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Global Insights: Assessing Obama's Iran Diplomacy

Tuesday, Aug. 10, 2010

One reason why President Obama and other very senior U.S. officials personally met with a select group of leading columnists and opinion writers at the White House last week was to highlight the often overlooked progress his administration has achieved in securing comprehensive European support for the U.S. policy toward Iran. Although it is too early to judge the effects of the new sanctions adopted by the EU and the United States independently and collectively through the United Nations, we can begin to assess the administration's multilateral diplomacy. At least in the case of Europe, that diplomacy seems to be working well. We will know more about this issue in coming weeks as governments in Asia and the Middle East respond to U.S. requests to adopt their own supplementary sanctions beyond those required by the U.N. Security Council.

One of the few positive outcomes of last July's disputed Iranian presidential election and the failed U.S. diplomatic initiatives toward Iran was to make it easier for the Obama administration to induce foreign governments to adopt a harder stance towards Tehran. In Europe, the tarnished vote, accompanied by the regime's massive use of force against peaceful demonstrators, sharply diminished the legitimacy and popularity of the Iranian government. The non-confrontational approach of the Obama administration toward Iran also made Europeans, where Obama enjoys very high popularity, more comfortable following Washington's lead on this issue even when the Obama administration stressed the punishment track more than the engagement track. British, French, and German leaders found widespread popular support for applying increased diplomatic and economic pressure on Tehran.

Along with Australia, Canada, and the United States, the EU has adopted additional sanctions beyond those mandated by the U.N. Security Council designed to achieve the goals of existing Security Council resolutions but impose enforcement measures well beyond their formal obligations under the resolutions. On June 16, 2010, EU lawmakers enacted new measures that targeted the assets, visas, and cargo companies owned by the Iranian Revolutionary Guards Corps. EU sanctions now ban companies based in EU member states from investing, assisting, or transferring technology to Iranian oil and gas companies sanctioned by the EU or that could be used to refine petroleum products, manufacture liquefied natural gas, or for general exploration and production in energy sector.

Iranian officials have threatened to boycott the goods of countries whose governments impose sanctions on Iran. In addition, they are trying to embarrass the Europeans diplomatically by seeking to portray EU leaders as American poodles. They have, for example, belittled the need for any further EU participation in the international negotiations seeking a resolution to the Iranian nuclear crisis. On Aug. 4, Ahmadinejad's chief of staff, Esfandiar Rahim Mashaei, said that, "We have realized that holding nuclear talks with the EU is futile as the Europeans have nothing to say." Instead, Mashaei, perhaps the Iranian president's closest adviser, called for direct talks between Ahmadinejad and Obama. One of the participants at the White House gathering last Wednesday recorded that, "The U.S. officials expressed surprise and delight that the European Union's sanctions were so tough" despite all these costs.

In crafting their latest round of sanctions, these governments worked closely with Washington to develop measures that most strongly leverage their unique economic strengths vis-Ă -vis Iran. Nonetheless, intra-alliance tensions persist over whether the Europeans sometimes allow commercial considerations to override their nonproliferation policies. Unlike the United States, several EU members have considerable economic ties with Iran. Collectively, the EU traded almost $30 billion worth of goods with Iran last year. Europeans purchase primarily energy resources from Iran, while Iranians depend heavily on imported European industrial equipment and technology, which Iran often acquires by using European-based front companies and middlemen.

One difference between the EU and U.S. sanctions has been that the Europeans have been more reluctant than their U.S. colleagues to antagonize their main economic partners over the issue by sanctioning their firms for trading with Iran. The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, signed into law on July 1, authorizes President Obama to penalize foreign companies having business with the United States if they sell refined petroleum products to Iran, the new EU sanctions has no such provision. The Treasury Department has used this authority to sanction several European companies that U.S. analysts have concluded are affiliated with the Iranian government. These firms include investment companies in Germany, banks in Belarus, and several engineering and mining firms based in Germany, Italy, Luxembourg, and Japan. The sanctions ban these entities from conducting business with U.S. firms and individuals. In contrast, the EU sanctions do not apply to firms from China, Russia, or Turkey that might plausibly try to backfill for the EU companies as they withdraw.

Although the new sanctions have only recently been introduced, the administration has already declared them a great success, while critics are pointing to their limited scope and Iranian opportunities for circumvention. To help depoliticize the debate and conduct a more effective sanctions campaign, we need better tools to assess their results and correct any flaws in their design or application. For this important feedback process to occur, the governments and international institutions implementing the sanctions need to improve their collection and exchange of data regarding their direct and secondary impact, taking into account Iranian countermeasures. Without accurate measures of effectiveness, knowing when the sanctions are not being applied properly is difficult, which hinders making appropriate corrections. Without timely data, it is impossible to know when changes in Iran's situation or Iranian policies require corresponding alterations in the sanctions or how they are applied. Persuading private sector entities such as financial, insurance, consulting, energy, and manufacturing firms to break ties with Iranian partners requires having convincing evidence that working with the Iranian entities would result in their participation in illicit Iranian activities—which in turn could damage their reputations and subject them to secondary sanctions.

That said, if the sanctions fail to disrupt the pace of Iran's nuclear program by the end of the year, then it might make sense to consider the option laid out by Steven Walt in a recent ForeignPolicy.com piece. Walt proposes attempting to establish one last firebreak that would allow Iran to continue enriching uranium to a low level but reassure others that Tehran would not seek nuclear weapons:

"What if the United States acknowledged that it can't stop Iran from having control of the full nuclear fuel cycle (at least, not at an acceptable price), and that in all likelihood Iran will end up with a latent 'breakout' capability akin to Japan's? What if we actively tried to construct a deal that kept them from crossing the nuclear threshold and actually testing and deploying a weapon? Have we ever put a proposal like that on the table -- one that acknowledged their right to an enrichment program provided they ratified and implemented the NPT Additional Protocol and maybe undertook some other measures designed to reassure us about the peaceful nature of their nuclear program?"

Of course, President Obama correctly pointed out that, despite U.S. and other international efforts to negotiate a compromise: "It may be that their ideological commitment to nuclear weapons is such that they're not making a simple cost-benefit analysis on this issue." Then we have run out of good options. ...

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