As the United States and Iran trade blows again, it’s important to remember that sanctions relief would have only allowed the Islamic Republic to finance its war machine.

Déjà vu is a funny thing. Washington was on the verge of reliving a familiar chapter of its Iran policy before Tehran reminded it of where that road leads. The recently negotiated Memorandum of Understanding (MoU) between Iran and the United States this June offered the Islamic Republic a meaningful economic opening predicated on a flawed but familiar assumption: that sanctions relief will moderate Iran and potentially “transform” the Middle East.

At least for now, that assumption is overshadowed by Iranian attacks on commercial shipping and US partners in the region and the US retaliation. President Donald Trump now believes the short-lived ceasefire to be “over.” As the Trump administration pivots, it remains an open question whether the United States is heading back to a policy of maximum pressure or seeking a new negotiating framework. But history should be the administration’s guide. Offering sanctions relief of any kind will both fail to moderate the regime and will only finance threats that America will have to address later.

To be clear, there is a world of difference between the surrounding strategic context, the characters who helped produce it, and the content of the fatally flawed 2015 nuclear deal with Iran, known as the Joint Comprehensive Plan of Action (JCPOA), and the more recent MoU aimed at opening the Strait of Hormuz. But the operating philosophy of pay-to-delay and pay-to-play remains the same.

Worryingly, the MoU targeted the heart of Washington’s pressure policy on Iran: sanctions. General License X initially suspended penalties under 11 different sanctions authorities and granted Iran waivers to sell oil and receive direct payments. In response to Iranian violations of the MoU and attacks against shipping, however, the US Treasury Department has since replaced it with General License X1, which permits a 10-day wind-down of previously authorized transactions but prohibits new purchases or shipments after July 17. But so long as the MoU remains in effect, even if only politically, Washington will be prohibited from issuing new sanctions and will have to work toward de-restricting Iran’s other frozen funds abroad.

Earlier, in anticipation of these funds, Iran’s Foreign Ministry spokesman declared that Iran will spend some portion of its repatriated monies to build more drones and missiles. But even if one dismisses this as grandstanding, history provides an important lesson as to what Tehran’s theocrats and military men did with sanctions relief in the past. In 2015, once sanctions were waived, the regime increased military spending, intensified domestic repression, empowered its network of trans-national terror proxies, and became markedly less risk-averse when confronting adversaries.

At home, the regime closed 2015 with between 966 and 1,054 executions, its highest annual toll in more than two decades and the deadliest year since at least 1989. In 2016, Iran established the first pillar of its digital repression with the National Information Network, a state-controlled domestic internet built for censorship, surveillance, and internet shutdowns. Between 2015 and 2017, authorities had detained 30 dual nationals as part of the regime’s “hostage diplomacy.”

A European Parliament workshop convened in 2017 found the country’s human rights situation was “not really improving” in the wake of the JCPOA. The UN Special Rapporteur similarly concluded there had been no “tangible effects” on the ground, documenting continued executions and arbitrary detention. Then Supreme Leader Ali Khamenei himself warned that after the nuclear issue the West would next turn to “human rights,” a pressure tactic which Tehran vowed to resist.

Three months after the 2015 deal was signed, Iranian regime media hailed it as an agreement that “served [the regime’s] armed forces” by waiving international sanctions on leading entities engaged in the defense industry and missile development.

In the following fiscal year, Iran’s military budget allocated $19 billion to the military establishment, including the Islamic Revolutionary Guard Corps (IRGC), the regular military, and the Defense Ministry, a 90-percent increase over the previous allocation. By 2018, Iran’s defense spending was 53 percent higher than five years earlier and among the highest levels recorded in at least two decades.

Iran’s military buildup was not merely reflected in a budgetary increase. In July 2015, when the JCPOA was agreed, Iran possessed three types of medium-range ballistic missiles (MRBMs), the class of projectiles that from Iranian territory can reach both Israel and all US bases in the region. Since then, Tehran has unveiled at least seven more types of MRBMs (including two alleged hypersonic systems) and introduced two new solid-propellant space-launch vehicles which can shorten its pathway to a deliverable intercontinental ballistic missile that could one day target continental Europe or even the US homeland.

In the region, Iran used the post-JCPOA period to transform Syria into a key element of its Middle East policy by creating a “land bridge” to project power into the Eastern Mediterranean. In July 2015, Tehran increased its financial support for Bashar al-Assad by approving another $1 billion credit facility, while deploying thousands of troops to Syria. It also expanded the Afghan Fatemiyoun and Pakistani Zeynabiyoun brigades into forces numbering in the tens of thousands by offering higher salaries. Together with Hezbollah and Iraqi militias, this coalition enabled Assad to recapture eastern Aleppo in December 2016, the regime’s most significant battlefield victory of the civil war.

