Trouble over Tehran

Five reasons that Israel and the United States might want to think long and hard about preemptively striking Iran's nuclear facilities.

This week's imminent publication of an International Atomic Energy Agency (IAEA) report on Iran's nuclear program -- details of which have been leaking out -- is expected to provide evidence that Tehran is hard at work building a nuclear weapon. Once again, the proverbial tick-tock in media and diplomatic circles has begun: Is a U.S.-backed Israeli strike against Iran in the offing?

Much of the saber rattling and the leaks from Israel may be designed to use the IAEA report to motivate the international community to do more about Iran's developing nuclear program and to lay down a warning of what the consequences might be if it doesn't. Already, China and Russia are urging evidence in the report be kept secret, so it's a good bet that they would block any proposals for kinetic action, and perhaps even further sanctions, in the United Nations. The Israelis might decide for any number of reasons that they must launch a military strike at some point; and it might be that a U.S. president cannot be in a position to dissuade them. Indeed, as a tiny nation living on the knife's edge with a dark history and a track record of successful pre-emption against military threats, the Israelis may well act at some point, though not necessarily now.

Before they do, here are the five top reasons they might want to consider keeping their jets and missiles on the ground:

1. There's no good end state. Striking Iranian nuclear sites is like mowing the grass. Unless a strike succeeded in permanently crippling the Iranian capacity to produce and weaponize fissile material, the grass would only grow back again. And no strike -- or even series of strikes -- can accomplish this. Iran's hardened sites, redundancy of facilities, and secret locations present significant obstacles to a successful attack. Even in the best-case scenario -- an incomplete strike that, say, set back the Iranian nuclear program by two to three years -- the Iranians would reseed it with the kind of legitimacy and urgency that can only come from having been attacked by an outside power. Self-defense would then become the organizing principle of Iran's nuclear program; it would resonate tremendously throughout the Middle East and even in the international community.

The counterargument of course is that the Israelis would cut the grass periodically, striking Iran every 18 months or so. But this situation is probably untenable; it would put Iran and Israel in a permanent state of confrontation and keep the region burning for years to come.

2. No one can prevent Iran from acquiring a nuclear weapon. Except Iran. The fact is that India, Pakistan, North Korea, and even Israel -- nations with both a profound sense of insecurity and entitlement -- have all developed nuclear weapons secretly. Iraq and Syria were on their way, too. Iran, under the Shah, was also committed to a nuclear program and might, over time, have tried to weaponize.

But denying Iran a weapon means more than taking away the toys; it means changing the national calculation and motivation of a power that historically has imagined itself as a great nation. Even in the unlikely event Iran became a democracy, its own regional image and ambitions might still impel it to develop a nuclear capacity. At a minimum, denying Iran nuclear weapons means fundamentally changing the mullahcracy in Tehran; a military strike by the Israelis might do just the opposite -- further legitimizing it, particularly if there were civilian casualties. There's no better way to mobilize a divided polity or bring out its nationalist and unified character than to demonize a foreign enemy. And the Israelis would be the target of a massive Iranian propaganda effort across the Arab world, an effort that would likely win a great deal of sympathy.

3. There are severe costs to the United States. When countries undertake actions that carry great uncertainty and risk, two questions need to be asked. First, can it be done? Second, what will it cost? The fact that Israel faces an existential threat may understandably lead it to downplay the costs to others, particularly to the United States. After all, it's easy enough for Americans to assume, living thousands of miles away, that Iran is a rational actor and would never use a nuclear weapon against Israel because of the expectation of its own obliteration at the hands of the Israelis or the United States. Israelis, of course, maintain that the threat of retaliation is not an acceptable deterrent and will look to their own interests first.

But let's look at what an Israeli strike might do to U.S. interests and an economy still in recession. Even if the Iranians could only temporarily block shipping in the Strait of Hormuz (through which 40 percent of all oil sails), the price of oil would spike exponentially, further undermining and sabotaging world markets -- and doing tremendous damage to the fragile economic recovery in the United States. These economic and financial uncertainties could be truly global and catastrophic. At the same time, the Iranians would certainly try to turn up the heat against U.S. forces in Afghanistan and those remaining in Iraq, further compounding an already tenuous security situation in both countries. Together with a resurgent al Qaeda in Iraq (a Sunni threat), U.S. forces would be faced with a Shiite one as well. At the precise moment U.S. forces are committed to leaving Iraq, they could get sucked back into staying. Iran might well lash out at foes and perceived foes across the region, including in the Persian Gulf, particularly in a place like Bahrain. The Iranian capacity to strike the continental United State may be limited, but the capacity to wage a clandestine war against U.S. and Israeli interests across the Middle East is far more formidable.

