The Sanctions Debate

Despite the proclamations that the nuclear talks with Iran in Geneva last week represented a "positive step" - the talk of enacting new sanctions on Iran continues. Yesterday, Stuart Levey, the Treasury Under Secretary for Terrorism and Financial Intelligence stated that a comprehensive and sweeping set of sanctions was being prepared if Iran fails to demonstrate the peaceful nature of its nuclear program. This rhetoric is far from new though. Sanctions were passed against Iran in 2006, 2007, and 2008 - to no avail - and this year both the Obama administration and Congress have been loudly threatening Iran with a new line of sanctions if it does not cooperate. And, with Obama's September deadline to Iran apparently punted in light of an "agreement in principle" at Geneva - despite the revelation of the Qom nuclear facility - expect the sanctions talk to continue.

Is a sanctions regime the right course of action to take though? The case against sanctions generally revolves around three main points: the inability of sanctions to achieve the desired result (effective in less than one-third of cases), their adverse impact on the general populace (instead of the targeted government and elites), and their potential negative impact on the sending country. Despite these problems though, sanctions continue to be employed as a foreign policy tool for coercion and deterrence. On the other hand, possibly the best argument in favor of sanctions rests on the simple premise that they represent the middle ground between doing nothing/talking and utilizing military force. Unfortunately, this is the no man's land in which Obama finds himself in regards to Iran - stuck between the rock of talking (and its potential/probable failure) and the hard place of military action (which is certainly undesirable).

Barring a massive change of heart, it seems likely that we will see a new string of sanctions on Iran sooner or later - and one must ask, what will this look like and what are the probable effects on Iran? Successful sanctions regimes share two main characteristics: they are multilateral and harsh. Given the wonders of globalization, unilateral sanctions are almost always unsuccessful as substitute goods and services can be obtained elsewhere. A multilateral front ideally makes this impossible, or at the least substantially more difficult. Secondly, it is clear that harsh (and thereby short-lived) sanctions have the best chance of achieving the desired result, Ratcheting up sanctions gradually is generally unsuccessful, as are long-lived sanctions (which also reduce the credibility of the sending countries). These are both enormous hurdles for the U.S. to overcome - especially given the tepid reception of the Russians and the (so far) outright refusal of the Chinese to cooperate.

Should the U.S. aggressively seek sanctions against Iran though, what are the likely effects? The idea being bandied about in Congress and various governmental and academic circles today is largely revolving around the idea of gasoline sanctions. Despite massive oil reserves, Iran lacks the refining capacity to meet its domestic demand and, as such, imports at least a third of its gasoline. As the thinking goes, banning those gasoline imports would begin to throttle Iran's economy, thus forcing it to cooperate on its nuclear program. This would not necessarily be the case though. The Iranian government heavily subsidizes the cost of gasoline to its citizens and, should the sanction be enforced, the government could simply reduce or eliminate the subsidy (which, according to some sources, it has been looking to do anyways as a way to reduce traffic congestion) while successfully pawning off the blame on the United States. Without the subsidy, gasoline demand would drop substantially. Additionally though, as pointed out by Vivienne Walt in a Time Magazine piece, Iran has stockpiled about a four month reserve of gas and also receives imports now from both China and Malaysia - both of whom would be reluctant to agree to (and enforce) the sanctions.

Finally, and perhaps most importantly, is the potential effect of a gasoline sanction on the people of Iran. One school of thought argues that the economic crunch would exacerbate an already agitated opposition who would turn on the government. While this is certainly possible, the exact opposite could also occur. Sanctions often have the unintended consequence of uniting the citizenry of the target country against the sending country - and this is especially dangerous in Iran where we frequently see a "rally 'round the flag" effect following U.S. chiding.

Ultimately, it's difficult to judge whether or not sanctions could achieve the desired results with Iran. Even if they are properly constructed and enforced, that's no guarantee of success. The sanctions regime against North Korea has consistently failed, and Iran is in a far better negotiating position than the DPRK. All that being said though, inaction on the part of the United States is clearly not an option. In the weeks and months ahead, the Obama administration will have to make tough choices on whether or not to sanction Iran - either way accepting the consequences and recognizing that he may eventually have to make the tougher choice of either risking a nuclear Iran or escalating past sanctions.