Page 1 of
2 Who will
Iran sanctions really
cripple? By Peter Lee
Collective punishment is alive and well in
the 21st century. Iran, North Korea, Syria, the
Gaza Strip and Cuba labor under stringent economic
sanctions imposed by Western leaders too young to
remember the miseries that World War II inflicted
on the well-being, prosperity, and dignity of
their civilian citizenry.
Apparently in an
attempt to put a human face on the "crippling"
sanctions imposed on Iran for jet-setting Western
elites that find the minor personal affronts of
the Transportation Safety Administration at US
airports unendurable, the Tehran regime invited
New York Times pundit-in-chief Nicholas Kristof to
undertake a largely untrammeled and unsupervised 1,700-mile
(2,735-kilometer) tour of
If the regime hoped that Kristof's
squishy liberal core would be touched by what he
saw, they were undoubtedly disappointed. His
humanitarian impulses safely in check, on June 17
"The economy is breaking people's
backs," a young woman told me in western Iran.
I regret this suffering, and let's be
clear that sanctions are hurting ordinary
Iranians more than senior officials. …
Yet, with apologies to the many
wonderful Iranians who showered me with
hospitality, I favor sanctions because I don't
see any other way to pressure the regime on the
nuclear issue or ease its grip on power. My
takeaway is that sanctions are working pretty
"Regret" and "apologies"
aside, Kristof's message was the same as fellow
Times columnist Thomas Friedman's infamous advice
to Iraqis terminally discommoded by the US-led
Well, Suck. On. This.
Friedman's journalistic lodestar is the cabbie who
drives him from the airport, Kristof sets his
reportorial compass by the local Apple store.
Of course, in Tehran, it's not the
official Apple store. It's the local shop selling
smuggled iPads and iPods.
Kristof uses his
experience at the store to highlight the
sophisticated character of the Iranian urbanite,
yearning to be part of the cosmopolite
international elite plugged into the Western
system - and disenchanted with the obstinate
theocracy whose independent foreign policy
deprives him or her of unfettered access to these
heartstrings would also be tugged into further
empty expressions of "regret" and "apologies" by
reports that American Apple sales clerks, acting
on corporate instructions to adhere strictly to
the US sanctions regime, are refusing to sell
their electronic treasures to Farsi-speaking
customers, whether or not they actually intend to
send them to relatives inside Iran. 
Nevertheless, smuggled Apple products
apparently enter Iran in large enough quantities
that the premium is only $40 to $60 more than what
US consumers pay. 
A more striking
example of Kristof's neo-liberal tunnel vision
occurs as he discusses another outrage inflicted
on Iranian youth by the mullahs' refusal to
knuckle under to the West:
I chatted with the owner of a store
selling Nike, Adidas and Saucony sneakers,
hugely prized as status symbols. If a young man
wants to find a girlfriend, the shop owner
explained, the best bet is to wear Nikes.
But sales have dropped by two-thirds in
the last year, he fretted. He added in disgust
that some Iranians are in such penury that they
attend parties wearing Chinese-made, fake
Perhaps Kristof needs reminding
that Nikes, both real and fake, are made in China
(virtually all Nikes are made in the democratic
hot spots of Vietnam, China, and Indonesia).
For that matter, Apple is pretty much a
Made in China operation.
Which brings us
to the issue of unintended consequences.
Beyond inflicting pain on Iranian citizens
and eroding the legitimacy and authority of the
Iranian regime, the Western sanctions regime has
accelerated both the strategic alliance and the
economic integration of the Iranian regime and the
People's Republic of China.
As the United
States, EU states, and Japan have pursued their
program of diplomacy by harassment against Iran,
China has exploited the opportunity to scoop up
energy and infrastructure projects.
Chinese "backfilling" has attracted the anger and
frustration of the United States for at least a
decade - and some serious heartache for the EU,
which regards Iran as its natural market and
But China can do what it
wants, it seems. China hasn't signed on to the
sanctions regime - beyond the narrow nuclear,
weapons of mass destruction and missile-related
sanctions passed by the Security Council - and has
declined to follow US sanctions guidance or, for
that matter, weigh in with any national sanctions
of its own.
The Chinese conundrum has been
a key headache for US strategy on Iran. Beijing's
resistance to playing the sanctions game has
undercut US strategy both toward Tehran and
The US government has made what
I believe is disastrous and strategically
short-sighted decision in response - politicizing
the enforcement powers of the Treasury Department
in order to leverage the central US position in
the world financial system for narrow geopolitical
The theory is that recalcitrant
nations can be coerced into supporting US national
sanctions through the threat of cutting off their
financial institutions from the world financial
The experiment was first tried
against China on the issue of North Korea in the
matter of a Macao institution, Banco Delta Asia
(BDA) during the George W Bush administration.
