CIA: Iran will focus on its economy, not terrorism, with sanctions money – LA Times

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A secret U.S. intelligence assessment predicts that Iran’s government will pump most of an expected $100-billion windfall from the lifting of international sanctions into the country’s flagging economy and won’t significantly boost funding for terrorist groups and sectarian militias it supports in the Middle East.

Intelligence officials have concluded that even if Tehran increases support for Hezbollah commanders in Lebanon, Houthi rebels in Yemen or President Bashar Assad’s embattled government in Syria, the extra cash is unlikely to tip the balance of power in the world’s most volatile region, according to two U.S. officials who spoke on condition of anonymity to discuss the intelligence document.

The controversial CIA report, which has been briefed to key members of Congress, thus provides ammunition to both sides in the battle brewing on Capitol Hill over President Obama’s signature foreign policy achievement, a sweeping deal to block Iran’s ability to build nuclear weapons for at least a decade in exchange for the easing of sanctions that have hobbled the country’s economy.

Under the deal sealed Tuesday in Vienna, once Iran completes a series of strict requirements, the U.S., the European Union and the United Nations will suspend the most damaging sanctions against Iran’s financial and energy sectors, and Tehran will be given access to about $100 billion from oil revenues frozen in overseas accounts. That could occur in early 2016.

The United States also will rescind most of its banking sanctions, allowing Iranian banks to reconnect to the global financial system, and will lift restrictions on Iran’s automotive, shipping and insurance industries, as well as on trade in gold and precious metals. In all, 444 companies or individuals, 76 aircraft and 227 ships would be removed from U.S. blacklists.

Non-nuclear sanctions, including those related to human rights abuses and Iran’s support for terrorism, will remain in place. A U.N. arms embargo would lift in five years, and restrictions on the transfer of ballistic missile technology remain for eight years, although administration officials said the U.S. and its Persian Gulf allies will step up efforts to interdict any Iranian military shipments to its proxies.

Republican lawmakers briefed on the CIA report have seized on the conclusion that Iran could increase support for terrorist groups and expand its military role in Yemen, Syria and other regional hot spots, describing it as a fatal flaw in the Vienna agreement.

“I don’t know what information the Obama administration possesses that indicates this deal will actually prevent Iran from getting a nuclear weapon or will cause the mullahs to reduce their support for worldwide terrorism, but it sure isn’t the same intelligence we’re seeing in the Intelligence Committee,” Rep. Devin Nunes (R-Tulare), chairman of the House Intelligence Committee, said in a statement.

The Obama administration is banking, in part, on Iranian President Hassan Rouhani and other so-called moderates in Iran’s leadership to steer most of the anticipated money into domestic infrastructure and other investments to quell increasing public frustration over a lack of jobs and business opportunities.

Rouhani was elected in 2013 on a campaign promise to improve Iran’s economy, and U.S. intelligence analysts say his advisors determined early on that Iran’s high inflation and moribund finances could not recover while biting sanctions were in place. The analysts believe that the impact of the sanctions kept the Iranians coming back to the negotiating table over the last 20 months.

For his part, Obama acknowledged Wednesday that some of the money could be siphoned off to fund Iranian proxies in the Middle East.

“Do we think that with the sanctions coming down, that Iran will have some additional resources for its military and for some of the activities in the region that are a threat to us and a threat to our allies? I think that is a likelihood that they’ve got some additional resources. Do I think it’s a game-changer for them? No,” Obama said a White House news conference the day after the deal was reached.

“The notion that they’re just immediately going to turn over $100 billion to the IRGC or the Quds Force I think runs contrary to all the intelligence that we’ve seen and the commitments that the Iranian government has made,” Obama added, referring to the Iranian Revolutionary Guard Corps and its special forces units abroad.

Obama said it is a “mistake” to say his administration believes that Iran will only spend the money on “daycare centers, and roads, and paying down debt.” But he said preventing Iran from building a nuclear weapon is more important that releasing “incremental additional money” that Iran could use “to try to destabilize the region or send to their proxies.”

Under the sanctions regime, Iran currently has about $100 billion frozen in oil escrow accounts in banks in several countries that buy Iranian petroleum products, including China, India, Japan, South Korea, Turkey and Taiwan.

Iran would be able to withdraw funds from those accounts once it has complied with the initial terms of the nuclear deal, including taking out two-thirds of its centrifuges, reducing its enriched uranium stockpile by 98%, shutting down its plutonium facility and allowing International Atomic Energy Agency inspectors broad access for monitoring of operations.

Appearing on CNN, national security advisor Susan Rice said Wednesday that the goal of the U.S. and five other world powers in the negotiations with Iran was solely to stop Tehran from amassing enough nuclear fuel to build a bomb that could be used against the United States or its allies, and was “never” meant to stop Iran from funding terrorism or address other concerns about Iran’s activities in the region.

“We think for the most part they’re going to need to spend it on the Iranian people and their economy, which has tanked,” Rice said. “It is possible, and in fact we should expect, that some portion of that money would go to the Iranian military and could potentially be used for the kind of bad behavior we have seen in the region up until now.”

Lawmakers have 60 days to review the accord and an option to approve or reject it. Opposition is widespread among Republicans, who control both houses of Congress, but it’s far from clear whether they can secure enough votes to override a promised White House veto.

Opponents believe that the administration is taking too great a risk and gives up too much to Iran.

Divining how foreign leaders will act is a challenging job for intelligence analysts and comes with many pitfalls, Michael Allen, a former director for counter-proliferation strategy on the National Security Council under President George W. Bush, said in a telephone interview.

“Traditionally the hardest analytical intelligence questions are leadership intentions,” said Allen, who has not seen the CIA assessment on the deal. “I’m not sure we are in a position to assess that the Iranians would spend the vast majority of their windfall on the economy versus supporting malign activities in the region.”

CIA: Iran will focus on its economy, not terrorism, with sanctions money – LA Times.