Virus crisis to accelerate breakdown in Iran’s client states

As if losing their most famous general and facing the prospect of unending US sanctions wasn’t enough, there’s now another thing for the embattled authoritarians of Tehran to worry about. It’s not the CIA, MI6 or Mossad, Delta Force or the SAS — it’s the coronavirus disease (COVID-19). The virus may well end up fundamentally changing everyone’s political expectations, but it’s going to have a massive impact on the fragile political ecosystems of large parts of the Middle East and North Africa.

Iran has had the worst of it so far. After a long period of denial, the health minister announced on March 19 that people were dying due to the virus at a rate of one every 10 minutes — and this was accelerating. As of Sunday, the Johns Hopkins Coronavirus Resource Center reports more than 55,000 confirmed cases and some 3,400 deaths in Iran — the sixth-highest number of fatalities in the world. And that’s just the official figures, which many Iranian doctors privately claim are a vast underestimate. Several ministers, senior politicians and others close to Supreme Leader Ali Khamenei have succumbed. The heart of the epidemic seems to have been the shrine and pilgrimage city of Qom, which is central to Iran’s production of clerical knowledge and power, and therefore to the regime’s legitimacy. About 20 million Iranians and 2.5 million foreigners visit every year, with many of the latter, including several thousand Chinese, studying in densely packed seminaries. 

The regime has long seen China as a counterbalance to Western, particularly US, pressure. It has ignored the Chinese persecution of Uighur Muslims and has gone to great lengths to develop air and rail connections between the two countries. Unusually, the Islamic Revolutionary Guard Corps (IRGC)-controlled Mahan Air kept flying into China well after Beijing had acknowledged the seriousness of the outbreak in Wuhan and other transport links were being closed down. The flights may have brought back not just contraband but also the virus, which 16 other countries claim Iran then passed on to them. The regime denied that it had taken hold until too late. It encouraged people to celebrate Victory Day on Feb. 11 and turn out to vote in the parliamentary elections as a sign of popular confidence in the regime (they didn’t). It hesitated to quarantine Qom. And only at the last minute did it warn against large gatherings for Nowruz, the Persian New Year, in late March. This comes on top of the shooting down by Iranian air defenses in January of a civilian airliner taking off from Tehran airport and the brutal suppression of popular protests last autumn, both of which were met by a similar campaign of denial and obfuscation.

What happens in Iran very quickly spreads to Iraq. That was once an advantage for Tehran. It used its religious and cultural links with the Shiites of Iraq to embed its influence virally in the post-2003 political landscape. But real pathogens know no political allegiance. And, as in Iran, the official Iraqi figures for infections and deaths are probably a huge underestimate. The Iraqi governing class is in turmoil as it seeks to manage sustained popular anger while protecting its own privileges. One prime minister has resigned. The candidate initially nominated as a replacement failed to attract enough support. A second is also struggling. The government as a whole, which has never been much good at providing public goods, is in no fit state to provide effective leadership.

The long-term problem for Iran — as for everyone in the region — is that the money simply isn’t there anymore

Sir John Jenkins

 

Iran has better medical provision than Iraq, but that’s not saying much. To judge from social media, both systems seem to be in a state of collapse, offering an opportunity for the IRGC and Shiite militias (as in Lebanon) to fill the vacuum in order to expand their social control. Health professionals in both countries are committed and skilled, but politics, violence and corruption get in the way. And no one trusts official announcements. Tehran at first denied that the threat was serious, blamed outsiders for exaggerating the impact and then suggested the US (or Israel or both) had deliberately spread the virus; a lie Khamenei is still repeating. They waited for weeks to shut religious shrines and still have problems getting people not to visit them. The IRGC has posed as defenders of the people against the virus, but they have also threatened with reprisals doctors who dispute the official statistics.

The long-term problem for Iran — as for everyone in the region — is that the money simply isn’t there anymore. Energy prices were already under pressure and Iran’s energy sector has been savagely hit by US sanctions. But with oil at or under $30 a barrel and global demand tanking, the International Monetary Fund (IMF) thinks the budgets of all energy-producing states in the region are in trouble. Those in Iraq and Iran are in danger of implosion. 

The current Iraqi budget assumes an average oil price this year of $56 a barrel. Even at that level, revenues more or less equal current expenditure — two-thirds of it spent on wages and pensions and much of the rest mortgaged to the international companies that actually extract the oil. They have now been asked to scale back production and accept deferred terms; in turn, they are beginning to lay off workers and put pressure on their own suppliers. There is no spare government cash for investment and no significant private sector to create meaningful jobs for the huge number of people already unemployed in the country. The government has simply put many of them on the public payroll. That (and overseas bank accounts) is where the money goes. And now it’s gone.

The same applies more or less to Iran, which has a more diversified if ramshackle private sector but still relies on energy exports to fund the budget. Iraq has a primitive banking sector, while Iran’s is opaque and unreconstructed. Neither state has the ability to borrow on international markets long-term. And, even if they did, interest payments and redemptions would simply represent another drain on the public finances. 

