U.S. Is Right to Stay the Course on Iran Sanctions

(Bloomberg Opinion) -- It has been a year since the Trump administration began to reimpose economic sanctions on Iran. The first phase kicked in on Aug. 7, 2018, targeting transactions with Iran involving dollar banknotes, precious metals, steel and passenger aircraft, among other things. U.S. imports of Iranian rugs and food items were also proscribed.

Three months later, the Trump administration sanctioned Iranian oil exports, banks, ships and ports — all part of what it billed a “maximum pressure” campaign against the Islamic Republic.

The impact of the sanctions is plain to see. The Iranian economy is in a free fall: GDP will shrink this year, and inflation is soaring. Oil exports have plunged to 100,000 barrels a day, from a peak of 2.8 million bpd shortly before the first round of sanctions. Its biggest buyers have found other suppliers.

But what exactly is this U.S. policy achieving in geopolitical terms? That depends on what you think the sanctions were meant to accomplish.

Those in the Trump administration who harbor hopes of toppling the Iranian regime will feel let down. Sanctions rarely ever deliver regime change, and anyway that should not be an American objective.

The administration says the sanctions are designed to change the regime’s behavior — a panoply of activities ranging from the pursuit of nuclear weapons and ballistic missiles, to the promotion of terrorist groups and militias across the Middle East. Secretary of State Mike Pompeo has claimed that the campaign has “raised the cost of the regime’s expansionism.” 

This is not the first time — or even the millionth — that a politician has claimed success prematurely. The real picture is decidedly mixed.

Some reports suggest the economic squeeze has forced the regime in Tehran to cut back its financing of proxies like Hezbollah.  There’s not enough evidence yet that these groups are curtailing their dangerous activities. One Iran-backed militia, the Houthi rebels in Yemen, has actually stepped up missile and drone attacks on Saudi Arabia. 

The Iranian government, meanwhile, shows no inclination to parley. It has rejected offers of negotiation without preconditions from Trump and Pompeo. Instead, it has responded with bellicose rhetoric — President Hassan Rouhani invoking Saddam Hussein-esque threats of “the mother of all wars” — and with attacks on tankers in the Persian Gulf. It has also resumed uranium enrichment, and is threatening to raise the purity to levels ever closer to weapons-grade. 

For critics of the Trump administration’s Iran policy, all this is reason enough to declare the “maximum pressure” campaign a failure. But it is too soon to draw that conclusion.

Sanctions are a long game, and the fact that Iran is feeling economic pain is reason enough to persist with them. If a year or two of double-digit GDP shrinkage and hyperinflation aren’t enough to persuade the regime to alter its behavior, then four or five years might.

Ordinary Iranians may chafe at the hardships caused by the sanctions. They are also growing fed up with their government for spending scarce resources on foreign misadventures; pressure to curtail them will only increase as the resources grow scarcer.

There is, of course, another consideration: How much more damage would Iran have inflicted on its neighbors if its economy, unburdened by sanctions, were in rude health?

We needn’t guess. When sanctions were eased after the 2015 nuclear deal, the regime accelerated its assistance for the Syrian dictator Bashar al-Assad and other proxies, and increased persecution at home. More import revenues would have meant more dollars and arms shipments to Syria, Lebanon, Iran, Yemen — and, very likely, an expansion of influence in other places. 

The best argument for patience with the Iran sanctions is that they have worked before. Remember that it was a steady increase in sanctions starting in the mid-2000s that persuaded the supreme leader, Ali Khamenei, to drop his opposition to nuclear negotiations, which only began in earnest in 2013. (Khamenei later tried desperately to save face by claiming this was a gesture of “heroic flexibility” on his part.)

It is true that those sanctions were U.N.-endorsed and imposed by all the world powers, whereas the Trump administration is currently going it alone. But in terms of impact, the American sanctions are just as debilitating — arguably, even more so — than the ones that went before. And anyway, Iran’s increasing belligerence in the Gulf and its enrichment threats are likely to bring other world powers closer to the American position.

Staying the course on the sanctions is, for now, the Trump administration’s smartest option. It should continue to offer negotiations, and it can ameliorate the suffering of ordinary Iranians by allowing humanitarian trade, especially in medicines. But it should keep the pressure on the regime at maximum.

To contact the editor responsible for this story: Katy Roberts at kroberts29@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Bobby Ghosh is a columnist and member of the Bloomberg Opinion editorial board. He writes on foreign affairs, with a special focus on the Middle East and the wider Islamic world.

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