BICOM

Key Points

• The joint international effort to confront the Iranian nuclear threat is at the forefront of Israeli Prime Minister Benjamin Netanyahu’s concerns as he visits the UK and Germany this week.
• With a review of Iran’s progress and US-driven policy due in September, the Obama administration is keen to see a united international front with regard to Iran. Secretary of State Hillary Clinton has raised the prospect of ‘crippling’ sanctions should engagement not bear fruit.[i]
• Having so far refrained from responding seriously to the ‘carrot’ on offer, Iran has a clear interest in preventing a unified international stance against it and reducing the size of any new sanctions ‘stick’.
• Israel is concerned that, rather than seeking to negotiate in good faith, Iran will use the US engagement policy to play for time. Israel wants to see the international community ready to quickly implement biting sanctions that would force Iran to reconsider its position.

Introduction

Israeli Prime Minister Benjamin Netanyahu’s top concern on his trip to Europe this week is Iran.  It will be a key feature in particular of his separate meetings with British Prime Minister Gordon Brown and German Chancellor Angela Merkel.  Netanyahu is keen to gauge European thinking towards the regime since the Iranian presidential elections, which are widely perceived to have damaged the regime.[ii]  He wants to ensure that the international community remains focused on confronting what Israel and much of the Arab world perceive as the foremost threat to their interests.

Earlier this year, UN officials declared for the first time that Iran has sufficient low-enriched uranium, with additional purification, to manufacture a nuclear bomb.[iii]  It has a long history of obstructing efforts to inspect known or suspected nuclear facilities.  Intelligence assessments of Iran’s ‘nuclear timeframe’ range from a matter of months to 2013, or even 2015.[iv]  The US, Britain and Israel have long shared similar views on the strategic threat posed by Iran, and there is widespread consensus about the need to foil Iran’s military nuclear ambitions.  Whether or not Iran responds to President Barack Obama’s engagement offer during coming weeks, Netanyahu is keen to discuss diplomatic action that will lead Tehran to rethink its nuclear policy.  This document sets out the main concerns about Iranian intentions in the context of US-led policy and a new sanctions agenda.

Engagement: the context of current policy

Since coming to office, the Obama administration has stressed its preference for engagement through dialogue to resolve the Iranian nuclear dispute.  In March, Obama released a special video message marking Nowruz (the Persian New Year), in which he offered a ‘new beginning’ in US-Iran relations.[v]  He also reportedly despatched a secret missive, via the Swiss, to Iran’s Supreme Leader Ayatollah Ali Khamenei prior to the June 12 elections.[vi]  Formally, in April, the five permanent members of the UN Security Council and Germany (known as the P5+1) in April asked EU foreign policy chief Javier Solana to invite Iran to direct talks at which the US would participate.[vii]

Despite these overtures, no substantive public development has ensued.  Since the elections, Iran has been preoccupied with its domestic woes.  Obama made clear at the recent G8 summit in Italy, that the US offer of negotiations is not indefinite.  He added that world leaders would review Iran’s progress at the G20 summit in Pittsburgh on 24-25 September.[viii]  In order to retain credibility in its engagement policy, the US has not announced specific actions it would take if Iran does not come to the negotiating table, but Secretary of State Hillary Clinton has raised the prospect of ‘crippling’ sanctions.[ix]  In a Newsweek interview in May, Obama stated: ‘If it doesn’t work, the fact that we have tried will strengthen our position in mobilizing the international community, and Iran will have isolated itself.’[x]

Next move, Tehran?

Iran is trying to avoid isolation.  Much of the international community remains unsure of what to make of Iran since the elections.  With the notable exception of Syria, whose president, Bashar Assad, visited Tehran last week to congratulate Mahmoud Ahmadinejad on his return to power, Iran has few consistent allies.  So some form of Iranian response to the US attempt to engage is certainly plausible.  Some observers have interpreted Ahmadinejad’s appointment of a physicist, Ali Akbar Salehi, as head of the country’s nuclear agency, as a sign of pragmatism on the nuclear issue.[xi]  But Iranian analyst Mehdi Khalaji argues that, on balance, more of the same can be expected policy-wise in Ahmadinejad’s second term.[xii]  The list of cabinet nominees he submitted last week is made up of loyalists and radicals. His proposed defence minister faces an Interpol arrest warrant requested by Argentina over his alleged involvement in the bombing of the Jewish community centre in Buenos Aires in 1994 that killed 85.[xiii]

Even so, Iran clearly has an interest in preventing a unified international stance against it and reducing the size of the sanctions ‘stick’ with which it could be threatened.  The BBC reported last week that Iran had allowed IAEA inspectors to return to the near-complete Arak nuclear reactor after a year in which access was blocked.[xiv]  The decision will prove to be transparent political manoeuvring if access is short-lived or does not lead to more comprehensive inspections at other sites.

