Iran’s emergence as a hot zone for the coronavirus further complicates that country’s relationships with its neighbours at a time when its economy is sliding deeper into recession.
US President Donald Trump’s “maximum pressure” campaign on Iran by tightening economic sanctions coincides with a spreading health crisis that will test a hardline leadership.
Iranian confidence in its rulers is stretched in any case – there has been persistent unrest in which violent clashes with the authorities over economic hardship have resulted in dozens of deaths.
Battered by a sanctions regime, a deepening economic retrenchment and now a health emergency, Iran’s leaders will feel they are more than usually beleaguered.
Coming on top of America’s assassination of Iran’s military commander, Major General Qassim Suleimani, in early January, these are precarious moments for the Iranian leadership.
Now the question is whether an overstretched Iran will feel obliged to pull back from its expensive involvement in Syria and its support for allies in Lebanon, Yemen and elsewhere in a troubled region.
In other words, will its leadership, under considerable pressure at home, stage a retreat, or even decide it is in its interests to seek some sort of accommodation with a US administration that is bent on tightening the screws? US Secretary of State Mike Pompeo last week imposed additional curbs on travel by figures close to Iran’s rulers.
The alternative is for Tehran to withdraw into its shell while it rides out economic and other pressures. Given the parlous state of Iran’s economy, this will be easier said than done.
In all of this, the survival of an embattled regime in power since the overthrow of the shah in 1979 will be paramount.
Whether that prompts a rethink of Iran’s refusal to negotiate a replacement nuclear deal without sanctions being lifted first remains to be seen.
These options will be canvassed behind the scenes in arguments between moderates close to Iran’s president, Hassan Rouhani, and hardline elements aligned with Supreme Leader Ayatollah Khamenei.
As things stand, it appears the hardliners have secured the upper hand.
Iran’s parliamentary elections last week made this clear. Hardliners achieved a near clean sweep after the powerful Guardians Council excluded thousands of moderate candidates from the race.
Appointed by Khamenei, the council vets suitable candidates for elections.
Dozens of moderate members of parliament were denied the opportunity to recontest.
Ali Vaez, director of the Iran Project at the International Crisis Group, said:
This is 2004-2005 all over again: a shift of the centre of Iranian politics to the right, harbingered by a major victory by the hardliners in low-turnout parliamentary elections, followed by a takeover of the presidency by the hardliners.
This is potentially bad news for President Rouhani, who had sought an accommodation with the US and its allies after signing a deal in 2015 in which Iran agreed to freeze its nuclear weapons program.
Iran will have presidential elections next year.
Trump took the US out of the nuclear deal in 2018. As a consequence, Tehran has been edging away from commitments made under the Joint Comprehensive Plan of Action (JCPOA) to halt its enrichment processes.
Complicating all of this is the coronavirus epidemic in a country where health services are already stretched.
By mid-week, Iran had reported 95 cases, but this almost certainly significantly understates the situation. The country is believed to have suffered the most deaths from the virus outside China.
Iran’s efforts to curb the contagion are vastly hampered by the fact that it is a destination for millions of Shia pilgrims annually from surrounding countries. These include Afghanistan, Pakistan and the Gulf states.
The holy city of Qom has become a hotbed of the virus. Multiple deaths have been reported there.
Symbolic of Tehran’s challenges in getting the coronavirus under control is the case of its deputy health minister.
Earlier this week, Iraj Harirchi had denied the authorities were covering up the scale of the outbreak. He later self-reported he was suffering from the disease.
This will have done little to engender confidence in the government’s ability to contain the disease or provide a credible accounting of its spread in a country of 80 million.
Adding to concerns region-wide is that Iran is believed to be the source of infections that have emerged among its neighbours, including Afghanistan, Bahrain, Iraq, Kuwait and Oman.
All these countries have now imposed restrictions on travel to and from the Islamic Republic. Dubai, a transit hub and home to the airlines Emirates and Etihad, has suspended all passenger and cargo flights to Iran for a week as a “precautionary measure”.
Curbs on travel will have a further dampening effect on Iran’s economy. It’s already reeling from tough sanctions, which include wide-ranging restrictions on the country’s oil exports, its economic lifeblood.
