Washington Wednesday: Iranian sanctions

MARY REICHARD, HOST: It’s Wednesday, the 14th of November, 2018. Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher. First up: Washington Wednesday.

It’s been six months since the Trump administration announced it would withdraw from the Iran nuclear deal.

Three months ago a first round of sanctions hit Tehran. Last week, the administration announced a second round. Here’s Treasury Secretary Steven Mnuchin.

MNUCHIN: This morning we will fully impose sanctions on the Iranian regime. This is part of a maximum, unprecedented economic pressure campaign against the world’s largest state sponsor of terror.

REICHARD: Some 700 individuals and businesses are on the list—including 300 that have not previously been sanctioned. The administration says these are the most stringent sanctions ever imposed on Iran.

MNUCHIN: We are making it abundantly clear to the Iranian regime that they will face mounting financial isolation until they fundamentally change their destabilizing behavior… We are watching the Iranian regime with laser focus.

Here now to discuss the latest is Professor William Inboden. He is executive director of the Clements Center for National Security at the University of Texas. He previously served as senior director for strategic planning on the National Security Council under President George W. Bush.

I should explain we’ve caught the professor on a travel day, so we’ve connected by phone between flights at nice, quiet O’Hare airport in Chicago. Busy day, professor. Good morning to you.

INBODEN: Good morning to you. It is a busy day.

EICHER: As simply as you can, could you explain what these sanctions are and what they do? What are the sanctions aimed to punish or prevent?

INBODEN: Yeah, so the sanctions are really aimed to go at the heart of the Iranian economy and the two main things they’re doing is cutting off all of Iran’s oil exports. You know, that’s its main export, main source of revenue. As well as cutting off Iran from the international financial system, so sort of isolating the Iranian banks and limiting their ability to get access to hard currency. So, they’re very severe.

EICHER: Now, part of the policy change is taking punitive measures against other countries that do business with Iran. But the U.S. sanctions exempted eight nations. The administration didn’t name the countries, but they reportedly include these five: Turkey, Iraq, South Korea, Japan, and India. What is the rationale for those exemptions, do you think?

INBODEN: Well, the administration is trying to balance here on the one hand being as tough on Iran as they can, while also being realistic about most of Iran’s trade is with other countries, it’s not with the United States. And we have important equities and relationships with those other countries. In addition to the five you mentioned, I believe China is also one of them. And, of course, large significant economy there.

So, the Trump administration is giving six month exemptions, reportedly, to this list of eight other countries. And the idea is that will give them time to gradually wean themselves from dependence on Iranian oil, find sources of other oil suppliers, while still bringing pretty severe pressure on the Iranian economy. So it’s a balancing act.

EICHER: This week the United Nations declared Iran is in compliance with the 2015 Iran nuclear deal. But when the Treasury Secretary announced these latest sanctions, he didn’t focus on Iran’s nuclear program. Instead, he talked about Iran’s destabilizing activities.

Now, we know this is a country that has been on the State Department’s state sponsor of terrorism list for the last 34 years.

So with that stated goal in mind, do you think will these sanctions work? Do you have any hope that Iran will stop supporting terrorism?

INBODEN: Well, this is where I have quite a bit of sympathy with the Trump administration’s criticism of the Iran deal. As Secretary Mnuchin pointed out, the original, one of the original flaws with the deal included that it was only focused on Iran’s nuclear program and it didn’t address Iran’s activities throughout the region.

I mean, Iran’s goal in the Middle East is to be the dominant power in the Middle East and to export its rather violent Shia revolutionary ideology. And the original deal didn’t address Iran’s support for terrorism, didn’t address its efforts to destabilize other governments in the region such as Iraq, didn’t address its ballistic missile program. And then even on the nuclear program, it only limited it for another eight years and still allowed some research on uranium enrichment. So, it was a pretty narrow and, I thought, rather weak deal, so that’s why I can certainly appreciate and share the administration’s concern about the deal and rejection of it.

EICHER: Now, as you know, the United States was not alone here. Other nations entered into that agreement and they’ve been critical of the Trump administration’s decision to withdraw. What is the substance of that criticism, as you understand it, and do you foresee a way for a more united front on Iran?

INBODEN: Well, the substance of the criticism from our allies who are a party to the deal is essentially that, look, the Iranians were honoring the terms of the deal and so we shouldn’t break it. And there’s some legitimacy to that. This is where my position is, even though I opposed the original deal. I did think think that once we were in it, we should have gone about withdrawing in a much more multilateral cooperative way and bring our allies along with us by showing them, look, this is such a bad deal and it is not addressing our main concern with Iran.

But the Trump administration didn’t really do that. It was rather impetuous in how it withdrew from the deal and essentially put our allies more aligned with the Iranians than with the United States.

So, where we go from here, there’s a number of questions. First, will the Europeans and China and others support and cooperate with the imposition of new sanctions. There’s some indication that they will. Second, will the Iranians still be able to evade the sanctions through cutouts to third parties, through creative use of escrow accounts and other front companies. And there’s some indication that they’ll at least partially be able to evade them.

But the two really big questions are, one, will Iran now start to resume its nuclear program because by most accounts it was honoring the terms of the deal, although it was a pretty bad deal. And then second, will Iran retaliate?

Several Iranian leaders, including the head of the Iranian Revolutionary Guard Corps, their main terrorist organization, have threatened violent retaliation because of the new sanctions. And the United States is vulnerable in a lot of places. Iranian rockets attacked our consulate in Basra a few weeks ago. We have a number of American forces, of course, in Iraq and Syria who are vulnerable to Iranian attack. Iran has been sponsoring attacks on our forces in Afghanistan. Iran might decide to disrupt global oil markets with attacks on Iraqi and Saudi oil production. And Iran may resume terrorism in Europe or even the United States.

And so this is where I hope the Trump administration is doing some contingency planning and preparing for strong counter-measures, should Iran lash out and retaliate in this way. And, likewise, I hope they’re prepared for strong next steps if Iran does start resuming its nuclear program.

EICHER: Well, I was just going to ask what do you think those next steps for U.S. policy with Iran would be?

INBODEN: Well, it needs to be comprehensive strategy for Iran’s role in the whole region. So, it needs to include countering Iran’s bad influence in Syria. We’ve largely ceded Syria to Iran and Russia and that was a mistake.

I think it needs to include a lot more support for the political opposition and dissident movement inside of Iran—more of a freedom agenda, if you will, that will put some internal pressure on the regime.

And especially it needs to include bringing our allies and then other important countries like Russia and China back on board, so Iran really is isolated, rather than now those countries being a little more aligned with Iran against the United States.

EICHER: William Inboden was senior director for strategic planning on the National Security Council under President George W. Bush. He’s now at the University of Texas—well, actually, he’s now at O’Hare airport and I only heard one little announcement. So, very good job. Professor Inboden, thank you so much and safe travels to you.

INBODEN: Thanks so much. Always a pleasure to be with you.

(Iranian Presidency Office via AP) In this photo released by official website of the office of the Iranian Presidency, President Hassan Rouhani speaks in a meeting with finance ministry officials in Tehran, Iran, Monday, Nov. 5, 2018.

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