4. It will legitimize and popularize Iran in the Middle East. George H.W. Bush's administration went to great lengths to prevent Israel from responding to Iraqi Scud attacks during the 1991 Gulf War. The logic was pretty compelling: Iraq was in defiance of the international community and U.N. Security Council resolutions, and a 34-country international coalition had formed to enforce the global good. The last thing needed was for Saddam Hussein to turn his invasion of Kuwait into an Arab-Israeli confrontation. The same applies here, to some extent.

Sanctions may never prevent the Iranians from acquiring a weapon, but they do have some impact; and Iran has become greatly isolated. An Israeli attack could undermine all that good work, particularly in the wake of this year's Arab revolutions. An Israeli attack might be quietly welcomed by the rulers of some Persian Gulf states, but it would be viewed on the Arab street as another example of Israeli aggression and U.S. double standards. The Arabs would love to see the Iranians taken down a notch or two; but Israel's involvement is going to complicate the post-strike environment and almost certainly undermine any U.S. effort to clean up the mess that will be left behind.

5. If the Israelis strike, the United States is necessarily involved. There's no way that an Israeli strike comes off without major complications and a military response against U.S. interests. Clearly, the assumption in Tehran will be that the Israeli attack was coordinated with the United States. Likely responses include attempts to close off shipping in the Strait of Hormuz and proxy attacks against U.S. military installations and embassies. Even if the United States is actively not involved in the strike, it will likely be called upon to aid or support Israel against attacks from Hezbollah and Hamas using high-trajectory weapons. Washington's credibility, at an all-time low internationally, will be further undermined. The United States is now involved in the two longest wars in its history and still has thousands of forces on the ground in two Muslim countries. And let's be clear: The United States is not winning those wars. The last thing it needs is another war against a Muslim country whose staying power and effectiveness in striking back at America (albeit in asymmetrical ways) should never be underestimated.

All these concerns are offered up knowing full well that Iran's acquisition of a nuclear weapon is a major problem for the United States, Israel, and the international community. It might even be a game-changer. The IAEA report seems likely to conclude that Iran is determined to acquire such a weapon, and it will reinforce -- with clarity -- that neither sanctions nor diplomacy have proved effective in stopping Tehran. No one should trivialize the consequences of an Iranian bomb. We can't stick our head in the sand, but we shouldn't lose our heads either.

If there was a reasonable chance or expectation that an Israeli strike would eliminate Iran's nuclear capacity, then a more compelling argument might be made in defense of it. But there isn't. And that leaves us in a very tough spot, poised somewhere for the moment between two equally unpalatable choices: risky and potentially catastrophic military action, or learning to live with an Iranian bomb that could dramatically reshape the power balance in the Middle East.


Majid Saeedi/Getty Images


Europe's Coming Trade War with China

Today, the talk in Brussels is all about Beijing's price for helping bail out the eurozone. But the real danger is a looming protectionist backlash.

Isn't it ironic? For many years, European leaders reckoned that they could use their continent's economic weight to nudge China into making deeper economic reforms. Now, it seems that the People's Republic is using its financial clout to lever a debt-plagued Europe into austerity and unlock its vast technology market. Once a model of economic integration, Europe has turned into an outlet store where Chinese companies can pick up brands like Volvo, Saab, and MG at knockoff prices. On top of that, some analysts speculate that Beijing is poised to get the ban on European weapons exports lifted and gain official recognition as a market economy, which would make it harder to slap China with sanctions for unfair trade.

So, are the Mongol hordes about to ride roughshod over the Old Continent? Not really. The truth is that there is no evidence of a Chinese scramble for Europe. If anything, Chinese investors are tremendously reluctant to sink their hard-earned yuan into European markets. That also goes for Chinese companies, which have barely increased their direct investments, apart from a few highly visible takeovers, and have even rid themselves of several billion eruos of European stocks and bonds since 2007. Takeovers of strong brands like Volvo remain the exception, not the rule. Only in Eastern Europe have Chinese firms ventured into greenfield investment projects in the car, machinery, and transportation industries.

