Iranian oil platform, Iran flag.
(photo credit: Reuters)
Some 25 centuries ago, Cyrus the Great, the King of Persia, liberated the Jewish people from Babylonian captivity. Today, the Jewish state can likewise empower the Iranian people economically and politically, engendering a deep sense of gratitude and affection for Israel all over Iran.
The United States has imposed broad sanctions against Iran, causing extreme economic hardship for ordinary Iranians, but this is absolutely unnecessary for the purpose of pressuring the Islamist regime.
Alternatively, the focus of sanctions could be narrowed down from Iran’s economy to the treasury of Iran’s government, lifting the pressure off the shoulder of ordinary Iranians, while stripping the Islamist regime of its leeway to misbehave. What’s needed is a shift in strategy from “maximum economic pressure” to “maximum fiscal control.” Here is how.
Israel would lobby its strongest ally, the Unites States, and persuade it to strike a sanction swap agreement with the United Nations Security Council. The United States would offer to abandon its current plans to cut off Iran’s oil exports down to zero by November 6th, to recommit to the Joint Comprehensive Plan of Action (JCPOA), and to lift its sanctions against Iran, excluding sanctions against the economic empires of the Revolutionary Guard and the Supreme Leader. Concurrently, the Security Council would exercise its authority under the UN charter to set up an international control regime for the payments of Iran’s oil exports. All sale proceeds would be taken upfront by an international fund, from which Iran would be only partially paid just enough to offset gains received by the treasury of Iran’s government from the removal of US sanctions. This revenue-neutral sanction swap could be achieved by having the International Monetary Fund set a weekly schedule for the returned or “repatriated” oil income. Any oil income in excess of those repatriation caps would then be invested in international capital markets for the benefit of the Iranian people, following investment guidelines used for sovereign wealth funds. The task of investing those funds, as well as brokering the sale of oil to the highest bidder, would be delegated to the World Bank.
Now, here is how the new scheme would control Iran’s behavior, especially in regard to its nuclear and missile programs. If and when Iran violated any Security Council resolution, the Security Council would freeze the payments of oil income to Iran. The repatriation caps may also be raised by the Security Council to reward good behavior. The scheme would be terminated only when Iran was no longer deemed a threat to international peace and security. At that point, Iran would be allowed to establish unregulated sovereign control over the accumulated funds.
But could this be made happen? Certainly, the proposed plan would need Iran’s cooperation, but not its affirmative consent. If the Security Council were to adopt the plan, allowing UN member states to purchase Iran’s oil as much as they wished, as long as it was done through the international mechanism, it would be in their interest to comply, especially if financial penalties were established for any violation. Their compliance would then leave Iran with no option but to reluctantly cooperate with the World Bank in order to receive any oil income. So, the main question is whether the Security Council could be convinced to adopt the plan.
Most likely, the plan would be welcomed by long-suffering Iranians with overwhelming and enthusiastic support. Iranian people’s views could be gauged by a simple opinion poll, allowing the Security Council to ignore any objections by the Islamist regime. Europeans would also have a strong reason to support the plan, as it would lift US sanctions enforced against non-US entities once and for all. Americans would benefit as well, as US businesses would finally regain access to Iran’s market after almost four decades. Global consumers of energy would also benefit, as the plan would liberate Iran’s underdeveloped energy resources from decades of heavy sanctions. Finally, permanent members of the Security Council would not have any strong reason to oppose the plan, as they would retain control over its execution.
The plan would also improve the prospects for political change in Iran, even while alleviating the Iranian people’s frustration with their economy. Due to demographic shift, there is a widening gap in the finances of Iran’s welfare programs. Given the plan’s revenue-neutral design, that gap would keep growing as before, subjecting the regime to rising risks of anti-Islamist uprisings. In this situation, the regime would be faced with a binary choice: either it would improve behavior for increased repatriation rates, or it would refuse to do so, frustrating people’s expectations and turning more of them into anti-Islamist protesters. What’s more, the promise of unregulated sovereign control over the rising balance of accumulated funds would provide the ultimate catalyst for an anti-Islamist revolution, as it would strongly motivate Iranians to rise up for their freedoms.
Finally, this alternative strategy could produce results without even being executed. As is the preference of President Donald Trump, America’s Plan A for Iran could still be a negotiated grand bargain, based on the list of 12 concrete demands outlined by Secretary of State Mike Pompeo. But the best way to push the Islamist regime into such a deal is to show that the United States has a solid Plan B that could be implemented even without Iran’s active involvement. The very announcement of this strategy by the United States could be that magic that makes the Islamist regime capitulate.
Cutting Iran’s oil income shouldn’t be only a one-time exercise. Israel’s security interests would be better served if this is instead an ever-impending threat to Iran.
The writer is an Iranian economist based in Washington, DC.
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