Sanctioning Iran: If Only It Were So Simple – 2
Unilateral Nature
Despite its recurrent reliance on economic sanctions over the past 30 years, Washington has received relatively minimal cooperation from even its closest allies. Even at the height of the hostage crisis, the United States’ closest European allies rebuffed U.S. entreaties to join in multilateral sanctions against Iran’s revolutionary regime, and eventually enacted only limited restrictions on trade. In fact, as Tehran’s enmity toward Washington became entrenched, European trade with the revolutionary regime actually expanded during the hostage crisis, and the modest penalties imposed by Europe were lifted as soon as the hostages were released.9 Since those early years, European concerns about Iranian foreign policy have yet to be matched by any parallel willingness to formally abrogate its historic economic ties. In particular, Germany has proven loathe to relinquish its longstanding trade ties, although the government of Chancellor Angela Merkel has sought to align her Iran policy more closely with London, Paris, and Washington.
Over the years, as Iran’s economic ties have expanded and grown more complex, the task of generating reliable allies in adopting economic strictures against Tehran has grown correspondingly more difficult. Defection from the sanctions regime, or even the presumption of noncompliance by other actors, produces a vicious cycle and consistently undercuts any effort to broaden the sanctions regime. Not surprisingly, the track record shows that European willingness to temper its trade and investment with Iran far outpaces any corresponding responsiveness by Russia and China.
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This trend will only be exacerbated by any renewed effort to expand the scope of sanctions. Despite the initial tough talk from Europe, it remains unclear whether the political will exists in particular states, or within the broader EU, to formalize restrictions on their trade and investment in Iran. It is hardly assured that the recent assertive shift in German policy will hold up to the test, particularly if any sanctions proposals garner piecemeal support from the rest of the world.
For this reason, the postures of China, India, and Russia will be disproportionately influential. Moscow and Beijing have historically resented external interference in their own internal affairs, and they apply this preference in their own foreign policy. Neither the specter of a rigged election nor the crackdown on peaceful protestors has proven far less troubling to China or Russia as to the United States and Europe. In addition, both countries have dramatically expanded trade and investment with Iran as Europe has receded from the scene, and their leaderships value their strategic ties to the largest and arguably most powerful Middle Eastern country. Experience suggests that both will continue to veto more stringent sanctions as long as their leaderships are convinced that the threat is not urgent or that additional diplomatic initiatives from the West can contain its impact. The Russian leadership publicly rebuffed the press for more strenuous sanctions during U.S. Secretary of State Hillary Rodham Clinton’s October 2009 visit to Moscow, with Prime Minister Vladimir Putin calling any consideration of economic penalties against Tehran “premature” and Foreign Minister Sergey Lavrov describing sanctions as “counterproductive” as long as nuclear negotiations remain viable.10
The other crucial international constituency that has been slow to embrace tougher Iran sanctions is the region. Iran’s southern neighbors in the Persian Gulf can be counted as the United States’ most reliable regional allies, and their enduring fears of Iran have been exacerbated by the Islamic Republic’s political retrenchment as well as by its increasing sway within the region. And yet, there is little appetite in the Gulf-which is still regaining its footing in the wake of the recent oil price crash-for preemptively adopting measures that may antagonize its powerful northern neighbor. With 400,000 Iranian expatriates and a critical role as Iran’s offshore banker and exporter, Dubai is particularly vulnerable to any shocks emanating from Iran. The Gulf Cooperation Council will cooperate fully with UN Security Council measures but is unlikely to lead the charge for any effort to build a “coalition of the willing” in sanctioning Iran. This reluctance is even more powerful for the Iraqi and Afghan leaderships, who may owe their liberation and their offices to U.S. intervention but have powerful trade and strategic ties with Tehran. Any new sanctions measures that force Baghdad or Kabul to choose between their adversarial allies could be profoundly destabilizing.
Iranian Countermeasures
Iran’s traditional reaction to external attempts to exert economic pressure has been defiance and, at minimum, rhetorically rejecting the idea that sanctions have had any sort of negative impact on its economy. Indeed, withstanding the sustained U.S. embargo is something of a point of pride for Iran, particularly during its earliest years when the revolutionary leadership’s quest for independence and its ambivalence about capitalism and international entanglements corresponded neatly to the attenuation of its economic relationship with the United States.
