National Security

Building Blocks

The obsession that is preventing a nuclear deal with Iran.

Following two days of talks last week, officials from Iran and the IAEA threw in the towel, failing again to clinch a deal on access to sites, people, and documents of interest to the agency. The IAEA's immediate priority is to get into certain buildings at the Parchin military base near Tehran, where they suspect Iran may have conducted conventional explosives testing -- possibly relevant to nuclear weaponry -- perhaps a decade or so ago. There is no evidence of current nuclear work there (in fact, the agency has visited the site twice and found nothing of concern). But by inflating these old concerns about Parchin into a major issue, the agency risks derailing the more urgent negotiations that are due to take place between Iran and the P5+1 countries (China, France, Russia, the United Kingdom, the United States, and Germany). Those talks seek to, among other things, curtail Iran's 20 percent uranium enrichment.

The IAEA again wants access to the site because of secret evidence, provided by unidentified third-party intelligence agencies, implying that conventional explosives testing relevant to nuclear weaponization may have taken place a decade or so ago at Parchin. The agency has not showed Iranian officials this evidence, which has led Iran to insist that it must have been fabricated. (This could well be true, given that forged documents were also passed on to the IAEA before the 2003 Iraq war.) As Robert Kelley, an American weapons engineer and ex-IAEA inspector, has stated: "The IAEA's authority is supposed to derive from its ability to independently analyze information....At Parchin, they appear to be merely echoing the intelligence and analysis of a few member states."

Olli Heinonen, the head of the IAEA's safeguards department until 2010, is also puzzled at the way the IAEA is behaving: "Let's assume [inspectors] finally get there and they find nothing. People will say, 'Oh, it's because Iran has sanitized it....But in reality it may have not been sanitized....I don't know why [the IAEA] approach it this way, which was not a standard practice." And Hans Blix, former head of the IAEA, weighed in, stating, "Any country, I think, would be rather reluctant to let international inspectors to go anywhere in a military site. In a way, the Iranians have been more open than most other countries would be." The U.N. Security Council can encourage Iran to cooperate with the IAEA, but they cannot expand the agency's legal authority.

In any case, what is the point of going to Parchin? Even if the allegations of decade-old conventional explosives testing turn out to be true, Iran would not have violated its IAEA safeguards agreement. This is because the agreement's "exclusive purpose" is to verify that nuclear material "is not diverted to nuclear weapons or other nuclear explosive devices," something the agency has verified ever since Iran's safeguards agreement came into effect in 1974. The IAEA itself has admitted that "absent some nexus to nuclear material the Agency's legal authority to pursue the verification of possible nuclear weapons related activity is limited."

The IAEA's insistence to get into Parchin to verify long-ago non-nuclear issues is nothing more than a tempest in a teapot, but by continuing to cast Iran in a negative light -- when, in fact, Iran is within its rights to refuse IAEA entry -- the agency is poisoning the atmosphere of the much more important upcoming talks between the P5+1 and Iran.

These latter talks should focus on the most important issue: curtailing Iran's 20 percent uranium enrichment. In fact, Iran has signaled that it is willing to strike such a deal, given some reciprocation in the form of sanctions relief. Limiting Iran's 20 percent enrichment is sufficiently important that the P5+1 should put sanctions relief on the table in order to obtain this major concession from Iran. As Suzanne Maloney of Brookings suggests, "The incentives must be more persuasive than the paltry offers the United States has made to date." In the past, the P5+1 have indicated that there would be "consideration" of easing sanctions "later," after Iran made concessions. This is obviously not a recipe for success: reciprocity should be simultaneous. In general, there needs to be a symmetry of compromise by both sides.

But Obama's hands may be tied by the legislative text of the U.S. sanctions. As I -- and others -- have noted before, U.S. sanctions can only be lifted after the president certifies to Congress that, among other things, "the government of Iran has: (1) released all political prisoners and detainees; (2) ceased its practices of violence and abuse of Iranian citizens engaging in peaceful political activity; (3) conducted a transparent investigation into the killings and abuse of peaceful political activists in Iran and prosecuted those responsible; and (4) made progress toward establishing an independent judiciary."

