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The Limits of New Iran Sanctions

Interviewee: Meghan L. O'Sullivan, Adjunct Senior Fellow, Council on Foreign Relations; Jeane Kirkpatrick Professor of International Affairs, Harvard's Kennedy School, Council on Foreign Relations
Interviewer: Bernard Gwertzman, Consulting Editor, CFR.org
July 8, 2010

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Iran faces new rounds of sanctions both from the UN Security Council and the United States. But while the sanctions wisely couple punitive measures with a desire for "robust dialogue," says sanctions expert Meghan O'Sullivan, a professor of international affairs at Harvard's Kennedy School, there are serious questions about whether Tehran will see them as a serious threat to regime stability and change course. O'Sullivan also notes the U.S. sanctions, which target countries doing business with Iran, could jeopardize the "extraordinary international consensus" on Iran. If the current sanctions strategy doesn't push Iran to negotiations, she says, the "United States and its allies will need to look at the other options, which include military force, containment, and fostering political change in Iran."

The Security Council passed a resolution last month putting new sanctions on Iran. In addition, the U.S. Congress passed a law, which was signed by President Obama, putting sanctions on foreign companies that deal with Iran. This has involved a lot of effort and political capital--tools that many foreign policy analysts describe as being impotent. How often do sanctions really work?

There is a lot of skepticism about the utility of sanctions, in part because there are very few instances where you can point to sanctions directly delivering a result. The best examples are actually ones where sanctions were threatened, but not enacted, such as in 1999 when Indonesia curtailed militias opposing the independence of East Timor because it thought that lending from international financial institutions to Jakarta was about to be terminated.

Still, it is too simplistic to dismiss sanctions entirely. The record is quite mixed. If you look at the multitude of sanctions imposed by Congress, by the United Nations, and by the U.S. executive branch over the last couple of decades, you can discern general conditions under which sanctions are more likely to contribute to a positive outcome and conditions under which "success" is less likely.

What are these conditions?

I would highlight two. The first is whether the sanctions regime is structured in a way that is conducive to the goals that are being pursued. What I mean by this--and it's not generally recognized--is that sanctions regimes should have different structures to them depending on what objectives they're meant to address. If you want to bring about a change in behavior by a government, you should have a sanctions regime that creates a flexible framework for working through a set of issues and where incremental progress can be acknowledged by the lifting of partial sanctions. If you want to contain a regime, your premium will be on getting multilateral support for your efforts in order to maximize the economic impact of the sanctions regime. Alternatively, if you are most interested in promoting a change in the government in the country in question, you will want a quite a different-looking set of sanctions that both pressures the regime and nurtures the opposition.

And the second?

The second condition is whether sanctions are accompanied by other foreign policy tools in an intelligent way. It's interesting to me that people say, "sanctions don't work," but you never hear anyone say, "military force doesn't work" or "diplomacy doesn't work." None of these instruments are or should be expected to yield strategic results when employed solo; they need to be coupled with other tools to make an overall strategy. And, again, depending on what you are trying to achieve, the appropriate complements to sanctions will vary. If you are seeking behavior change, the most important companion tool is a regular dialogue between countries to assess progress and explain expectations and actions. With containment, you are likely to need to complement sanctions with a variety of tools to maintain an international coalition--whether it be incentives, compensation to third parties hurt by the loss of trade or business, or humanitarian programs to minimize criticism of the sanctions. And finally, in the case of regime change, you might consider aid to civil society or, in today's day and age, access to electronic information.

People say, "sanctions don't work," but you never hear anyone say, "military force doesn't work" or "diplomacy doesn't work." None of these instruments are or should be expected to yield strategic results when employed solo--they need to be coupled with other tools to make an overall strategy.

Using your own criteria, how do you evaluate the most recent sanctions against Iran? Will they have any effect on getting Iran to suspend its nuclear enrichment program?

On the first count, I'd give the sanctions good marks in terms of being well-structured in relation to the goals. I am sure the Obama administration was hoping to engage in a more "behavior change strategy," coupling the existing sanctions with a robust dialogue, but Tehran's refusal to engage made this a non-starter. So the administration put in place a sanctions regime geared to applying pressure on Tehran to return to the negotiating table; this inevitably required a more multilateral set of sanctions than those that existed when President Obama came into office. The administration also went to great lengths to standardize the message about the goal of sanctions: to coerce Iran back to meaningful negotiations--not to destabilize the regime, which many in Iran and the international community had suspected was the goal of the sanctions in place in the 1990s and 2000s. So the multilateral, multilayered sanctions--first by the United Nations and then augmented by EU sanctions and U.S. sanctions--were the product of a very deliberate and disciplined process.

Crisis Guide: IranOn the second count, I am less admiring. Yes, the sanctions regime is not standing alone, and is accompanied by the use of other tools, which is a good thing. But the reality is that the most meaningful of these tools--the efforts by the United States to build up the military capacity of Iran's neighbors--is probably not compelling Iran to make meaningful concessions on its nuclear pursuits, but doing the opposite.

Does this mean you are not optimistic about the sanctions succeeding? Iran sent a note to the EU on July 6 saying that it was willing to go back to the table on September 1, if certain conditions were met, but the letter did not say that Iran would discontinue its nuclear enrichment program.

