The War Party Pushes Obama for Even More Iran Sanctions

The first issue of The Weekly Standard for 2011 includes an article by Reuel Marc Gerecht and Mark Dubowitz, entitled “The Logic of Our Iran Sanctions: Accelerate Them Now.”  Gerecht and Dubowitz are both affiliated with the Foundation for Defense of Democracies and are prominent voices in neoconservative circles focused on Iran.  We highlight their current article because it seems highly indicative of the direction in which America’s ongoing Iran policy debate is likely to go in 2011: toward pursuit of even “tougher” sanctions, including measures intended to terminate non-U.S. purchases of Iranian oil.  And, when that doesn’t work, we’ll give war another chance.

Gerecht and Dubowitz open by offering what might seem like a certain measure of praise for President Obama:

More aggressively than any president since Jimmy Carter, Obama has used sanctions against the Islamic Republic.  The White House and the State Department have deployed a “coalition of the willing.”  Washington has assiduously avoided punishing any major European, Russian, or Chinese transgressor of U.S.-mandate sanctions; rather, the administration has chosen to encourage compliance by underscoring the common threat of an Iranian bomb while suggesting that an American economic hammer, wielded by an increasingly pugnacious Congress, will eventually come down on malefactors.

But Gerecht and Dubowitz then draw out the implications of the Administration’s current course — implications which, they suggest, the Administration is reluctant to face up to:

Administration officials will tell you that the president aims only to coerce Khamenei into a compromise; privately, they’ll admit that [Obama’s] aim is to contain a nuclear Iran if sanctions fail to stop uranium enrichment.  But few in the administration now believe that Khamenei will compromise unless sanctions endanger his regime.  And containment, which is what Washington does when it wants to wage war without direct confrontation, is a regime-change strategy: Political and economic isolation is designed to nurture Iran’s convulsive internal contradictions, vividly on display after the June 12, 2009, elections.  The contentious issue in Iran policy isn’t the goal — do we want Khamenei and his Revolutionary Guards to fall?  Democrats and Republicans differ on this far less than they did when President George W. Bush saw an “axis of evil.”  The issue is timing: Can we put enough pressure on Khamenei and his praetorians to either crack the regime or make the supreme leader believe that the nuclear program actually threatens his rule?

Gerecht, of course, is on record many times over as an advocate of military strikes against Iranian targets and coercive regime change in Tehran.  But, in this context, he and his co-author warn that the Obama Administration may be tempted to avoid facing the implications of its current policy by seeking a diplomatic “off ramp”:

The administration may try to avoid the inevitable — sanctions that significantly curtail the export of Iranian oil — by playing with the idea that the West and Tehran can settle for some enrichment inside the Islamic Republic that doesn’t allow for processing the quality and quantity of uranium for nuclear weapons. . . .  A negotiated “deal” with Tehran that concedes Iranian enrichment is a face-saving way for the West to avoid confessing that it would rather risk Khamenei’s having a nuke than face the two alternatives: a crippling sanctions regime, which could spike the price of oil, or an American preventive military strike.

However, Gerecht and Dubowitz note that this “avenue of escape isn’t open to the White House,” for multiple reasons.  (The authors make clear their own opposition to such an approach and, along with other factors they identify, argue that a deal allowing internationally-supervised enrichment in Iran “would likely collapse [because of domestic opposition in the United States] before American negotiators could fly home”.)

They then go to the heart of the matter.  Whether the Obama Administration likes it or not, there is now “an unrelenting sanctions logic” in America’s Iran policy:

It has also anchored itself in Ottawa and jumped the Atlantic and the Pacific.  United Nations Security Council resolution 1929 has been much more powerful than the three resolutions before it because the Europeans, the Japanese, and the South Koreans have chosen to interpret it more aggressively than they have in the past.  The trick for Washington now is how to ratchet up significantly the pain in Tehran while encouraging our allies to continue to do more than they’d originally thought possible.  The administration may be right (though we remain skeptical): As long as the Americans, the Europeans, and some of the big Asian players are voluntarily implementing more and more sanctions, the cumulative effect may be a punishing tidal wave, which any transgressions by the Chinese, Russians, and our allies are powerless to stop.  Washington needs an incremental approach — implemented rapidly — that does not spook the oil markets and that allows for the market and increasing oil supplies from Iran’s competitors to dull the effect of less Iranian crude being traded.

