Not So Fast, Bibi: Why New Sanctions Won’t Bring Down The Islamic Republic

Donald Trump and Benjamin Netanyahu (Wikimedia Commons)Donald Trump and Benjamin Netanyahu (Wikimedia Commons)

by Shemuel Meir

President Trump’s recent declaration on the renewal of the oil and finance sanctions on Iran were greeted with great enthusiasm by Israeli Prime Minister Benjamin Netanyahu. Netanyahu thanked President Trump for the severe sanctions, which would impose a “huge stranglehold” on the Islamic Republic and could do away entirely with the Joint Comprehensive Plan of Action (JCPOA) nuclear agreement led by President Obama. Netanyahu’s announcement was filled with superlatives of “an historic day,” and “a great day for the State of Israel,” taking personal credit for standing alone against the world in the battle against the “Iranian threat.”

Israeli commentators have adopted Netanyahu’s line. The main problem with the discourse on Iran was that while it may have been based on the prime minister’s factsheet, the facts were not always in his favor.

Political commentators also refrained from asking questions. Will the new sanctions lead to the final dismantlement of the “bad” nuclear agreement? Will it lead to the collapse of the Islamic Republic, as U.S. National Security Advisor Bolton and U.S. Secretary of State Pompeo had hoped to bring about? Would the sanctions have any effect on Iran’s regional policy? Would the possible cancellation of the nuclear agreement be a positive contribution to Israel’s security, as Netanyahu claims?

Are these the toughest sanctions and maximum pressure on Iran? Not necessarily. Trump retracted his original plan to bring Iran to its knees through the imposition of a “zero exports” policy vis-à-vis the country’s oil supply. Eight countries — China, India, South Korean, Italy, Greece, Japan, Turkey and Taiwan — received an exemption (albeit a “temporary” one, but in the Middle East it is hard to distinguish between temporary and permanent) from the sanctions and will be able to continue to import Iranian oil. These waivers would leave the U.S. room for future diplomatic maneuvering. It is also worth noting a special exemption that passed under the radar: India was allowed to continue its infrastructural works for the development of Chabahar, a strategic harbor in southern Iran opposite Oman.

Netanyahu praised himself and strongly hinted that he was responsible for SWIFT’s (Society for the Worldwide Interbank Financial Telecommunication) financial sanctions. But his presentation of the facts was incomplete, and the full implications of the SWIFT sanctions are not yet clear. In the past, as part of the international sanctions led by President Obama, Iran was disconnected completely from SWIFT, a move that severely harmed its trade relations.

This time around, we are witnessing ties being severed with Iran’s central bank and a number of (as yet unidentified) banks — rather than an overarching disconnection. Because SWIFT is a Belgian system bound by the laws of the European Union, it is possible that we will see a legal confrontation between the U.S. and the EU, should the former demand a complete disconnection.

Additionally, as part of its attempts to safeguard the nuclear agreement, the EU is working on the establishment of a Special Purpose Vehicle (SPV) that would be invulnerable to U.S. financial sanctions. This new financial mechanism has run into difficulties and has not yet been launched. Nevertheless, it would appear that the U.S. Treasury’s celebrations of its demise were premature.

It is important to emphasize that the JCPOA is first and foremost a non-proliferation agreement that is political-strategic in nature. The crucial issue is the political commitment of Iran, the EU, France, Germany, and the United Kingdom to maintain and implement the agreement. In this regard, the trade and financial aspects — as well as the listing of the large corporations that have withdrawn from Iran — are of secondary importance. Furthermore, over the years, Iran has developed an economy that is able to deal with sanctions and blockades.

The Israeli discourse accepts the successful outcome of the sanctions as fact. President Trump’s “harsh sanctions,” so goes the theory, will certainly bring Iran back to the negotiating table and will force it to accept an “improved agreement,” thereby elimination of the existing nuclear agreement.

These basic assumptions do not necessarily stand up to scrutiny. A global, historical view shows that sanctions are an elusive thing that do not always bring the desired results: sometimes sanctions have zero effect, other times they can lead to the opposite results. U.S. sanctions on Japan led to the surprise attack on Pearl Harbor. The sanctions imposed on Italy following Mussolini’s invasion of Ethiopia had no affect at all. The international sanctions on South Africa were not responsible for the fall of apartheid regime.

It is important to emphasize that the sanctions led by President Obama, which resulted in Iran signing the the nuclear agreement in 2015, were comprehensive international sanctions under the auspices of UN Security Council Resolutions, which bind every country. It was tough political isolation that pushed Iran to accept the agreement.

