Briefing Book

Why the Iran Sanctions Matter

It's easy to criticize the U.N. Security Council's new resolution targeting Iran. But it might prove a surprisingly effective tool in tightening the noose on the regime in Tehran.

Wednesday's U.N. Security Council resolution sanctioning Iran marks a critical turning point in the U.S.-led efforts to target Iran's illicit activities. The resolution focuses on Iran's nuclear-weapons and ballistic-missile programs; the Islamic Revolutionary Guard Corps (IRGC), which is responsible for these programs as well as the regime's support for terrorism; and the Islamic Republic of Iran Shipping Lines (IRISL), which has been directly involved in proliferation shipments. The sanctions included in this resolution are, as U.S. Ambassador to the U.N. Susan Rice put it, "as tough as they are smart and precise." If anything, this new resolution is both too precise and purposefully vague. And therein lies its strength.

The list of 40 entities and one individual listed in the resolution's three annexes is extremely targeted. Employing such "smart sanctions" -- pinpointing the specific entities and persons involved in Iran's illicit conduct and holding them accountable while shielding the general Iranian public from old-fashioned, shotgun, regime-wide sanctions -- has been very effective. This tactic denies Iran's revolutionary regime the chance to deflect blame for the country's economic woes, while disrupting its ability to finance and transport material necessary for its nuclear-weapons and ballistic-missile programs. But the number of entities excluded from the resolution is even more telling than the list of those that made the final cut. Most entities designated this week, for example, had already been designated by the U.S. Treasury Department and/or the European Union. They have therefore already been subject to most of the impacts a U.N. resolution would hope to achieve, such as economic isolation by major financial institutions.

Consider Iran's shipping line, IRISL. The U.S. government first designated IRISL in September 2008 for facilitating the transport of cargo for U.N.-designated proliferators and falsifying documents and using deceptive schemes to shroud its involvement in illicit commerce. And, as the State Department noted at the time of the designation, IRISL had already been "called out by the U.N. Security Council as a company that has engaged in proliferation shipments."

But following up on U.S. and EU designations of entities like IRISL or the IRGC-controlled Khatam al-Anbiya construction company (also called Ghorb) by designating them at the United Nations as well is vitally important to the global sanctions regime. With critical countries such as China, Malaysia, Singapore, and others willing to do only the minimum to comply with Security Council resolutions, getting critical entities like IRISL and IRGC companies designated at the U.N. means wider implementation of sanctions.

Unfortunately, multilateral action is not only difficult to achieve, but can often lead to lowest-common-denominator decision-making. So while international consensus was being built for robust action at the U.N., Britain, the European Union, the United States, and others wisely pursued both unilateral and bilateral financial measures focused on IRISL, IRGC-affiliated entities, and other individuals and institutions facilitating Iran's illicit conduct. With the increased militarization of the Iranian regime and the blatant abuses of the IRGC-affiliated Basij militia, targeting entities affiliated with the Revolutionary Guard unilaterally while international consensus was being built to do so at the U.N. level was an effective strategy. That does mean, however, that this week's list of sanctioned entities is more of a reinforcement of prior actions than completely new ones.

And that's OK. Because though the lists of sanctioned entities are very precise, U.S. and other negotiators made sure that general "hooks" upon which additional actions could be "hung" were peppered throughout the body of the resolution. These will provide the United States and other states and multilateral bodies with the international imprimatur for further action. Put another way, the new resolution is most important not for the specific entities listed in its annexes, but for providing a foundation upon which further efforts to disrupt Iran's illicit activities can be built.

Note, for example, the multiple times the resolution "calls upon all States" to do things above and beyond checking the list of specifically sanctioned entities and persons, such as the call to "exercise vigilance" over transactions involving the IRGC that could contribute to "proliferation-sensitive nuclear activities or the development of nuclear weapon delivery systems." In plain English, this language effectively empowers states and other international bodies to take still more stringent action against the IRGC.

Broadening its sanctions against Iran's shipping company, the resolution "calls upon all States" to inspect "all cargo to and from Iran, in their territory, including seaports and airports, if the State concerned has information that provides reasonable grounds to believe the cargo contains items the supply, sale, transfer, or export of which is prohibited" by this or prior Security Council resolutions. The contrast between the specificity of the list of sanctioned entities and the fairly low standard of "reasonable grounds to believe" is a telling example of purposeful vagueness that could prove powerful in the hands of states inclined to get tough on Tehran.

