Thursday, August 9, 2012

Why sanctions fail; and the consequences of attacking Iran (or not)

Why sanctions fail; and the consequences of attacking Iran (or not)

Excess gas flares off at an Iranian oil installation
Here’s one cute example of why sanctions against Iran aren’t working:

U.K. investment bank Standard Chartered could be suspended from operating in New York after state finance regulators found hundreds of billions of dollars worth of transactions with Iran…

The state regulator alleges the bank colluded on tens of thousands of transactions totaling more than $250 billion, earning Standard Chartered millions in fees…

SCB’s obvious contempt for U.S. banking regulations was succinctly and unambiguously communicated by SCB’s Group Executive Director in response [to an inquiry by SCB's CEO for the Americas]. As quoted by an SCB New York branch officer, the Group Director caustically replied: “You f—ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.” — Eric Platt and Linette Lopez, Business Insider

This is is in addition to legal exemptions to sanctions. The three largest importers of Iranian oil, China, Japan and India have been granted exemptions in return for reducing their Iranian oil imports, but not ending them. South Korea, the fourth largest, has temporarily stopped, but intends to resume shortly. Overall, 20 nations have such waivers, and the Iranians claim that 80% of their oil economy is unaffected (probably an exaggeration).

There is no question that the Iranian economy is being hurt by sanctions. But, from the point of view of the regime, it’s a small price to pay to (in their view) make it possible for them to kick the Big Satan out of the Middle East, destroy the Little Satan and ultimately spread the Shiite Islamic revolution throughout the region. If there ever was a game changer, an Iranian nuclear weapon would be one.

Imagine if, in early 1945, the US had faced economic sanctions aimed at the Manhattan Project. Would we have pulled back with success a few months away?

Here is another, related topic:

Uzi Baram is a former Labor Party MK and minister in the Rabin government. In an op-ed today he wrote,

Let every citizen know that things are never going to be the same again [if Israel attacks Iran]. I am not talking about the weapon systems Israelis will have to face. Rather, I am talking about the more mundane aspects of our lives — an end to Israel being a leading economy that is inundated with foreign investment; an end to inbound tourism.

This would also spell the end of Israel as we know it now, the Israel that despite the effect [sic] of the social justice protests, still has a few bright spots…

It’s all very clear: If we attack, the Iranians would react in kind. The Arab and Muslim world, both the Iran-sympathizers and its haters, would tighten the noose around Israel…

But the way things are right now, the decision-making apparatus’ conduct is worrisome. My goal is to shed light on the elephant in the room; namely, that Israel will be a different country altogether after an attack. Its economy, its socio-economic landscape and its society will all look utterly different. Thus I call on the government and the people to engage in a dialogue that would do away with Churchillian speeches before we go on the attack.

He may be right that a preemptive strike would have far-reaching consequences. In fact, I’m sure he is, although it’s hard to predict what they will be. What he fails to mention is that not preempting will also have consequences, even if a nuclear weapon is never used against Israel.

Not preempting means violating the principle that has served Israel well in its darkest days, that of not depending on other nations to protect it. At best, the US would attack Iran and destroy its nuclear capability. In that case, Israel would still suffer strikes from Iranian and Hizballah missiles, as well as needing to go to war against Hizballah. How would this be significantly different from Baram’s scenario? And what would be the consequences for Israel of becoming a protectorate of the US?

Of course there is also the case in which the US, for whatever reason, changes its stated policy and chooses to allow Iran to develop nuclear weapons. Even apart from the direct security consequences stemming from an Iranian nuclear umbrella, wouldn’t Israel be a “different country forever” in this new world? Wouldn’t foreign investment and tourism be severely punished?

Baram thinks that the Israeli government needs to involve its citizens in a national dialogue about what to do. Unfortunately, the question of what to do and when to do it depends on a great deal of information that simply can’t be public. Although there are many issues about which public debate is indicated, even essential, this isn’t one of them.

What a silly op-ed!