Next Steps with Iran
While news about the global economy dominates the headlines, another crisis is crying out for our attention and resolve.
Within a week of our elections, the Iranian regime unveiled a new ballistic missile design. According to military experts, this new missile marks a significant advance from earlier Iranian designs because it can be launched with little to no notice, unlike earlier Iranian missiles, and it can threaten the length and width of the Middle East and even reach as far as some European capitals.
As if this development weren’t enough of a concern, the Director General of the International Atomic Energy Agency (IAEA) recently reported that Iran has produced enough low enriched uranium to make one nuclear weapon. While Iran has not yet weaponized that material, and several steps are required before it can do so, the trend is clear: if unchecked, Iran will soon have nuclear weapons and the means to deliver them.
As troubling as these developments are, it is equally troubling that they went largely unnoticed. No one wants to use the military option against Iran. Yet every day that passes without using every other means at our disposal only means that we are one day closer to having no other choice. Iran has vulnerabilities susceptible to pressure from the United States and its allies and we must exploit them before it is too late.
As an example, despite Iran’s tremendous crude oil reserves, it relies on huge volumes of imported gasoline to meet its domestic demand. The Iranian government then subsidizes this gasoline for the Iranian people. These gasoline subsidies are crippling the Iranian treasury, as they account for as much as 20 percent of Iran’s total annual gross domestic product. The last time the Iranian regime tried to balance its budget by reducing these subsidies, riots and violence cowed the Iranian rulers.
This economic situation is untenable in the long run, especially given the current price of oil. The price of $50 per barrel oil is roughly half what of Iran needs to sustain its current level of government expenditure, according to the International Monetary Fund. The result is that Iran is getting squeezed from both ends.
The U.S. can use this situation to force Iran to change direction. According to Arizona State University law school professor Orde Kittrie, Iran’s gasoline imports come from five companies: “the Swiss firm Vitol; the Swiss/Dutch firm Trafigura; the French firm Total; British Petroleum; and one Indian company, Reliance Industries.” If these companies stop selling gasoline to Iran, whether as a result of U.S.-led diplomacy and cooperation or economic sanction, Iran would not be able to replace the lost imports. The result would be a possibly game changing dislocation to Iran’s economy. And, if necessary, the United States can lead this effort alone.
Exploiting Iran’s vulnerability in this way was agreed upon by both presidential candidates during the last campaign. For example, then-Sen. Obama said in October, “Iran right now imports gasoline, even though it’s an oil-producer, because its oil infrastructure has broken down, if we can prevent them from importing the gasoline that they need…that starts changing their cost-benefit analysis.” This idea should be a part of sanctions legislation, which I believe Congress should pass early next year.
President Bush has the authority to take a wide-array of action to thwart Iran’s aggressive posture in the next several weeks before he leaves office. He could sanction the Iranian Central Bank, which has taken over many of the proliferation and terrorist financing activities from Iranian banks that have already been sanctioned. And he could sanction companies that are investing in the Iranian energy sector in violation of the Iran Sanctions Act, none of which have been sanctioned since 1998.
Lastly, these developments should remind the new Administration of the importance of building on the Bush Administration’s progress on missile defense. Iran’s missile developments, and the likely role of proliferation that made it possible, demonstrate the importance of deploying a missile defense system that prevents rogue regimes from being able to blackmail the United States and our friends. It is critical the new Administration continue the deployment of the European Missile Defense site in Poland and the Czech Republic, which is specifically designed to counter the Iranian threat.