After Aleppo, the Islamic Republic’s Shia foreign legion became beneficiaries of the regime’s largesse. In June 2016, Secretary-General Hassan Nasrallah publicly announced, “As long as Iran has money, we have money…the rockets, the food, the drink, the salaries, the expenses, the weapons.” US official estimates of Iranian financial support for Hezbollah were estimated at the time to be the “hundreds of millions of dollars.” 

Iran also stepped up support for Hamas by helping rebuild tunnels demolished during the 2014 war with Israel. During a February 2016 visit by a Hamas delegation to Tehran, IRGC Quds Force commander Qasem Soleimani declared that the JCPOA had not changed Tehran’s “unconditional” support for Hamas, adding that sanctions had previously constrained the resources Iran could devote to the group.

Although the Houthis had already seized Yemen’s capital, Sanaa, in 2014, they remained a local insurgency equipped with captured Yemeni stockpiles and limited strike capabilities. Beginning in 2016, Iran transformed them into a regional military threat by supplying attack drones later seen in the region and increasingly sophisticated ballistic missiles. The Houthis shifted from fighting largely inside Yemen to launching regular strikes against Saudi cities, airports, military bases, and oil infrastructure, while extending their reach hundreds of kilometers beyond Yemen’s borders.

By 2017, they were firing Iranian-derived Burkan-2H ballistic missiles toward Riyadh, and UN investigators later concluded that missiles launched into Saudi Arabia shared key design characteristics with Iran’s Qiam-1. In the ensuing years and amid a ceasefire which Iran exploited, Tehran stepped up the transfer of missile technology and components to the Houthis, providing them with anti-ship ballistic missiles and MRBMs which the Houthis employed against Israel, US vessels, and international shipping from 2023–2025.

The Islamic Republic’s strengthening foothold from Iraq to the Levant and the Red Sea increased Tehran’s risk tolerance. A regime with a larger missile arsenal and stronger proxies was more willing to accept the dangers of regional escalation, believing it could absorb and disperse retaliation through its network of partners while brandishing systems that would deter any retaliation against its territory. That toxic combination of confidence and capability led to more Iranian overt intervention in the region, including ballistic missile launches from its own territory in response to threats starting in 2017.

That confidence also helped lay the foundation for the coordinated multi-front strategy that ultimately culminated in Hamas’s October 7 attack and a subsequent multi-front campaign against Israel popularly called a “ring of fire.”

The events that followed the JCPOA provided the Islamic Republic with a strategic blueprint to replicate. In April, Supreme Leader Mojtaba Khamenei pledged to safeguard Iran’s “nuclear and missile capabilities” as national assets. At the same time, President Masoud Pezeshkian credited the missile program with preventing Iran from becoming “just like Gaza” and ruled out negotiations over its future. Tehran has reportedly already assured Hezbollah it will receive increased funding once sanctions relief takes effect and Iranian assets are unfrozen. Soleimani’s successor, Esmail Qaani, declared hours after the MoU was announced that “Hamas will soon be rebuilt.”

The first era of sanctions relief did more than finance Tehran’s military capabilities. It taught the Islamic Republic that it could expand its regional footprint, absorb military confrontation, and eventually return to the negotiating table with more leverage at a time of its own choosing.

A decade later, despite Washington initially flirting with the same approach, the Trump administration’s latest actions and statements are proof positive that it has lived up to its commitment of an Iran agreement that would be “performance-based.” Now is the time for the president to step away from the table and signal that he has learned from the lessons of history. Otherwise, if these measures are only an intermezzo between the next round of shooting followed by talking, Americans will again relive history and its consequences.

About the Authors: Janatan Sayeh and Behnam Ben Taleblu

Janatan Sayeh is the Iran analyst at the Foundation for Defense of Democracies, focused on Iranian domestic affairs and the Islamic Republic’s regional malign influence. Previously, he held various research roles at the International Republican Institute, Washington Institute for Near East Policy, and the American Enterprise Institute. Born and raised in Tehran, he studied Hebrew and Arabic at the Hebrew University of Jerusalem and received his BA in political science from the University of California, Berkeley.

Behnam Ben Taleblu is the senior director of the Iran program at the Foundation for Defense of Democracies (FDD) in Washington, DC. For well over a decade, Behnam has supported FDD’s Iran program as a senior fellow, research fellow, and senior Iran analyst. Before his time at FDD, Behnam worked on non-proliferation issues at an arms control think tank in Washington. Leveraging his subject-matter expertise and native Persian-language skills, Behnam closely tracks a wide range of Iran-related functional and regional topics, including nuclear non-proliferation, ballistic missiles and drones, sanctions, the Islamic Revolutionary Guard Corps and its proxies, the foreign and security policy of the Islamic Republic, and internal Iranian politics.

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