The news that Hezbollah, the Iranian-backed militia that controls large swathes of Lebanon, has been reduced to crowd-funding to fill its coffers is a clear indication that the Trump administration’s tough sanctions policy towards Iran is starting to pay dividends.
Iranian President Hassan Rouhani struck a characteristically defiant note last autumn when Washington announced the imposition of a new round of sanctions designed to cripple Iran’s oil, banking and shipping sectors.
The White House described last November’s move as "the toughest sanctions regime ever imposed". US Secretary of State Mike Pompeo said Iran must "act like a normal country, or see its economy crumble".
But Mr Rouhani, together with the rest of Iran’s clerical leadership, dismissed the effects the sanctions were likely to have on Iran’s economic well-being, with the Iranian president declaring that Tehran would "proudly break the sanctions" and “continue selling oil”.
Five months on, Iran’s defiant stand against Washington’s increasingly robust position does not appear to be achieving the results that Mr Rouhani had hoped for.
On the contrary, as the parlous state of Hezbollah’s finances illustrates, the sanctions are having a serious impact on Iran’s already-struggling economy.
Now Iran’s economic plight is likely to deteriorate even further, following Washington’s historic decision earlier this week to designate Iran’s Islamic Republican Guard Corps (IRGC) as a terrorist organisation.
Ordinarily Washington’s security establishment only confers this status on non-governmental actors that support the terrorist creed, such as ISIS and Al Qaeda. The fact, therefore, that the White House has decided to apply the designation to an organisation that is an intrinsic part of the Iranian political establishment represents a serious escalation in Washington’s confrontational approach towards Tehran, one that could seriously limit the regime’s ability to maintain its malign activities elsewhere in the Middle East.
It was the significant flaws in the 2015 nuclear deal former US President Barack Obama helped to negotiate with Iran, such as Iran’s ability to continue developing ballistic missiles capable of carrying nuclear warheads, that initially persuaded the Trump administration to withdraw from the deal last May. But it has been Iran’s continued, and unwelcome, meddling in the affairs of the Arab world that has persuaded Washington to intensify the economic pressure on Tehran, in the hope that the wholesale damage inflicted to the Iranian economy might persuade the regime to change its conduct.
Announcing the designation of the IRGC as a terrorist group, US President Donald Trump said he had concluded that the IRGC “actively partipates in, finances and promotes terrorism as a tool of statecraft”. This was clearly a reference to Iran’s support for Hezbollah in Lebanon as well as its involvement with the Houthi rebels in Yemen. Then there is Iran’s extensive military investment in Syria, where it has played a critical role in keeping Syrian President Bashar Al Assad in power, while elements of the IRGC’s Quds Force are also active in Iraq, where it is actively seeking to undermine the political status quo.
While there will inevitably be questions about how much impact the new US measures will have on curbing the activities of a resourceful and committed leadership at the IRGC, at the very least it will send a warning signal to organisations and individuals who facilitate the IRGC’s agenda in the region of the risks they are taking if they continue to support its activities.
Furthermore, the wide range of punitive measures Washington intends to apply against the IRGC and its leaders will undoubtedly have an impact on their freedom of manoeuvre, as well as their ability to finance their nefarious activities in the Middle East and beyond.
One of the more effective measures contained in the latest round of sanctions applied by the Trump administration last year has been to exclude Iran from the Brussels-based Swift international payment system, which has severely curtailed Tehran’s ability to maintain regular payments.
The financial crisis currently affecting Hezbollah, which is arguably the IRGC’s most important ally in the region, certainly suggests that, for all Tehran’s bluster that it can overcome the impact of the US-led sanctions, the Iranian regime is now facing severe difficulties when it comes to financing its various proxies in the Middle East.
The financial crisis that Hezbollah now finds itself facing is certainly a salutary tale for an organisation whose ultimate ambition has been to seize control of Lebanon’s political establishment.
Brian Hook, the US Special Representative to Iran, earlier this month estimated that Iran contributes around 70 per cent of Hezbollah’s annual budget of around $1 billion. Iran’s failure to meet its spending commitments, driven to a large extent by the impact US sanctions are having on Tehran, means that Hassan Nasrallah, the organisation’s spiritual head, has been obliged to issue a crowd-funding appeal, calling on the 500,000 partisans who support Hezbollah to contribute $4 per month.
The so-called “Campaign of Millions to Support the Islamic Resistance” hopes to raise around $2 million a month through individual donations. In addition Hezbollah is promoting other fund-raising initiatives, such as the “Equip a Mujahid” campaign that helps to provide arms and training for Hezbollah fighters.
These are, by any measure, pretty desperate measures, actions that suggest that, far from being able to contend with Washington’s robust policy towards Iran, the sanctions regime is seriously affecting Tehran’s ability to continue financing its terror network.