Sadly, having a sanctions regime well-structured to the objectives at hand doesn't guarantee success. In this case, I see some substantial problems with sanctions and their ability to produce results. First, there is the difficulty of translating the impact of sanctions into political change in Tehran. No one is very clear on how this is going to happen, mostly because this depends primarily with how the regime works and on internal Iranian dynamics.

There's a perception on the part of many, which is understandable, that the more pain you inflict, the more likely it is that you're going to get the regime to come to the table. But this may or may not be true. Will sanctions that harm the personal financial interests or status of regime leaders be sufficient to bring about a political change? If so, then we can be content with sanctions that don't cause Iranian society any hardship or disrupt normal economic relations, as Russia and China wish. But this is unlikely. If the sanctions have any hope of bringing Iran to the table in a meaningful way, they need to be perceived by Tehran as a serious threat to regime stability. And that would involve some real stress on the Iranian economy--such as major inflation, growing unemployment, unrest over economic circumstances.

Another issue that I am skeptical about is the extraordinary international consensus holding on sanctions toward Iran.

Why?

There will be a number of challenges to this consensus, but the greatest one might, surprisingly, be the sanctions bill just passed by Congress and signed by President Obama. It was passed with overwhelming bipartisan support, but it contains what we call secondary sanctions, or extra-territorial sanctions. These sanctions are ones that the United States imposes not on Iranian companies, but on the companies or entities in third countries for doing business with Iran that the United States thinks helps the regime.

In the past, these kinds of sanctions were viewed very negatively by our allies and others, who perceived them as efforts by the United States to use its economic strength to achieve what it couldn't convince others through diplomacy to do. In reality, they were so controversial that every president--Clinton, Bush, and Obama--has waived them rather than impose them. They have quite literally never been used. My guess is today that these sanctions will evoke a strong international reaction, given that President Obama will be under greater pressure by Congress not to waive them, but also because many countries have worked closely with the United States in putting together the latest packages. They will particularly sting in the EU, where the EU has really rolled out a meaningful additional set of sanctions.

If this sanctions-based strategy doesn't compel Iran to the negotiating table in a meaningful way, the United States and its allies will need to look at the other options, which include military force, containment, and fostering political change in Iran.

There's another issue with the secondary sanctions. If you read the bill closely, Congress has also asked the Obama administration to publicly identify and sanction Iranian individuals involved in the violation of human rights. I certainly have no theoretical or moral objection to this, and it may well end up being one of the more significant elements of the sanctions. But we should anticipate some difficulties around it. Not only will the administration need to make judgments about who to hold accountable on very limited information, given the lack of a U.S. presence in Iran, but when enacted, this part of the sanctions is going to muddy the thus-far clear picture about the objectives behind the sanctions. It will be harder to make the case that the sanctions and the strategy are sharply focused on bringing Iran to the negotiating table. Instead, the sanctions may end up looking very much like their goal is to promote regime change, complicating the messages sent and received by Tehran. And other practical questions will be raised. Will the United States be comfortable if one of the lead negotiators appointed by Tehran is a person sanctioned by the United States for human rights violations

If the sanctions don't work and Iran continues its nuclear program, what's left? Military force, or do you just have to accept Iran will be a nuclear state?

I could see a few outcomes--and they're not necessarily mutually exclusive. First, it is possible that, as happened with Libya, the sanctions will exacerbate the already fragile economic situation in Iran and produce the desired result. But, absent something like a significant decrease in the price of oil over the same time period, I see this as unlikely. Another possibility is that the sanctions become the impetus for Iran to get its economic house in order--as it did in the 1990s when sanctions deprived it of the ability to borrow from the IMF. Already, Tehran has undertaken a major drive to minimize its dependence on imported refined product and has announced that, beginning in September, it will phase out energy subsidies that have seriously warped its finances. In this scenario, Iran might withstand the sanctions and, over the medium term, strengthen its financial position as a result. In this case, obviously, Iran will not make any significant concessions on its nuclear program.

One certainty about which there should be greater awareness is that the sanctions will have an adverse impact on global energy security in the coming decade. While the immediate impact of sanctions can be sometimes hard to discern, sanctions--U.S. and international--have and will slow down the development of Iran's oil and gas reserves. Even if the Chinese come in and take these contracts, as some fear, they are unlikely to develop Iranian resources in a way that maximizes global energy security. Depending on the strength of the global economy, it is possible that the United States and others will look at the skyrocketing price of oil in the coming years and wish that Iran's resources had been developed, perhaps within certain constraints, but brought on line nonetheless.

But to return to your question, if this sanctions-based strategy doesn't compel Iran to the negotiating table in a meaningful way, the United States and its allies will need to look at the other options, which include military force, containment, and fostering political change in Iran. I think the Obama administration and the international community are thinking seriously about the first two, and should probably think more about the limits or virtues of the last. But I do know that if any of these alternatives are pursued, sanctions can and should be a part of these alternate strategies--although, as we discussed at the start of this interview, the sanctions regime in place should differ from the one currently being used to bring Tehran to the negotiating table.

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