Iranian political figures have consistently sounded the refrain that sanctions have actually benefited Iran by strengthening its indigenous capabilities and sovereignty. Most recently, Tehran has suggested that U.S. plans to restrict sales of imported gasoline would enhance the government’s economic reform program. “We have lived with sanctions for 30 years; they cannot bring a large nation like Iran to its knees,” Saeed Jalili, Iran’s nuclear negotiator, boasted to a German interviewer on the eve of his October 2009 talks with representatives of the P5 + 1. “They do not frighten us. On the contrary, we welcome new sanctions” and “We want to use our resources carefully.”11 He elaborated by saying that Iran welcomes everything that limits consumption and contributes to increasing self-sufficiency.
Beyond this symbolic dismissal of the influence of economic pressures, Tehran has sought to reduce its exposure and avert the prospect of external economic leverage through a variety of tactics over the years. Most recently, Iranian officials have launched a variety of official schemes to minimize gasoline consumption, through a partially successful program to ration gasoline and shift to compressed natural gas fuel for the transportation sector as well as to expand domestic production through investments in refinery upgrades and expansion. Over the past two years, these efforts have achieved very modest reductions in Iran’s out-of-control demand for gasoline imports. There are also reports that Tehran has used supertankers to store a strategic stockpile of gasoline intended to temporarily abate domestic shortages, and that the well-established market for smuggling gasoline could be easily manipulated to the regime’s benefit in the event of a cut-off in refined product imports.
In addition, Iran has also used diplomacy to blunt the prospect and impact of sanctions, deliberately expanding its network of trade partners and gradually reorienting its trade and investment patterns to privilege Asia, both in recognition of the market potential and the region’s tendency to eschew politicizing economic ties. Since Washington has begun focusing on Iran’s dependence on gasoline imports, Tehran has sought to shift its imports away from countries that are themselves exposed to U.S. pressure, trumpeting new arrangements with both Venezuela and China as a hedge against prospective new sanctions.
Beyond these policy steps to limit the potentially negative impact of sanctions, the Iranian leadership has begun testing out a public diplomacy response that takes a cue from an old adversary, Saddam Hussein. In contrast to the longstanding refrain that sanctions have strengthened Iran’s economy by requiring self-sufficiency, Iranian leaders have become more vocal around the threat posed by the nation’s aging and notoriously shabby aircraft fleet, apparently coordinating with human rights activists to launch an internet petition condemning U.S. restrictions on airline parts.1213
Such a campaign would no doubt be expanded to include the impact of any shortages prompted by sanctions targeting Iran’s gasoline imports, and the specter of a humanitarian crisis has already prompted the foreign minister of France, Bernard Kouchner, to publicly distance his country from any broader effort to target that vulnerability.14
Price Elasticity: Iranian Security Imperatives
Finally, while Tehran is certainly capable of change, economic pressures alone have only rarely generated substantive modifications to Iranian foreign policy, particularly on issues that the leadership perceives as central to the security of the state and the perpetuation of the regime.15 In general, external pressure tends to encourage regime coalescence and even consolidation of its public support. Past episodes of economic constraint have enhanced cooperation among Iran’s bickering factions and increased preparedness to absorb the costs of perpetuating problematic policies.
Specifically, the debate within the Iranian leadership at the height of the war with Iraq during the mid-1980s offers an illuminating case in point. Tehran was confronted with mounting frustration with the increasing human, political,
and financial toll of thewar, aswell as a collapse in the oil markets which cut prices by half. Mousavi, Iran’s prime minister at the time, had the thorny task of persuading its feuding parliament to pass an austerity budget, which entailed convincing traditionalists with ties to Iran’s bazaar merchant community to accept new taxes, and left-wing radicals to endorse cuts in state spending, particularly on social welfare. Mousavi succeeded by presenting both factions with a choice: either accept the harsh budget measures or end the war. The regime’s ideological commitment to the “sacred defense” and the conviction, even among growing misgivings about war strategy, that this was an existential struggle meant that this was no choice at all. Iranian leaders eventually undertook the painful political and economic steps that Mousavi proposed.
Today, as an ever more hard-line Iranian leadership confronts greater challenges at home and abroad, there is evidence that this preference for addressing economic pressures by adopting previously unthinkable economic reforms appears to be playing out again. In October 2009, Ahmadinejad won preliminary support for reforming Iran’s lavish and inefficient price subsidies from a parliament that has been largely unfriendly to the president’s economic agenda. The international debate on sanctions helped fuel progress on the measure by adding new urgency to the need to deal with this longstanding drain on Iranian resources. As in the 1980s and 1990s, today’s Iranian leaders tend to react to sanctions, both real and threatened, by economizing even where such steps risk alienating crucial political constituencies, rather than shift their posture on matters judged vital to the regime’s security.
