The nuclear deal with Iran will prove unenforceable. Ultimately,
Tehran will become the dominant economic and military power in the
Middle East and if it chooses, build nuclear weapons.
The United States was successful in assembling an international
coalition to impose tough economic sanctions. Restrictions on access
to technology, international banks and their electronic payments
systems imposed double-digit unemployment and inflation and brought
Iran to the negotiating table.
Simply, finding buyers for oil shipped via 3-million-barrel
supertankers was one thing, but the inability to transfer funds
through Western banks made securing $150 million payments quite
another.
The Obama administration sought to dismantle Tehran's nuclear
infrastructure — including its underground centrifuge machines,
which enrich uranium into fissionable material. However, Tehran
balked and other events in the region made Obama desperate for a
deal — the rise of the Islamic State in Iraq and Syria, its spinoff
in Libya and deteriorating relations with Israel and Saudi Arabia on
issues transcending the Iranian nuclear challenge.
The agreement significantly reduces the number of Iranian
centrifuges and other nuclear infrastructure, but only limits
Tehran's ability to quickly "break out" from these restrictions and
accumulate enough fissionable material to create a nuclear weapon in
less than a year. Theoretically, we are told that is enough time for
the West to detect Iranian violations and respond — but it is not.
The lifting of economic sanctions has the potential to create an
economic superpower with malevolent, anti-Western aspirations.
Iran has the oil reserves of Saudi Arabia, the natural gas reserves
of Russia, the mineral resources of Australia — including iron ore,
bauxite, copper and the world's largest supply of zinc — a
sophisticated manufacturing sector, a stock market with strong
corporate reporting requirements, a well-educated population of 80
million and a large middle class.
In 2010, Iran produced 1.6 million automobiles — across virtually
all vehicle classes — through indigenous manufacturers and joint
ventures with Western firms. Although sanctions pushed that number
down to 1 million in 2014, it bears noting autos are among the most
difficult and complex mass production items to make, and Iran's
technological potential could quickly put it in the same category as
South Korea or even France.
Iran provides Western Europe and China with an alternative to
Russian natural gas.
The surge of European, Chinese and American investment into Iran
will be remindful of the Gold Rush that gave rise to modern
California. And once those euros, yuan and dollars are in, political
pressures will make it very tough to re-impose Western economic
sanctions.
Were Iran to start making weapons-grade material, any Western
actions would be preceded by talks. But as with Russia in the
Ukraine, Europe's largest economy, Germany, would be cautious about
losing access to Iranian natural gas and its other commercial
interests, and similar distractions would impede other European and
Asian cooperation.
The U.S. trump card has been its unique grip on the global banking
and payments system, but China's success in recruiting European
allies to join its Asian Infrastructure Bank demonstrates that Asian
alternatives to U.S.-dominated Western financial institutions will
soon emerge.
Even as sanctions handicapped Iran, it has projected power directly
and through surrogates in Lebanon, Iraq, Yemen and elsewhere. Once
the Iranian industrial juggernaut gets rolling, a society with an
anti-Western theocratic bent, sophisticated technology and
manufacturing industries and the resource wealth of Saudi Arabia,
Russia and Australia combined will emerge as an economic and
military power on par with our European allies.
Ultimately, Iranian nuclear aspirations will prove awfully difficult
to contain within 12 months with U.S. threats to assemble an
international coalition to take military action or impose sanctions.
A decade from now, when U.N. inspectors discover Iran is building a
nuclear weapon, Western leaders will ask how they could have let
this happen.
Barack Obama will still be around and perhaps will offer some
answers.
Peter Morici is an economist and professor at the University of
Maryland and a national columnist. He tweets @pmorici1.