The European Union on Sunday implemented tough new energy sanctions, denying Iranian crude oil imports to EU markets. There is, however, a growing consensus that the US and its allies need to further ratchet up the economic pressure on an increasingly recalcitrant and jingoistic regime in Tehran.
The goal is stop Iran’s drive to become a nuclear-weapons power.
EU sanctions will severely cut into Iran’s energy sector, which provides roughly 80 percent of the country’s exports, and almost half its state revenue.
Nonetheless, as the noose of sanctions continues to strangle Iran’s economy, the country’s leaders are scrambling to show defiance. Central bank Gov. Mahmoud Bahmani declared on Monday, “We are implementing programs to counter sanctions and we will confront these malicious policies.” He cited $150 billion in foreign reserves to be used to cushion the impact of new sanctions.
In response to repeated Iranian threats to close the Strait of Hormuz, with a view toward shutting down the vital passageway to Persian Gulf oil shipments from other countries, the US has stepped up its military presence in the region. Brig.-Gen. Amir Ali Hajizadeh, who commands the aerospace division of the Revolutionary Guards, told Iran’s state-controlled Fars News Service, “We have thought of measures to set up bases and deploy missiles to destroy all these bases in the early minutes after an attack.” All of Tehran’s saber-rattling in the Persian Gulf—coupled with its efforts to circumvent sanctions—helps to explain why there is a pressing need for a comprehensive embargo.
In light of Iran’s ability to set up front companies to bust sanctions, The Wall Street Journal on Tuesday bemoaned, in an editorial titled “Obama’s Iran Loopholes,” the lack of sanctions enforcement from the Americans. According to the Journal, “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... But if you’re a big oil importer in China, India or 18 other major economies, the sanctions are mostly smoke.”
Writing in late June on the website of Foreign Policy magazine, Mark Dubowitz, a leading US sanctions expert, urged greater “economic warfare” targeting Iran’s entire energy apparatus and branches of its non-gas-and-oil sectors.
Dubowitz,the executive director of the Foundation for Defense of Democracies, advocates a creative piece of US legislation from Rep. Ted Deutch (D-Florida), Rep. Robert Dold (R-Illinois) and Sen. Mark Kirk (R-Illinois) that designates Iran’s entire energy sector as a “zone of primary proliferation concern.”
The proposed law would bar businesses active in the US and in the EU from engaging in commerce with the Islamic Republic’s energy branch. Dubowitz proposes zooming on punitive measures for “Iran’s automotive sector, which is the largest part of its economy outside the energy industry” as well as the Iranian Revolutionary Guards Corps -controlled construction and engineering sector. He further argues that the Revolutionary Guards-dominated Iranian telecommunications and technology sector ought to be designated a “zone of electronic repression.”
Lastly, the UN Charter permits a full embargo against a country that consistently violates UN resolutions, permitting the Security Council to impose a “complete or partial interruption of economic relations and of rail, sea, air, postal, telegraphic, radio and other means of communication, and the severance of diplomatic relations.”
The enactment of an exhaustive UN embargo of Iran’s economy remains largely a utopian idea because Russia and China—Tehran’s main enablers at the UN—would go to great lengths to prevent it.
Economic warfare might very well have a solid chance of compelling Iran’s leaders to suspend their illicit weapons-grade nuclear-enrichment program. The principal challenge is for the US and its allies to strictly enforce sanctions and to rapidly move toward a comprehensive embargo of the Islamic Republic’s economic activity. Underscoring the importance of sanctions, in a column from mid-June, The New York Times columnist Nicholas Kristof, writing from Iran, reported an unemployed salesman as saying, “We blame our regime, not Western countries.”
The writer of this analysis is a research fellow at the Foundation for Defense of Democracies.