In 2007, BDA was cut off from the US
financial system on some extremely dubious charges
concerning its purported role as a nexus for North
Korea's alleged efforts to launder the notorious
The fact that
BDA sent all of its cash deposits to that
distinguished imperial institution, Hong Kong
& Shanghai Bank, for inspection and no
counterfeits had been detected for years was an
evidentiary speed bump that the US Treasury
Department's newly politicized Financial Crimes
Enforcement Network or FinCEN easily ignored.
One of the architects of the policy, David
Asher, declared in congressional testimony that
the purpose of the policy was "to kill the chicken
in order to scare the monkeys", the chicken being
BDA and the monkeys being the People's Bank of
China, an important conduit for North Korea's
international financial transactions..
appears that China received a genuine scare from
the BDA case, but dodged the FinCen bullet when
North Korea fortuitously detonated an atomic bomb
and the US hardline against Pyongyang collapsed in
a fog of proliferation-related anxiety.
The BDA case also collapsed in humiliation
and disarray for the United States (despite the
solicitous efforts of the many US foreign policy
journalists to protect it from the embarrassment
that honest and accurate reporting would have
inflicted) as the (relative) grown-ups led by
former secretary of state Condoleezza Rice
regained control of the Bush foreign policy
apparatus from vice president Dick Cheney, former
UN ambassador John Bolton and the cowboys.
When President Barack Obama took office,
the commitment to financial coercion was not
abandoned; it was improved and upgraded.
Stuart Levey, who had directed the
weaponization of FinCEN under Bush, was the
second-highest Bush official retained by Obama
(after former defense secretary Robert Gates).
In true Obama fashion, the financial
sanction process was carefully formalized and
Instead of financial sanctions
implemented in secret star chamber proceedings on
trumped-up charges under US domestic financial
regulations by a cabal of ideologues enjoying
privileged authority within the executive branch
thanks to the support of the White House, the
Obama administration went to congress and acquired
the color of law for coercion against nations that
flouted US calls for financial sanctions.
Obama also enjoyed the immense advantage
of not being George W Bush.
Instead of the
Bush approach to foreign policy - which took as
its point of departure unilateral, untransparent
US decision-making and action, followed by
ruthless testicle-twisting to obtain the
compliance of reluctant allies - Obama's foreign
affairs team solicited and obtained the buy-in of
previously uncooperative governments in the
European Union and Asia.
As a result, the
sanctions regime against Iran, as Kristoff
reported, is remarkably robust and effective.
But just as China was the monkey-or
400-pound gorilla-in the room on North Korean
sanctions under the Bush administration, it plays
a similar role in Iran sanctions today.
The key headache for the United States is
how to keep China from either exploiting Iranian
opportunities to the detriment of loyal
sanctioners, or alleviating Iranian misery to the
extent that the regime can escape the threat of an
economic, subversion, and sedition-fueled "Iranian
summer" of regime change.
weapon in the hands of the United States is a
section of the 2012 Defense Appropriations Act
that gives the executive branch authority to sever
banks that transact energy business with Iran from
the US financial system - unless their home
countries obtain a precious six-month waiver from
the US government.
A decrease of 20% is
enough to get the waiver. Presumably this is the
number that the US came up after conferring with
Saudi Arabia, the Gulf emirates, and Iraq to
determine how much shortfall they could
realistically make up. The grinding economic
crisis has actually been a blessing in disguise;
despite taking a considerable amount of Iranian
energy out of the supply equation, prices have
actually dropped instead of risen in an
environment of slackening demand.
suffered a double whammy as its absolute volume of
exports has dropped, and oil prices have sagged at
the same time, delivering the "crippling" economic
blow that sanctions advocates have always yearned
The EU, for whom economic suicide has
apparently become a way of life, went the whole
hog and banned Iranian energy imports entirely
despite the reliance of weak sisters Greece,
Italy, and Spain on Iranian imports.
Strategic allies such as South Korea and
Japan heeded the call to cut imports.
South Africa, India, and Malaysia
responded less enthusiastically, but reduced
imports enough to gain the waiver.
unbridled and perhaps unnecessary enthusiasm, the
EU sanctions will also forbid European insurers,
who currently cover 95% of crude shipments, to
cover Iranian cargoes, thus creating no small
inconvenience for the compliant nations that have
cut their imports by 20% but still somehow have to
get the other 80% safely to their shores.