Iran’s Guardian Council on May 18 confirmed the 2016-2017 military budget, which had been passed last month by parliament. The budget allows $19 billion to go to the military establishment – the Islamic Revolutionary Guard Corps (IRGC), regular military, and Defense Ministry – a 90-percent increase in military spending compared to the previous year. It’s a massive jump in defense spending, but one that should not be surprising given the windfall Tehran is set to reap from last summer’s nuclear deal. Ultimately, the increase presages further Iranian destabilization of a region already embroiled in turmoil.
Of the $19 billion, $11.3 billion is earmarked explicitly for the armed forces’ annual budgets. In addition, Parliament allowed the government to allocate $5 billion to “military projects,” to be chosen at the discretion of the military apparatus. The budget also allows the military to raise $1 billion through fees for Iranians who buy their way out of military service. Finally, it lets the government give the military $1.7 billion from a financial settlement reached in January.
The nuclear deal has lifted financial restrictions on Iran, giving it access to its frozen assets and – to a partial extent – the international financial system. Tehran hopes that foreign banks will now provide it with loans to finance its military projects.
But while the UN arms embargo on Iran remains in place for another five years, Tehran is already challenging those restrictions by entering new arms negotiations with China and Russia (such as multirole fighter jets from the former and T-90 tanks from the latter). To finance them, Tehran can take advantage of its already-existing working relations with financial institutions in Moscow and Beijing.
This year’s spike in Iran’s military budget gives it greater resources to escalate its involvement in proxy wars in Syria, Iraq, and Yemen, and to accelerate the pace of its ballistic missiles program. U.S. inaction as Iran doubles down on its military objectives is not, as President Obama recently described it, a step towards helping Tehran “share the neighborhood” with other regional powers. Instead, it brings the region one step closer to military conflict.
Saeed Ghasseminejad is a research fellow at Foundation for Defense of Democracies.