Similarly, the resolution "requests" that all member states report to the U.N. "any information available" on "transfers or activity by Iran Air's cargo division or vessels owned or operated by [IRISL] to other companies" that might be related to sanctions evasion. The resolution "calls upon" states to "take appropriate measures" -- which, again, by virtue of being appropriately vague is appropriately empowering -- both to prohibit Iranian banks from opening branches, subsidiaries, representative offices, joint ventures, or correspondent relationships with banks in their jurisdiction and to prohibit financial institutions in their territories or under their jurisdiction from opening offices or accounts in Iran.

Indeed, the resolution specifically "welcom[es]" the guidance issued by the Financial Action Task Force (FATF) -- the multilateral technocratic body that sets international standards to combat money laundering and terrorism finance -- to assist states in implementing their financial obligations under two previous resolutions, 1737 (2006) and 1803 (2008). In particular, it highlights the FATF's warning to "exercise vigilance over transactions involving Iranian banks, including the Central Bank of Iran, so as to prevent such transactions contributing to proliferation-sensitive nuclear activities, or to the development of nuclear weapon delivery systems." So though the Central Bank of Iran is not specifically sanctioned, it is, broadly speaking, open game.

In February, the FATF named Iran to its new blacklist, recognizing that in support of its weapons programs, its crackdown on democracy, and its terrorist proxies, Tehran has continued to engage in deceptive financial conduct aimed at raising, moving, hiding, and accessing funds internationally. In line with the G-20's call to protect the international financial system from abuse, the blacklist identified countries with deficient "anti-money laundering and combating the financing of terrorism" (AML/CFT) measures. Iran received special designation on the blacklist; it was the only country whose illicit financial conduct merited a call for international countermeasures.

Contrary to conventional wisdom, Iran is highly sensitive to such actions. After one of the FATF's warnings, for example, Iran sent a delegation to lobby the agency despite not being a member. The FATF, however, dismissed Iran's claims that legislative changes had fixed its financial shortcomings, calling the new measures "skimpy" and noting their "big deficiencies." Indeed, the FATF blacklisted Iran even as it recognized the regime's "recent steps" to engage with the agency. The message seemed to be that the FATF would not mistake public engagement for substantive progress. Similarly, though Iran requested technical help from the U.N. Office on Drugs and Crime to set up a computer-based training center for its nascent financial intelligence unit, the FATF still highlighted the regime's "failure to meaningfully address the ongoing and substantial deficiencies" in its AML/CFT efforts.

The result is a sharp increase in the cost of doing business for the Iranian regime. European multinational companies are terminating business relationships with Iran, following the lead of major international banks in tightening the noose on Iran's financial system. Chinese and Malaysian companies may lap up available contracts, but many key technologies Iran needs for its oil and gas industries and for its nuclear and missile programs are only available in the West.

And now, for a change, existing sanctions might finally be seriously enforced. Just as important as the specific list of sanctioned entities and the broad invitations to take further action against Iran is the resolution's creation of a monitoring committee, including a panel of experts, to better enforce existing sanctions. Indeed, expert panels proved effective in strengthening sanctions on Sudan and Ethiopia. The "naming and shaming" power of the panel's findings could further influence firms and individuals considering whether to run the risk of doing business with Iran. Furthermore, an expert panel could also help the Sanctions Committee and U.N. member states by recommending ways to make the sanctions more effective. Such a monitoring committee would be particularly effective if it included among its experts individuals knowledgeable about export control and dual-use goods.

But implementation and follow-up is everything in the sanctions business. For the new resolution to make a difference, three things must happen.

First, states like Britain and the United States, regional bodies like the EU, and multilateral bodies like the FATF and G-20 must all act on the resolution's various "calls" to expand the resolution beyond the list of specifically sanctioned entities.

Secondly, the monitoring committee must demand substantive reports from member states upon which it can submit public reports with substantive recommendations for enhancing enforcement of existing sanctions.

