...And Sanctions

Even as October 1st approaches, marking the beginning of international negotiations with Iran, as well as the first direct talks between the U.S. and Iran in thirty years, the Obama administration is rushing to prepare a new set of economic sanctions to provide further leverage against the Islamic Republic.  According to SecDef Gates, there’s “a pretty rich list to pick from,” and potential targets include energy equipment and technology. The biggest target pushed for by lawmakers, and the most difficult to reach an international consensus on, is an embargo on gasoline shipments to the Islamic Republic. Proponents of this step hope that, with forty percent of its gas imported from abroad, an embargo will put domestic pressure on the Iranian government to negotiate.

There’s been difficulty finding consensus among world leaders about how to best approach sanctions against Iran. France, Germany, and Britain are all ready to support further Iran sanctions, especially given last week’s revelation over Iran’s secret nuclear facility. Even Israel’s PM Netanyahu has decided to let the current U.S.  plan of talks and sanctions play out, though he demanded sanctions regardless of whether talks go forward.

Russia and China, two countries the U.S. must convince if it wants to pursue UN-backed sanctions, have been more difficult, given their strong economic ties to Iran. Russia, which previously opposed sanctions, has recently come out in favor of them, however lukewarmly. There is still some uncertainty on whether they will support some of the harsher long-term sanctions being proposed. China, on the other hand, has been consistent in its opposition to any further sanctions, and stuck to its guns following the discovery of Iran's previously undisclosed facility last week. Likely factoring in are China’s oil and gas interests in Iran, possibly totaling some $100 billion according to the NY Times. China also currently supplies Iran with a third of its gasoline imports, and has a general distaste for the use of sanctions in foreign policy. Any UN-backed sanctions, if they do pass, are likely to be watered down through some combination of Russian and Chinese pressure.

There’s also debate on whether the much talked about gasoline embargo would have the desired effect on Iran. French Foreign Minister Bernard Kouchner spoke out against fuel sanctions last week, citing concerns that they would mainly harm Iran’s public, “and mainly poor people.” There are also concerns that the sanctions will create a “rally ‘round the flag” effect, solidifying support for the government.

Dr. Fereidun Fesharaki, a Senior Associate in CSIS’ Energy and National Security Program, has an interesting take on potential gas sanctions. At a discussion a few weeks ago on global energy markets, focusing to some extent on China and Iran, Dr. Fesharaki stated that by 2012-2013, Iran will have increased its refining capacity enough to become a net exporter rather than an importer of gasoline. Over the course of the discussion, he mentioned that gasoline sanctions on Iran could have a very interesting and unforeseen impact, up to and including a grateful Ahmadinejad. According to Fesharaki, sanctions would be “the best thing which can happen to [Ahmadinejad],” not because it will unite the people behind him (Fesharaki believes they wouldn’t) but because it allows him to emplace unpopular policies under the guise of foreign pressure. If sanctions are enacted, the Iran could,

…reduce [the quota for subsidized gasoline] to 65 liters per person, per month. Now what this would do is that it would put one third of the Iranian oil in the international market, substantially reduce imports, save him two billion dollars, reduce the traffic congestion in Iran, and change the disgusting… pollution in the city. All this can be achieved, so those who want to help him, be my guest.

Given Ahmadinejad’s educational background, it’s interesting to think that this kind of opportunity might appeal to the civil engineer in him, in a sort of ‘silver lining’ type of way. In recent months, he has defiantly welcomed sanctions. It will be interesitng to see how the use of sancitons and negotiations plays out, whether they are applied simultaneously or if sanctions will be used only if the talks flounder. Democratic leaders in Congress have delayed talk of sanctions for now, but pressure has mounted to speed passage of new sanctions since last week's news.