Coming on the eve of the international policy reassessment, a calibrated diplomatic response by Iran at this juncture would be consistent with the regime’s history of playing for time whilst continuing to advance its nuclear programme.  A chief Israeli concern is that, rather than seeking to negotiate in good faith, Iran will formulate a counter-package to Western incentives which seems appealing, but offers little of substance.  For instance, an Iranian acceptance of a reciprocal freeze – no new sanctions in return for a freeze on the installation of centrifuges – might allow habitual fence-sitters on Iran, such as Russia and China, to maintain their relatively passive positions.  However, the ‘freeze for freeze’ proposal would still enable Iran to pursue weapons-grade uranium using its existing infrastructure of some 7,000 enrichment centrifuges.[xv]

Israel and Arab states in the Middle East are concerned because they are at the front line of the Iranian threat.  Egyptian President Hosni Mubarak, who sought clarifications from Obama at the White House last week about his Iran policy, commented last year that ‘the Persians are trying to devour the Arab states.’[xvi]  The regional players want to know what the Americans’ next move will be.  How, for instance, would the international community enter into an engagement process in such a way as to constrain further Iranian attempts to merely ‘buy time’?  Netanyahu will raise these issues with his counterparts in Europe this week.

The sanctions agenda: a pivotal role for Europe?

The US is conscious of the need for its engagement approach to be backed by the credible threat of sanctions.  For some time, the US has been seeking to discourage other countries and foreign companies from dealing with Iran. Since 2006, the US Treasury has designated more than 40 Iranian entities with ties to the regime’s WMD-related and terrorist activities, including state-owned banks.[xvii]

Additional measures against Iranian banks and insurance companies doing business with Iran are now being prepared in Congress. There is wide bipartisan support in the US for sanctions legislation targeting Iran’s energy sector, considered the soft underbelly of the Iranian economy and strategically important to Iran’s Islamic Revolutionary Guards Corps (IRGC).  Despite its huge oil reserves, Iran lacks sufficient refinement capacity to meet its domestic needs and imports 40% of its annual fuel consumption. Persuading major international energy companies to stop exporting petroleum to Iran could have a severe impact on the Iranian regime.[xviii]

The US wants to maintain credibility with regard to its offer of engagement policy, so for the time being, the Obama administration has held back the sanctions card.  At the same time, it is working with its European partners to ensure a strong united front that will confront Iran should engagement fail. The US has also placed this issue at the top of its agenda with Russia.[xix]  There is a busy diplomatic calendar ahead, with an International Atomic Energy Agency (IAEA) board meeting, the UN General Assembly and a G20 summit all taking place in September.  The international approach needs to be well coordinated.

The forthcoming IAEA meeting in Vienna on 14 September is an opportunity to build diplomatic pressure on Iran.  It was reported in Haaretz last week that the nuclear watchdog is concealing documented evidence, signed by its Iran team head, of weaponisation efforts and that American, British, French and German diplomats are demanding that outgoing Director General, Mohamed El Baradei publish it.[xx]  Hard evidence confirming suspicions of Iran’s military nuclear programme would capsize its claims not to be building a bomb.  Notwithstanding the difficulties of reaching unanimity in the UN and EU, this would make an overwhelming case for far-reaching sanctions.

It remains unclear whether Europe has the political will to act collectively on sanctions, and to what extent.  Britain, along with France, has led the way, with Gordon Brown and French President Nicolas Sarkozy indicating that new sanctions against Iran will be in order this autumn if there is no progress.[xxi]  The Counter-Terrorism Act 2008 provides the Treasury with new powers to enforce sanctions in the UK.  The other major European players, Germany and Italy, are more reluctant. They have more to lose in from sanctions because they are among Iran’s largest trading partners.[xxii]  A key question is whether the determination of the international community is sufficient to force Iran to assess that its pursuit of nuclear weapons capability comes at an unbearable cost.

Conclusion

Until now, Iran has skilfully withstood diplomatic efforts to force it to comply with international demands.  With a stock-taking of Iran’s progress and US-driven policy due in just a few weeks, the international community is poised to take major strategic decisions about the action that is now required.  Multilateral sanctions are preferable.  But unilateral moves, and a targeting of specific business sectors, could assist in paralysing Iran’s economy and bringing unendurable pressure on the regime.

