David Sivak, DCNF
President Donald Trump claimed that Iran’s military budget has grown nearly 40 percent since the U.S. signed the Iran nuclear deal in 2015.
Estimates range from 13 percent to 37 percent due to a lack of transparency surrounding Iran’s defense spending.
Trump announced Tuesday that the U.S. would withdraw from the Iran nuclear accord. The deal, signed in July 2015, required Iran to dismantle two-thirds of its centrifuges and give up 95 percent of its enriched uranium. Provisions took effect January 2016.
The Obama administration estimated that the deal would lengthen the “breakout” period – the amount of time it would take for Iran to build a nuclear weapon – from two to three months to about one year. But the agreement included sunset provisions, making it a temporary fix.
The deal provided Iran with sanctions relief estimated at somewhere between $29 billion and $150 billion. The Treasury Department separately paid Iran $1.7 billion in cash to settle a legal claim, although the timing of a prisoner swap led to accusations that the funds doubled as a ransom payment.
These concessions, Trump argued, have allowed Iran to fund its military ambitions across the Middle East at the expense of its economy.
“In the years since the deal was reached, Iran’s military budget has grown by almost 40 percent, while its economy is doing very badly. After the sanctions were lifted, the dictatorship used its new funds to build nuclear-capable missiles, support terrorism, and cause havoc throughout the Middle East and beyond,” Trump said during the announcement.
Iran has a fragile economy – inflation regularly hits double digits, youth unemployment stands at 30 percent and the value of Iran’s currency continues to decline.
So when a budget proposal was leaked in Iran showing an increase to military spending and cuts to cash subsidies, Iranians took to the streets in protest. Protestors could be heard chanting, “Neither Gaza nor Lebanon, I will give my life for Iran,” referring to the financial support Iran provides to its proxies around the Middle East.
Military spending is only one dimension of Iranian discontent – secret parts of the budget were revealed showing how much money was going to religious institutes that support the hardliner clerics. These clerics are seen by many in Iran as advancing their own interests at the expense of the Iranian people.
Protests began in late 2017, leaving 25 dead.
Critics say that sanctions relief on oil – the lifeblood of the Iranian economy – and other concessions have been a windfall for Iran’s military. Trump claimed that its budget has ballooned by nearly 40 percent in just a couple years.
His statistic may come from the Stockholm International Peace Research Institute (SIPRI), a Swedish research organization that studies conflict and arms control. Adjusted for inflation, it estimates that Iran spent $14.5 billion on its military in 2017, up from $10.6 billion in 2015 – a 37 percent increase.
Iran’s defense spending has fluctuated drastically over the years, but the latest upswing began in 2014, the year before the Iran deal was reached.
As a share of government spending, the increase in military expenditures has been far less dramatic, rising from 15.4 percent to 15.8 percent of total spending over the same two year period.
Has the U.S. helped fund Iran’s military ambitions?
Bloomberg reported in 2016 that the Iranian parliament allocated the $1.7 billion in cash payments directly to the military. Some of these funds have been used to aid proxy groups including Lebanon-based Hezbollah and the Houthi rebels in Yemen, according to The Washington Times.
As for the sanctions relief, “It’s impossible for any of us outside to really say with much confidence what happened to that money,” Alex Vatanka, a senior fellow at the Middle East Institute, told The Daily Caller News Foundation.
Even though Iran approves a budget each year, it likely has off-the-books accounts. A lot of the money it spends abroad, for example, does not come from official defense budgets, says Farzin Nadimi of the Washington Institute for Near East Policy.
A lack of transparency surrounding the budget leaves experts to guess exactly how much Iran spends on its military and where the funds are spent. So while Trump’s claim is supported by a reputable organization, the figure by SIPRI is just one of several published estimates.
The International Institute for Strategic Studies (IISS), for example, only calculates an increase of 13 percent from 2015 to 2017. London-based IHS Markit estimates that expenditures have risen 32 percent from 2015 to 2018.
Figures reported by Iranian outlet Mashregh News (kindly translated and provided by The Washington Institute) suggest an increase of 34 percent.
Trump’s claim is further complicated by public statements from Iranian President Hassan Rouhani that suggest a much larger increase.
He claimed in 2017, for instance, that the military budget had grown 145 percent since he assumed office in 2013 (SIPRI only estimates a 21 percentincrease). Experts we spoke to say the higher figure may in part be explained by inflation or perhaps off-the-books spending.
Bigger military budgets are a source of pride for the regime – Rouhani threw out this particular stat in a speech commemorating National Army Day – so his estimate should be taken with a grain of salt.
Rouhani proposed a 90 percent increase to military spending for the current year, according to Defense News, including a substantial increase to the Iranian Revolutionary Guard Corps (IRGC). This merely reflects a proposed increase, however, and adopted budgets often allocate far less.
“Based on the Iranian budgeting process of the past few years it should be expected that the actual 2018 budget for the IRGC will not be such a big increase as the proposed 2018 budget suggests,” Pieter Wezeman, a senior researcher at SIRPI, told TheDCNF.
No matter the exact figure, Vatanka believes it’s a mistake to put too much emphasis on the size of Iran’s defense budget.
Sanctions against Iran have prohibited the sale of most conventional military equipment since 2010, so Iran can’t readily buy expensive military technology. (The nuclear deal loosened those restrictions in 2015, allowing the U.N. Security Council to grant exceptions on a case by case basis.)
“You know, the fact that they still fly F-4s and F-14s from the days of the Shah in the ’70s, that tells you they’re not necessarily big spenders,” Vatanka told TheDCNF.
Russia is one of the only countries willing to negotiate military sales with Iran.
Iran has a conventional military arsenal, including an army of 350,000 troops, an air force and a regular navy, but its largest military expenditures support the IRGC, pension contributions and law enforcement personnel. Iran continues to develop a ballistic missile program despite U.N. sanctions.
Vatanka says that Iran can support its proxy wars without growing the military budget. “Iran is waging a war in the region through these militias and proxies on the cheap. They don’t cost much. Your average Afghan fighter is fighting under the Iranian command in Syria getting $550 a month in salary, you know, running around with Kalashnikovs,” he said.
“They did it when they were not under sanctions, they did it when they were under sanctions – they’ve done it since.”
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