Years of bargaining with Iran has yielded the exact opposite of what was sought: Iran now seems more determined than ever to join the nuclear club. The UN Security Council’s deadline for Iran to freeze its uranium enrichment program passes on Thursday. Tehran has refused to comply. The U.S. and others have signaled they will push for sanctions right after the deadline.
Question: Can tough economic sanctions persuade Tehran to surrender its nuclear dreams?
Yes, strong sanctions might work. Applied to the right pressure points, economic leverage can squeeze a government where it hurts–in the economy. That pain can translate into political pressure, forcing leaders to change course.
But it is never easy.
History suggests that more often than not, such sanctions fail. They fail because politics, profits and corruption often trump the greater good. They fail because there are always profiteers waiting to smuggle goods into an embargoed country. And they fail because there are always countries willing to reap profits by doing business under the table.
The central questions now: How much economic pain are Iranians prepared to absorb for the sake of becoming a nuclear power? How much pain is the rest of the world willing to inflict–and suffer–to stop them?
Put another way, which is scarier: $4-a-gallon gas or a nuclear Iran?
The Security Council is likely to start with relatively mild actions, limiting travel visas for officials, for instance, or banning equipment that could be used in Iran’s nuclear industry.
The U.S. has been working with European banks to curb financial activities in Iran, even in the absence of a Security Council resolution. In May, the Washington Post reported that a Treasury Department task force had developed a plan to “restrict the Tehran government’s access to foreign currency and global markets, shut its overseas accounts and freeze assets held in Europe and Asia.” A spooked Iranian government has reportedly been transferring funds out of some European banks, fearing a freeze.
Such sanctions often take years to work. Iran may be able to build a bomb by the end of the decade, if not sooner.
The fastest and most effective way to squeeze Iran is to target its oil and gas industries. Iran is the world’s fourth leading oil producer, after Saudi Arabia, Russia and the U.S. It accounts for about 5 percent of the world market. It is believed to have earned about $49 billion selling oil and natural gas from March 2005 to March 2006–more than double its take of four years ago, the Wall Street Journal reported. Crimp that pipeline and Iran will notice immediately. Of course, so will everyone else. Some estimate that would send oil prices soaring to $100 or more a barrel.
The other sensitive Iranian target: gasoline. Iran has vast oil reserves but it lacks sufficient refinery capacity and must import more than a third of its gasoline, mainly from Europe and India. (It also subsidizes gasoline so that Iranians pay about 40 cents a gallon.) A gas embargo could cripple much of the country’s industry, if it were stringently enforced.
But there’s also a strong chance that such drastic actions would boomerang. Instead of undercutting the mullahs, harsh economic punishment could anger Iranians and help the regime rally the country. Many Iranians support the country’s nuclear ambitions out of national pride.
Iran is flush with oil cash and swaggering on the world stage. But it is not invulnerable. Its economy, even with all that oil money, is shaky because it is under the stifling control of the central government. Inflation and unemployment are running in the double digits.
Anything less than the Security Council’s complete resolve to stop Iran’s nuclear program through tough sanctions is destined to fail. Russia and China, with billions of dollars in trade and investment with Iran, are likely to be reluctant to join the U.S. and its allies in placing a great deal of economic and diplomatic pressure on Tehran. They must be convinced to join the rest of the world on this.
The price of failure will be extraordinarily high. Failure will leave just two options, neither in the least appealing: living with a nuclear Iran or mounting a military strike to stop it.