Finally, unless the report finds that Iran has become fully compliant with its obligations, the Security Council must quickly follow up on the report with another round of sanctions. The resolution requests that the director general of the International Atomic Energy Agency submit a report to the Security Council within 90 days on whether Iran has established "full and sustained suspension" of its illicit nuclear activities. If the international community does not respond in a timely fashion, the entire premise of targeted and graduated sanctions -- the credibility of which are premised on consequences for ongoing illicit conduct -- will be irreparably damaged. One reason Iran has not been deterred by the sanctions put in place to date is that the deadlines of prior resolutions came and went with no timely follow-up. This delay undermined the whole sanctions enterprise, leaving Iran with the general sense it could survive sanctions, get by, and outlast the resolve of the international community. June 9's resolution offers an opportunity to reverse that trend and re-empower sanctions as an effective tool of foreign policy, one that doesn't require the use of force.

On their own, these sanctions will not solve the crisis over Iran's nuclear program. But wisely implemented and enforced, they could prove critical in preventing Iran from getting the bomb. And that's a very good thing.

Briefing Book

Iraq At Eye Level

As the dust settles on Iraq's pivotal election, some of the most prominent Western journalists in the country sound off on what it means for Iraq's future and the U.S. role in the region.

On Sunday, March 7, Iraqi voters went to the polls to cast their vote in the country's second parliamentary election since the collapse of Saddam Hussein's regime. The vote, which will determine the makeup of the government that will lead Iraq following the expected departure of U.S. forces, promised to provide a barometer of the country's political future and hope for stability. Although the vote was marred by violence, killing at least 38 people, voter participation was strong, with turnout estimated at 62 percent.

On Monday, Foreign Policy gathered by phone some of the leading journalists who had been reporting from across the country to hear their perspective. The Washington Post's Rajiv Chandrasekaran moderated a discussion with the New York Times' Anthony Shadid, the Wall Street Journal's Charles Levinson, and the Washington Post's Leila Fadel. These correspondents shared their opinions on everything from the surprisingly strong candidacy of former interim Prime Minister Ayad Allawi to the ever-present sectarian divide in the country and the effect of yesterday's events on the future of Iraq.

Election Day and the Sectarian Divide

Iraq's civil war, waged between its Sunni and Shiite populations, may be over, but the country's sectarian divisions are far from healed. In many cases, they have been simply transferred to political rivalries. In the most recent elections, Prime Minister Nouri al-Maliki was poised to capture the majority of the Shiite vote, while former interim Prime Minister Ayad Allawi, a secular Shiite himself, appeared to be the favored candidate of Iraq's Sunni population. Our correspondents discussed the dynamics of the campaign and how sectarianism influences Iraq's political process.

Rajiv Chandrasekaran: Let me say it's a real pleasure to have all of you here. Anthony, could you start off with a brief, top-level, assessment of what occurred on Sunday, and then we can drill into some more specific issues?

Anthony Shadid: I was out in Anbar, trying to get a read on where Sunni sentiments were headed. When you try to gauge the Sunni vote, I think often it is portrayed as [a narrative of how] Sunnis abandoned the insurgency and now have joined the political process -- but I can also see it as a quest of the Sunnis to find their voice in post-invasion Iraq. They first looked to the insurgency to shore up their presence on the Iraqi political landscape. There was the alliance, however uneasy, with the Americans, when the Sahwa movement came to maturity, and I think it was a very tactical choice about Ayad Allawi, as being able to counter the sway of religious Shiite parties.

The more time I spend in Iraq, the more it reminds me of Lebanon. There's this discourse out there of national unity and moving beyond ethnicity -- but there's a very entrenched ethnic system. I think there's a visceral sectarian and ethnic torment in this country. I think it's regrettable. I think people resent it at the same time they subscribe to it. I think people want to move beyond it, but they don't have the guarantees of their own security to do that in a decisive or forceful way.

Charles Levinson: I think Allawi will dominate the Sunni areas, and I think Maliki will do well in the Shiite south. I think it's going to be a question of how much Allawi can chip into Maliki's Shiite support in the south. Anecdotally in Baghdad, it was quite surprising that though [Allawi] had this whole campaign against him -- he's Baathist, the most prominent and popular Sunni officials in Iraq are all behind him -- in solidly Shiite areas in Baghdad, this guy had a very respectable presence, and there were definitely a number of people who were supporting him. In the Shiite areas, Maliki definitely had more support. But among the people we talked to, Allawi often had more support than the Iraqi National Alliance, which is pretty remarkable.

I think a lot of journalists have been a little burned on Allawi hype so many times in past elections, so he's been a little bit under the radar for most of the campaign. People were still prone to counting him out, but I think the dynamics are significantly different this time politically, as far as his prospects are concerned. 

