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.

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.

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.

“What they wanted us to do was give the confidence to Iran to do the swap. We have done our duty,” said Davutoglu, calling the deal an important step for regional and global peace. “We were told that if Iran gives 1,200 kg without conditions, then the required atmosphere of trust would be created [to avoid sanctions]. So if we do all these things, and they still talk about sanctions … [it] will damage the psychological trust that has been created.”

The Turks and Brazilians, who felt they had “delivered” Iran on the terms demanded by the United States, were surprised and disappointed at the negative reactions from Washington. Little did they know that their success in Tehran, which had been given a 0-30 percent chance just days earlier, came just as the Americans were putting the final touches on a package of sanctions to be presented to the UN Security Council. The Tehran agreement was as welcome as a pothole in the fast lane, and the Americans were not reluctant to let their displeasure be known.

The five major powers had made up their minds (without consulting other members of the Security Council that currently includes both Turkey and Brazil), and these two mid-level powers were told in so many words to get out of the way.

The gratuitous insult aside, which approach do you believe would most likely result in real progress in slowing or halting Iran’s nuclear program? We have been imposing ever-greater sanctions on Iran for more than fifteen years. When we started they had zero centrifuges; today they have in excess of 9,000. To those who believe that one more package of sanctions will do what no other sanctions have done so far, I can only say I admire your unquenchable optimism.

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.

“What they wanted us to do was give the confidence to Iran to do the swap. We have done our duty,” said Davutoglu, calling the deal an important step for regional and global peace. “We were told that if Iran gives 1,200 kg without conditions, then the required atmosphere of trust would be created [to avoid sanctions]. So if we do all these things, and they still talk about sanctions … [it] will damage the psychological trust that has been created.”

The Turks and Brazilians, who felt they had “delivered” Iran on the terms demanded by the United States, were surprised and disappointed at the negative reactions from Washington. Little did they know that their success in Tehran, which had been given a 0-30 percent chance just days earlier, came just as the Americans were putting the final touches on a package of sanctions to be presented to the UN Security Council. The Tehran agreement was as welcome as a pothole in the fast lane, and the Americans were not reluctant to let their displeasure be known.

The five major powers had made up their minds (without consulting other members of the Security Council that currently includes both Turkey and Brazil), and these two mid-level powers were told in so many words to get out of the way.

The gratuitous insult aside, which approach do you believe would most likely result in real progress in slowing or halting Iran’s nuclear program? We have been imposing ever-greater sanctions on Iran for more than fifteen years. When we started they had zero centrifuges; today they have in excess of 9,000. To those who believe that one more package of sanctions will do what no other sanctions have done so far, I can only say I admire your unquenchable optimism.

Now we're seeing some of the big five waver over the sanctions Iran is bragging about (NYT):

On Wednesday, however, Russia seemed to strike a more ambivalent note when Foreign Minister Sergey V. Lavrov released a statement expressing cautious support for the draft resolution, but stressing that it is far from completion. 

He said there is a “basic understanding” of the new draft, but that it must be approved by non-permanent members of the United Nations Security Council. If Washington and its European partners proceeded unilaterally, he said, the proposal “would go beyond decisions agreed upon by the international community and would run counter to the principle of the supremacy of international law guaranteed by the U.N. charter.”

Mr. Lavrov’s statement said he “expressed concern” over this during a conversation with Mrs. Clinton on Tuesday night, and encouraged her to re-examine Tehran’s latest proposal to “help establish a favorable atmosphere for the resumption of political and diplomatic efforts to regulate Iranian nuclear problems.”

An official in the Russian Foreign Ministry, speaking on condition of anonymity under ministry rules, said Mr. Lavrov placed a call to Mrs. Clinton after learning of her announcement on Tuesday night. The official said Russia views Tehran’s proposal to enrich uranium in Turkey as very similar to a deal brokered in October by the International Atomic Energy Agency, but acknowledged that Washington is skeptical.

“Our position is, give them another chance,” the Russian official said. “We should take into account this demonstration of readiness by Iran.”

So much for either "smart diplomacy" or the multilateralism that the Obama administration touted last year. I can understand skepticism about Iran's intentions and frustration with its delaying tactics. However, the Obama approach to Iran was supposed to be getting them to the negotiating table. The Brazil-Turkey deal does that and they decided to deliberately sabotage it, in the process embarassing Western-allied emerging powers that are among Iran's important business partners. And this comes back to the basic problem with US approach to Iran — is it about:

• Negotiating with Iran to ensure it respects the NPT
• Ending its support for Hamas and Hizbullah
• Containing its influence regionally
• Overthrowing the Islamic Republic regime (as Congress assigns funds to)

 So which one (or several) is it, and are they compatible?

Update: There is more good analysis of this at the BBC and the Economist, looking at the move by Iran to drive a wedge between the great powers and the middle powers over sanctions. There is no reason to trust Iran's motives, but shouldn't this opportunity for negotiations on core issues be seized upon? Is time that much of the essence, especially since previous sanctions have been partly ignored? See also Rami Khouri's latest.

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%.

So what are the chances that China agrees to sanctions?

So far, it appears unlikely, at least to judge from media headlines. Yet, a recent article in Huanqiu, a hardline Chinese-language foreign affairs magazine, points to an increasingly nuanced positioned, and thus hints at the possibility of change.

The author, Yin Gang, works at the Chinese Academy for Social Sciences. His views aren’t official policy, but they are indicative of official thinking. The type of language he uses he is also refreshingly frank. So, I thought to highlight some of the more useful points.

First, the carrot.

“China understands Iran’s desire for nuclear deterrent capability. China’s nuclear deterrent capability was difficult to achieve under Western pressure. But times have changed. China and Iran are both signatories to the non-proliferation agreement. We should respect these principles”.

