On October 6, Charlie Rose broadcast an interview with Stuart Levey, Undersecretary of the Treasury for Financial and Terrorism Intelligence (can be viewed here: www.charlierose.com/view/interview/11231). Levey is widely considered the principal architect of U.S. sanctions policy, particularly with respect to Iran, under both President George W. Bush and President Barack Obama. It is worth recalling that the very first appointment that President-elect Obama made at the Treasury Department, even before he could get Secretary Geithner confirmed, was to retain Stuart Levy (a Dick Cheney protégé) from the Bush Administration.
The interview is revealing about Levey’s “philosophy” of sanctions. Levey believes that sanctions can work at multiple levels. There is, for example, a formal level, where UN sanctions prohibit this or that activity. But, perhaps even more importantly for Levey, there is an informal level, at which private companies, banks, and other market actors can be deterred from engaging in business activities in Iran which are not formally proscribed, out of concern over “reputational risk.”
The interview underscores just how profoundly dysfunctional U.S. sanctions policies are. We have criticized sanctions as being futile and counterproductive, in that America’s continued resort to multilateral and unilateral sanctions against Iran undermines whatever credibility U.S. offers of “engagement” might otherwise have. But, the Levey interview makes clear that the damaging effects of sanctions go beyond even this. Levey says that sanctions are meant to press Iran to engage in serious diplomacy with the United States and the international community. But, he has, in effect, created a sanctions policy which will be very difficult for the United States to walk back, even as part of a process of negotiation and prospective rapprochement. We suspect that this is precisely what Levey intends. That President-elect Obama moved so rapidly to retain Levey was a sad indicator of how internally contradictory and incoherent the Obama Administration’s Iran policy would turn out to be.
Flynt Leverett directs the Iran Project at the New America Foundation, where he is also a Senior Research Fellow. Additionally, he teaches at Pennsylvania State University’s School of International Affairs. Hillary Mann Leverett is CEO of Strategic Energy and Global Analysis (STRATEGA), a political risk consultancy. She is also Senior Lecturer and Senior Research Fellow at Yale University’s Jackson Institute for Global Affairs. This article was first published in The Race for Iran on 7 October 2010 under a Creative Commons license.