The termination of nuclear sanctions means Iran will pocket about $215 billion in cash, sell another million barrels of oil a day (bpd), and produce 5 million more bpd within 10 years; while the West gets 20 years of cheap oil.
American foreign policy since the defeat of the Ottoman Empire at the end of World War I has been to make sure that no state could gain hegemon status across a wide swath of the Middle East. Up until the 1979 Iran Hostage Crisis, the U.S. had allied with Shiite Muslim Iran to undermine the ability of Soviet Union to foment the rise of a Sunni caliphate that could dominate the region. Since the Iran Hostage Crisis in 1979, the U.S. backed Saudi Arabia to prevent Iran from spreading a Shiite caliphate.
But President Obama signaled he intended to change history when his first action moving into the White House in January 2009 was sending back the Winston Churchill bust loaned to the U.S. by the British after the September 11, 2001 terrorist attacks. Obama’s infamous bow to the King of Saudi Arabia in April 2009 was seen in the region as America accepting new Sunni influence dominating the Middle East.
At Obama’s first international speech on June 4, 2009 at Cairo University, he apologized for West’s “colonialism that denied rights and opportunities to many Muslims.” The President used revolutionary language from the Quran to spur Arabs to revolt: “We have the power to make the world we seek, but only if we have the courage to make a new beginning, keeping in mind what has been written.”
The President was rewarded for blazing a new path, winning the 2009 Nobel Peace Prize for his “extraordinary efforts” to “strengthen cooperation between peoples” by “reaching out to the Muslim world.” In his Nobel Prize acceptance speech, Obama spoke of “just war” and the use of force “justified on humanitarian grounds.”
The Obama Administration began pouring hundreds of millions of dollars into non-governmental organizations (NGOs) promoting the “just” overthrow of authoritarian Arab states. Top-secret American diplomatic cables obtained by WikiLeaks have exposed the Obama Administration’s “democracy-building campaigns,” and that money for “Arab Spring” revolutionary movements was surreptitiously funneled by CIA grants.
Stable authoritarian regimes in Tunisia, Morocco, Libya and Egypt were overwhelmed by rebellion spread to the masses across Facebook pages and YouTube videos. Libya’s Gaddafi and Egypt’s Mubarak were removed. Syria’s Bashar al-Assad barely survived.
But as tyrants were ousted, the Muslim Brotherhood and other Sunni jihadists temporarily adopted democracy to fill the political void and gain power. With their focus on forcing strict sharia law, and no governing experience, the economies of new Islamic nations collapsed and sectarian violence became the norm across the Arab world.
The reputation of the U.S. in the region imploded as the Islamic State took over half of Syria and Iraq, and Russia intervened in Syria. Facing the risk that the Islamic State would triumph as a Sunni Muslim caliphate spanning the entire Middle East and North Africa, Obama in desperation attempted to back an offsetting Shiite Caliphate in Iran.
For Iran, the end of the sanctions achieves oil trade surpluses and cash proceeds.
- Sanctions reduced Iran’s oil-export trade surplus from $70 billion in 2011 to about $30 billion last year. At an average of $35 per barrel oil price in 2016, Iran, with 35 million barrels of floating crude oil storage in the Strait of Hormuz and higher pumping, can easily increase production by 1 million barrels a day, to generate $40 billion a year.
- Iran was required under the sanctions to bank $1.5 billion a month in restricted oil trade accounts over 5 years of sanctions, equaling about $75 billion.
- Iran had $26 billion in U.S. bank accounts and other American assets that were frozen in 1979. The estimates’ value, with accumulated interest is about $140 billion.
Still, Iran’s production capacity is declining by about 8-10 percent per year for existing oil fields. It is estimated that Iran will need U.S. technology and about $300 billion investment to achieve a 5 million bpd increase over the next 10 years.
Sanctions relief also gives Iran’s President Hassan Rouhani and supporters a chance to win an overwhelming victory in February’s national parliamentary elections. Especially important will be who wins control of the “Assembly of Experts,” which can choose and remove the Shiite “Supreme Leader,” according to Stratfor Global Intelligence.