In theory at least, other oil producers face similar challenges. But costs can be cut. Saudi Arabia can produce up to 12 million barrels of oil a day very cheaply, still has significant financial reserves and can borrow on domestic and international markets. It has other natural resources and a highly developed health infrastructure. It acted fast and early in closing mosques, schools and shopping malls, quarantining parts of the Eastern Province — and now Riyadh, Makkah and Madinah — and restricting international and much domestic movement. The other Arab Gulf states have acted with a similar sense of urgency and responsibility, with most of them effectively closing their borders to non-nationals and the UAE quickly shutting down its airlines.

But the countries in which Iran has invested are in deep trouble. Yemen is at high risk of collapse as the Houthis continue to play games. Lebanon has defaulted on its external debt and is functionally bankrupt. Syria is destroyed. And the demographic displacement produced by conflict in these countries provides an ideal environment for viruses to spread — as does Gaza, one of the most densely populated places on the planet.

Iran shows little sign of adapting to the new situation. Oil exports might have crashed; real incomes are in steady decline; the middle class is shrinking; and the government has sought emergency help from the IMF for the first time since the revolution. Tehran has welcomed humanitarian assistance from the UAE, Qatar and Kuwait and has received assistance from the EU using the mechanism set up a year ago to enable EU-based companies to trade with Iran without using the US dollar (even though humanitarian aid is not subject to US sanctions). And Khamenei and President Hassan Rouhani have at least stopped claiming the IRGC is developing a vaccine. But they have rejected offers of assistance from Washington and refused entry to nongovernmental organizations such as Doctors Without Borders. Against all the evidence, they publicly praise their own efforts while seeking to blame sanctions for any failures. To buy temporary social peace, they may actually have given up on containing the pandemic. At the same time, there are reports Iran may have tried to hack into World Health Organization email accounts. They have doubled down on conspiracies alleging the US military and Jews are waging biological warfare, something the ignorant and the Islamist — Sunni and Shiite alike — are alarmingly ready to echo, especially now they can no longer convincingly claim that the virus is one of God’s soldiers sent to punish the infidel and the wicked. 

Instead, Iran is focusing on strong-arming Iraqi politicians into choosing their preferred candidate as prime minister so he can expel US forces. Ali Shamkhani, the Secretary-General of Iran’s Supreme National Security Council, was recently in Baghdad to knock heads together. Esmail Ghaani, Qassem Soleimani’s successor as commander of the IRGC’s Quds Force, isn’t the self-isolating type either. He has been spotted touring Syria, and he has also just been to Baghdad. Against expert advice, the borders between the three countries — and into Lebanon — remain highly porous. In Lebanon, Hezbollah is cynically using the crisis to crack down on critics and promote its political allies. And in Iraq there are reports that the IRGC is encouraging a new organization, “Usbat Al-Thairen,” to continue attacks on US forces while pretending it wasn’t them or their pals in the Popular Mobilization Forces. They clearly don’t see why a global health crisis should stop the rockets. Perhaps they think all those Daesh killers the US has been fighting will instead catch coronavirus and obligingly die once the American troops have gone.

But reality must eventually catch up even with ostriches. The crisis will mercilessly expose existing weaknesses and accelerate and amplify existing trends everywhere. And the indicators are mostly flashing red. Conflict won’t end and overcentralized, authoritarian states will struggle to reform. Doubling down on repression, as Iran seems to be doing, is not a strategy. And where the only lesson learned is that for things to stay the same they must never change, then popular consent will become even harder to buy. It is unlikely that the US or other Western powers will feel any more sympathetic toward the region once the pandemic is over, whether Donald Trump wins in November or not. That leaves few other potential international partners, except for China — where the virus originated and whose neo-imperial ambitions have become even clearer over the past few weeks — and Russia, which has sponsored the destruction of Syria and decided to cut up rough on energy. It’s not looking good. 

The incompetence of the Iranian leadership has become clearer over the last six months. Even where they have shown competence in a bad cause — in Iraq, Syria and Lebanon — this crisis will accelerate breakdown. And my guess is that it will persuade even more Iranians that they need political change. That can only happen from within. But there’s no reason why we should give Khamenei a break while we wait. 

If we really want to do something positive, Iraq is a good place to start. Khamenei and his sectarian Shiite friends want the US (and therefore the UK and France as well) out. I don’t see why we should oblige. Half the Iraqi political class and most Kurds want us to stay and help, though they fear to say so. Leave the field clear for Tehran and Iraq will become a slave state. But, even if that happens, it will be at best a Pyrrhic victory for Tehran. The conflict in Yemen can — and should — be settled. But neither Iraq nor Syria look like triumphs anymore. Instead, like Lebanon, they will simply bring Iran burdens and stored-up misery. 

*Sir John Jenkins is a senior fellow at Policy Exchange. Until December 2017, he was Corresponding Director (Middle East) at the International Institute for Strategic Studies (IISS), based in Manama, Bahrain and was a Senior Fellow at Yale University’s Jackson Institute for Global Affairs. He was the British ambassador to Saudi Arabia until January 2015.