SPEAKING
FREELY Sanctions derail diplomacy on
Iran By Richard Javad Heydarian
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Mohammad ElBaradei,
former International Atomic Energy Agency (IAEA)
chief, used to say using the so-called "carrot and
stick approach" on Iran - simultaneous use of
sanctions and incentives to induce cooperation -
is doomed to fail, because "Iran isn't a donkey".
Others would go further and say that Iran is a
proud civilization, and an ambitious regional
power, which will not give up an iota of its
nuclear ambitions, no matter how painful the
price.
On the contrary, the Barack Obama
administration - together with
its European allies -
contend that a combination of debilitating
sanctions and nominal incentives will push Iran
closer to a desirable compromise.
Recent
developments suggest that the truth may lie
somewhere in between: sanctions might induce Iran
back into the negotiating table, but they (alone)
can't force Tehran to its knees. Looking at the
dynamics of recent nuclear talks between Iran and
the world powers (the so-called P5+1), it is
increasingly clear, rather ironically, that
sanctions are undermining and further complicating
the course of negotiations.
Sanctions are
hurting the prospects of a negotiated solution to
the Iranian nuclear conundrum on two levels.
First of all, both sides are claiming
diplomatic victory and political sagacity against
the backdrop of tightening sanctions. On the one
hand, the Iranians are claiming that they have
valiantly stood their ground, displaying
tremendous resilience by pushing the boundaries of
their nuclear program despite the barrage of
Western sanctions. Meanwhile, the Obama
administration is touting the deep impact of
sanctions - on the Iranian economy and its
willingness to negotiate - as an indication of the
success of its vigorous diplomatic efforts to curb
Iran's nuclear ambitions. Thus, both sides are
caught in an intractable nuclear brinkmanship: the
Iranians are intensifying their enrichment
activities, and expanding the scope of their
nuclear program, while the West is piercing the
knife of sanctions ever deeper into the flesh of
Iran's fragile economy.
Secondly, the
sanctions are further complicating the process of
negotiations. Due to the wide scope and complexity
of sanctions, both sides are facing a "sequencing
dilemma" in pushing the diplomatic envelope and
installing an effective confidence-building
regime. While the Iranians seek the reversal of
transatlantic sanctions as a prerequisite to
kick-off any meaningful negotiation, the West is
greedily holding onto the sanctions card as a
means to keep Iran's behavior in check. In this
sense, both sides are talking pass each other.
The negotiations have moved in parallel
universes, because Tehran has focused on lifting
Western sanctions, while the West is demanding a
total halt to and shipping out of Iran's
high-grade (20%) enriched uranium and the closure
of the Fordo nuclear plant - atop universal calls
for greater transparency and cooperation with the
IAEA.
The sanctions have also developed a
life of their own. The incumbent governments in
the West will need tremendous political will and
tireless coordination to reverse and re-configure
the sanctions regime, layer by layer. The
sanctions are wide-ranging and multifaceted: they
cover oil exports, financial transactions,
shipping insurance, and trade across a wide range
of commodities. To make matters worse, the legal
character of Western sanctions - especially those
by America - provide little wiggle room for the
executive to make any meaningful bargaining in the
nuclear negotiations.
Domestic politics is
another obstacle. In Iran, the nuclear
negotiations have (once again) become a
centerpiece in an ongoing national debate over the
destiny of the revolutionary state. With the 2013
presidential elections in sight, Iran's leading
politicians are jostling for influence and
popularity. From the leader of the parliament, Ali
Larijani, to Iran's chief nuclear negotiator,
Saeed Jalili, and Tehran's charismatic mayor,
Mohammad Reza Ghalibaf, all are putting up a brave
face and encouraging the nation and its leaders to
withstand growing external pressure - no matter
how paralyzing and destabilizing they have been -
and defend Iran's nuclear rights.
President Obama is also facing his own
domestic challenges vis-a-vis the Iranian crisis.
In a bid for re-election, his administration has
tirelessly sought to keep Republican Hawks -
calling for military intervention - at bay, while
trying to project a strong foreign policy profile
on the Iran issue. Crucially, he can't make any
substantive concession - no matter how decisive in
resolving the crisis - in the nuclear negotiations
lest he risks further backlash from the Israeli
lobby as well as certain sections of the American
electorate, who are worried about Iran's nuclear
ambitions - thanks to incessant media-led
disinformation and sensationalization.
Ultimately, sanctions are also
questionable in terms of their impact on the
nuclear calculus of Iran. There is no doubt that
the sanctions are biting. The Iranian currency is
down by almost 50%, the inflation rate is highest
in a decade, oil production is the lowest in two
decades, while oil exports are down by almost 40%
and the economy is on the brink of a recession. By
some estimates, the sanctions - if pushed even
further - could slash Iran's trillion-dollar
economy by as much as 10%.
Iran's Asian
partners have also reduced their exposure by
slashing Iran crude imports by almost 18%. South
Africa, South Korea and Singapore have or are set
to completely halt Iranian imports. Facing the
double evil of falling currency and declining
foreign trade (in international currency), Iran is
resorting to barter deals, costly transactions
schemes, tightening monetary-fiscal policies, oil
discounts, unfavorable credit terms, and heavy
crackdown on black market currency exchange and
imports of luxury products.
Not to
mention, the Supreme Leader, Ayatollah Khamenei,
has encouraged the Iranian nation to purchase
local products in order to protect the country's
deteriorating trade balance, while the government
has increased refined petroleum production to
counter US sanctions. In addition, the slash in
public subsidies, beginning in 2010, has also
exerted a downward pressure on overall energy
consumption in the country, forcing the population
to consider a more economized lifestyle. Austerity
has been in the books for sometime now.
Clearly, the nation is moving towards an
emergency mode, yet the history of the Islamic
Republic is replete with such collective display
of sacrifice and resilience. The sanctions do
hurt, but the regime can withstand them. Despite
the sanctions, Iran is still expected to earn
around $40 billion in oil exports. Also, the
country has low foreign debt, a positive trade
balance, and a relatively manageable
budget-deficit (as long as oil prices hover above
$80 per barrel). Moreover, it benefits from
substantial foreign currency reserves, estimated
at above $100 billion, and is still enjoying
substantial trade with emerging economies in the
region and beyond. Surely, tighter sanctions will
have great impact on the civilian economy, but the
regime will always have enough cash to pump into
its nuclear and military ambitions.
What
is increasingly clear is that at a certain
threshold the sanctions have helped to bring Iran
back to the negotiating table, but the West's
unwillingness to properly leverage its sanctions
has undermined the prospects of a negotiated
settlement. If the West becomes evermore
inflexible with sanctions, and push for even more
punitive measures, the hardliners in Iran could
eventually outmaneuver the pragmatists and
moderates - who have called for nuclear
negotiations - and push for a more defiant and
uncompromising nuclear posture.
Richard Javad Heydarian is a
Manila-based foreign affairs analyst specializing
on Iran and international security. His has
contributed to or been quoted in the Diplomat,
Tehran Times, Foreign Policy in Focus, Asia Times
Online, Russia Today, and other publications
(Copyright 2012 Richard Javad Heydarian)
Speaking Freely is an Asia Times Online
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say.Please
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