Thinking Ahead on Iran

Congress Should Give Obama Administration Flexibility on Iran

SOURCE: AP/Vahid Salemi

Iranian President Mahmoud Ahmadinejad, center, joins hands with his Brazilian counterpart Luis Inacio Lula da Silva and Turkish Prime Minister Recep Tayyip Erdogan on May 17 after signing an agreement to ship most of Iran's enriched uranium to Turkey in a nuclear fuel swap deal.

By Brian Katulis, Peter Juul | May 19, 2010

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News that the Obama administration reached agreement with key U.N. Security Council countries including Russia and China to impose a new set of international sanctions against Iran marks a new phase in the U.S.-led effort to deal with international concerns about Iran’s nuclear program. The Obama administration has embarked on a strategy that has strengthened America’s leverage and marshaled broader international support after years of the Bush administration’s passive appeasement, which did little to shape Iran’s behaviors on the nuclear front until its last two years in office. Now it’s time for the White House to start thinking about the next steps and getting ahead of the curve to analyze likely consequences of various sanctions under consideration.

Concerns have grown this year that Iran’s nuclear program may not be only for civilian energy purposes, as the Iranian government asserts—particularly after the International Atomic Energy Agency issued a report suggesting that more evidence suggests Iran is seeking a nuclear weapon. The agreement among the permanent members of the United Nations Security Council came just as Turkey and Brazil announced a deal to turn over part of Iran’s nuclear stockpile for a year. But it’s not yet clear how that proposal might be implemented and whether it would fully address growing international concerns about Iran’s program. And it seems likely that new types of sanctions are in the cards for Iran unless it comes fully clean on its program.

There is still some uncertainty about what the next round of U.N. sanctions might actually contain—it depends on how the current diplomacy at the United Nations shapes up. These sanctions levy an arms embargo on heavy weapons such as tanks, warships, and combat aircraft, as well as expand the number of Iranian government entities and individuals subject to sanctions. They also authorize states to inspect Iranian cargo if it is suspected of involvement in proliferation activities.

But no matter what happens at the United Nations, several types of sanctions being considered in Congress seem likely to pass. The Comprehensive Iran Sanctions, Accountability, and Divestment Act appears to have overwhelming support in Congress. This bill incorporates an earlier legislative proposal, the Iran Sanctions Enabling Act, which authorizes state and local governments to divest funds from companies with more than $20 million of investment in Iran’s energy sector.

Enabling divestment will, in theory, encourage states and local governments to put economic pressure on firms and individuals to not do business in Iran’s energy sector, thereby encouraging Iran’s economic isolation. But in practice, coordinating divestment by such a large array of independent political actors faces severe collective action problems in creating real economic pressure on Tehran. And even then, there are problems enforcing divestment laws, as the recent case of California’s retirement funds’ struggle to divest from Iran illustrates.

Encouraging divestment ultimately seems more like a way of appearing to take action rather than actually taking action by enacting national-level divestment-style policies such as requiring federal contractors to comply with the terms of the act.

But the lead item of the Iran sanctions legislation is giving the president expanded authority to apply new sanctions on Iran’s energy sector. These sanctions include restrictions on persons investing $20 million or more in that sector and persons that sell, lease, or provide Iran with goods, services, technology, information, or support above $200,000 to its energy sector. It also authorizes the president to impose sanctions on persons that provide Iran with refined petroleum products. Sanctions include banking, foreign exchange, and property transactions.

The act also prohibits direct and indirect imports of Iranian goods to the United States and exports to Iran from the United States, with a number of humanitarian exceptions. It prohibits executive agencies from entering into contracts with companies that export sensitive technology to Iran. It requires the president to submit a report on foreign investments in Iran’s petroleum sector exceeding $20 million; the sale, lease, or provision of items to support Iran’s petroleum refinement capacity; and the refined petroleum products being received by Iran 180 days after the legislation’s enactment.

These sanctions are an attempt to cause real economic pain for Tehran that could affect the regime’s decision calculus. It will likely increase Iran’s international economic isolation and strengthen President Obama’s hand in convincing foreign governments and companies to stop doing business in Iran.

But here’s the sticking point —it remains unclear what Tehran’s decision calculus actually is, which makes the effectiveness of sanctions unclear. The regime may ultimately be willing to pay this price for its nuclear program. Sufficiently biting sanctions may also inflict too much pain on the Iranian people and give the Iranian government a propaganda victory at home and abroad. And the United States faces a collective action problem internationally in forcing compliance with sanctions. These sanctions will work best if enacted following United Nations sanctions and in concert with similar measures by U.S. allies rather than as a unilateral American effort.

Congress should give the Obama administration as much leeway as it can on implementation as it continues its deliberations on sanctions legislation. Despite wild criticism from the usual suspects, President Obama’s dual-track strategy of engaging and isolating Tehran has been successful so far. It has given the United States the moral high ground in its dealings with a brutal regime that flouts its international obligations. The combination of pressure and engagement has forced the Iranian regime to seek an out via a revival of the nuclear fuel swap with Brazil and Turkey. It remains unclear how this new gambit by Tehran will play out, but it is a direct result of the Obama administration’s sanctions drive.

The United States can, of course, go above and beyond these sanctions. But Congress should give President Obama maximum flexibility in implementing any additional sanctions so as to better coordinate with international allies and partners. Only with such flexibility can American diplomacy properly calibrate our actions to bring about the shared legislative and executive goal of a non-nuclear-armed Iran.

There are other ways that Congress can support President Obama’s Iran policy, however. It can ratify the New START Treaty and the Comprehensive Test Ban Treaty when the administration submits them for consideration. Doing so will reinforce the existing nuclear nonproliferation regime by having the United States live up to its obligations under the Nuclear Non-Proliferation Treaty. And living up to these obligations neutralizes Iranian rhetoric about the NPT’s fairness and the supposed lack of progress toward disarmament. It puts the burden on Tehran to explain why it is not complying with its obligations and creates favorable international conditions to pursue further action against Iran’s nuclear program. Such a dynamic is already evident in the way U.N. Secretary General Ban Ki-moon and IAEA director Yukio Amano singled out Iran at the opening of the NPT review conference.

Congress should take actions to support President Obama’s policies on Iran and nuclear weapons if it is truly concerned about Iran’s nuclear program and the threat a potential Iranian bomb has to the region and the world. These are critical components in isolating Iran and forcing the regime in Tehran to come clean on its nuclear program, and each is intertwined with the other.

Brian Katulis is a Senior Fellow and Peter Juul is a Research Associate at the Center for American Progress.