American and European Union sanctions against Iran have not yet "worked", acknowledges EU sanctions coordinator Francesco Fini, because obviously "we don't have yet a negotiated solution" curbing Tehran's nuclear pursuits. "But they ARE working," Fini emphasises, noting that when Iranian negotiators meet with world powers to discuss the international community's desired changes to their nuclear program, as in the last two rounds of EU-headed negotiations in Kazakhstan, "what they are asking in return is sanctions relief."
Iran expert Mark Dubowitz, sharing a panel with Fini, credited the EU's sharply targeted measures, especially the oil embargo, as the reason Tehran is even taking a seat at the table. But the "bad news", warns the director of Washington D.C.-based Foundation for the Defense of Democracies, is that "Iranian nuclear physics is beating Western economic pressure."
Dubowitz believes Iran is 15 months or less away from having an undetectable nuclear bomb and that despite impressive European restrictions on the regime's ability to earn, stash -- and, crucially, to spend -- foreign currency, existing sanctions are insufficient to break the "nuclear will" of the Iranian regime.
"We will not get a nuclear deal with [Iran's Supreme Leader Ali] Khamenei unless we make it very clear to him we're going to collapse his economy and that economic collapse could spiral into political collapse," he believes In other words, Dubowitz explains, though neither U.S. or European governments can officially seek regime change within the mandate of current United Nations Security Council resolutions, Iranian leaders should be made aware that the "only way out" for them is an agreement on their nuclear program.
Dubowitz's dire warning on 16 April seemed to be borne out 17 April by diplomats at the International Atomic Energy Agency (IAEA) briefing reporters on an upswing in Iranian nuclear capabilities. The viewpoint from Vienna is that Iran has managed, despite difficulties caused by sanctions, to triple its number of advanced uranium-enrichment centrifuges installed in the Natanz facility. Though the upgrade has not yet brought Natanz to full uranium-enrichment capacity or the regime's stated goal of having 3,000 centrifuges there, it's stark proof that even the ever-tightening noose of international restrictions is not having the desired impact -- either at the negotiating table or eight meters underground in the Natanz laboratories.
Despite his lauding of the EU's existing restrictions on Iranian financial activities, Dubowitz believes the bloc holds the key to increasing pressure on the regime to its tipping point. He says approximately a third of Tehran's foreign-currency reserves are in foreign banks and most of that amount is in euros, which are then converted as needed to do business with governments and companies that are still willing to deal with the regime.
Dubowitz believes the EU should more aggressively block transactions in euros, since the European Central Bank (ECB) bars activities related to "financing of terrorism, proliferation-sensitive nuclear activities and the development of nuclear weapons delivery systems." "Europe is in a position today to deny Iran the ability to settle those euro transactions through the euro clearing and settlement network" known as Target2, Dubowitz maintains.
The ECB has responded to such charges by denying any "illegitimate transactions" have been processed. The U.S. Congress is skeptical, judging by a letter sent to EU President Herman van Rompuy in late February asking that existing loopholes be closed. No action has been taken on that call and now legislation pending on Capitol Hill that could mean U.S. penalties against financial institutions including the ECB itself if it can be proven that euro-denominated transactions by the Iranian regime are taking place. The measure's sponsor, Illinois Senator Mark Kirk, has even released a video to explain how urgent he feels new legislation is to close what he calls the "euro loophole" in Target2.
The Atlantic Council's Sarwar Kashmeri isn't convinced that the rest of the world is going to fall into line so easily. While the U.S. And Europe are doing their utmost to isolate the regime, he notes, "I don't see any non-aligned country having changed its position that Iran is within its obligations to develop its own nuclear power sources", as Iran claims it's doing with its nuclear exploration. Kashmeri also underscores what he feels has been limited success in sanctioning Iranian financial activities. "Virtually anything is still available -- at a price of course -- to the Iranian government," he says. Even if that price gets much higher with more U.S. and possibly European sanctions, Mark Dubowitz believes Iran has enough cash to survive until it has the ultimate bargaining chip: a nuclear-weaponization capability. But Dubowitz says President Barack Obama is not prepared to wait for that outcome if diplomatic options fail. "President Obama is going to bomb Iran" in that case, he asserts.
Carnegie Europe Director Jan Techau thinks the price for that conclusion would be incredibly high and not just for Iran. "The moment this option becomes viable," Techau says, "cracks in the coalition will become visible. Some countries will refuse to participate in any military operation (which is the smaller problem, because not all will be needed); others will reject a military solution outright."
Meanwhile a large group of U.S. foreign-policy and economics heavyweights added their names to a scathing new assessment of sanctions policies on 17 April from the U.S.-based non-governmental organisation The Iran Project (theiranproject.org). The study "Strategic Options for Iran: Balancing Pressure with Diplomacy" suggests past and current efforts at resolving issues with Iran are ineffective and counter-productive. Contrary to the popular assumption that restrictive measures are having a positive effect, the authors and their proponents suggest they actually "may have narrowed the options for dealing with Iran" by increasing hostility and corruption in the regime, manifested also in increased repression against citizens.
"It seems doubtful that pressure alone will change the decisions of Iran's leaders," the report states, suggesting that diplomacy, not dire warnings of possible military action, is the most effective way to accomplish a nuclear solution.
But, Dubowitz reminds, "the clock is ticking."