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On Economic Sanctions

futility_imageFor years the United States has relied on tough talk and targeted sanctions to try to force Iran to stop all enrichment of uranium, even enrichment to low levels under IAEA safeguards.   Even proponents of sanctions concede it hasn’t worked.1

So another idea has surfaced: embargo Iran's imports of gasoline. Since Iran now imports 30-40 percent of its consumption, the theory is that embargoing these imports will "cripple" the Iranian economy and force Iran to cave in.2

Unfortunately, that probably won't work either.  It is more likely to backfire.  And it comes at the expense of a better approach that is far more likely to succeed.

Absent clear evidence of an ongoing nuclear weapons program, Russia, China and the rest of the world are not going to line up to "cripple" Iran for enriching uranium to low levels under international (IAEA) safeguards.

Even our closest allies in Europe, who are quite hawkish on Iran's nuclear program, oppose the idea of a gasoline embargo because they understand that it will hurt the people of Iran far more than the military or the leadership.3

Trying to coerce the support of other countries and companies with threats of unilateral penalties against them will pit the U.S. against the world. It will isolate America, not Ahmadinejad.

The proposed gasoline embargo won't "cripple" Iran.  It will harm the people of Iran while making repressive elements within the regime stronger.

Today's oil market is a global market with thousands of suppliers eager to sell to the highest bidder.  A few may be cowed into boycotting Iran. But there are many more.

Ever wonder why Ahmadinejad is so friendly with Hugo Chavez? Venezuela alone exports enough gasoline each year to supply Iran's needs twice over. more

The only way to keep Venezuelan gas out of Iran will be to blockade Iran at sea, an act of war that will be widely opposed and might easily escalate into uncontrolled conflict that sews chaos across the Middle East.

Meanwhile, Iran's rationing system will ensure that the elites get what they want. The Revolutionary Guard will grow rich controlling smuggling in the black market.  It is the people of Iran who will feel the pinch, but they see this as a dispute about Iran's right to nuclear energy, which they support. They will blame America for the pain they suffer from an embargo, and tend to rally behind Ahmadinejad at least on this issue -- exactly the opposite of the intended effect.

With public opinion in Iran coalescing against the ruling regime, why choose this moment to create an external crisis that unifies the Iranian people -- against the United States?

This dynamic explains why even leading dissidents who strongly oppose the regime also oppose a gasoline embargo. more

A gasoline embargo will give Ahmadinejad an economic bonanza, inadvertently.

Right now, the government is forced to spend over 10 percent of Iran's GDP subsidizing gasoline that sells for 30-40 cents a gallon in Iran.  Tehran has wanted to end those subsidies for years, but feared the public backlash.

The proposed embargo would offer the perfect alibi for ending those subsidies -- thereby freeing up billions of dollars for other uses, including purchasing advanced weapons -- while blaming foreigners for the spike in prices that would follow.

There is a better way

Sanctions are most effective when kept in the background as a latent threat: a backstop for failed negotiations. When actually imposed, they provoke hostility and resistance at first, and take a long time to work, if they work at all. Witness Libya, where sanctions took decades of attrition to produce any positive change.

The better approach is to set principled and reasonable negotiating objectives and then give diplomacy a chance to succeed, postponing overt sanctions or threats of sanctions until it is clear that diplomacy has failed. more

Nations have a right to enrich uranium for peaceful use under safeguards.  Any reasonably achievable level of sanctions is unlikely to succeed in forcing Iran to surrender that right. However, there are arrangements that will make us far more secure than simply closing down open and safeguarded enrichment would do.  These arrangements may well be achievable through tough diplomacy without the need for sanctions.

If heightened sanctions turn out to be necessary, the focus should be on carefully targeted financial sanctions that hit the elites and spare the people, not the other way around.

Footnotes

1. Dennis Ross, Choices and Strategies for Dealing with Iran: Testimony before the Senate Homeland Security and Governmental Affairs Committee's Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security(2008). [back]
2. Ordre Kittrie, "How to Put the Squeeze on Iran, Wall Street Journal, November 13, 2008. [back]
3. Mark Landler, “U.S. Is Seeking a Range of Sanctions Against Iran,” The New York Times, September 28, 2009 ("For now, administration officials said, the United States was not likely to win support for an embargo on shipments of gasoline or other refined fuel to Iran. The European allies, one official said, view this as a “blunt instrument” that could hurt ordinary Iranians, inflame public opinion and unite the country behind the government of President Mahmoud Ahmadinejad, whose legitimacy within Iran has remained under a cloud since his June 12 re-election that opponents claim was rigged.") [back]
4. Rory Carroll,  Venezuela sells petrol to Iran to reinforce front against US, The Guardian, July 4, 2007. [back]
5. The Oil and Gas Journal reports that Iran is building three of the largest FCC-RCC units in the world-94,000 b/d in Arak, 91,000 b/d in Isfahan, and 79,000 b/d in Abadan. The Abadan upgrade will be finished in 2010, Arak in 2011-12, and Isfahan in 2012-2013. These three projects alone will produce enough gasoline to eliminate all imports in the medium term."Report updates Iran's refinery project status," Oil & Gas Journal 107, no. 3 (January 19, 2009). [back]
6. See also Hamid Dabashi, “Commentary: Huge risks in Iran sanctions, CNN.com, August 5, 2009. [back]
7. "Larijani, during a Friday Prayers talk (December 5 http://www.tabnak.ir/pages/?cid=28090). [back]
8. (http://www.rajanews.com/detail.asp?id=21168). [back]