In October, the International Monetary Fund reported Iran’s economy would contract by 9.5% in 2019. This was the worst year for Iran since 1984, at the height of the Iran-Iraq war.
In 2019, the only countries to do worse, according to the IMF, were Libya, in the grip of a civil war, which suffered a 19% contraction, and Venezuela, which shrank 35%.
The IMF and World Bank had predicted incremental growth, if that, for Iran in 2020. In view of coronavirus concerns, marginal growth now seems highly unlikely.
Iran is also stricken by skyrocketing rates of inflation. The IMF put the figure for 2019 at 35.7%. The Statistical Centre for Iran assessed the number higher at nearly 50%.
Food and fuel costs have gone through the roof. This has been the main cause of the civil unrest that continues to beset the regime. With US-sponsored sanctions in place and now a health crisis bedevilling the country, there is little relief in sight.
What is clear is Iran is facing its most challenging moment since 1988 and the end of its war with Iraq in which an estimated 500,000 Iranians were killed. War costs bled the economy dry.
In some ways, the latest situation may be more challenging for the regime given that Iranians were unified in a war effort. That unity is now a distant memory.
Even though Australia follows the United States in much of its policy, Australian exporters and consumers will be hoping we don’t get caught in the crossfire as the US and China impose sanctions on each other.
These sanctions could make Chinese exports more expensive or prevent access to the US market. China has already indicated it will play tit for tat, imposing its own sanctions.
Trade disputes are often as much about rhetoric as about reality. China will remind the world that the US began as a pirate nation, harvesting European technological innovation and cultural production (such as work by Byron, Shelley, Dickens and Trollope) on the basis that it was a developing nation and because it could.
Away from the headlines China will likely take the US to the World Trade Organisation (WTO), a global mechanism for resolution of trade disputes. The US has announced it will take China to the WTO over patent violations.
The US will presumably ramp up claims with the WTO against other trading partners (such as India, Indonesia, Thailand and members of the European Union) that appear on its watch list for allegedly pirating US knowhow.
What this means for Australia
Academics such as Matthew Rimmer have astutely highlighted disadvantages for Australian consumers as citizens of an IP colony. This is where we import more than we export in content and pay a premium for work from overseas.
For example, we pay more than our US counterparts for software and hardware that most people take for granted. Our IP regime – in principle and practice – construes many violations of IP rights as piracy.
Our regime is aligned with that of the US. That reflects our traditional defence policy and the significance of US investment. What is good for US companies Microsoft, Pfizer and Disney is deemed to be good for Australia.
But joining in this cascade of retaliation will jeopardise economic growth, foster political unrest in developing economies and penalise consumers. The salient feature of economic growth over the past four decades has been globalisation – trade and investment across borders – rather that fundamental productivity gains through information technology.
Integration with the global economy (alongside the hollowing-out of local manufacturing and the TAFE system) mean that we cannot turn back the clock to the days of Alfred Deakin. Deakin’s grand compromise – the Australian Settlement – promised to protect small farmers, local manufacturers and workers behind walls that restricted migration and imports.
The headline-grabbling sanctions from Trump might also not necessarily be supported. Some business leaders recognise the importance of trade across the global economy and are perplexed by the current policy that seems to be driven by Trump’s late-night tweeting rather than anything coherent.
Where does that leave China?
China’s response has so far been cool. Moderation in the public arena highlights the idiosyncratic nature of Trump’s statements. It also reflects a deeper reality.
China wants to sell high-technology products to Australia, the US and other nations. One is example is 5G telecommunication networks from Huawei.
It wants the advantages that come from exploitation of the global IP regime, with its innovators and entrepreneurs building portfolios of patents and buying leading Western brands. It is likely to emulate what we saw with Japan: from “pirate” to IP citizen, complying with laws, within a few decades.
Beijing is slowly strengthening the enforcement of IP rules in key regions such as China’s Pearl River Delta. In part that’s an effort to reduce the backlash in its export markets and it’s also a recognition that growth may be a matter of fostering innovation rather than copying or cheap labour.
Australia sources many manufactured items from China, with that production often dependent on US, Japanese and EU IP. Our own economy depends on exports of commodities; universities are dependent on overseas (particularly Chinese) students. So we don’t want to see an increase in international tensions and don’t want a slowing of the global economy because of a cascade of tit-for-tat sanctions.
