Russia, China, India; The Islamic Republic's Triangular Strategy to Counter Sanctions

Following Hassan Rouhani's directive to the Planning and Budget Organization to propose solutions to counter the new round of sanctions at a national managers' meeting, Mohammad Baqer Nobakht, the Vice President and head of the Planning and Budget Organization, presented an executive package titled 'Comprehensive Proposed Program to Counter the Effects of Sanctions' in a letter to Rouhani. According to Nobakht's letter, this package is 'the first part of a comprehensive program to counter sanctions consisting of 12 executive packages,' which has been prepared by experts from the Planning and Budget Organization, relevant agencies, and a group of academic and economic experts. The head of the Planning and Budget Organization also stated, 'Given the resources available within the country, we can successfully navigate through the sanctions.' Thus, it appears that the bureaucratic apparatus of the government is attempting to mitigate the negative consequences of sanctions that are set to be implemented by the U.S. this fall. A primary question that arises after studying this 'anti-sanction package' is what shortcomings the 'resistance economy' policies proposed by the Supreme Leader had that now the Planning and Budget Organization must again and in parallel draft a 'comprehensive program to counter sanctions' alongside the resistance economy policies? Another question is, if the 'resistance economy policies' failed to make the Iranian economy resilient over several years, what guarantee is there that the 'comprehensive program to counter sanctions' will be effective against U.S. sanctions? Ultimately, one must ask what the fundamental condition for mitigating the effects of sanctions is and whether the government can fulfill these conditions. It should be noted that in February 2014, Ali Khamenei, the Supreme Leader of the Islamic Republic, issued general policies for the resistance economy, which were communicated in 24 articles after consulting with the Expediency Discernment Council to the heads of the three branches of government and the head of the Expediency Discernment Council. Less than two years later, in September 2015, what was called the Resistance Economy Command Headquarters was established to focus and direct the resistance economy. Now, nearly three years later, with increasing tensions between the Iranian regime and the United States, it seems that the Iranian economy has still not been made resilient. Therefore, it appears that the aspiration for a 'resistance economy' has not been realized even after more than five years since its formulation and two years after its command; otherwise, drafting a new policy package under the title 'comprehensive program to counter sanctions' would be redundant. In other words, it seems that the government intends to insure itself against sanctions whose boundaries and limits are unclear within a timeframe of about three months. This is while the structural problems of the Iranian economy, such as the lack of coordinated and efficient governance, over-reliance on oil revenues, massive budget deficits, accumulated and immense liquidity, the dominance of the IRGC over a significant portion of the economy, widespread financial and managerial corruption, and the lack of transparency and accountability persist. Within the framework of these economic constraints, sanctions are more effective, and therefore challenges such as unemployment, inflation, pension funds, the expansion of poverty, and the inefficiency of the banking system are expected to intensify. What policies are being pursued for a real confrontation with sanctions? Apart from what is written on paper under the title 'anti-sanction package,' the most fundamental anti-sanction policy that the government is pursuing is the further concession of parts of the Iranian economy to Russia, China, and India so that this triangle and three-pillar consortium can ensure the survival of the Islamic Republic. While government officials promote the 'anti-sanction package,' they are aware that Iran's vast, fragmented, corrupt, and inefficient bureaucracy cannot quickly adapt to new conditions. This is why, in the first practical step to implement anti-sanction policies, the Supreme Leader sends Ali Akbar Velayati to Russia to negotiate for a $50 billion investment and oil-for-goods exchange with the Russians. Subsequently, Velayati is expected to travel to China to negotiate the expansion of economic cooperation between Iran and China. Meanwhile, it is reported that in the coming days, Abbas Araghchi, the Deputy Foreign Minister of Iran, will discuss expanding economic cooperation with Indian officials. Such actions are not surprising as the Iranian government is aware that the structure of Iran's rentier economy—under current conditions and in the absence of coordinated and unified governance—cannot accept fundamental changes. Therefore, the only path that remains in conditions of weakness and sanctions is to open the way for greater influence of the Russia-China-India axis into the strategic depth of the Iranian economy and to cede more of the country's resources to these countries.