Although these are laudable goals, they complicate negotiations by establishing conditions that have nothing to do with Iran's nuclear program. If Iran is going to be sanctioned no matter what it does with its nuclear program, why would they yield on the nuclear issue? As veteran CIA officer Paul Pillar points out, the sanctions are essentially "designed to fail." The message being sent to Iran is that the sanctions are not really about the nuclear program but the regime itself. Although technically the president can waive some of the congressional requirements in the interest of national security, in practice he would run an unacceptable political risk in crossing Congress and appearing "soft on Iran."

But the sanctions are unlikely to destabilize the regime and bring in more liberal leaders. In fact, the sanctions are directly benefiting the officers of the Iranian Revolutionary Guard because they control the Iranian black market. As Sune Engel Rasmussen points out in a recent Foreign Policy dispatch from Tehran, IRGC officers are amassing "great wealth through smuggled goods, including everything from alcohol and cigarettes to flat-screen televisions." Moreover, the regime has placed price controls on many staples and basic services and is thus responsible for the continuing affordability of bread, meat, cooking oil, and transport. An Iranian activist summed it up well, "People are becoming more dependent on the government for everything. Why would they rebel against this government?"

The sanctions are also helping China obtain oil at below-market prices. Beijing has basically exploited Iran's isolation to drive a harder bargain, pressuring Iran into cheaper prices and even carrying out barter deals with substandard goods. Although the sanctions are creating great hardships for the weakest in Iranian society -- the poor, the sick, and the elderly -- they have not yet brought about any official change in Iran's nuclear calculus. Perversely, they are punishing and disempowering precisely the people who oppose the current government. As Omid Tofighian sums up, "the politically progressive and intellectually enlightened section of Iranian society, that until recently were regularly travelling abroad for work and higher education, have experienced a devastating blow to their plans. Their contribution to the potential for change has been hindered....Weakening this particular group of Iranian society has highly detrimental consequences for the democratic process."

So sanctions have helped China get cheap oil, enriched the officers of Iranian revolutionary guards, solidified the population's dependence on the regime, and hurt the middle class, which could bring about true democratic reform.

Given this reality, it is puzzling that some have called for more sanctions. The Institute for Science and International Security (ISIS) recently released a slick new report calling for even more sanctions as a way to extract nuclear concessions from the Islamic republic. A worse set of recommendations could not have come at a worse time -- just as nuclear negotiations between Iran and the global powers are due to resume post-U.S. elections. As Greg Thielmann, a senior fellow at the Arms Control Association and a former top State Department analyst on proliferation issues, notes, "The report does not offer a realistic formula for negotiating a satisfactory agreement on limiting Iran's nuclear programme. It would require Iran to capitulate on virtually all fronts....Some of the measures it suggests would be likely to disrupt P5+1 unity...and the maximalist requirements it cites for an agreement could convince Tehran that the U.S. objective is regime change, rather than full compliance with its obligations to the IAEA."

The bizarre aspect of the call for increasing pressure is that the best intelligence concludes that no nuclear weapons work is going on in Iran right now. James Clapper, the director of national intelligence, has confirmed that he has "a high level of confidence" that no such work is going on now. Defense Secretary Leon Panetta has also weighed in: "Are they [Iranians] trying to develop a nuclear weapon? No." And Mohamed ElBaradei, the Nobel Peace Prize laureate who spent more than a decade as the director of the IAEA, said that he had not "seen a shred of evidence" that Iran was pursuing the bomb, adding, "I don't believe Iran is a clear and present danger. All I see is the hype about the threat posed by Iran."

Of course, it would be better if Iran stopped stockpiling 20 percent enriched uranium -- even though such activity is legal under the nuclear Nonproliferation Treaty. The problem with the impasse over the Iranian nuclear program is not that there aren't enough sanctions already in place, but that there is no clear roadmap of what Iran needs to do with its nuclear program in order to have even the existing sanctions removed. In fact, the Iranian regime may be continuing 20 percent enrichment as a bargaining chip to exchange for getting rid of sanctions. What is needed is for the P5+1 to spell out in crystal clear terms what realistic steps Iran needs to take with its nuclear program to have the existing sanctions lifted. Some reasonable scenarios have been provided by the Arms Control Association.

