Sanctions on Iran banking get much tighter

Swift, a Banking Network, Agrees to Expel Iranian Banks - NYTimes.com:

It is the first time that Swift, a consortium based in Belgium and subject to European Union laws, has taken such a drastic step, which severs a crucial conduit for Iran to electronically repatriate billions of dollars’ worth of earnings from the sale of oil and other exports.

Advocates of sanctions against Iran welcomed the action by Swift, which takes effect on Saturday, according to a statement on the network’s Web site. The statement said that Swift had been “instructed to discontinue its communications services to Iranian financial institutions that are subject to European sanctions.”

Lázaro Campos, Swift’s chief executive, said in the statement that “disconnecting banks is an extraordinary and unprecedented step for Swift. It is a direct result of international and multilateral action to intensify financial sanctions against Iran.”

After the closure of a major bank doing business with Iranians in Dubai, the financial sanction noose is tightening... This is a major step, which will make all sorts of transactions (not just oil related ones) very difficult.

Remembering the sanctions on Iraq

I've made my opposition to sanctions — on Iran or anywhere else, and yes that includes Israel (divestment and boycotts is not the same thing) — clear in previous posts. By all means impose travel bans on senior officials, exclude countries from international sports (had much effect for rugby fans in South), boycott academics and public figures who are supportive of repressive regimes, and other inventive solutions. But don't carry out policies that cut off entire populations from the global economy, leave them isolated from the world, deny them educational opportunities and even possibly slowly starves them and denies them the tools of modern life.

This is a lesson I learned in the 1990s, when still at university and researching Iraq under the sanctions. The sanctions were one of the great war crimes of the 1990s, killing at least half a million Iraqi children and creating the situation that would contribute, a decade later, to the mess that was/is Iraq. It was the deliberate de-modernization of a country, and one of the great shames of George H. W. Bush and Bill Clinton's policies.

Andrew Cockburn has a great piece in the LRB reviewing a new book on the sanctions and their impact:

The first intimation that the blockade would continue even though Iraq had been evicted from Kuwait came in an offhand remark by Bush at a press briefing on 16 April 1991. There would be no normal relations with Iraq, he said, until ‘Saddam Hussein is out of there’: ‘We will continue the economic sanctions.’ Officially, the US was on record as pledging that sanctions would be lifted once Kuwait had been compensated for the damage wrought during six months of occupation and once it was confirmed that Iraq no longer possessed ‘weapons of mass destruction’ or the capacity to make them. A special UN inspection organisation, Unscom, was created, headed by the Swedish diplomat Rolf Ekeus, a veteran of arms control negotiations. But in case anyone had missed the point of Bush’s statement, his deputy national security adviser, Robert Gates (now Obama’s secretary of defence), spelled it out a few weeks later: ‘Saddam is discredited and cannot be redeemed. His leadership will never be accepted by the world community. Therefore,’ Gates continued, ‘Iraqis will pay the price while he remains in power. All possible sanctions will be maintained until he is gone.’

Despite this explicit confirmation that the official justification for sanctions was irrelevant, Saddam’s supposed refusal to turn over his deadly arsenal would be brandished by the sanctioneers whenever the price being paid by Iraqis attracted attention from the outside world. And although Bush and Gates claimed that Saddam, not his weapons, was the real object of the sanctions, I was assured at the time by officials at CIA headquarters in Langley that an overthrow of the dictator by a population rendered desperate by sanctions was ‘the least likely alternative’. The impoverishment of Iraq – not to mention the exclusion of its oil from the global market to the benefit of oil prices – was not a means to an end: it was the end.

Visiting Iraq in that first summer of postwar sanctions I found a population stunned by the disaster that was reducing them to a Third World standard of living. Baghdad auction houses were filled with the heirlooms and furniture of the middle classes, hawked in a desperate effort to stay ahead of inflation. In the upper-middle-class enclave of Mansour, I watched as a frantic crowd of housewives rushed to collect food supplies distributed by the American charity Catholic Relief Services. Doctors, most of them trained in Britain, displayed their empty dispensaries. Everywhere, people asked when sanctions would be lifted, assuming that it could only be a matter of months at the most (a belief initially shared by Saddam). The notion that they would still be in force a decade later was unimaginable.

Do read the whole thing.

Iran, Brazil, Turkey and the US

Yesterday morning I was at the UN building in New York, with a small group of journalists meeting Secretary General Ban Ki-Moon. One of the issues that came up was Iran — in fact the buzz at the UN generally speaking is that Iran is the main topic of conversation at high-level meetings and the G-summits, no matter what's officially on the agenda. Ki-Moon had just received news that the US had just gotten a tentative agreement over a new package of sanctions on Iran and shared it with us, although he didn't have much to say about it apart some vague statement that the best way of addressing the Iran issue was through dialogue.

