In recent weeks, there has been a welter of claims that Iran is spending billions of dollars in military aid to its regional allies, with commentators outbidding each other as figures climb ever upward. These have coincided with demonstrations in Iran where some protestors chanted that money spent abroad should be brought home.
“People think the regime is paying out around the region,” one Iranian professor recently told me. “Arguably, Iran’s foreign policies have been successful in expanding Iran’s influence. But many people think money should be spent on Iranians rather than on Arabs – given to [Iran’s allies in] Lebanon, Syria, Palestine. People are angry! Some believe that many clerics are really Arabs who want to go and live there!”
Those in the United States seeking regime change in Iran now seem to believe the Islamic Republic is ripe for overthrow. They also seem to believe reports of “billions” spent by Iran in military support to its allies will spark enough political outrage to justify new U.S. sanctions, and upend the 2015 nuclear agreement between Iran and six world powers, which was endorsed unanimously by the United Nations Security Council.
Among those highlighting the Iranian foreign spending is U.S. president Donald Trump. In an official White House statement on the Iran nuclear deal issued on Friday, January 12, Trump bemoaned “a corrupt regime that wastes the Iranian people’s money on weapons systems at home and terrorism abroad.” Maryam Rajavi, co-leader of the Mujahedeen-e Khalq (MEK), the cultish Iranian exile group previously allied with Saddam Hussein, wrote a long article in the Wall Street Journal claiming Iran has “spent upward of $100 billion on the massacre in Syria.” John Bolton, former U.S. ambassador to the United Nations, who has been paid to promote the MEK, told Fox News that protests in Iran are “about whether the regime survives or not” and that the United States should reintroduce all previous sanctions.
Majid Rafizadeh, president of the “International American Council,” who regularly writes warmly of the MEK and has compared Iran’s Ayatollah Ali Khamenei to Adolf Hitler, has argued Iran’s defense budget will increase by “nearly 90%” in 2018-19, up from $26 billion in 2017, with the “surge … linked to the Iranian regime’s military adventurism in other countries especially in the Syrian civil war as well as its support for proxies across the region.”
Among the organizations most active in promoting such views is the Foundation for Defense of Democracies (FDD). David Adesnik, FDD’s Director of Research, recently published a “policy brief” that he claims uses “open-source reports” as evidence that Iran is spending $16 billion annually “to support terrorists and rogue regimes.”
The brief replaces the term “military spending” with the more elusive “support” for “terrorists and rogue regimes.” It includes a figure of $15-20 billion for Iran’s annual “support” for the government of Syrian President Bashar al-Assad. According to Adesnik, this sum is based upon a claim by “Syria expert” Steven Heydemann, which was featured in a 2015 Bloomberg View opinion piece written by Eli Lake. Though Adesnik misspells Heydemann’s first name as “Stephen” and the piece is behind a pay-wall, Adesnik makes clear the figure includes Iranian oil supplied on credit, which is not necessarily military spending.
To corroborate this claim of “$15 billion or more” in annual support, Adesnik cites the “belief” of an unnamed “senior military officer” speaking under what are known as “Chatham House rules.” This refers to the convention, developed at the UK’s Royal Institute for International Affairs, that reporters may quote participants in discussion but not reveal their identity or affiliation. By definition, this means Adesnik is neither presenting accessible evidence nor referring to “open-source reports.”
To back up his argument, Adesnik writes that Iran extended a $1 billion line of credit to Syria last year, in addition, he claims, to $5.6 billion in credit given in 2013 and 2015. There are a number of problems with this allegation, starting with the source Adesnik cites: a Wall Street Journal article from January, 3, 2018, in which reporter Asa Fitch writes:
Last year, Iran extended a $1 billion line of credit to Syria, adding to the $5.6 billion credit it had given in 2013 and 2015. Iranian oil shipments to Syria have provided another valuable lifeline.
The first problem is simple math. There were wide reports that a credit line of $1 billion agreed in 2015 was activated last year. This was in addition to a credit line agreed in 2013 of $3.6 billion. This would equal a total of $4.6 billion, not the $6.6 billion that Adesnik supposedly derives from the Wall Street Journal report.
Secondly, the Wall Street Journal claim that the credit line does not include oil (that is, Iranian supplies of oil delivered on credit) is flatly contradicted elsewhere. The Israeli newspaper Ha’aretz, for example, on January 1, 2018, gave a figure of $4.6 billion for credit to “let the [Syrian] regime buy oil and other goods from Iran.” The website of the MEK, whose co-leader the Wall Street Journal has kindly featured on its opinion page, also notes the figure – which it puts at $5.6 billion – was “mainly to import Iran’s oil.”
A third problem is that agreement to a credit line does not necessarily mean the credit is taken up – a point made by John Hopkins economics professor John Hanke in 2013, when the $3.6 billion credit agreement was announced.
