Iran’s economy faces a bleak future under unprecedented US sanctions, the second package of which taking effect in November following the first package that was imposed this month. The Iranian currency has experienced a significant drop of 70 percent of its value in recent months, but this decline threatens to turn into a complete collapse as the new wave of US sanctions would hit the oil and gas sectors, which are vital to the Islamic Republic’s economy. Although Iran has been subjected to severe sanctions in the past and succeeded in containing them, as in the 1980s and later after 2006, this time it faces a different test: the US Administration’s insistence on forcing it to change its regional behavior and reduce its support to its proxies. Otherwise, it will be subjected to the most painful sanctions, including “crushing” its oil exports and thus depriving it of hard currency, amid increasing public discontent and unprecedented protests against the regime in many Iranian cities. In an indication of how unsafe Iran feels, its lawyers filed a lawsuit before the International Court of Justice in The Hague, arguing that new US sanctions have “dramatic repercussions” on its economy. On these recent developments, Asharq Al-Awsat interviewed the senior consultant to Aperio Intelligence, Barry Marston, who previously worked as a spokesman for the British Foreign Office before moving to the private sector. Aperio Intelligence is an independent research firm engaged in risk consulting, corporate intelligence and financial crime. Asked about the amount of money Iran had in foreign banks and whether they could be easily transferred or were subject to sanctions, Marston said that the total figure promoted by officials and experts for the value of frozen Iranian funds around the world by 2015 amounted to $100-120 billion. In addition, the US Treasury Department’s report on the terrorist assets of 2016 referred to Al-Quds Force in the IRGC as the entity with the largest amount of frozen funds in the United States ($14.3 million). The senior consultant added that according to reports, around $50 billion of funds (mostly due to Iran’s oil revenues) were frozen in central banks in East Asia, noting that before 2015, Iran had successfully liberalized part of these funds, treating them as initial payments for goods purchased from China, South Korea, Japan, India and other countries. One of the reasons for the rising tensions between the United States and Turkey, according to Marston, is the discovery of a huge plan between 2012 and 2014 (as demonstrated during a trial in the United States that ended in May 2018) to launder and transfer $13 billion of frozen assets in Turkish and foreign banks to Tehran, often by simply turning these funds into gold. After 2015, frozen oil revenues around the world were among the least controversial, Marston said. He explained that most of them have been returned mostly quickly, and sometimes diverted through other directions to avoid the remaining US financial sanctions. He recounted that the United States released $400 million (with $1.3 billion in benefits) from an arms deal during the Shah’s reign as a gesture of goodwill, claiming that the simultaneous release of four US citizens held by Iran was a mere coincidence. The current steps to re-impose sanctions have prompted Iran to begin urgent efforts to try to recover as much of its frozen assets as possible as quickly as possible, the senior consultant told Asharq Al-Awsat. He noted that by mid-2017, officials at the Central Bank of Iran described the remaining frozen funds around the world as “insignificant.” These Iranian banking sources indicated that up to $30 billion has been recovered, while there were still some $3.7 billion left abroad, of which $1.5 billion was “inaccessible”. The logical conclusion is that a large amount of the $120 billion of the funds that Iranian and Western sources have promoted were not actually there in the first place, or were simply meaningless numbers in the books of accounts, according to Marston. Asharq Al-Awsat asked Marston about the US intention to exert more pressure on Iran by depriving its economy of access to hard currency and whether the Iranians had the power to prevent the riyal from collapsing. He said: “The Iranian economy will surely face a very difficult period in the next two years. However, it should be noted that Iran was able to absorb some of the similar difficult periods during the eighties of the last century and also under the United Nations sanctions after 2006. It is likely that the Iranian currency will continue its descent, as the riyal has lost 70 percent of its value between May and August.” Marston noted that imports were very expensive and essential services, such as water and electricity, faced great pressure. He added that unemployment among young people was already very high and would get worse, stressing that some financial institutions could actually stop working. “But Iran knows how to act as a war economy - as long as it can contain widespread popular discontent. Iranian citizens will face severe economic pain, especially as the regime, under pressure, consistently gives priority to its military forces and to cover its external obligations,” he emphasized. Asked whether economic pressure on Iran had forced it to change its regional behavior, and whether its support for its regional proxies, such as Hezbollah and other groups in Iraq and Syria, had declined, the senior consultant said: “The 10 years of increasing sanctions between 2005 and 2015 coincided with a surge in Iran’s spending on its armed and paramilitary assets abroad, so there is no reason to expect a radically different response this time.” Iran’s financing of paramilitary forces is one of the most strikingly ambiguous matters, according to Marston. He explained that between 2005 and 2015 - when Iran’s economy was supposed to wither under sanctions - experts estimated that transfers to Hezbollah increased from nearly $100 million to as much as $700 million (US officials estimate) as part of Hezbollah’s deep involvement in Syria. On whether the Americans could succeed in fulfilling their promise to annihilate the Iranian oil exports, he said: “Iran has ready markets in the Far East and will seek to exploit them. The imposition of sanctions will be more difficult for the United States this time, because the administration is trying to enforce them in a unilateral way, instead of passing through the Security Council. Chinese, Europeans, Indians and others, will forcibly respond to the sanctions but in a partial form.” However, Marston noted that once the United States “begins expanding its sanctions, Iran will be in an increasingly dire situation; because those who want to buy Iranian oil (either legitimately or through the black market) will force Tehran to sell at cheap prices.” He stressed that the withdrawal of Total was another indication that Iran’s ability to produce oil and develop new fields would likely face a decline over time, due to chronic weakness in investment, the migration of foreign experts and companies, and the dire situation of spare parts. It can therefore be concluded that sanctions have an undeniable impact on Iran, but the US administration seems far from having a coherent and integrated strategy to contain Iran’s role regionally, Marston noted.