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Tuesday, July 31, 2012

Are sanctions against Iran working? Um, no.

During Mitt Romney's visit to Israel's capital:
Prime Minister Binyamin Netanyahu Sunday told Romney in a Jerusalem meeting that diplomacy and sanctions leveled against Iran have not worked so far.

"I heard some of your remarks and you said that the greatest danger facing the world is the Ayatollah regime possessing nuclear weapons capability," Netanyahu said. "Mitt, I couldn't agree with you more, and I think it is important to do everything in our power to prevent the ayatollahs from possessing that capability. We have to be honest and say that all the diplomacy and sanctions and diplomacy so far have not set back the Iranian program by one iota."

Netanyahu said that a "strong and credible military threat coupled with sanctions" was needed to "have a chance to change the situation."
In response:
Defense Secretary Leon E. Panetta sent a tacit message to Israeli leaders on Monday, urging that diplomacy and economic pressure be given more time to work before they move ahead with any military strike on Iran.

In comments to reporters in Tunisia a day before he was to arrive in Jerusalem, Mr. Panetta said that economic sanctions against Iran were increasingly effective, although he acknowledged that they might not seem so.

“These sanctions are having a serious impact in terms of the economy of Iran.” He added that “while the results of that may not seem obvious at the moment,” the Iranians had expressed a willingness to negotiate, and that they “continue to seem interested in trying to find a diplomatic solution.” Mr. Panetta concluded that “what we all need to do is continue the pressure on Iran.”

Although the sanctions have cut seriously into Iran’s oil exports, and its currency has plunged by more than 40 percent against the dollar since last year, they have failed to force the country to stop enriching uranium. Negotiations aimed at getting Iran to give up its nuclear ambitions have stalled. Mr. Panetta and the Obama administration remain hopeful that a sweeping new round of sanctions imposed in June, meant to cut Iran off from the global oil market, will further increase the pressure.
It is beyond belief that this administration, after watching Iran's use of "diplomacy" over the years to buy more and more time, still believes that Iranians are interested in a diplomatic solution.

The fact is that the only US action that helped to delay Iran's nuclear program was not diplomacy or sanctions, but cyberwar, presumably via Stuxnet and perhaps other covert computer espionage. While delays are welcome, they are not a strategy to stop the program and they will not reduce the Iranian desire for nuclear weapons one bit.

And the last word has to go to the Wall Street Journal, which in early July revealed that even the latest round of economic sanctions are riddled with holes to allow Iran to withstand them:
Though economic sanctions still haven't slowed or stopped Iran's nuclear drive, the Obama Administration has decided to make them even weaker. The Iran sanctions regime is looking like the U.S. tax code—filled with loopholes.

It's so weak, in fact, that all 20 of Iran's major trading partners are now exempt from them. We've arrived at a kind of voodoo version of sanctions. They look real, insofar as Congress forced them into a bill President Obama had to sign in December. The Administration has spoken incantations about their powers. But if you're a big oil importer in China, India or 18 other major economies, the sanctions are mostly smoke.

This is possible because, thanks to lobbying by the Obama Administration, the sanctions law contained several loopholes you could drive a warhead through. One provided that if a country "significantly reduced" its oil imports from Iran, the State Department could exempt it from sanctions for a renewable period of six months. Naturally, the definition of a significant reduction was left to the Administration's discretion.

As of last week, we know that its definition is trifling: India earned a free pass after merely pledging to cut its Iran imports by 11%, and Japan earned one after cutting 22% of its Iranian business in 2011. Then there's China, the Islamic Republic's biggest customer, which is now exempt after cutting Iran imports by 25% between January and May (measured year-over-year).

The problem is that China's reduction is an apparent fluke, not a dedicated effort to reduce trade or isolate Iran economically. Imports fell by about 50% in February and March because a Chinese oil giant delayed the start of a contract over a price dispute. Once that was resolved, imports shot back up—by 34% between April and May, and again by 35% between May and June.

All this "is completely legitimate and justified," said a Chinese Foreign Ministry spokesman, and "does not violate any U.N. Security Council resolutions or undermine the interests of a third party or the international community." So much for the Obama Administration's assertion last week that China-Iran trade shows "the success of our sanctions policy," as Beijing "supports our dual-track approach of diplomacy and pressure."

This fantastic claim follows years of Chinese troublemaking—via open opposition to U.S. and European Union sanctions, sales of sensitive nuclear-related technologies and materiel, currency schemes to avoid banking restrictions and more.

To be sure, Iran is feeling some pressure these days.... Iran is suffering real economic pain.

But enough pain to stop the 30-year nuclear drive of a revolutionary regime built around a messianic cult of martyrdom? A regime with foreign currency reserves between $60 billion and $100 billion, and which would net more than $40 billion in oil revenue even with a 40% drop in sales?

We've never considered sanctions likely to persuade Iran to drop its nuclear program, but it's dangerous to pursue them half-heartedly while claiming progress and keeping the international temperature down as Iran's centrifuges spin. That's been the Obama Administration's consistent approach, and it'll probably continue at least through Election Day in November. It's a good way to comfort adversaries in Tehran and Beijing while undermining friends in Jerusalem and beyond.