In recent days, opponents of the Iran nuclear accord have argued that if Congress blocks it, the major powers that negotiated the agreement can simply go back and crank up sanctions to put more pressure on Iran to agree to a better deal.
That argument, however, has been met with push-back from some prominent financial experts, such as Henry Paulson, the Treasury Secretary under George W. Bush, and Jacob Lew, who occupies that post under the current president. They have argued that the other powers won’t reimpose sanctions, leading the sanctions regime against Iran to unravel and leaving the U.S. isolated — all without getting the inspection and monitoring of Iran’s nuclear program that the deal would secure.
And here’s another prominent financial figure who is also dismissing the “go back and get a better deal” argument: Paul Volcker, the former chairman of the Federal Reserve under presidents Ronald Reagan and Jimmy Carter. Volcker has been widely credited with curbing inflation at the time and helping launch the much-vaunted Reagan recovery.
“I think this arrangement ought to be approved,” Volcker told me in a phone interview today. “I think it would be a sad day if it’s not.”
Volcker took particular issue with the idea that if Congress blocks the deal, the major powers would reimpose sanctions and/or more pressure would result in Iran agreeing to a better deal, a case that has been made by critics of the agreement, such as former Senator Joe Lieberman.
“I think that’s extremely unlikely,” Volcker said, adding that it was very hard to imagine “that the group that negotiated before is going to renegotiate with Iran or that Iran is going to be willing to do it.”
Volcker, who also headed President Obama’s economic recovery advisory board, also took a dim view of the idea that the U.S. could reimpose sanctions on its own or that we could somehow pressure our allies to join another sanctions effort after Congress blocked the deal.
“Sanctions are very hard to enforce,” Volcker said. “To enforce them effectively you have to have a multi-lateral effort, and a multi-lateral effort that has its heart in it. In this case, expecting that to happen when the U.S. is the one that backs out is not a strong negotiating position, to say the least.”
“The idea that we can put sanctions on the whole world, including our allies, is not promising, Volcker said. “You risk a loss of leadership…you have to have some awareness of what your friends and potential allies are going to recognize as reasonable.”
Asked about criticism that the deal’s verification and monitoring program is too weak, and could allow Iran to cheat, Volcker said he understood such worries, but suggested they shouldn’t lead Congress to halt the agreement.
“The combined intelligence capacity of the United States, the International Atomic Energy Agency, and the other European countries” give us “a very high chance of detecting violations,” Volcker said.
Moreover, Volcker added, if such violations were detected, we would then “have a case for taking more forceful action.”