As Lee Hamilton, Thomas Pickering, and Anthony Zinni suggest, "the time is ripe for a deal and wrong for more sanctions." The Stockholm International Peace Research Institute recently released an expert report advising the IAEA to stop obsessing over gaining access to Parchin -- it is advice worth heeding. And the P5+1 ought to adopt a more mature approach: instead of looking at what more they can do to Iran, they ought to focus on how to advance a deal by offering Iran a roadmap out of the sanctions. The "all sticks, no carrots" approach has been an abysmal failure; all that it has achieved so far is building up Iran's enriched uranium stockpile. Jim Walsh of MIT summed it up well recently: "If the nuclear [related] activities were in the past, I don't care. It's dead, and it's regretful, but let's do a deal with Iran that moves forward." After his inauguration yesterday, President Obama should launch a fresh, constructive approach to Iran that cuts through the thicket of sanctions confusion sown by Congress.. 


Democracy Lab

Seizing the Moment

The world’s leading nations are convening a meeting on the fight against corruption. Here’s what they ought to be discussing.

In 2010, the world's twenty most powerful nations formed an action plan to fight corruption. That was a welcome step, but it should be fairly obvious that just under three years later, the phenomenon of corruption remains alive and well. In mid-February the G20 Anti-Corruption Working Group (WG) will meet again under the co-chairmanship of Russia and Canada in Moscow. But can it make any significant progress?

The international community has already established some important measures against corruption, above all the Organization for Economic Co-operation and Development Anti-Bribery Convention and the United Nations Anti-Corruption Convention. Yet both have their limits. The former is too narrow (since it focuses only on the select club of the world's richest countries), while the latter is too broad (since it tries to include everyone, whether large or small).

The WG, by contrast, offers a potential Goldilocks configuration. By combining the established industrial powers of the OECD with the rising new economies of the BRICs, the G20 brings together an auspicious combination of states. But there's a problem here, too: A number of the key member countries of the WG are deeply implicated in the "secrecy jurisdictions" where a large part of the proceeds of corruption are held.

The United Kingdom is profoundly ambivalent about its dependencies in the Channel Islands and the Caribbean; Washington shows great indulgence toward the many U.S. corporations that park their funds offshore ( 19,000in the Cayman Islands alone); Russia's elites like to hold their funds in Cyprus; and China's newly-rich love to park their cash in the United States.

Yet there are grounds for hope. As a result of the financial crisis, finance ministries in the United States and Great Britain have noticed for the first time that there are huge revenue costs against the indirect advantage of soaking up the corrupt funds flooding into the financial markets of London and New York. In Russia, meanwhile, as Putin attempts to gain much greater control of Kremlin-licensed oligarchs, the mood is moving against the export of capital. In China, the exposure of Chongqing Party Secretary Bo Xilai and former PremierWen Jiabao as multi-millionaires has raised the nominal campaign against corruption to the front of the agenda promoted by new Communist Party chief Xi Jinping. He may mean business. So this might be the moment for the WG to get something done.

There are plenty of opportunities to be seized. First of all, the problem of political finance needs to be attacked boldly. Across the world, the raising of political funds for campaign-related purposes is probably the largest single source of corruption. The widespread recognition of the issue of political funding in the 2012 election in the United States has advanced the case for reform. But the problem may run even deeper elsewhere. (It costs $10 million to run a constituency-based campaign in India, for example.) Action has to be domestic, and Brazil has shown the way with the imprisonment of 29 congressmen for taking bribes under President Lula in 2005 and 2006. The minimal step would be to outlaw cross-border political funding, as has already been done in the United States, the United Kingdom, and several other countries. Here international collaboration is both practical and necessary.

Similarly critical is the behavior of international companies -- not just the usual suspects in the Fortune 500, but also thousands of other firms that affect the business culture in every country. That the problem remains entrenched is demonstrated not least by the recent scandal surrounding Walmart in Mexico. But there are some signs of progress. The OECD Anti-Bribery Convention has triggered some limited changes in corporate behavior, but actual prosecutions are few except in the most active seven countries. A number of countries (including China, India, Russia, and Indonesia) passed anti-foreign bribery legislation in 2011, but it remains to be seen how these new laws will be enforced. Outside the legal process, thousands of companies have committed in the last twenty years to a set of high ethical principles, including the rejection of corruption. The U.N. Global Compact and the World Economic Forum's Partnering Against Corruption Initiative offer leading examples of such standards. But their effective enforcement depends on a willingness by the participating companies to submit to an external review process by an independent assessor -- a notion so far seldom adopted.

