When the clock strikes midnight on Sunday evening, the US will drop the hammer on Iran with major energy and banking sanctions. Ironically, this coincides with the 39th anniversary of the hostage crisis and 54th anniversary of Khomeini’s exile. So what comes next? [Thread]
2| Specter of the looming sanctions has already dented Iran’s key oil exports, though the exact numbers are murky. While nowhere close to the absolute zero the Trump admin was aiming for, no doubt that Iran’s exports has dropped. reuters.com/article/us-ira…
3| Washington’s logic for the energy and banking sanctions is clear: if Iran goes broke, its government will have to come back to the negotiating table and stop its regional interventionism. The logic is clear, but is it sound?
4| In a new @CrisisGroup briefing we look at Iran’s economic performance & regional behaviour over the past 40 years. Guess what? there’s almost no correlation b/w the two. Tehran pursues what it deems vital to its national security come hell or high water crisisgroup.org/middle-east-no…
5| Take the 1980s as an example: Iran was at war, with shrinking oil revenue and GDP growth, yet stayed committed to building up its proxy networks and trying to export the revolution abroad. 
6| Conversely, in the early 2000s Iran's oil proceeds and GDP were on the rise - but rather than ramp up its foreign commitments it actually improved relations with neighbors, cooperated with US on Afghanistan, &, as U.S. notes, had "lull" in terrorism.
7| The period b/w 2011-15 is also quite instructive: diplomatic height of nuclear crisis and when a tight web of international sanctions helped sink oil exports, weakened the currency, and raised inflation to almost 40 %.
8| Yet it was during this period of economic difficulty that Iran significantly expanded its military footprint in the region, from extending multi-billion dollar credit lines to Damascus to mobilizing militias against ISIS in Iraq. What does that tell us?
9| Firstly, while U.S. and its ME allies perceive every Iranian regional engagement as malign/expansionist, Tehran sees itself as a status quo power on the defensive – keeping Iraq from being overrun by ISIS, supporting its partner in Syria, etc. crisisgroup.org/middle-east-no…
10| Secondly, Iran’s military strategy is intended to be done on the cheap: not just compared to the U.S. but, strikingly, compared to its regional rivals. See this report by @CSIS csis-prod.s3.amazonaws.com/s3fs-public/pu…
11| True that Iran's military budget increased by 30% after the JCPOA, but the 2016 bump brought spending back to 2009 levels – not to a new high. More importantly, Iran was broadening its regional involvement at a time when it was spending less on its military (2011-2015).
12| Finally, Iran may choose to tactically retreat or halt certain activities, as it has in the past. It is also logical that when it has more resources it can continue expanding its regional footprint. But nothing suggests that sanx will prompt a substantive shift in Iran's FP.
13| Paradoxically, Tehran could become less-risk averse if Washington succeeds in weakening its economy. Sanctions may also be a boon for the IRGC, which benefits politically & economically the deeper the shadows.
14| As a senior Iranian official told @Crisisgroup: “if the economy spirals out of control, the leadership in Tehran will welcome a crisis that could change the subject domestically”. I explain the risks here:
15| Important here to also remember the wider regional context, which a new @CrisisGroup commentary by my colleague Naysan Rafati dives into: U.S. and Iran may not be heading to war, but they're tangoing on a minefield. crisisgroup.org/middle-east-no…
16| We identify 3 key concerns for the months ahead: 1) incremental escalation by Iran/U.S. 2) actions of local allies in the region and 3) risk of crisis from unintended friction. Flashpoints in the Trigger List are especially sensitive. crisisgroup.org/trigger-list/i…
17| Places like al-Bukamal are like a Cold War-era Berlin on the Euphrates, with U.S/backed forces, Iranian missile and drone strikes, Iraqi air sorties, Israeli bombings - oh, and ISIS. crisisgroup.org/trigger-list/i…
18| So what's the alternative? Containing Iran could more constructively be achieved by addressing local drivers of conflict, and recognizing that Iran acts more to fill vacuums than revive an empire.
19| And while hard to envision right now, Washington could also acknowledge legitimate Iranian security concerns, like inferior conventional military strength.
20| For its part, Tehran should recognize that its doctrines are seen as inherently aggressive by its adversaries, encourage integration of allied militias into state structures, & stop proliferating missile technology.
21|21 Path ahead has more pitfalls than promises, and may result in an escalatory logic that benefits no one.
