Setting the trap on Iran
The Obama administration's strategy as it devises sanctions for Iran is to build a sticky trap -- so that the harder the Iranians try to wriggle out of the sanctions, the more tightly they will be caught in the snare.
It's a clever idea. But even if it works with mousetrap precision, it's unlikely to stop the Iranian nuclear program. That's one reason why Defense Secretary Bob Gates and other officials are pressing to explore the "what-ifs" about Iran -- and to accelerate planning for contingencies that could arise as the confrontation deepens.
The White House didn't like the New York Times' characterization of a memo Gates wrote in January as a "wake-up call," given all the work the administration has already done on Iran. But the Times' story captured the urgency with which Gates and other officials see the problem -- and their fear that sanctions, however well constructed, may not do the trick.
Gates's memo called specifically for "prudent planning and preparation" for the showdown with Iran, according to one senior official quoting from the text. The defense secretary requested that the "principals committee," the top officers of the National Security Council, discuss the range of issues and options that might arise.
The next step in this pressure campaign is the sanctions regime being crafted by Stuart Levey, undersecretary of the Treasury for terrorism and financial intelligence. This will have several interlocking components: The showpiece will be a new U.N. Security Council resolution to add sanctions against the Iranian Revolutionary Guard Corps and its affiliated companies, along with other Iranian firms involved in manufacturing, transporting and financing weapons shipments and other illicit activities. But that's just the beginning.
The administration knows the resolution will be watered down by Russia and China, but it wants the U.N. sanctions anyway -- as a platform for additional measures by the United States and its allies. It's these private and unilateral sanctions that will have real bite: As the Iranians try to evade them, their deception will trigger additional punitive measures.
"If you focus on bad conduct, their evasion doesn't undermine sanctions but escalates them," explains one senior official.
An example of how the sticky trap can work is the case of the state-owned Bank Sepah. The United States imposed sanctions in January 2007, alleging that the bank had financed development of missiles that could carry nuclear weapons. The United Nations added its own sanctions against the bank in March 2007.
The Iranians allegedly then turned to two other state-owned institutions to finance nuclear activities, Bank Melli and Bank Mellat. The United States hit them with sanctions, too, and pressured international banks to stop doing business with them. Banks that allegedly helped the Iranians evade controls were whacked with big fines. To settle U.S. government charges last December, the British bank Lloyds agreed to pay $217 million and Credit Suisse agreed to pay $536 million. Most global banks have decided that doing business with Tehran isn't worth the risk.
The trap also squeezed the state-owned Islamic Republic of Iran Shipping Line, which was cited in 2008 sanctions by the United States. The company allegedly tried to escape the dragnet by renaming some of its ships. The British stripped the shipping line of its insurance; the Iranians sought coverage in Russia and then Bermuda, but they were pursued by U.S. monitors who argued that the company's deceptive conduct was evidence of its unreliability as an insurance risk.
Yet for all this aggressive pressure, Iran continues to conduct both banking and shipping -- which illustrates the difficulty of using sanctions to force a change in policy. The track record is spotty, from Cuba to Iraq.
For policymakers, the discussion is beginning to shift to the sensitive area suggested by Gates's memo -- the space between sanctions and outright military action. What options would the United States and its allies have, short of war, to raise the cost to Iran of pursuing a nuclear weapons program? Are there means of subverting, sabotaging or containing such a program without actually bombing Iranian facilities?
We won't be hearing a lot of public discussion about this gray area. But that's where senior officials will focus more of their energy in coming months, as they prepare for the possibility that Levey's clever trap won't work.