Why new US sanctions on Iran won’t work — and might backfire

Why new US sanctions on Iran won’t work — and might backfire
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The Trump administration released more details this week of how it plans to slap sanctions back on Iran. It is an ambitious and aggressive policy to change Iran’s behavior, but it is premised on faulty assumptions, and ultimately may be counterproductive.

Two months ago, Secretary of State Mike PompeoMichael (Mike) Richard PompeoSenate GOP attempts to wave Trump off second Putin summit Graham would consider US-Russia military coordination in Syria White House: Trump 'disagrees' with Putin's request to question Americans MORE outlined 12 demands of Iran. The list reads more like a chronicle of Iran’s undesirable activity than an actual platform for negotiation. It foretold the inevitable reimposition of U.S. sanctions on Iran unless it completely changed the premise of its foreign policy. Now the State Department says that one goal of the renewed energy sanctions is to reduce Iran’s oil exports to zero until it begins acting “like a normal country.”

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The first assumption is that the policy will work. Several countries have said they do not intend to respect fresh U.S. sanctions, and the largest importers of Iran’s oil are likely to find ways to limit the effectiveness of the sanctions. Turkey has a long history of importing sanctioned oil from Iraq and Iran, and does not believe that it is bound by U.S. sanctions. While the United States could put sanctions on Turkey, doing so will come at the price of risking Turkey’s assistance in countering Iran in Syria.

 

India also has said that it does not recognize unilateral sanctions. In the past, India has made alternative arrangements with Iran to purchase oil in rupees, thus providing a way to avoid U.S. sanctions. While such deals are not as lucrative for Iran, they do allow a route for exports.

India is certainly not the only country that may seek to avoid sanctions and replace the dollar at the same time. As the largest importer of Iran’s oil, China is well positioned to negotiate for a yuan-based price for oil, a development that would be a boon to the Peoples Bank of China in its effort to have the yuan compete with the dollar on the world stage.

Ultimately, the question will be how many deals Iran can cut to undermine the sanctions. While sanctions will bite, it will be impossible to reduce Iran’s oil exports to zero without imposing great cost on ourselves.

The second assumption is that this policy is a good idea. The imposition of new economic sanctions now is a risky gambit, and it may be counterproductive. While aimed at Iran, the new sanctions will target any nation that does business with Iran. Perhaps the Trump administration believes that it can sanction Turkey and India with little risk of blowback. But how far is it willing to go to ensure that China does not import Iranian oil?

This new threat of sanctions comes at a time when the administration is posturing to launch simultaneous trade wars with our neighbors, allies and closest trading partners. The dynamics of escalating economic tensions with China already are bafflingly complex. It is hard to see how advancing an additional line of pressure against China, in order to indirectly impact Iran, will help achieve a favorable outcome and not interfere with other efforts.

The Trump administration’s patchwork approach to policy has proven time and again to run at cross-purposes. It is doubtful that quickly imposing such wide-ranging sanctions against numerous allies, partners and adversaries will yield the intended results in such a complex environment of negotiations.

The third faulty assumption is that sanctions can force Iran to change its behavior. In the unlikely event that other nations do not balk at the new sanctions, coercion is not likely to make Iran rethink its nuclear program or its malign activity. On the contrary, Iran has pledged to restart its nuclear activities — and these are not merely threats to make a point. Iran’s nuclear program had been frozen for many years before it was restarted in 2003. It was only after the United States committed itself to regime-change policies in Afghanistan and Iraq, and placed Iran on the “Axis of Evil,” that the government of Iran restarted its program.

Although Iran’s nuclear ambitions are unquestionably interwoven with the leadership’s drive for global recognition and regional dominance, deterrence is the sine-qua-non of the pursuit of nuclear weapons.

Moreover, increased sanctions will further empower the hardliners in Tehran. The argument for coercion assumes that the people of Iran, who are suffering under a mismanaged economic system, will rise up against their government and force it to acquiesce to Secretary Pompeo’s 12 demands. This is a pipe dream. However flawed their government may be, Iranians are not going to rally with the United States against it. It is far more likely that moderates will be silenced, and more extreme anti-American voices will prevail. After all, the same pressures that prompted Iran to restart its nuclear program also brought Mahmoud Ahmadinejad into power.

At the global level, it is hard to see how the strategy to sanction Iran into submission plays out in our favor. The other parties to the Joint Comprehensive Plan of Action (JCPOA) believe that the new sanctions regime is a foolhardy endeavor. Yet, the Trump administration appears determined to push the policy. In the context of ongoing economic skirmishing with the world, sanctioning Iran is merely another source of tension between the United States and the world’s other major economies.

There is no question the United States remains economically powerful enough to force most nations to accept these new sanctions. The questions are if these sanctions will coerce Iran to change its behavior, and to what extent other nations will tolerate this iconoclastic hardline. At this point, countries may not be willing to sacrifice access to the U.S. economy for Iran, but forcing them to choose will certainly cost the United States political capital. And under the Trump administration, that capital is devaluing rapidly.

Christopher Steinitz focuses on adversary analytics and strategic and operational naval issues at the Center for Naval Analyses (CNA), a federally funded R&D center for the U.S. Navy and the Marine Corps. His specialties include North Korea, the Middle East, Iran and jihadist groups.