UN Sanctions Won't Work

To take down Iran’s nuclear program, America must take unilateral action against the Iranian economy.

Ambassador Susan Rice has hailed the fourth round of UN sanctions as a sign that the body is standing up to Iran, while President Ahmadinejad has likened it to a “used handkerchief” that belongs in the bin.

These sanctions represent a marginal ramp up of UN Resolution 1737 of 2006. They ban the imports of some conventional weapons, such as tanks, attack helicopters, warships and missile systems; they prohibit Iran from developing a ballistic-missile capability; they expand the inspection of ships heading for the country; they recommend “vigilance” in dealings with the Iranian central bank and with Iranian banks in general; and they further expand the list of blacklisted Iranian companies and restrict the travel of one additional Iranian official. After months of negotiations and major concessions to Russia and China in non-related areas, this was the best the United States could do!

The administration says the goal of the punitive measures is to deter Tehran from its nuclear-enrichment program. Will these sanctions further that goal? Absolutely not.

Sanctions can be effective only if they threaten the regime’s survival. They can do that if they demand a change in policies that most Iranian citizens also want changed. That is not the case here. By and large, Iranians support their government’s nuclear-enrichment policies. Alternatively, sanctions could succeed if they caused sufficient direct pain on the regime, for instance, withholding something a senior official desperately needs; or if they cause sufficient harm to average Iranians, enough to cause them to rise up and overthrow the regime. These sanctions don’t come close to achieving any of these results.

Why has the United States gone down such a dead-end path? And what could it do instead?

America has pushed for tough sanctions at the UN; sanctions everyone knew would be vetoed by China, Russia or both. Beijing and Moscow have predictably whittled down the penalties, with the result that they are toothless. The Chinese were quite open about it; they would not accept anything that caused pain for average Iranians. So what did the United States get? A UN resolution. The international community (except Brazil and Turkey) is against Tehran. That’s it! Perhaps the Obama administration views UN resolutions as magic potion. More likely: the White House simply does not have the political will to adopt tough sanctions against the clerical regime.

If America was serious about sanctioning Iran, it would adopt the following approach. Since average Iranians support the regime’s nuclear policy, the Obama administration should shift the focus of its rhetoric away from the nuclear issue. It should highlight the regime’s human-rights record, its disastrous economic mismanagement and corruption. Washington’s rhetoric should be on the side of the Iranian people—pushing for open elections, human rights and economic progress. The regime has afforded the United States monumental openings, especially given its economic failures. Washington shows little understanding of how to exploit the situation. Stop harping about the nuclear issue; if and when the regime collapses a change in nuclear policy will automatically ensue.

The United States should drop the UN channel and instead use a unilateral approach, but with the support of its allies, much as it did when it penalized Credit Suisse for dealing with the Iranian regime. Washington should threaten any entity that refuses to cooperate. It should threaten exclusion from the U.S. market and even stiffer fines than the $536 million paid by Credit Suisse at the end of 2009. Few entities would choose Iran over America.

The United States should freeze every foreign bank account with a balance of over a million dollars owned by Iranians, not only those belonging to key regime figures, but also those belonging to rich Iranian merchants. This would threaten the financial interests of all who benefit from the regime, not those of average Iranians. Targeting a few bank accounts does nothing because most of the individuals targeted by the United States have accounts under false names or in their partners’ names.

Washington should further tighten Tehran’s isolation from the international financial system by sanctioning every Iranian financial institution, including the central bank of Iran. Again, any financial institution that does not cooperate would face U.S. fines and exclusion from the U.S. market. Cutting off the central bank and all Iranian financial institutions would increase the cost of Iranian imports because Iran could not use letters of credit, but would have to rely on barter or resort to cash, literally in suitcases, to buy what it needs. Either regime insiders would be forced to forego their own economic interests or finance trade to keep prices from soaring and Iranians from rising against them.

The Iranian economy is such a mess and its prospects are so dismal that average Iranians would welcome the collapse of the regime if it would result in the restoration of economic prosperity and social justice—even if it meant more hardship along the way.

Hossein Askari is the Iran Professor of International Business and International Affairs at the George Washington University.