The ongoing war of words between the leaders of North Korea and the US has created international fears of a potential nuclear catastrophe. But each side’s actions go well beyond words.
North Korea has conducted six nuclear tests since 2006, including its recent hydrogen bomb test and a spate of ballistic missile tests with ever-increasing range. The Trump administration, for its part, dispatched a naval armada to the region earlier this year, and recently conducted bomber flights close to the North Korean border.
But with much attention focused on both sides’ military moves, and on the rigorous enforcement of economic sanctions against North Korea, there has been little focus on calls for a diplomatic solution.
Further reading: Five assumptions we make about North Korea – and why they’re wrong
Where are we at currently?
Recent statements by the Trump administration and allies such as Australia appear to assume the impact of sanctions, coupled with demonstrations of overwhelming military capacity, will secure North Korea’s unilateral back-down.
Australia’s foreign minister, Julie Bishop, emphasised to the UN General Assembly recently that Australia would be vigorously pursuing sanctions of its own against North Korea. She argued such sanctions would “compel North Korea to abandon its illegal programs”.
Absent in Bishop’s speech, however, was an equally emphatic commitment to pursuing a negotiated diplomatic solution.
The most recent UN Security Council resolution against North Korea unanimously (China and Russia included) imposed a set of severe economic sanctions on the isolated country.
Less noticed in the US-drafted resolution was a quasi-military imposition of a naval interdiction of vessels transporting prohibited items from North Korea. This opens the way to a naval blockade of the country comparable to that imposed on Cuba at the time of the Cuban Missile Crisis in 1962. It also potentially creates a further source of military confrontation with North Korea.
At the same time, the resolution called for a diplomatic resolution of the crisis. This was little noticed in subsequent public debate.
The resolution seeks a resumption of the Six-Party Talks involving China, North and South Korea, Russia and the US on the basis of negotiating verifiable denuclearisation on the Korean Peninsula, a commitment to peaceful resolution of the crisis, mutual respect of sovereignty, and economic co-operation.
Sanctions might not work as they have in the past
Sanctions played a key role in the successful multilateral negotiation of the Iran nuclear agreement. However, they may not necessarily have the same impact in the case of North Korea. Its regime has long cultivated the ethos of self-reliance, and has made regime survival its top priority.
In this context, if war is to be averted, sanctions will need to be accompanied by a willingness to engage in substantive negotiations that might engage with the North Korean regime’s security and survival concerns.
It is sometimes argued that North Korea has never responded positively to negotiations. However, the 1994 agreement brokered by former US president Jimmy Carter did result in a significant pause in the North Korean nuclear program. There was verified compliance of North Korea’s ceasing plutonium production from 1991 to 2003.
The breakdown of the arrangement in 2003 was not wholly attributable to North Korea. The Bush administration’s delay in proceeding with agreed US oil shipments and full normalisation of political and economic relations played a key role.
In the case of the current crisis, it is unrealistic to expect North Korea to immediately surrender its nuclear and missile capabilities. Instead, it is important to initiate, without preconditions, a negotiation process involving phases.
Such a process would first seek an initial North Korean freeze on its current nuclear and missile testing programs in return for constraints on military drills close to its border. It would then move on to a possible longer-term resolution that tackles all parties’ legitimate security needs.
Experts such as Morton Halperin, a former senior security adviser to the Clinton, Nixon and Johnson administrations, have argued strongly for the need for a comprehensive agreement that would include elements like:
a Korean War peace treaty;
negotiation of a regional nuclear-weapon-free zone;
security guarantee inducements for North Korea to join such a zone; and
economic and energy assistance to North Korea.
Countries outside the region also have a key mediating role to play in breaking the current impasse on starting negotiations. Most recently, German Chancellor Angela Merkel has offered to play such a role, citing the process involved in the Iranian nuclear agreement.
Rather than talking of being “joined at the hip” in support of any US military “solutions” to deal with North Korea, Australia too could be far more proactive and constructive in promoting and facilitating multilateral negotiations to avert a catastrophic war or nuclear holocaust.