This is not the situation today. U.S. sanctions under President Trump are unilateral, and face opposition from the countries party to the JCPOA (United Kingdom, France, Germany, Russia and China) as well as from EU member states and the majority of other countries in the world. In fact, only the U.S., Saudi Arabia, the United Arab Emirates, and Israel support the new sanctions. We are not talking about the isolation of Iran in the international arena; the current configuration reduces that chances that the sanctions will succeed.

Furthermore, the past teaches us that there is no guarantee that the heap of U.S. sanctions imposed on Iran over the decades have indeed brought about the desired results.  A comprehensive study carried out by the Crisis Group on U.S. sanctions since the Islamic revolution found that there is no correlation between sanctions and changes in Iranian policy.

One of the most significant (and enigmatic) exemptions that passed under the radar and did not affect the Israeli discourse on the deal was around Iranian nuclear facilities. Russian, Chinese, and European corporations are permitted to continue to assist Iran in three nuclear sites: Fordow, Arak, and Busher. The Fordow site was formerly an underground “immunity zone,” as per the belligerent statements of former Israeli Prime Minister Ehud Barak, where — until the agreement — Iran was enriching 20 percent grade uranium.

Arak was formerly a heavy water reactor that could have been used to produce plutonium. Under the JCPOA , Fordow’s and Arak’s former activities are now banned. The Busher site houses a light water reactor provided by Russia for electricity production. The exemption from sanctions and the permission to develop these three nuclear sites under IAEA monitoring, and in accordance with the relevant sections of the JCPOA nuclear agreement, could signal President Trump’s possible willingness in the future to preserve the existing agreement. Instead of annulling it completely, he will attach additional conditions such as the limitation of ballistic missiles and Iranian regional military activities in the Middle East.

According to reliable reports, Israeli intelligence has not yet finalized its assessment regarding the intentions and goals of President Trump’s sanctions. The predominant assessment is that the U.S. desires to improve the existing agreement through sanctions, rather than bring down the regime. According to an Israeli military intelligence assessment, Iran will not withdraw from the nuclear agreement, and one should not rule out a possible summit between the U.S. and Iranian leaders.

Reading between the lines, one can see that the prime minister and Military Intelligence Directorate do not share the same point of view. In the past, the Directorate, the body responsible for the National Intelligence Assessment, did not share Netanyahu’s enthusiasm regarding the cancellation of the nuclear agreement. The Military Intelligence Directorate actually supported the continued existence of the agreement.

It is possible that Iran will agree to return to the negotiating table to discuss an “improved agreement” with the U.S. But we can assume that it would be on a similar basis to the one defined by French President Macron: to keep to the existing agreement – a significant and necessary element in the Iranian strategic view – that will enable Iran to develop a civilian nuclear program under IAEA monitoring, while concurrently enter into negotiations for a future annex regarding ballistic missiles and regional issues.

And if Iran agrees to negotiate an “improved agreement?” Will this be the dawn of a new day for Israel? Will Prime Minister Netanyahu agree to an “improved agreement” — one that would include the continuation of civilian uranium enrichment under IAEA monitoring, which contradicts his aim of obliterating the existing nuclear agreement? Will Israel and Saudi Arabia agree to discuss their ballistic missiles? And what will happen while discussing “regional issues,” Iran raises the idea of a Middle East Nuclear Weapon Free Zone (MWFZ), as well as the issue of Israel joining the Non-Proliferation Treaty, which Egypt, Saudi Arabia, and the other members of the Arab League raise in all the international forums)?

And if Iran asks to include a resolution to the Israeli-Palestinian conflict, as per the Saudi Peace Initiative (to which Iran is indirectly a party as a member of the Organization of Islamic Cooperation)? There are many faces to these “regional” issues apart from regional subversion and terrorist activities, which Netanyahu and the Israeli discourse focus on almost exclusively.

Republished, with permission, from +972 Magazine.

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Shemuel Meir

Shemuel Meir is a graduate of the Johns Hopkins School of Advanced International Studies (SAIS) and a former IDF analyst and Tel Aviv University researcher. He is currently a strategic blogger for Haaretz focusing mainly on nuclear issues, Iran, and a Middle East Nuclear Free Zone.

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One Comment

  1. If the Israeli’s really want to get rid of the Ayatollahs they would cut deals with the Chinese, Indians. That would put an end to the mullahs. But would Israel really benefit from a new secular democracy in Iran? What excuse would they have to carry on getting all that funding from US? It is a perverse world we live in, but the Ayatollahs are Israeli’s best friend really.

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