It would be reasonable assume that agreement to the $1 billion credit line in 2015, and its activation in 2017, was because the original $3.6 billion credit line reported in 2013 had been exhausted, but this is still well short of the $6.6 billion used by the Wall Street Journal and FDD.
Confused? I reached out to Asa Fitch, who wrote the Wall Street Journal article, about his cited figures. But, at the time of publication, he had not yet responded to my inquiry.
Still, for the sake of argument, let us assume the highest figures – the ones Adesnik takes from the Wall Street Journal – are correct. That would mean that, since 2013, Iran has extended $6.6 billion in credit to the Syrian government, which over four and a half years comes to an annual average of $1.46 billion.
How does that get to “$15 billion annually,” as Adesnik insists? Well, it can’t be the oil, as that is included in the credit lines, so perhaps it is military spending?
Critical Threat Inflation
Adesnik cites to a March 2017 report from the Critical Threats Project, an initiative of the American Enterprise Institute headed by Frederick Kagan, which makes various claims about the number of Iranians fighting in Syria. But the report does not present any evidence of Iranian military spending on Syria. Nor does it establish that any of the alleged expenditures – for example, on wages to soldiers or on costs of weaponry – is supplemental to Iran’s general defense spending.
The Critical Threats report claims that 7,000 Iranian Revolutionary Guards are in Syria (which is around 1.4% of Iran’s entire armed forces, whose strength in 2016 was assessed to be about 523,000 by the International Institute of Strategic Studies). This figure is itself sourced to anonymous “experts” mentioned in another Wall Street Journal article. The article provides no evidence to support for the claim. Even the “20,000 Shiite militiamen,” which the Critical Threats report describes as the number of all “foreign fighters” in Syria allied to Iran – including Hezbollah, and Iraqi and Afghan fighters – would only be 4% of Iran’s total military force.
Could this be enough to support Adesnik’s claim that Iran spends $15 billion annually on Syria? What, then, is Iran’s overall defense spending? The Stockholm International Peace Research Institute puts it at $12.3 billion in 2016, of which 4% would be a mere $492 million.
How does the military spending of Iran compare to that of rivals? Stockholm says Saudi Arabia’s military budget is $70 billion, the United Arab Emirates is $22.8 billion, Israel’s $17.8 billion. The United States leads all others at a staggering $611 billion.
Combined, these four governments outspend Iran by a factor of nearly 60. Even if Iran is really spending double what the Stockholm researchers say, it would still be outspent 30 to 1, and 3 to 1 by Saudi Arabia alone.
But, back to Adesnik’s brief. Turning his attention to Iraq, he suggests that Iran “may” have spent $1 billion a year there since 2014. It is unclear whether Adesnik includes Iranian support for the Baghdad government – also backed by the United States – in his $16 billion figure for Iranian support for “terrorists and rogue regimes.” Nor is it clear if he includes the resources Iran has committed against ISIS/Daesh as part of the $16 billion.
Regarding Lebanon, Adesnik gives a figure of $800 million for Iran’s annual support for Hezbollah, which he sources to a September 2017 report by the Foundation for Defense of Democracies itself. The study notes, citing the Wall Street Journal, that nearly 25% of this estimated total in 2006 – $180 million – was funding provided by Iran “to rebuild homes” destroyed during the Israel’s invasion of Lebanon that year.
So much for “open-source evidence.” And so much for the $16 billion.
In one variation of this “Iranian billions” argument, some claim evidence is not needed because the support is hidden. Iran funds regional military outreach, goes the argument, without including the money in official accounts, perhaps channeling resources though opaque religious foundations.
No doubt it does. But where would Iran raise this $16 billion or more a year before squirreling it secretly to its allies? Since the easing of sanctions after the 2015 nuclear agreement, formally known as the Joint Comprehensive Plan of Action or JCPOA, Iran has doubled its oil and condensate sales to produce a revenue of around $40 billion a year. Is it really believable that 40% or more of that revenue would go to regional military aid?
Would such a massive diversion not show up elsewhere in the economy? There is broad consensus among economists that Iran’s recovery from recession since the nuclear deal and current annual GDP growth rate of 5.6%, according to the London-based Economist Intelligence Unit, is the result of increased oil revenue. As Djavad Salehi-Isfahani, Professor of Economics at Virginia Tech, has written in LobeLog, “Iran’s economic recovery was slow to materialize after the JCPOA was signed but rebounded vigorously once it went into effect… [This] was mainly spurred by the easing of sanctions on trade, in particular oil exports.”
Could this recovery have happened if 40% of Iran’s total oil revenue was being sent and spent abroad every year in support for Iran’s allies? The answer, surely, is no.
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