As for the Chinese government, it too is holding back from becoming heavily involved in the European Financial Stability Facility (EFSF) set up to bail out struggling countries like Greece, Portugal, and Spain. Europe expects China to buy tens of billions of euros' worth EFSF bonds. But though the People's Republic needs to invest its foreign exchange reserves abroad to prevent the yuan from climbing too rapidly, it is rather picky. Because it has little confidence in the politicians managing the EFSF, it prefers to invest via the International Monetary Fund, which exercises tighter control over how the money is spent. But Beijing is not going all-out in extracting concessions from Europe. True, on Sept. 14, Premier Wen Jiabao reiterated his wish to get market-economy status for China, but Chinese officials recognize that any attempt to capitalize from Europe's weakness will seriously backfire.

"We are at a very precarious juncture," a senior Chinese diplomat in Brussels told me recently. "On the one hand, companies and the public opinion in China have become less positive about Europe and do not want us to make compromises. On the other hand, we know that European leaders are also under a lot of pressure to play hardball with us. Negative perceptions will only get worse if we respond too assertively to Europe's crisis." Prudence is thus the guideline. If China hopes to achieve anything at this moment, it is a cast-iron guarantee that it will see its money back in case of additional government bond purchases.

Nor is Europe going to give China an easy ride. Advanced member states are not leaving their strategic assets and know-how up for grabs. Even those countries that seem the most desperate to attract Chinese investments or financial support generally stick to the principle that market- economy status can only be granted if China also lives up to the standards of a market economy. They might be all charm when discussing business deals in Beijing, but back in the discreet meeting rooms in Brussels, European diplomats are urging the European Commission to take a stronger position against unfair competition. Over the last two years, the commission, which now has full sway over trade and investment negotiations, initiated various new anti-dumping and anti-subsidy procedures aimed at China. Several more are in the pipeline. Chinese companies might be barred from government contracts if European companies cannot tender in China. There will probably also be more screening of investment from countries like China in strategic sectors. Like the U.S. Congress, the European Parliament is pushing for even bolder moves, like green tariffs and a true industrial policy.

Perhaps Europe will become more forthcoming if it sinks deeper into economic trouble? If anything, the opposite is true. As the economic morass deepens, European leaders are starting to think hard about future sources of growth. Gradually, a consensus is maturing that Europe cannot thrive on the service sector alone and that a total collapse of the welfare state can only be avoided if the continent maintains and strengthens its industrial base -- just as Germany, the European Union's strongest economy, has done. The European Commission recently devoted an entire policy paper to making the case for an EU-wide industrial policy.

European leaders thus see China as a daunting challenge, not a potential savior. Not only is China a cheaper market, but it is also catching up in technological performance, infrastructure, and the productivity of its labor force. Given Europe's dwindling competitiveness, it will be hugely difficult to boost industrial production -- at least without restoring to some form of protectionism.

China will likely retaliate in kind. It will not accelerate the appreciation of the yuan, as beleaguered European exporters want, nor scale back its financial support to exporting industries or open up its service sector to foreign competition. The result will be a cold trade war between Brussels and Beijing, similar to the long standoff between Beijing and Washington over everything from distorted currency rates to intellectual-property rights violations.

Were the coming crisis to last only a few years, Europe's free trade-minded bureaucracies could withstand the protectionist mood, but as we are heading for a lengthy siege, the liberal firewall might not withstand the populist tide. In good times, Europe tolerated growing trade imbalances and was fairly patient with China's mercantilist policies. But now that Europe is in trouble, trade revenues, technological assets, and jobs in industry are once again becoming a matter of national stability and political survival.

So is a Sino-European trade war inevitable? The way to prevent one seems obvious: Europe needs to rein in its overconsumption and China its overproduction. Such a coordinated adjustment, however, is highly unlikely. The more Europe pushes for opening up, the more hard-liners in Beijing will pressure their government to stand strong. Ultimately, Europe will start beefing up its defenses. A lot of this will happen unilaterally, mostly because the World Trade Organization does not properly cover issues like investment, services, and government procurement. Chinese leaders will have little choice but to respond by punishing European investors -- one way or another.