Can Iran’s Ruling Mullahs Survive the Coronavirus?

It now is obvious that the coronavirus is a health and civic tragedy for the Chinese people and a serious political problem for the Chinese government. What few appreciate is that the virus also could be a disaster for the Mullahs in Iran.

The Chinese people of course are at greatest risk of being affected, especially in and around the city of Wuhan. No one is sure how many have died and how many others are sickened.  The fact that the Communist government found it necessary to mobilize all its resources and construct prefabricated hospitals in and around Wuhan in only ten days gives some indication of how serious the situation is.

The Chinese government now faces a crisis of confidence at home and abroad. Slow and unsteady is its response, the Communist administration now is receiving substantial pressure at home and abroad for more transparency.  That government, however, can fall back on the immense strength of the Chinese economy to cushion it from political problems sure to come.

The same can’t be said for the  Mullahs in Iran. For them, the microorganisms in Wuhan may spread to a political contagion they can’t alleviate.

China currently is Iran’s economic lifeline. With most of Iran’s other potential oil export markets closed due to American sanctions, China has been Iran’s major source of revenue and foreign currency. As of January, approximately 70% of Iran’s oil exports went to China.

That lifeline now is frayed.  Just a few weeks into the epidemic,  forecasts for Chinese economic activity are being slashed. Concurrently, demand in China for imported oil is shrinking. World oil prices are collapsing.  This week they entered bear territory for the year. OPEC is meeting in emergency session, hoping to get a daily cut of 500,000 barrels as a way to stabilize prices.

This oil price shock proves a double whammy for Iran. Its greatest customer is contracting its purchases, and the remaining oil that can be sold will obtain a far lower price.

This collapse of Iran’s export markets and of the world oil price in general gives the Mullahs even less money than before to spend on their economy, their nuclear program and their foreign adventurism.  All of this comes at the worst possible time.

The Iranian home front remains furious over the stagnating economy.  Iran’s international isolation is growing over its claims to be increasing uranium enrichment.  Iran’s drive for regional influence continues to meet stiff resistance among the population in Lebanon and Iraq. Iranian-inspired proxy wars drag on in Syria and Yemen. The Iranian government is overstretched, unpopular at home and abroad, and desperately needing to prioritize on which front to concentrate.

Militarily, Iran remains formidable, but its ability to project force and sustain it for sufficient time to further Iranian political aims is in question. By concentrating so much on foreign military and political adventures and by failing to invest in its people, Iran has left itself woefully dependent on oil as its sole source of revenue.  Now facing the loss, at least temporarily, of much of the demand from its major oil buyer,  Iran will face stark choices very soon.

For the United States and the West, the question becomes how to deal with the current situation. Contrary to many voices in the American Foreign Policy establishment, this is not the time to be offering Iran a revised grand bargain on its nuclear program. While there are areas where agreement might be found, the only deal an American administration could and should offer Iran is a deal they previously were unlikely to accept: end all of Iran’s foreign adventurism – all of it – in return for sanctions relief.

Until now, it was inconceivable that the Mullahs would entertain such a possibility.  Since the revolution of 1979, unwavering opposition to and hatred of America and Israel has been part of the fabric of the Mullah’s self-appointed legitimacy.  Now however those Mullahs may have little choice.  Reports filtering out of Iran show much internecine conflict among the ruling clerics.  Increasingly they fear for their own survival following the riots of last year, the assassination of General Qassem Soleimani and the subsequent anti-government demonstrations in January.  Without money to feed Iran’s increasingly restive population, decision day could be coming soon for the clerics.

At times like, this, it is wise for any American administration to remind itself of its limited ability to direct and control events in a foreign society so far away.  In international relations as in life, sometimes the wiser choice is to sit back and let events run their course. To paraphrase Lee Atwater, former political adviser to Presidents Ronald Reagan and George H. W. Bush, “when your opponent is shooting himself in the foot, don’t interrupt him.”

About the Author
Daniel B, Markind is an attorney based in Philadelphia specializing in real estate, commercial, energy and aviation law. He is the former Chair of the National Legal Committee of the Jewish National Fund of America as well as being a former member of the National Executive Board and the National Chair of the JNF National Future Leadership. He writes frequently on Middle Eastern and energy issues. Mr. Markind lives in the Philadelphia area with his wife and children.
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