Getting serious about sanctions

History has shown that sanctions can work when they have a resolute and united world behind them.

By TODD WARNICK
EU foreign ministers talking in Brussels 390 (photo credit: Reuters)
EU foreign ministers talking in Brussels 390
(photo credit: Reuters)
While the United States and Europe have been ratcheting up sanctions against Iran, they still pale in comparison to the draconian measures imposed on Iraq in 1991. It’s worth remembering how the world reacted to the regime of Saddam Hussein, that however horrible, did not pose nearly the danger and evil to the Middle East region and the world that characterizes the words and actions of Iran’s Supreme Leader Ali Khamenei and its President, Mahmoud Ahmadinejad.
Four days after Iraq’s invasion of Kuwait on August 2, 1990, the United Nations Security Council passed United Nations Security Council Resolution 661, which imposed a near-total financial and trade embargo on Iraq, designed to force it to withdraw its forces, pay reparations and to disclose and eliminate any weapons of mass destruction.
The resolution was all-encompassing: it forbade the import of all Iraqi products and commodities; any activities related to the export of Iraqi products; the sale of weapons or other military equipment to Iraq; and prohibited making available funds or other financial or economic resources to any commercial, industrial or public utility operating within Iraq, except for medical or humanitarian purposes.
The vote passed 13-0 with only Cuba and Yemen abstaining. On April 3, 1991, following the end of the Gulf War, the Security Council passed the even harsher Resolution 687, which in addition to sanctions called for the removal of weapons of mass destruction, including the demand that Iraq unconditionally remove and destroy all chemical and biological weapons and ballistic missiles with a range greater than 150 km.
The UNSC also demanded that Iraq submit a report within 15 days declaring the locations of these weapons and agree to urgent, on-site inspections. It established a special commission related to the inspections and set provisions for it, asking that Iraq abide by its obligations under the Nuclear Non-Proliferation Treaty and agree not to develop nuclear weapons.
In Iraq’s case, the world was resolute: the resolution was passed 12-1 with two abstentions. Previous sanctions, which led to hyperinflation, widespread poverty and malnutrition, brought Iraq to its knees and forced it to accept the provisions of Resolution 687 on April 6, 1991 – just three days after they were passed.
How times have changed. Sanctions on Iran in recent years have come in fits and starts at best. It’s only in recent months that Europe and the United States have begun to impose sanctions that might mean real hardship for the Iranian economy, but most of the rest of the world has yet to join in.
To great fanfare, the European Union announced a few days ago an oil embargo on Iran and a freeze on the assets of its central bank (CBI); and in the US, Congress passed the Kirk-Menendez Amendment at the end of December. Specially, the law would forbid any US financial institution to deal with the CBI, or to deal with any financial institution that does so. In other words, if you do business with Iran, you will lose access to the largest financial market on earth.
The Obama administration also last week imposed sanctions on Iran’s Bank Tejerat, its third-largest bank, closing off one of the last of Tehran’s conduits for doing business in the West. The bank is the 23rd Iranian- linked financial institution to be blacklisted by the US since 2006.
While initially heralded in Israel and the West, it turns out that the Congressional amendment and EU sanctions don’t take effect until July 1, and the sanctions on Bank Tejerat will go into effect only in a couple months’ time. The Americans and Europeans are also still mired in their wishful thinking that somehow negotiations might be resumed, most likely using Turkey as a back channel, though with Ankara’s recent foreign policy failures across the Arab world and the growing threat of a possible Turkish economic debacle on the horizon, its ability to bridge gaps with Tehran is highly unlikely.
Prime Minister Binyamin Netanyahu and Defense Minister Ehud Barak have made clear that these moves are insufficient and will not force Iran to abandon its nuclear weapons program.
Continued delays also provide the Iranians with more time to shift a greater portion of uranium enrichment activities to a fortified site deep underground at Fordo, south of Tehran, designed to withstand air strikes.
However, the increase in sanctions over the past few months has not been without some effect, and in fact has been particularly harmful to Iran’s currency, the rial, which has been devalued by 70 percent against the US dollar since September. As another indicator of the sanctions’ effects, Iranian banks are offering 21% interest as Iranians continue to get rid of local currency as quickly as possible.
But Asia and its four largest consumers (China, India, Japan and South Korea), to where Iran exports approximately 70% of its crude oil, are hardly on board with the sanctions regime. While Japan has pledged to “start reducing... as soon as possible, in an orderly manner,” South Korea is dragging its feet and India has defiantly announced that it will not cut back on Iranian imports at all.
China, of course, has made it clear that it wants nothing of Iranian sanctions and both they and the Indians will likely purchase even more oil and benefit as well from somewhat lower prices, as the Iranians look to supplement sales lost because of sanctions made by the EU.
Iran has experienced some problems with oil payments, but seems to be getting around those as well. For example, the Reserve Bank of India halted a clearing mechanism last year due to sanctions, but then payments were cleared through Turkish and UAE banks, and through Gazprombank of Russia.
Regime change is also not an option: during the 2009 “elections,” there was no indication that any real opposition in Iran would be in favor of anything except continuing to develop nuclear capabilities.
Historically, sanctions can work. They worked in South Africa; they worked in Iraq. But they require a world that is resolute and united. While US and the EU have somewhat upped the ante, much of the rest of the world is purposefully not joining in – most notably, Iran’s intractable Asian customers and Russia, who continue to oppose sanctions at every opportunity. The number of options left open to Israel is therefore extremely limited: Iran holding a nuclear weapon is not one of them.
The writer is based in Israel and is the founder of the website Middle East Clarity.