Examining the Impact of Iran Sanctions: Highlights from Today’s ACA Event

Robert J. Einhorn, Special Advisor for Nonproliferation and Arms Control, Department of State

The Arms Control Association organized a briefing today on “The Impact of Sanctions on Iran’s Nuclear Program, which is the third in our Solving the Iranian Nuclear Puzzle Briefing Series. The session included a keynote presentation by Robert J. Einhorn, Special Advisor for Nonproliferation and Arms Control, Department of State, in which he provided a detailed overview of the Obama administration’s approach to Iran’s nuclear activities. Einhorn’s address was followed by  full panel of experts who  examined the role that sanctions play as part of an overall strategy to address Iran’s nuclear program.

Following are some of the highlights from the session based on my notes. Please check the ACA Web site here for the transcript of the event.

Robert J. Einhorn, Special Advisor for Nonproliferation and Arms Control, Department of State

  • The Administration is still pursuing a dual track strategy of sanctions and engagement. The objective of sanctions is to exert substantial pressure on Iran to persuade it to negotiate seriously. It is to effectively drive up the cost for intransigence and impede access to sensitive technology to persuade Iran to engage seriously in negotiations.
  • Sanctions implemented so far have resulted in a slowing down of Iran’s nuclear program.
  • They are also taking a significant toll on Iran’s economy, making it harder for Iran to acquire investment in the energy sector and to conduct international commerce, leaving Iran increasingly isolated.  And such an effect will continue to increase.
  • But, as shown by Iranian behavior in Istanbul and Geneva, sanctions have not yet produced any substantial change in their position.
  • The administration will seek to tighten the implementation of the current sanctions regime and introduce new measures in the coming period to increase the cost on the Iranian regime.  In our view, as Sec. Clinton has said, sanctions are not a goal but a means to build leverage toward a negotiated solution.
  • The administration is ready to pursue a phased approach whereby confidence in Iran’s nuclear program could be built incrementally. “We have made clear, Iran can have a civilian nuclear energy program.” The door to engagement remains open.

Kenneth Katzman, Specialist in Middle East Affairs, Congressional Research Service

  • With the overlapping set of sanctions in place, it is important to distinguish between the type of sanctions set in place by UN Security Council resolutions, the United States and other U.S. allies. Among these various regimes, only the United States has introduced a ban on trade with Iran.
  • UN Security Council Sanctions are focused on WMD-related entities and activities. Sanctions prohibiting investment in the Iranian energy sector and financial sector are permitted, but not mandated by, UNSC resolutions. Russia objects to introducing UN sanctions that would target the civilian economy.
  • As a result of U.S. and European sanctions, major foreign companies are winding down their operations in Iran and there has been a significant drop in gasoline sales to Iran (75-80 %), but consumption has also fallen after removal of subsidies by the Iranian government.
  • Contrary to what many analysts had feared, sanctions have not generated a rally-around the flag for the Ahmadinejad administration.
  • New measures being considered include: reduction of European and other allied countries’ embassy representation in Tehran; prohibiting Iran air flights to Europe; imposing a ban on Iranian official visit to Europe; and expelling Iran from the UN Commission on the Status of Women.

Kimberly Elliott, Senior Fellow, Center for Global Development

  • Since WWI there have been about 200 episodes of sanctions enforced on various governments. Success rate is measured against an instrumental standard, that is the success in changing the behavior of the targeted state.
  • Overall, when applied by the United States, only one in three sanctions episodes could be considered successful or somewhat successful. Since 1970, however, the rate drops to only a 20 % rate of success.
  • Sanctions are likely more successful when their goal is limited and clearly defined and they work better when employed against allies rather than adversaries.
  • Cost incurred by sanctions must be consistent with the goal being sought. When the goal sought is ambitious (such as the case with Iran), the cost incurred should exceed 5.5 % of GNP.

Lessons for the Iran case drawn from the empirical study of nine sanctions episodes:

  1. Sanctions require patience. In the case of Iran, the international sanctions introduced are still relatively new and certain countries still require time to have an effective mechanism in place to ensure enforcement.
  2. The more modest the goal being pursued, the higher the chances are for a successful outcome.
  3. When introducing sanctions, it’s important to keep in mind that for them to be effective, the cost of defiance by the targeted state must be higher than the cost of compliance with the goal being sought.
  4. International and multilateral coalitions are key to effective sanctions regimes. Unilateral measures should not undermine that coalition.

John Limbert, former Deputy Assistant Secretary, State Department Bureau of Near Eastern Affairs

  • We employ sanctions because they are a “tool we know.”  We don’t know how to change relations with Iran’s regime.
  • The U.S. dual track strategy has focused disproportionaly on sanctions and efforts towards engagement have not been sufficiently robust. The Tehran Declaration in May 2010 may have offered 80% of what we wanted, but the emphasis on sanctions had “sucked all the air out of the room” and we couldn’t seriously consider it.  It looked to some like we couldn’t take yes for an answer.
  • Iran’s behavior is likely to be affected more by the sense of isolation and pariah status that international sanctions  impose rather than their economic cost.
  • Iran deciding to end the war with Iraq in the late 80s shows that it can respond  to very high levels of pressure. But with oil prices averaging over 80 dollars per barrel now, compared to 12 dollars per barrel then, Iran will be largely cushioned from any such impact this time.  It is doubtful Tehran will reconsider on the basis of sanctions alone.

Greg Thielmann, ACA’s Senior Fellow

  • Sanctions do make nuclear weapons and ballistic missile development more difficult and time-consuming.  They raise the political and economic costs for Iran’s leadership for withholding cooperation from the IAEA and defying the UN Security Council.
  • Sanctions are a means to an end. Sanctions alone will note force Iran to comply. They are a means to achieving negotiating leverage.
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