In retrospect, the rare cases where economic pressures have produced changes to Iranian security policies relate less to the actual financial cost to the Iranian leadership, which have ultimately proven manageable even during periods of low oil prices, than to the perceptions, timing, and utility in swaying critical constituencies within the Iranian political elite potentially predisposed to such policy changes anyway. In the late 1990s, the decline in oil revenues helped to inform the then-burgeoning reform movement’s interest in ameliorating the country’s image and relationships abroad. But even then, as the regime faced serious economic constraints and increased tensions with its historically most important European trade partners, Iran’s ultimate decisionmaker remained unwilling to countenance any fundamental transformation in the threatening
behaviors that precluded improved economic interactions with the United States.
The final relevant dimension to the prospective impact of sanctions on Iranian conduct and preferences relates to the domestic political unrest that has followed in the wake of the contested outcome to the June election. The argument that sanctions could offer particular utility in forcing a change in the Iranian leadership has little basis in the past history, or the present rhetoric, of the opposition leaders and movement. Iranians have long balanced their dissatisfaction in their govern-ment and ruling system with resentment of sanctions for reducing investment, employment, and opportunities for international interaction. Although the regime has far greater internal liabilities today than perhaps at any point since the mid-1980s, the likelihood that sanctions would strengthen the struggling opposition seems quite limited at best, primarily because sanctions would not ameliorate the movement’s greatest obstacles, which is the lack of a coherent strategy or objective and the regime’s continuing capacity for repression. Mousavi himself has publicly appealed to the international community against tightening the sanctions regime, arguing that further economic pressures would disproportionately impact the poor and those who have suffered as a result of the mismanaged and adventurous foreign policy of the Ahmadinejad administration.16
Will Sanctions Stop Iran’s Nuclear Quest?
Iran’s abrupt disavowal of its October 1 preliminary agreement to export the bulk of its low-enriched uranium underscores why the prospect of sanctions looms large at least in the rhetoric of U.S. policymakers. The justifiable skepticism about what Obama described as a “constructive” beginning to the administration’s formal dialogue with Tehran will continue to mandate a serious effort to identify punitive measures that could be incorporated within a broader strategy of persuading Tehran to cooperate with the international community. This is wholly appropriate. Official expectations, however, of the capacity of sanctions to reverse the Iranian regime’s determined effort to develop a sophisticated nuclear infrastructure appear to be considerably overblown.
Much has changed in Iran over the past three decades. Profound public alienation has already begun to complicate the regime’s efforts to persuade its population that economic deprivation is an acceptable price to pay for defending its much-vaunted “nuclear rights.” The global context differs as well: Iran today is not nearly as isolated as it was in the 1980s. The considerable economic opportunities offered by Europe and conceivably by the United States are no longer irreplaceable.
As a result, sanctions, while nominally successful in raising the costs to Tehran of its provocative policies, could fail in their ultimate goal of gaining Tehran’s adherence to international nonproliferation norms and agreements. Equally importantly, the time horizon for sanctions to revise the calculus of the Iranian elite may be more protracted than the world is prepared to wait. For this reason, it is incumbent upon the Obama administration to wrest as much progress from the often intractable diplomatic process with Iran in order to retard it from even marginally crossing the nuclear threshold.
Notes:
- Mark Landler, “U.S. Officials to Continue to Engage Iran,” New York Times, June 13, 2009, p. A14, http://www.nytimes.com/2009/06/14/us/politics/14diplo.html?_r=1.
- Dan Bilefsky, “France and Germany Warn of New Iran Sanctions,” New York Times, August 28, 2009, p. A10, http://www.nytimes.com/2009/08/28/world/middleeast/28iht-nukes.html.
- Najmeh Bozorgmehr, “Refusal to ‘Bargain About Our Sovereign Rights’ Fuels Pessimism,” Financial Times, September 30, 2009, p. 5, http://www.ft.com/cms/s/0/ 845724ce-ad58-11de-9caf-00144feabdc0.html.
- Patrick Clawson, “Iran’s Vulnerability to Foreign Economic Pressure,” testimony before the Committee on Foreign Affairs of the U.S. House of Representatives, July 22, 2009, http://foreignaffairs.house.gov/111/cla072209.pdf.
- Robert Carswell and Richard J. Davis, “Economic and Financial Pressures,” in American Hostages in Iran: The Conduct of a Crisis, ed. Warren Christopher et al. (New Haven: Yale University Press, 1985), p. 174.
- Iran Press News, December 3, 2008.
- Executive order no. 12957 declared that Iran con