Shortly before Hillary Clinton announced the consensus over a new sanctions resolution, which is going to the UN Security Council soon, Brazil and Turkey had successfully inked a deal with Iran. The deal would have Tehran turn over about half of its nuclear fuel stockpile for a period of a year, a similar deal that the US had earlier said it would be amenable to. So the announcement on new sanctions came as a big f-you to not only Iran, but also Brazil and Turkey, as Gary Sick writes:

Only hours before Clinton’s announcement, the foreign minister of Turkey held his own press conference. Obviously unaware of what was about to happen, he described in some detail not only the tortuous negotiation process with Iran, but his perception that he was acting directly on behalf of the United States.
According to Foreign Minister Ahmet Davutoglu, he had been in “constant contact” with Clinton herself and with national security adviser James Jones, while his prime minister, Recep Tayyip Erdogan, had face-to-face encouragement from President Obama in December and April.
The objective of Turkey and Brazil was to persuade Iran to accept the terms of an agreement the United States had itself promoted only six months ago as a confidence-building measure and the precursor to more substantive talks. There were twelve visits back and forth between the Turk and his Iranian counterpart, some 40 phone conversations, and eighteen grueling hours of personal negotiations leading up to the presentation of the signed agreement on Monday.
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China, Iran and the Saudis

All illustrations on this post are actual Iranian postage stamps.On some level, the debate over sanctioning Iran appears to boil down to what China's position will be — another sign of what one might call the slow but steady multi-polarization of Middle Eastern geopolitics. 

From Ben Simpfendorder's New Silk Road blog:

China’s foreign policy is at an inflexion point. The country is emerging as a major power, but that will require tough choices.
The toughest choices are usually found in the Middle East. The region doesn’t like major powers sitting on the fence, and it’s only time before China will be forced to climb down.
It is Iran that will likely force a decision. China has so far maintained its policy of non-intervention─as one Beijing-based policy advisor said to me, “if we intervene in Iran, it would set a bad precedent for our relations with other countries”.
Fair enough. But so would a failure to intervene. It would suggest that China isn’t concerned about its other regional partners, especially Saudi Arabia. Let’s not forget. Iran might supply 13% of China’s oil supply, but Saudi Arabia supplies an even larger 20%.
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Sanctions get smarter about software

The Linux penguin will crush your secret police.Earlier this year I wrote about SourceForge, the popular repository of open-source software, banned users from countries such as Syria and Iran because it was afraid of violating US sanctions.

Lo and behold, these sanctions have just been modified to allow services like sources to provide unfettered access. From the BBC:

The US treasury department has eased sanctions on Iran, Cuba and Sudan to help further the use of web services and support opposition groups.

US technology firms will now be allowed to export online services such as instant messaging and social networks.

Companies had not offered such services for fear of violating sanctions.

Opposition supporters in Iran used social networking sites and services to organise protests after the country's disputed presidential poll last year.

I know what you're thinking: "This Arabist blog has amazing influence over the Obama administration. Can he get me a visa?"

Well, no. Credit should go to the Syrian open source activist Abdelrahman Idlbi, who flagged the issue on ArabCrunch.

Iran sanctions: lessons learned from Iraq

Photo by Iranian Flickr user Leila

As someone who spent part of the late 1990s working on Iraq, I am adamantly against pervasive, population-centric economic sanctions (as opposed to sanctions directed at elites). Perhaps to a greater extent than the invasion of Iraq by the Bush administration, the UN sanctions regime pushed by the Clinton administration's "dual containment" policy were criminally destructive, paving the way for the past decade's civil war and the complete breakdown of Iraqi society. Charles Tripp, in his history of Iraq, wrote of the sanctions:

Food and medecines were theoretically exempt from the embargo. However, the import of fertilizers, agricultural machinery, pesticides and chemicals that might have a dual use, as well as parts for restoring Iraq's ruined electricity and water purification systems, was forbidden. Within a relatively short time, the effects of these enforced shortages were being felt by the Iraqi population, as malnutrition and disease took their toll, causing infant mortality rates to rise to levels not seen in Iraq for over forty years. This had little impact on the regime's priorities.

A more devastating assessment is made by Geoff Dwyer in his The Scourging of Iraq : Sanctions, Law and Natural Justice, which equates the sanctions with war crimes targeting civilian population. The type of sanctions carried out against Iraq were wrong, just as the current siege of Gaza is wrong, and similar sanctions against Iran would also be wrong.

