Iran’s Failed Foreign Policy: Dealing From a Position of Weakness

Adapted from a report published by the Middle East Institute Iran’s ambition is to be the dominant state in the Persian Gulf and an indispensable regional power in the broader Middle East. This is a plausible aspiration. Iran’s potential assets include a large population, a central geographic position, and a wealth of hydrocarbon resources. Despite

Adapted from a report published by the Middle East Institute

Iran’s ambition is to be the dominant state in the Persian Gulf and an indispensable regional power in the broader Middle East. This is a plausible aspiration. Iran’s potential assets include a large population, a central geographic position, and a wealth of hydrocarbon resources. Despite facing favorable regional circumstances after 2001, however, Iran failed to fulfill this ambition. Iran’s power is brittle: its conventional military is increasingly obsolescent, its economy is strangulated by sanctions and mismanagement, and the country is more diplomatically isolated than it has been for decades. Iran has mostly developed a narrow power base that enables it to engage in spoiling tactics and to deny opportunities to its adversaries. As a result, Iran’s influence—its ability to actually shape the regional environment in the direction it favors—is heavily constrained.

Most fundamentally, any gains that Iran would make from an agreement resolving the nuclear issue or from recent events in Iraq must be seen as opportunities for Tehran to cut its losses, not to make net gains.

This report explains why Iran is not a rising regional hegemon, as one often hears, but rather a mid-sized regional power frustrated at not reaching its ambitions. It analyzes the brittleness of Iran’s power and explains how this constrains its ability to influence regional developments, especially in Yemen, the Arab-Israeli conflict, Iraq, and the ongoing civil war in Syria. The report also explains how Iran’s nuclear program has been excessively costly despite the limited gains it has brought the country. Even more worryingly for Iran, the situation is unlikely to improve in coming years, as a number of regional trends are set to perpetuate or even worsen the constraints on its ability to project its influence.

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This has important implications. As it continues negotiations with the P5+1 (the five permanent members of the UN Security Council—China, France, Russia, the United States, and the UK— and Germany) on its nuclear program, Iran is dealing from a position of significant and growing weakness, not strength. The status quo is, for the Islamic Republic, excessively and increasingly costly. Tehran’s optimal outcome from these talks has thus not been to consolidate its regional preponderance but rather to cut its losses after years of mounting sanctions and isolation. In approaching the next and potentially final stages of the nuclear negotiations, the United States is in a position of strength. Pressure has worked: the Islamic Republic has been contained. It is militarily weak, economically strangulated, and diplomatically isolated….

Iran is a powerful state with the ability to influence events throughout the Middle East. But though the Islamic Republic has the potential—and the ambition—to be a hegemonic regional power, it is far from being one. Iran can plausibly aspire to an important regional role, but its weak conventional military and its stagnant economy prevent it from reaching its potential. Its tool kit emphasizes unconventional and retaliatory assets instead of conventional power projection. It can intimidate or threaten, it can spoil or deny, it can increase the costs for the United States and its regional partners of undertaking certain actions. Yet its ability to actually shape events is limited, well below its potential—and declining.


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Iran, moreover, is unlikely to emerge as a dominant regional power for the foreseeable future. Even if circumstances change—if, in particular, Iran and the P5+1 agree to a final deal resolving the nuclear standoff—many of the trends playing against it will remain. A comprehensive agreement would not represent a cure-all for Iran, as many sanctions would remain in place, and others would only be gradually lifted over many years. As a result, Iran’s oil production would not suddenly leap. The Iranian economy would still be mismanaged and weakened by corruption, an unpredictable and sometimes hostile investment climate, and dependence on hydrocarbons. Its military would need decades to rebuild. Moreover, the eventual emergence of a stronger Iraq will act as a strong check on Iranian influence. It will also remove one of the Islamic Republic’s only real foreign policy successes, as a more robust Iraq will not be a powerful ally or proxy of the Islamic Republic but a competitor. Most fundamentally, any gains that Iran would make from an agreement resolving the nuclear issue or from recent events in Iraq must be seen as opportunities for Tehran to cut its losses, not to make net gains. Iran has made extremely costly choices that have caused major harm to its economy, diplomatic standing, and military power. The Islamic Republic will need decades to repair this damage and eventually generate sufficient capabilities to fulfill its regional ambitions.

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