The defense industry is a particular challenge. It's likely that the payment of major bribes by both American and European-based contractors has been limited by exposure from such recent cases as those involving BAE Systems and Siemens, and defense contractors now have their own business international ethics organization (the International Forum on Business Ethical Conduct). However, Russia and China, as key exporters of arms, remain outside this forum. The issue is at its most acute in the $8 billion per year small arms market, which thrives on corrupt payments and which fuels a range of conflicts around the world (from the Democratic Republic of Congo to Afghanistan). The trade in small arms is also the main reason that Washington (under pressure from the National Rifle Association) vetoed the proposed U.N. Arms Trade Treaty in mid-2012, in spite of its valuable draft clauses that targeted corruption in the trade.

Another huge source of corruption is mispricing. That's when goods that are undervalued in an exporting country are invoiced to a purchasing entity in a tax haven (usually a "secrecy jurisdiction") from which profits can eventually be transmitted to a company's main domicile. It remains a critical issue both for low-income exporting countries (which are deprived of due revenue) and importing countries (where revenue is diminished through the parking of revenues in tax havens). International accounting bodies and the OECD have rules about "arms-length trading" that are designed to eliminate this (by referencing world prices), but its members -- and the big four auditors -- fail to live up to the task. Passive collaboration in mispricing should become an actionable offense.

The banks remain a big challenge. Once regarded as "innocent until proven guilty," the industry now inspires universal distrust thanks to numerous court cases that have shown its members guilty of a wide range of criminal activities. Their offenses range from laundering the fruits of drug cartels to misrepresenting the creditworthiness of borrowers with sub-prime mortgages. Evidence of bankers' repentance is amazingly scarce. Constant surveillance by regulators and a willingness to prosecute or withdraw licenses is the only answer, but again one which requires government support across the G20.

Organized crime remains a major driver of corruption as mafia groups continue to control politicians in countries as different as Mexico, Italy, and India. The United Nation's Office for Drugs and Crime reports a steady increase over the last ten years in the value of illegal and counterfeit trade, necessarily abetted by political power. Yet the expansion of forms of international collaboration in response are regularly threatened by the behavior of individual countries, such as the United Kingdom, which incredibly enough is threatening to withdraw from 132 information-sharing arrangements for criminal offenses, including corruption, that it holds with its E.U. partners. The WG needs to ensure that governments adopt exactly the opposite response.

As the complex evidence for climate change builds in the public mind, the role of corruption as a driver of climate change -- for example by accelerating the destruction of forests -- needs to be recognized. Equally urgent is a recognition that several of the key tools for reducing carbon emissions -- such as carbon trading or the big development funds aimed at addressing the problem --may be undermined by corruption (as has already occurred with funds provided by the Clean Development Mechanism in Bangladesh and India, for example).

The Arab Spring created a surge of new publicity about the misdeeds of authoritarian rulers (such as Egypt's Hosni Mubarak, whose family fortune was a major source of discontent, or Tunisia's Ben Ali, who left behind $23 million in cash in his palace when he fled the country). Yet the public resentment against the malefactors who accumulate huge fortunes at public expense continues to be exacerbated by the reluctance of countries such as the United Kingdom and the United States to repatriate these ill-gotten gains. There are cases in Switzerland, France, and the U.K. that show how this logjam can be broken, particularly by resorting to civil rather than criminal law. But the question of how repatriated funds will be spent is a long-standing excuse for inaction. An international trust fund into which these funds could be placed as a first stage to repatriation would validate and expedite a contentious process.

Last but not least, there is the ubiquitous small-scale corruption that beggars the lives of at least two billion people across the globe, perfectly described by Katherine Boo in her book Behind The Beautiful Forevers, about a Mumbai slum. While this is driven by a myriad of local circumstances, every bribe paid by a western tourist or by a trading company to clear a container feeds into the slough of despair that dogs the lives of so many of the world's poorest. The U.S. Foreign Corrupt Practices Act (as well as many of the foreign bribery laws passed by OECD member states in the last few years) actually permits "grease payments" (small-scale bribes that expedite everyday life and business). It is time for all of that to go.

The G20 certainly has the capacity to make progress. The milestones identified here go well beyond the group's official agenda. If real progress is made on the official agenda, there will still be plenty left for Australia to do when it take up the G20 Chair in 2014.

Photo by YURI CORTEZ/AFP/GettyImages