A sober approach to sanctioning Iran
The cynical (and usually correct) critique of economic sanctions was summed up this way by a retired U.S. diplomat named Douglas Paal: "Sanctions always accomplish their principal objective, which is to make those who impose them feel good." The Obama administration is struggling to craft a new round of U.N. sanctions against Iran that achieves more than this feel-good impact. The ambitious goal is "to cut off the revenues that fund Iran's nuclear and missile programs," says a senior administration official.
"We are going to put as tight a squeeze on Iran as we possibly can," adds a diplomat from one of the members of the U.S.-led coalition that is beginning to discuss a new sanctions resolution at the U.N Security Council. The resolution will target the Iranian Revolutionary Guard Corps (IRGC) and its vast network of companies, which the United States estimates may include up to one-third of Iran's total economy.
One focus of the proposed sanctions may be the Islamic Republic of Iran Shipping Lines, a 115-vessel fleet that analysts believe has carried cargo for the country's nuclear program. Another target might be the IRGC-owned construction company Khatam al-Anbiya, and its network of subsidiaries, which are said to build some of Iran's strategic infrastructure.
To provide economic muscle for the push against Iran, the Obama administration is working closely with Gulf oil exporters, such as Saudi Arabia and the United Arab Emirates. Secretary of State Hillary Clinton visited Saudi Arabia last month to enlist its help in the sanctions campaign -- and, in particular, to lobby China to back the U.N. sanctions resolution.
China is vulnerable to Iranian oil pressure because it imports about 540,000 barrels per day from Iran. So the Saudis and Emiratis have been assuring Beijing that they would be prepared to offset any shortfall in Iranian crude shipments.
The UAE has already boosted its oil exports to China as part of this pressure campaign. Shipments have increased from about 50,000 barrels per day last year to 120,000 now, with a goal by year-end of up to 200,000 barrels. Over the next few years, the UAE is offering to increase that export volume to China to about 500,000 barrels per day, which would nearly equal the current Iranian total.
Prince Saud al-Faisal, the Saudi foreign minister, traveled to China late last week to enlist its support against Iran. The Saudi message to Beijing, according to one U.S. official, is: "If you don't help us against Iran, you will see a less stable and dependable Middle East." Meanwhile, a high-level Israeli group also visited China last weekend, according to the Financial Times. The delegation included Stanley Fischer, the governor of Israel's central bank. Fischer, an eminent economist who is respected by Chinese officials, would be able to explain the impact of the planned sanctions regime.
The Israeli visit led one prominent energy expert to speculate privately that if sanctions fail to alter Iranian behavior, the Israelis might use military means to halt Iran's oil exports.
The campaign against Iran was the central topic during a recent visit to Washington by the UAE's foreign minister, Sheik Abdullah bin Zayed al-Nahyan. He urged administration officials to include Iran's vulnerable neighbors in the Gulf Cooperation Council -- Saudi Arabia, Qatar, Oman and others -- in their planning for dealing with Iran. "We will find ways to do more with them," said the senior administration official.
The trick for the Obama administration is to craft a sanctions plan that hurts the Iranian government without causing too much pain for the Iranian people. That's one reason the administration is wary of a congressional proposal for sanctions against Iran's imports of refined petroleum products -- a step that would probably harm the public more than the regime.
Officials talk about "targeted" sanctions that focus on the Revolutionary Guard Corps and its military-industrial complex of companies. But this effort is the diplomatic equivalent of "precision bombing" -- in practice, some collateral damage is inevitable, which could help President Mahmoud Ahmadinejad rally support for his hard-line government.
What's certain is that the Iranian nuclear issue is heading into a more intense phase of confrontation -- starting with the push for tougher U.N. sanctions. The Gulf countries have been asking what the administration plans to do if the sanctions don't work: That's the big foreign policy question of 2010, and Washington is beginning now to think about the answer.