Leila Fadel: What I was struck by was that Iraqis were voting with their life on the line -- this is the moment that they can decide what kind of government they'll have when U.S. troops finally leave. I think most people were looking for more secular, someone who could be a nationalist.

What I found was that more people were looking for something new. When you looked at the parties themselves, you found that they were trying to introduce new candidates. If they were known as sectarian groups like the Iraqi National Alliance, they were trying to bring in Sunnis and Kurds -- something to say "we're nationalists now." So most people were talking about new faces and, even if they're voting for Allawi or Maliki, the one thing that everyone agreed was that they were voting for someone to bring security. There's been seven years of real tragedy here.

What This Means for the United States

In Washington, policymakers are trying to determine whether these elections will allow U.S. President Barack Obama to continue his plans to draw down U.S. forces in the country. With American troops having already largely ceded control of urban areas, the U.S. presence is no longer as visible to normal Iraqis as it had been in previous years. Our correspondents weigh in on how the United States factored in to the campaign rhetoric, and what the elections mean for the future of U.S. involvement in Mesopotamia.

Chandrasekaran: How did the Americans factor into the campaign rhetoric? Was it something the candidates referred to frequently, or was it a nonissue?

Fadel: Everyone is voting with the understanding that the drawdown in the next two years will be significant, so for the first time they're voting for a government that can't be checked by the U.S. military, for better or worse. U.S. power has been waning here. They aren't in the streets. As the violence yesterday showed, there were explosions every five minutes from 6:30 in the morning, to 11 or 12.

There were definitely two buildings that collapsed on civilians, and we still have General [Ray] Odierno talking about how these buildings were abandoned when we saw people pulled out of those buildings -- 25 dead people. So you realize that they have much less visibility, much less power to force anyone to do something. So I think when Iraqis went to the polls this time, they understood that power is waning on the U.S. side and that they have to put their stake in before they leave.

Shadid: I think there is a narrative out there that, whatever happened yesterday, the Americans were going to posit this as the denouement of their entanglement here. Short of an Iranian invasion, the Americans are out of here in terms of a military withdrawal. I'm sure they're going to play with the numbers and dates. "50,000" is going to be defined very loosely in terms of whether it constitutes combat troops or not. They may even renegotiate the Status of Forces Agreement in terms of keeping a permanent military presence here. But time and again, we've learned that deadlines in Iraq operate according to American domestic political considerations. There is a midterm election coming in November, and that is going to dictate how the Americans act in Iraq, far more than how it plays out on the ground.

Allawi's appeal

The fortunes of former interim Prime Minister Ayad Allawi's al-Iraqiyya coalition was shattered when the de-Baathification commission, led by Allawi's political rival, Ahmed Chalabi, disqualified many of its most prominent members. However, its focus on a law-and-order message won Allawi the support of many Sunni voters -- an impressive feat for a Shiite politician, albeit a secular one. While our correspondents were sometimes skeptical of whether the hype surrounding him would translate into votes -- he had been expected to perform strongly in the 2005 parliamentary elections and the 2009 provincial elections, but his campaign fizzled -- they discussed the nature of his appeal and the Sunni strategy for voting for him.

Chandrasekaran: Anthony, I was struck by your piece from Fallujah in this morning's New York Times. Why has Allawi emerged as the leading candidate among the urban Sunnis that you talked to in Fallujah and others talked to in Baghdad?

Shadid: Allawi has been very successful in capturing neo-Baathist sentiment, as portraying himself as an opponent of Iran, and seeking to reincorporate Iraq in the wider Arab world, as a strongman -- it's a cliché, but nevertheless people talk about it -- someone who is going to be somewhat dictatorial in his rule and stand up to Iran and religious Shiite parties. What I think is interesting about Allawi is that, at least in Fallujah, it was a sentiment of the best of the worst.

I think he's emerged as a default Sunni representative, and I think that it's interesting that a secular Shiite can fill that role. We were talking to people in Fallujah and Anbar yesterday, and they said it was a tactical choice. No one was crazy about Allawi -- a lot of people in Fallujah remember that he was prime minister in 2004, during the second American attack on Fallujah. They seemed to give him a pass, but it wasn't this huge adoration for Allawi.