Israel’s new ambassador to Washington, Michael Oren, said last week that Jerusalem is still ‘far from even contemplating’ a strike on Iran’s nuclear facilities.[xxiii]  But unless diplomacy can provide a solution, by complementing the carrots on offer with effective sanctions, the possibility of military action is likely to increase. From Israel’s perspective, the speed and intensity with which sanctions can be effectively implemented is paramount.  Israel believes that a nuclear-militarised Iran would present a threat it could not live with. It also regards the military option as highly dangerous and unappetising. As such, it wants Iran’s leadership to be forced, through all the non-military means available, to abandon its ambitions for a nuclear arsenal.

 

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[i] Tim Reid, ‘Hillary Clinton: US will organise ‘crippling’ Iran sanctions if diplomacy fails’, Times Online, 22 April 2009.

[ii] ‘PM to gauge Europe’s attitude on Iran’, Jerusalem Post, 16 August 2009.

[iii] William J. Broad and David E. Sanger, ‘Iran Has More Enriched Uranium Than Thought’, New York Times, 19 February 2009; Julian Borger, ‘Iran has enriched enough uranium to make bomb, IAEA says’, Guardian, 19 February 2009.

[iv] Yossi Melman, ‘What we mean when we talk about Iran nukes’, Haaretz, 30 March 2009.

[v] Jason Djang, ‘A New Year, A New Beginning’, The White House, 19 March 2009; Office of the Press Secretary, Videotaped Remarks By The President In Celebration Of Nowruz, The White House, 20 March 2009.

[vi] Barbara Slavin, ‘Exclusive: U.S. contacted Iran’s ayatollah before election’, The Washington Times, 24 June 2009; Christiane Amanpour, ‘Obama sent letter to Iran leader before election, sources say’, CNN, 24 June 2009.

[vii] The P5 are the United States, Britain, France, China and Russia.  Daily Press Briefing with Robert Wood, Acting Department Spokesman, U.S. Department of State, 8 April 2009.

[viii] Matt Spetalnick, ‘Obama uses G8 debut to issue warning to Iran’, Reuters, 10 July 2009; Stephen Dinan, ‘Obama gives Iran deadline on nuclear program’, The Washington Times, 10 July 2009.

[ix] Tim Reid, ‘Hillary Clinton: US will organise ‘crippling’ Iran sanctions if diplomacy fails’, Times Online, 22 April 2009.

[x] Interview with President Obama, 16.5.2009, Jon Meacham, ‘A Highly Logical Approach’, Newsweek, published 25 May 2009.

[xi] Michael Slackman, ‘Hints of Iranian Flexibility on Nuclear Issue’, New York Times, 20 August 2009.

[xii] Mehdi Khalaji, ‘Ahmadinezhad’s Cabinet: Loyalists and Radicals’, The Washington Institute for Near East Policy, 21 August 2009.

[xiii] Israeli Ministry of Foreign Affairs Newsletter, 23 August 2009

[xiv] ‘Nuclear experts visit Iran site’, BBC, 20 August 2009.

[xv] ‘Iran says running 7,000 enrichment centrifuges’, Reuters, 9 April 2009.

[xvi] ‘Iran wants to devour the Arab world’, Jerusalem Post, 11 December 2008; Zvi Bar’el, ‘Mubarak wants Obama to present his peace plan soon’, Haaretz, 16 August 2009.

[xvii] Michael Jacobson and Mark Dubowitz, ‘Smart Sanctions Can Work against Iran’, Wall Street Journal, 13 August 2009.

[xviii] Ibid.; ‘PM to gauge Europe’s attitude on Iran’, Jerusalem Post, 16 August 2009.

[xix] Press conference by President Obama and President Medvedev of Russia; White House; 6July 2009

[xx] Barak Ravid, ‘Sources: UN watchdog hiding evidence on Iran nuclear program’, Haaretz, 19 August 2009.

[xxi] ‘U.K. to Iran: Take up Obama dialogue offer or face more sanctions’, Associated Press/Haaretz, 17 March 2009; Ben Hall and James Blitz, ‘Sarkozy to warn of tough sanctions on Iran’, FT.com, 6 June 2009.

[xxii] Herb Keinon, ‘PM to push for tougher Iran sanctions on 4-day European trip’, Jerusalem Post, 24 August 2009.

[xxiii] ‘Israel envoy to U.S.: We have no plan to strike Iran’, Haaretz, 16 August 2009; ‘PM to gauge Europe’s attitude on Iran’, Jerusalem Post, 16 August 2009.