Netanyahu and the sanctioning of Iran

Israel’s attempt to rally support for energy sanctions against Iran look like failing, for good reason. They would be likely to work to the detriment of the West’s and Israel’s goals.
Thomas S
25 February 2010

As Israeli commentators pick apart the Herzliya conference and mull over the state of Israel’s soul, a flurry of declarations and decisions has brought the issue of sanctions on Iran into sharp focus. The Prime Minister’s visit to Moscow last week to rally the Kremlin behind ‘crippling’, wide-ranging sanctions signalled a new drive to get the problematic states (that is, Russia and China) on side. Yet over the past two weeks, the extensive sanction regime proposed by Netanyahu in a speech last Monday has taken a battering.

Today, Russia’s predictable reply to Netanyahu’s request laid waste to rising hopes that Russia had grown disillusioned with Iranian prevarications (suggested by last week’s delay of a batch of promised S-300 SAM missile systems for ‘technical reasons’) and would come around to energy sanctions. Nor is Netanyahu guaranteed the support of the US over sanctions. Clinton’s Qatar speech last Monday revealed that, though shifting away from Obama’s early promises of ‘open hand’ policy and dialogue to a more hard-line stance, the US Policymakers are still reluctant to pursue extensive sanctions against Iranian interests, preferring to focus on limited, targeted sanctions that damage the interests of the Revolutionary Guards while leaving the majority of Iranians unaffected. This is likely to remain US policy, despite Clinton’s testimony today that Iran’s failures to accept administration offers of engagement have forced the US to ‘impose greater costs and penalties’.

All of this gives added significance to Netanyahu’s claim that, if necessary, an absolute sanction on the energy sector must be ‘done outside the Security Council’; that is, unilaterally. As the number of Israelis in opposition to military strikes ratchets up (including Zeev Raz, the Squadron Leader of the Osirak raid), the Israeli government is putting its energy into sanctions. Many see Iran’s energy imports as its Achilles heel. Despite holding around one-third of the world’s oil reserves, a lack of domestic refining capability means the country is dependent on petrol imports to meet 40 percent of its domestic consumption

Yet there are serious drawbacks to this position. Never mind that Russia, China and the United States have rather different plans in mind. Presumably, as shown by Netanyahu’s visit to Moscow, Israel is putting maximum effort into convincing the Big Three to accept the necessity for extensive sanctions (potentially using the implicit threat of a far worse alternative-an Israeli air raid or even ground surge-as diplomatic collateral). Even the sidelining of the UN, though perhaps lamentable by international law (I hear the collective scoff of the Israeli public), is something of a red herring.

The main difficulty for Israel, and all supporters of energy sanctions, is that there is very little reason to think that they will have the effect desired. Danielle Pletka, director of foreign policy studies at the conservative American Enterprise Institute, has stated that the Iranian regime ‘will likely be impervious’ to energy sanctions.

In fact, the reality is far worse; should anyone be tempted to say that, even if it fails to work, ‘at least we’ll know that we tried’, it may be argued that crippling sanctions will work to the detriment of Israel’s, and the West’s, goals.

Firstly, there is the problem of the Revolutionary Guard. Contrary to those who see the Iranian elite as one undifferentiated mass of hatred and danger, few analysts would deny that the inner circle of the Iranian regime is a fluid constellation of divergent interests and bickering cliques. Any policy towards Iran must consider how it will affect the balance of power between those who detest Israel enough to seek its destruction, and those who ‘merely’ dislike it intensely but know they must live with it. The targeted sanction regime drawn up by the US Treasury Dept adroitly takes this into account, ensuring that only those elites that pose the clearest and most immediate danger are affected. Not only would Netanyahu’s sanctions fail to make this distinction; there is good reason to think they would strengthen the Guards, cementing their hold on the reins of state, much to the detriment of Israeli security. As Alireza Nader, an Iran expert with the RAND Corporation, has said, "any sort of sanctions regime targeting fuel imports is going to be difficult to enforce because there is the black market, which the Revolutionary Guard is very much involved in”. This has been the case before, and would likely be the case in the event of hard-line energy sanctions.

There is also the wider impact on the Iranian population. Undeniably, there would be some effect. Iranians receive 100 litres of discounted petrol at every month, at great cost to the economically struggling government. Opinions on this issue diverge between supporters and opponents of energy sanctions. Netanyahu has made it clear which side he supports: oil sanctions, by hurting the Iranian people, will turn them against the government whom they will blame for bringing this cruel fate upon them. Yet few analysts agree with this position.

The faltering economy is a major bone of contention in recent domestic battles. As Fariborz Ghadar, an expert in trade at the Center for Strategic and International Studies, has pointed out, the Iranian government would welcome any excuse to shrink their energy subsidy programme, which is a drain on an already sparse budget. Energy sanctions would provide the perfect reason to do so. By chopping out this troubling expense, the Ahmedinejad regime would get that extra wiggle room to sort out its economic troubles and dampen domestic opposition.

There is also significant agreement among specialists that the Iranian people would not blame the government for its suffering, but rather the architect of that suffering: the United States and its allies. At a hearing of the House Oversight Subcommittee on National Security and Foreign Affairs last December, four of the five experts agreed that sanctions would aid the government, allowing it to cast the US and Israel as the villains and creating a nationalist rallying point around the regime. Far from destroying the existential threat, a crippling embargo could serve increase anti-Israel sentiment in Iran, creating an embattled atmosphere that could be exploited by the government to Israel’s harm.

Finally, there’s the effect on the nascent Green Movement within Israel. Though few of its supporters are especially supportive of the Jewish state, it’s clear that Israel would be much better off if the opposition movement won power. Yet many prominent opposition figures have come out against energy sanctions. Mir Hossein Moussavi has stated that they “will impose agonies on a nation who suffers enough from miserable statesmen”. Given that the government can find alternative sources of energy, argues Iranian human rights lawyer and Nobel laureate Shirin Ebadi, ‘economic sanctions will only affect the people’.

This is all, to some extent, academic. Without the agreement of Iran’s primary energy suppliers, such sanctions will falter in the first stages; we won’t get to the stage where the Iranian people and government are being hit hard. While most of Iran’s energy imports come from Swiss firms Vitol, Glencore and Trafigura, France's Total, and British Petroleum, as well as the Indian firm Reliance, other companies wait in the wings to replace them. As things stand now, it is likely that Royal Dutch Shell, Lukoil (Russia) and Zhuhai Zhenrong Corp. (China) would continue to import gasoline. Last year Venezuela’s president, Hugo Chavez, pledged to supply Iran with 20,000 barrels of gasoline a day as part of a concerted effort to further economic ties between the two ‘anti-imperialist’ nations.

This is not to say that there is no need to do anything. Ahmedinejad’s recent claim that Iran will to produce 20%-enriched uranium, and its rejection of an IAEA plan for the Islamic Republic to ship out its low-enriched uranium rods to Russia for further enrichment, suggest that the stakes are rising. Almost daily public declamations against Israel and America justifies the Israeli government’s belief that something must be done. Yet it will help no-one to rush through a policy that could make matters far worse. It’s imperative that Israel engage with its allies in formulating a refined, subtle approach to the persistent nuclear problem in Iran. If one thing is clear, it’s that blanket energy sanctions of the kind proposed by Netanyahu cannot and must not remain on the table as a viable policy option.

Thomas S.Evans is a journalist with the BBC

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