Levinson: I think this was a tactical decision -- made on a much larger scale. A lot was made about Allawi during the campaign about how much time he spent in other countries: He was in Qatar, Bahrain, Kuwait, Saudi Arabia, Egypt, Lebanon, Syria twice, Turkey -- all during the campaign period. This coalition was basically Iraqi Sunnis and other Sunni Arab states in the region saying, "The U.S. is out of here; we need to figure out a strategy."

And Allawi was chosen as their man. There were key meetings of this coalition in Jordan and Sharm al-Sheikh, and I think this was much more of a broad tactical decision to choose Allawi as their man and they were going to make their stand in Iraq with him. You saw, beginning last fall, major Sunni players coalescing around this guy. It wasn't just Allawi being smart and reaching out to Sunni voters; it was much more of a conscious decision made by Sunnis both inside and outside Iraq who are concerned about what will happen as the U.S. draws down.

Shadid: I would be surprised if Allawi picks up between one and three seats in any Shiite province outside of Baghdad and Basra. That would surprise me, but it could happen. We've always gotten Allawi wrong -- what he represents -- and I could be getting it completely wrong this time.

In Fallujah yesterday, out of 25 interviews, there was maybe one person who wasn't voting for Allawi. It struck me how often our [foreign journalists'] perspectives are oriented, because we're talking predominantly to an urban -- a somewhat more cosmopolitan and more sophisticated -- population. Sentiments in the countryside are often more visceral. It bothered me while I was writing a story yesterday and I was trying to understand the tribal influence in Anbar that makes them come out and vote for more traditional and more tribally oriented candidates. I'm just pointing it out as self-criticism for journalists, that we sometimes lose track of how deeply sentiments can run in more remote places.

Fadel: I think that's right. In the provincial elections and the 2005 [parliamentary] election, Allawi was seen as a front-runner. But he never garnered those seats. Part of that is that journalists end up in the more cosmopolitan areas, like Baghdad, like Fallujah, like Basra, where you have a different perspective than you have in the smaller towns, like Saqlawiyah [a town in Anbar province located northwest of Fallujah], for example -- I don't know who went to a polling station over there.


So, what now? After the votes are counted, the politicians will embark on what is expected to be a grueling campaign of coalition-building and political horse-trading. Our correspondents suggested this could fracture some of the electoral coalitions and stymie progress on Iraq's pressing legislative issues. They also feared that, given Iraq's nascent democratic institutions, the election's losers might not cede power willingly -- and could turn to violence to protest their poor showing at the ballot box.

Chandrasekaran: Assuming that Allawi and Maliki wind up with strong showings, but neither with enough to form a government on their own, where do you see the principal coalitions being formed?

Fadel: In conversations running up to the elections, it sounded to me like the coalitions of the past may be the coalitions of the future. In speaking with President Jalal Talabani and people around Maliki, I think that if Maliki becomes the front-runner, then we may very well see the Iraqi National Alliance, the State of Law, and the Kurds once again unite and form a coalition government that shuts out some of the other players. And a lot of people were talking about how [Grand Ayatollah Ali] al-Sistani wouldn't get involved before the election, but that he would get very involved following the election to make sure that Shiites stay united and a more secular leader like Allawi doesn't take the government. But I think that all changes if Allawi gets the largest number of seats.

Shadid: I think what we're about to embark on could be the most precarious period yet. The last negotiations lasted 156 days for a coalition government. One thing that has been proven over the past five years or so is that the Americans are very good at making sure that elections happen and that they go relatively smoothly. They can pull them off.

But what we've seen is that the governments don't really govern. There are no institutions there, there's no consensus in a country that requires a consensus government, and I think that's what we're really going to approach. Violence will be used as a tool by parties to put pressure on their negotiating partners. I think it could be a very tricky period. It comes at a time when the Americans are required to be an arbiter, given the system that they've constructed, but the Americans are much less willing and much less able to play that role. This could be a very prickly few months.

Levinson: If Allawi's people lose or don't do well, I think you'll see them raising all sort of claims of foul play. And if Maliki's people lose, how smoothly are they going to exit stage left?

Shadid: One person in Fallujah asked me what the process of de-Malikization is going to look like. That's a great way of putting it. Maliki has been very effective in putting his people into power. They call this group of people around him the "impenetrable circle." It's exclusively Dawa party. It's secretive and operates the same way Dawa did in exile, as a clandestine movement.