And, then the stick.

“China cannot ignore global opinion. It very well understands that its Arab and Jewish friends don’t want to see the Iranian nuclear problem end tragically”. He later continues, “Under no conditions will China accede to Iran’s demands, only to hurt the Arab and other countries feelings”.

How to explain the change? It appears to be Iran’s intransigence in the past year.

The International Crisis Group, which recently released a report on China's Iran policy, has more:

China will work to water down any Security Council resolution through a delay-and-weaken strategy that maximizes concessions from both Iran and the West.

For months, the United States and other countries have spent an enormous amount of diplomatic capital pressuring China to impose a new round of sanctions on Iran.

But this effort has yielded few results and merely serves to strengthen China’s strategic hand. The longer China holds out, the better treatment it gets from the West, which is hoping for sanctions that will likely do little to resolve the nuclear impasse anyway.

There are several reasons for Beijing not to impose meaningful sanctions.

Iran is China’s third-largest oil supplier and home to expanding Chinese energy and commercial enterprises. China and Iran also share a strong resentment of perceived American meddling in their domestic politics. The bond with Tehran helps counterbalance American interests in a region that some strategists in China consider part of its “grand periphery.”

Beijing has also led a charm offensive with Muslim countries since the Xinjiang riots in July 2009, partly in response to strong condemnations by top Iranian clerics of China’s administration of the restive western province.

Unlike the US and Europe, Beijing does not seem to see an urgent need to deal with the Iran nuclear issue. Trying to pressure Beijing by sharing Western intelligence on Iran is unlikely to have much effect.

Building an effective international coalition of countries – including Arab Gulf countries and those with Security Council membership – is a far better way to shape China’s Iran calculus.

So the calculation is that China is not so concerned about Iran's nuclear program, but concerned enough about its relationship with the US (and the leverage it can extract from the Iran issue) to avoid backing Iran. The alternative is then to weaken sanctions. There's been some agitation lately that Saudi Arabia wants Iran to act tough on Iran. Last week I cited a piece by David Ignatius: 

Prince Saud al-Faisal, the Saudi foreign minister, traveled to China late last week to enlist its support against Iran. The Saudi message to Beijing, according to one U.S. official, is: "If you don't help us against Iran, you will see a less stable and dependable Middle East."

Sanctions do have the advantage for the Arab Gulf countries of increasing reliance on them for oil, as I wrote before. However, backing tough sanctions does not mean Saudi would back a strike on Iran, as some have intimated. Saudi expert Jean-Francois Seznec:

It seems that, in fact, the Saudis are more worried about potential U.S. military action against Iran than they are about the Iranians’ ability actually to obtain nuclear weapons.  The Saudis may not express this view clearly enough to change views on Capitol Hill, but the U.S. executive branch is probably quite aware of Saudi worries about the prospect of U.S. military intervention in Iran.

In a nutshell, and to paraphrase Talleyrand, U.S. military action in Iran would be more than a crime—it would be a mistake or, more precisely, a series of mistakes, which would quite rapidly lead to the United States losing its influence in the world.  The economic “blowback” from any U.S. military action against Iran would be enormous, causing great harm to the United States.  More generally, military strength is no longer the true basis of national power in the modern world.  In the aftermath of a U.S. military confrontation with Iran, the new economic powerhouses—China, India, and Saudi Arabia—would have a shared interest in constraining the United States so that it could not act again to cause such damage to their interests.  In acting to realize that shared interest, these states would effectively lock the United States out of both Asia and the Middle East.     

On the economic front, a U.S. attack on Iran would lead to a major increase in oil prices, whether the Straits of Hormuz get blocked or not.  If only Iranian exports were taken off line, prices could still reach $150 per barrel, as 3 million barrels per day would be removed from the market and insurance premiums would reach the levels seen during the “tanker war” of the early 1980s.  If the Straits were blocked for some time, prices could go above $200 per barrel, as 16 million barrels per day in exports from the Gulf as a whole would have to find new ways to get to international markets.  In this scenario, Saudi Arabia could export up to 5 million barrels per day through the Red Sea, which would still leave the markets short of 11 million barrels.  Within 18 months, it might be possible to lay new pipelines to the Gulf of Oman that would bypass the Straits of Hormuz (mainly for oil exports from the United Arab Emirates), and Iraq could repair its strategic North-South pipeline to export oil via the Mediterranean.  However, even with these extraordinary measures, international markets would still be short of about 6 million barrels per day, and the impact on Asian economies that rely very heavily on Gulf crudes would be extreme.

Although, as I will discuss in greater detail below, Saudi Arabia would see a dramatic increase in its oil export revenues in such a scenario, the Saudis are nonetheless opposed to U.S. military action against Iran because, in their view, it could unleash complete havoc in the region. 

Why do I mention Saudi Arabia's (and I think most or all of the Arab world's) opposition to a strike on Iran in context of the sanctions? These are after all two quite different things. The reason there is a link is that it's hard to see tough sanctions going through without China's backing, which does not appear forthcoming. And soft sanctions are unlikely to have much of an impact on the Iranian regime — and perhaps tough population-centric sanctions wouldn't either.

Despite the view in neocon circles that sanctions would somehow bring more Iranians to support for the Green Movement, internal regime change in Iran still seems pretty improbable, especially in the context of a confrontation with the West. I suspect the neocons know this, but need sanctions to be implemented and then fail to be able to make the argument for a US-backed strike. And if it does come to a strike, probably by Israel, then the question becomes whether a direct attack on a sovereign state is a greater violation of international law then Iran's violations of the NPT, especially in the context of Israel's own nuclear program.  

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.