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Event Summaries
May 11, 2016

Event Summary: ‘Partner for Peace? Iran’s Illicit financing of Terrorism’

by
Henry Jackson Society

by Ruta Valaityte

On the 11th of May the Henry Jackson society hosted a talk by Dr Matthew Levitt, entitled ‘Partner for Peace? Iran’s Illicit financing of Terrorism’. The event took place in the House of Lords by the kind invitation of Baroness Neville-Jones. Dr Matthew Levitt is currently a Senior Fellow and Director of the Washington Institute’s Stein Program on Counterterrorism and Intelligence and is one of the leading experts in the field of Islamist terrorism.

The talk and discussion circulated around the shortcomings and potential negative consequences of the recent partial lift of sanctions against Iran. The set of sanctions in question was imposed on Iran in 2012 as a Western response to Iran’s nuclear program. In January 2016 after a long negotiation process the sanctions were lifted allowing Western investment and economic cooperation.

Dr Levitt pointed out that negotiations with Iran, in general, is not a bad thing. Nevertheless, he remained critical about the conditions of this particular agreement and some miscalculated statements of Western politicians. For example, the message by the U.S. state secretary John Kerry that there are no problems in doing business with Iran and if something is not clear the companies should just ask, is simply wrong. The situation is more complicated than it appears on the surface.

The remaining packages of sanctions over human rights abuses or support for terrorism pose a problem for foreign investment. Nevertheless according to Dr Levitt the key obstacle deterring tier 1 and tier 2 Western banks from investment are the prevalence of corruption and opaqueness of the Iranian economy. The fact that IRGC (Islamic Revolutionary Guard Corps) has pervaded all sectors of economy and society in Iran is a key issue. Dr Levitt’s talk focused on the obstacles this prevalence poses to Western investment, pointing out that well entrenched mechanisms of sanction evasion simply do not allow Western companies to do their ‘due diligence’ and make sure they are not involuntarily supporting military or terrorist organisations. This danger has now become even more acute as in the wake of war in Syria Iranian organisations were drawn closer to terrorist groups, Hezbollah being only one of them.

The stimulating discussion led by Baroness Neville-Jones addressed such diverse issues as the strength and structure of Iranian government, the power held by Iranian religious leaders, the response to lift of sanctions in the US, and the differences between European and US companies investing in Iran.

While remaining pessimistic about the possibility of regime change in Iran and sceptical about the current form of agreement, Dr Levitt reiterated that negotiations with Iran is not a bad thing. However, the expected effects might not be achieved. According to Dr Levitt even though ‘corruption is one of the costs of doing businesses’, the opaqueness and lack of transparency in the Iranian economy is likely to deter Western companies from large scale investment in this big and unexplored market.