanctions have fallen short of their objective, having done nothing to curb Iranian expansion. Furthermore, Trump’s administration threatened to impose sanctions on countries that engaged in commerce with Iran. Given that the economic benefits of trading with the US outweigh those of trading with Iran, most nations complied with Washington’s demands, significantly hampering Iran’s ability to export oil.

Public opinion of Americans is higher in Iran than the average Islamic nation. It is the US government, not the American people, that Iranians distrust. This wariness stems from decades of crippling sanctions and US intervention near Persia’s sphere of influence. Amplified sanctions would only serve to further damage this improving public opinion, thereby diminishing any prospects for peace in the foreseeable future. Regrettably, this has been the same exact approach of the Biden administration.

Iran’s perceived threat to American interests in the Middle East could be significantly mitigated if the US were to lift sanctions and open trade. Currently, the US and UK are Iran’s only major Western adversaries. In contrast, Iran maintains robust trade relations with the European Union. Iran ranks as Europe’s seventh-largest exporter of crude oil. Germany, in particular, has cultivated strong economic ties with Iran, with exports to Iran increasing by nearly 30 percent from 2015 to 2016 alone. This underscores Iran’s willingness to engage in commerce with the West.

The United Arab Emirates is one of America’s closest partners in the Middle East. However, from 2020 to 2021, the UAE emerged as Iran’s principal trading partner in the region. This development may have long-term negative implications, especially as the US continues to scale back its presence in the Middle East. A reduced diplomatic presence coupled with continued sanctions could see Iran sway the UAE to its side. Similar instances could unfold among the European countries previously mentioned.

Iran’s pursuit of economic expansion is precisely what US sanctions aim to stifle. The limited avenues for growth have driven Iran to seek alternative trading partners like Russia and China. Thus, the current US strategy appears counterproductive, as it pushes Iran further into the arms of rival powers.

Since the mid-1990s, Russia has been one of the largest foreign investors in the Persian capital and has played a pivotal role in aiding Iran’s development of nuclear weapons, something that would confer a strategic advantage upon both nations. The US, in its efforts to further isolate Iran, risks inadvertently fortifying this partnership. For instance, on May 8, 2019, Iran’s newly retired Minister of Foreign Affairs Mohammad Javad Zarif convened with Russian Foreign Minister Sergey Lavrov in Moscow, where they discussed American sanctions and the threat of Western aggression.

More recently, as efforts to revive the nuclear deal have intensified, Iran’s counterproposals have garnered the support of both China and Russia. When formal negotiations recommenced on November 29, 2021, Vladimir Putin positioned himself as a close ally of Iran’s then newly elected President Ebrahim Raisi, who was recently killed in a helicopter crash in May. Recent strategic maneuverings by the Kremlin indicate further efforts to secure Iran’s allegiance.

Rather than isolating Iran, sanctions inadvertently bolster Russia’s power. If the US were to lift these sanctions, open trade, and reestablish diplomatic relations, Iran may view the US as less of a threat and come to recognize that the benefits of fostering a friendship with the US outweigh those of an alliance with Russia.

Additionally, tensions could be reduced if the US were to scale back its support of Saudi Arabia, Iran’s principal rival. Following the outbreak of the Yemeni civil war in 2015, President Obama offered substantial assistance to Saudi Arabia, including intelligence and access to American refueling stations, extended in response to Crown Prince Mohammed bin Salman’s pledge to assist Saudi-aligned Presidential Leadership Council forces against the Iran-backed Houthi rebels.

Despite facing bipartisan opposition, President Trump continued this strategy, notably vetoing a bill that sought to terminate aid to Saudi Arabia entirely. If the Biden administration were to reassess this stance and limit this partnership to be strictly commercial, or even adopt a neutral position, the US would be perceived as less of a threat to Iranian interests.

Until the JCPOA was signed in 2015, Iran was on a determined path toward developing nuclear weapons. For decades, prospects of Iranian nuclearization have directed both the US and Israel to maintain a hawkish stance, suggesting that a nuclearized Iran poses an existential threat to global stability. Nevertheless, a different perspective suggests that if Iran were conditionally permitted to maintain a limited nuclear arsenal under a freshly negotiated agreement, it would make the region more stable. This would serve as both a compromise and a measure for Iran’s own national security.

Contrary to what Western propaganda tells us, the driving factor for nuclear proliferation in developing nations is to discourage invasion, not to incite warfare. While not ideal, the unfortunate reality is that denuclearization often makes a country vulnerable to invasion. Had Muammar Gaddafi not relinquished Libya’s arsenal eight years earlier, the North Atlantic Treaty Organization would have likely taken a diplomatic approach in resolving the 2011 crisis. Likewise, had Ukraine not surrendered its cache in the 1990s, there probably wouldn’t have been a Russian invasion. For better or worse, nuclear weapons are, above all, deterrents.

Though not a formally declared nuclear power, Israel is the only Middle Eastern country to possess a nuclear arsenal, which makes it Iran’s most formidable threat. When Nation A holds the power to obliterate Nation B without reciprocal capability, it makes for a less-stable world. Therefore, the logical conclusion would be that a nuclearized Iran would mitigate power disparities in the Middle East, creating a mutual deterrent.

However, while permitting Iran to possess nukes might create a balance of power in the region, it doesn’t guarantee that they wouldn’t be used. Should a reckless Iranian leadership launch a nuclear strike on Tel Aviv, Israel would surely respond with equivalent force. Moreover, there’s no assurance that Iran would ever accept diplomatic overtures from the US. The US State Department identifies Iran as the world’s leading state sponsor of terrorism. Were Iran to become a nuclear power, the possibility of nuclear weapons ending up in the hands of terrorists might increase.

Although Iran presents a geopolitical challenge in the Middle East, aggression is bound to exacerbate regional instability, which would not benefit the world. From a strategic standpoint, the US would gain more from adopting a doctrine of entente. Intervention is not a suitable method for addressing the threat posed by Iran but would, in fact, be evidence of the failure of the US to do just that.

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