To this end, and to maximize the impact of sanctions, Gerecht and Dubowitz argue that “Washington should aim its efforts at cutting foreign Iranian crude oil purchases”:

Using the preamble of Security Council resolution 1929, which establishes the nexus between Iran’s cash-generating energy sector and the sanctioned nuclear program, the United States and its allies can also pass additional measures to prohibit long-term purchase contracts for Iranian oil and natural gas.  And large up-front cash payments by foreign companies for Iranian oil and natural gas can be banned, as well as any energy bond issued by an Iranian entity (by prohibiting any foreign underwriter, purchaser, or financial institution from facilitating the issuance of a bond).

Current U.S. and EU rules severely limit investments in the Islamic Republic’s oil and natural gas sectors.  In the case of U.S. law, the investment limit is $20 million per year.  Large upfront cash payments on oil or natural gas purchases give the Iranians instant access to money to invest in their increasingly capital-starved energy sector.  And by using long-term supply contracts to collateralize billions of dollars in energy bonds, the regime could circumvent sanctions.  Bondholders require evidence that Iran can make payments on bonds, and one simple way to produce such evidence would be to sign a long-term supply contract, using the resulting guaranteed revenue stream in hard currencies to collateralize the paper issued.

The United States and the EU need to close any loopholes that would allow this kind of investment activity.  Using the political cover of the preamble of resolution 1929, Washington or the EU can also introduce measures to sanction any pipeline project (and its participating partners) transporting Iranian oil or natural gas, or any shipping company, insurance company, or financial institution that provides support to an Iranian oil or natural gas trade.  Needless to say, Washington or the EU can disqualify for any government contracting in America or Europe anyone buying Iranian oil or natural gas.  As crude oil and natural gas buyers find it increasingly difficult to use banks to settle or extend credit for Iranian oil and natural gas trades, these buyers will seek alternative sources.  Washington can also bar the participation in any U.S. energy deal (shale and offshore leases, for example) of any company that buys or facilitates the purchase of Iranian oil or natural gas.

We very much anticipate that Republicans (and more than a few Democrats) in the Congress that will take its seats later this week are going to press the Obama Administration to go in this direction.  There are several important lessons to draw from the line of argument that Gerecht and Dubowitz present:

  • First, key U.S. allies in Europe and Asia who calculated that giving more to Washington in the most recent round of multilateral sanctions would help the White House fend off domestic pressure for more coercive options were, to put it bluntly, wrong.  The hard-liners have their own calculation: that America’s allies are already in “too deep” on Iran sanctions to risk a rupture with Washington over a serious U.S. push to go after international purchases of Iranian oil.
  • Second, the Obama Administration was equally wrong in its calculation that pushing international sanctions against Iran harder than any of its predecessors would fend off domestic pressure for more coercive options.  The hard-liners have their own calculation about that, too: that, once a Democratic administration has bought into the main elements of the neoconservative analytic narrative and policy agenda, it is trapped in a “policy straightjacket” that cannot easily be escaped.
  • Third, the hard-liners are exactly right about where the Obama Administration’s current emphasis on sanctions, with “containment” as a backup policy, leads: to a U.S.-initiated war with the Islamic Republic, aimed ultimately at doing to Iran what the George W. Bush Administration did to Iraq.  The only real difference between them and us on this point is:  they like that scenario, and we think it would be a disaster — a disaster, first and foremost, for the United States.

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.  The text above is an excerpt from an article first published in The Race for Iran on 2 January 2011 under a Creative Commons license.

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