Photo from Flickr user Iraqwar

So it's somehow alarming to see move for generalized sanctions from the US Congress and energy companies already cutting their links with Iran:

Energy executives said Vitol, Glencore and Trafigura, which have hitherto sold Iran half of its petrol imports of 130,000 barrels a day, stopped supplying Tehran because of mounting political risk. “The political and public relations problems more than outweigh the business rewards,” said one executive.
The sale of petrol to Iran by non-US companies is legal as fuel imports have yet to be included in sanctions against the country. The companies declined to comment.
Vitol’s decision is particularly important as the company is by far the world’s largest oil trader. One executive familiar with Iran’s trade said “Vitol consciously decided not to participate in Iran’s tenders” at the start of the year. Trafigura, the Switzerland-based oil and metals trader, stopped selling to Iran about three months ago, an industry executive said. “They have concluded that there’s too much political and financial risk,” the executive said. Glencore stopped supply in late 2009, breaking a relationship with Iran of more than three decades.

The FT further analyzes where the Iran debate stands, and it's scary to see this line of thinking:

Supporters, including US lawmakers, argue that cutting off supplies would bring the country’s economy to its knees. To cope, they say, Tehran would need to reduce subsidies to slash consumption, an unpopular measure that would also stoke inflation.

The imposition of petrol rationing in the summer of 2007 led to public anger, with protesters setting a dozen fuel stations on fire. Some opposition supporters hope the increase in energy prices or further economic pressure from sanctions may encourage poorer people finally to join the anti-regime Green Movement.

“If the regime faced damaging economic pressure from a significant reduction in gasoline supplies ... it might decide that a nuclear bomb, instead of being the guarantor of the regime’s survival, could be the catalyst of its demise,” says Mark Dubowitz, of the Foundation for Defense of Democracies, which supports sanctions.

I'm not convinced that sanctions would really stop Iran's nuclear program (some argue that they might accelerate it), but even worse is the idea that they would push people to join the Green Movement. We know from the Iraq experience that sanctions hurt more than helped any resistance to the Saddam regime, and gave it extra tools to pacify the population. 

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Iran, the US, and democracy promotion

A protestor in Tehran, from Flickr user Green Movement

POMED's account of a recent Congressional hearing on what policy to pursue towards Iran, and most notably whether and how to support its opposition movement, made for some interesting reading. Several of those testifying — former Bush administration officials, regional experts, etc. — made the case of a human rights-based approach, with the US taking steps to challenge the legitimacy of the Islamic Republic's regime on human rights grounds. The approach being suggested by, if you compile the different witnesses' testimonies to the House Foreign Affairs Committee, is basically:

  1. Highly targeted sanctions to hurt the elite, esp. the IRGC;
  2. Open support for the Green Movement, which can decide whether it accepts that support or not;
  3. More funding for democracy promotion through the National Endowment for Democracy and other vehicles (although it's not clear who would eventually receive that money);
  4. A commitment to continue to side with the opposition no matter what takes place in the negotiations over the nuclear program, so that no "betrayal" of the Green Movement takes places if the regime is willing to back down;
  5. A public diplomacy campaign and commitment to internal regime change as an ultimate goal, which would also solve the nuclear issue.

I should add that Genevieve Abdo in particular was less gung-ho, and suggested that a reconciliation between the regime and opposition leaders could very well take place by the next parliamentary elections, which would leave the more radical elements of the Green Movement out on their own. I don't know much about Iran but I also see no reason a more democratic government in Iran would not be attached to a nuclear program considering the threats the country faces in the region. Logically, all of the larger Middle Eastern powers should pursue WMD programs of some sort, and indeed they all have (mostly chemical and biological for Egypt, Syria and Iraq and of course Israel's nuclear arsenal).

All of this to say: we are seeing considerable Congressional enthusiasm for a tough, democracy-driven (at least on the surface) policy towards Iran. Yet, at the same time, democracy is effectively absent from the relations between the US and Arab states (no, I will not count the State Dept. annual rights report). It is true that Iran's opposition is potentially much more credible than opposition movements in Arab countries, with seemingly real elite and popular traction. But that's also because in many respects are less democratic, and have less healthy political systems, than Iran's theocracy.

I am very supportive of the Green Movement, whatever it may actually be, and the goal putting an end to the militarization of the Islamic Republic, its corruption and its human rights abuses. I hope it's possible, and am conscious the US can influence this. But when I see US policy elsewhere in the region, I would warn Iranians: don't take this democracy talk too seriously. To paraphrase Ronald Reagan (invoked in the Congressional hearing for an uncompromising stand on Iran): don't trust, and verify.