The Logic of Our Iran Sanctions
Accelerate them now.
Jan 3, 2011, Vol. 16, No. 16 • By REUEL MARC GERECHT AND MARK DUBOWITZ
Conversely, no one else in the region will believe that a deal that leaves Iranian uranium enrichment in place is anything other than a rout of the West. The “EU-3” nuclear negotiations with Iran are the most important diplomatic undertaking that Brussels has attempted. (France, Great Britain, and Germany have represented the EU in these talks.) The Europeans, like the Americans, like the United Nations Security Council, have stated repeatedly and clearly that uranium enrichment by Iran without a full accounting of its nuclear program and complete access by IAEA inspectors to Iran’s known and suspected nuclear facilities is “unacceptable.” Such an enrichment “compromise” now would most likely guarantee that the Saudis would remind the nuclear-armed Pakistanis that it’s time for a little brotherly, Sunni Muslim tech transfer. The odds that others—especially the Egyptians and Turks—will also start down the nuclear path aren’t small. And unless Benjamin Netanyahu and much of Jerusalem’s political elite are just bluffing, the countdown for an Israeli preventive strike starts when the West concedes uranium enrichment to the supreme leader and his Revolutionary Guards.
And third, such a deal politically offers Obama nothing. Many Democrats and most Republicans would pounce on him for agreeing to “monitored” Iranian enrichment, which would likely collapse before American negotiators could fly home. The U.S.-led sanctions regime has shown that Washington can still have a significant impact on the Islamic Republic’s economy and politics (the foreign minister just got fired, and to minimize the impact of sanctions, the regime is cutting gasoline subsidies, which will either save the treasury billions or lead to crushing inflation). The near-miraculous attack of the centrifuge-destroying Stuxnet virus has bought the administration time and further strengthened those who want to use sticks to stop Khamenei’s nuclear aspirations.
In Washington, an unrelenting sanctions logic has developed. 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. We need to continue to invest the Europeans in the project, allowing them to own, as they have since 2003, negotiations with the Islamic Republic.
Thinking always of Khamenei’s Achilles’ heel, Washington should aim its efforts at cutting foreign Iranian crude oil purchases. The Europeans have already cut tech transfers to and future investments in Iranian oil and natural gas, severely damaging Tehran’s ability to sustain current production. The Chinese, while backfilling on some of these investment deals, are sharply reducing their purchases of Iranian crude. China cut crude imports from Iran between January and September 2010 by approximately 17 percent from the same period in 2009, even as the world’s biggest energy consumer bought more oil. Japan, too, is cutting back. The Japanese reduced purchases of Iranian crude by over 19 percent in the first eight months of 2010; in August alone, Japan cut its purchases by 31 percent. While Iran was Japan’s third- largest supplier of oil in June 2010, by August of this year it was in sixth place. Neither the Japanese nor the Chinese want to bet their economic security on an Iranian energy sector in rapid decline.
The administration can greatly intensify the “hassle factor” in buying Iranian crude by exposing the role of the Revolutionary Guards in the crude-oil export supply chain—and then using the law prohibiting commerce with the Guards to sanction foreign enterprises involved with them. The Treasury Department’s recent decision to sanction the Pars Oil and Gas Company, which is a Revolutionary Guard front company involved in gasoline trading and the development of some of the largest oil and natural gas fields in the Middle East, is a good example of the type of punitive designation that can greatly complicate Iran’s energy planning.