War's No Good, So... Sanctions?

A previous post explored the military option for curtailing Iran's nuclear program and determined it is an absolute last option primarily due to the indirect and direct consequences of a preemptive strike -- particularly one lacking global support. This post looks at the impact sanctions have had and what impact they could have if there is no deal, and the U.S. convinces the rest of the P5+1 to keep existing international sanctions in place.

Removing "killing them all" or even surgical strikes as immediate possibilities, the options then become financial sanctions and diplomacy as the best options for preventing Iran from getting a nuclear weapon, or at least delaying it. This is where the global community landed when it began the united, intensive, and punishing sanctions on Iran in 2012. According to Treasury Secretary Jacob Lew, Iran's economy was 15 to 20 percent smaller than it would have been had sanctions not been ratcheted up in 2012; the sanctions measures cost $160 billion in lost oil revenue alone. In addition, more than $100 billion in Iranian assets is held in restricted accounts outside the country. At the same time, the rial declined in value by 56 percent in the two years from January 2012 to January 2014 -- the same period in which inflation reached about 40 percent and unemployment climbed north of 20 percent. All told, the economic sanctions supported by the international community have been remarkably effective in damaging the Iranian economy. However, despite the impact of those sanctions, Iran continued to do exactly what the sanctions were put in place to stop.

As the economy was being wrecked, Iran pushed ahead with its nuclear program. When the first round of UN sanctions were put in place in 2006, just after Iran had enriched uranium to 3.5 percent (approximately 70 percent of the work necessary to create the 90 percent highly enriched uranium for a nuclear weapon), Iran had a few hundred centrifuges spinning. By the time the fourth, and last, round of sanctions were in place and after the Stuxnet virus had done its damage, Iran had more than 8,000 centrifuges and had managed to enrich uranium to 20 percent, getting them 90 percent of the way to weapons grade.

Finally, in the five years since those sanctions have been in place, Iran has increased its centrifuges to just under 20,000. While building up a stockpile of close to 15,000kg of low enriched uranium.

This timeline is important to keep in mind when some argue that the proper course forward is to keep tough sanctions in place until the Iranians give up their program. Immediate history suggests they won't. The sanctions were put in place to force the Iranians to come to the negotiating table, which they had walked away from several times in the past. They came and stayed this time and negotiated a deal that -- for the first time -- actually dismantles parts of its nuclear program.

Before a single cent of frozen assets are released (the famed $50+ billion) or a single sanction is lifted, Iran must do the following and be verified by the IAEA as having done so:

  • Provide information to and answer follow-up questions from the IAEA on possible military dimensions, etc.
  • Disassemble, remove and store under IAEA seal, centrifuges that are above the 6,104 limit (cutting their current total by some 68 percent)
  • Reduce its stockpile of low-enriched (3.67 percent) uranium to no more than 300kg from the current nearly 15,000kg stockpile - a 98 percent reduction - and get rid of all uranium enriched higher than 3.67 (current stockpile is anywhere from 8-10,00kg)
  • Convert Fordow site to an R&D facility
  • Remove and disable (e.g. fill with concrete) the Arak heavy-water reactor
  • Allow and make necessary arrangement for additional IAEA access and monitoring

Without firing a shot, or lifting a sanction or any corporations signing a contract, Iran will have had to done more damage to its nuclear program than any potential surgical strikes may be able to with none of the indirect consequences. If Iran has done all the above, only then will any sanctions be lifted. This means that before anything positive for Iran happens, it will have had to drastically reduce its nuclear program and provide a tremendous amount of intelligence to answer past questions and create a baseline for inspections going forward (as well as better intelligence for any future military strike).

The idea of ratcheting up the pressure is a nice theory, but the unfortunate truth is that the sanctions regime is already fraying. Back in April, former Secretary of State James Baker stated that members of the P5+1 were eager to resume business with Iran, "just as Russia has actually done in recent days by agreeing to the sale of a sophisticated air-defense system to Iran." Baker also pointed out that if the U.S. is the country to walk away from the final agreement, "we could be in a worse position than we are today, because the United Nations and European Union sanctions would likely be watered down or dropped. The U.S. would then be left with the option of only unilateral sanctions, which are far less effective."

Sanctions are a difficult economic tool to wrangle in the first place, because if they aren't targeted specifically on the people making decisions about policy (in this case, the Iranian nuclear program), they gamble on influencing pressures and internal political dynamics. Indeed, according to former Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, the sanctions may have reached a point of diminishing returns given that the regime -- specifically the Revolutionary Guard--has in fact gotten richer by running the black markets.

Sanctions scholar Sam Cutler has observed, it bears mentioning that the $50-100 billion in frozen assets, would likely become available if the U.S. walks away from the deal, because the foreign countries holding the funds probably would stop complying with the extraterritorial provisions of U.S. law that limited the funds' use in the first place.

To be sure, war will remain on the table as option -- as it must, to give these diplomatic and economic measures the proper incentivizing "teeth." But to responsible policymakers, it is the last option and should only be considered after all alternatives have been exhausted. At this point, the international community's appetite for sanctions has been exhausted; what remains is their willingness to embrace this deal. Is it perfect? Far from it. There are significant questions about the mechanics of inspections that need to be answered, as well as concerns about the exact threshold of violation that would trigger the snapback of those international sanctions. And of course, Iran's sordid behavior in the region worries many of our allies given the $50+ billion it will receive up front.

Is this the "good deal" President Obama says it is? That likely won't be determined until his successor's successor is in office. It is, however, like most agreements relating to nuclear non-proliferation, the best possible feasible option. It can be strengthened by unilateral American moves (some written about here) without the support of the P5+1 in the coming weeks and months before it is fully implemented and sanctions roll back.

Rather than killing the deal in congress and allowing the Iranian program to continue unchecked and unabated in the hope that the international community will maintain sanctions, perhaps the smarter course of action to maintain global unity against Iran getting a nuclear weapon, is to pass the deal. After which, congress has several weeks - if not months - to create new bi-partisan legislation to strengthen the deal on a unilateral basis and wait to see if Iran fulfills its requirements before any sanctions are lifted. If Iran fails to do that, it won't be hard to keep our international partners in line, as it will be Iran to blame. Or, at the least, it will be easier than if congress rejects the deal first, potentially leaving the U.S. standing alone.