Planned Economic Punishment of Iran Will Inevitably Backfire on U.S. Economy


By Richard Walker

The new wave of sanctions imposed by the State Department and Treasury on Iran’s Revolutionary Guard and Defense Ministry are likely to have as little economic impact as the U.S. sanctions already in place. They could, however, represent a last ditch effort by the White House to bring Iran to heel before a “shock and awe” attack is ordered against Iran’s nuclear and military facilities.

The reality is that the new sanctions do not have the backing of Russia and China. As for the EU, it has not given its wholehearted support to the latest U.S. move.

Behind closed doors in the corridors of power in Brussels and Strasbourg, diplomats have expressed disapproval and alarm at White House policy on the Middle East. The EU needs Iran if it is to achieve a goal of reducing its dependence on Russian oil and gas. To that end, it has had talks with the Iranians about the viability of a gas pipeline. EU leaders see a pipeline as a necessary move, fearing that in the event of a new Cold War, Russia could turn off the energy taps and use natural resources as a powerful diplomatic tool.

Iran’s considerable oil and gas reserves have made it a valuable international trading partner for all but the U.S. Any move by Washington against Iran that could hurt Russia and China economically would be viewed in Moscow and Beijing with concern. Russia’s disapproval of the latest sanctions was evident in a comment by Russian leader Vladimir Putin, that President Bush was like a man “running around with a razor blade in his hand.”

Nevertheless, Condoleezza Rice and the Treasury have hailed the latest sanctions, and the decision to brand the IRGC—Iran Revolutionary Guard Corps—a terrorist organization, as another powerful step in hurting Iran economically and forcing it to abandon its nuclear ambitions.

The Bush administration strategy appears to be predicated on several assertions that may not necessarily hold true. First, it believes that the Iranian leader, Mahmoud Ahmadinejad, is already so unpopular at home that any damage to his country’s economy will generate protests on the streets and force him out of office. History demonstrates, however, that sanctions rarely have the kind of political impact they are intended to have.

In many instances, unpopular leaders have used sanctions to boost their approval ratings by making those who imposed the sanctions the real enemies of their people.

One of the most glaring examples of the failure of sanctions over five decades is Cuba, that sits just off the U.S. coastline.

There is also the fact these new sanctions lack global backing and cannot therefore be effective. Iran will still have business partners in China and Russia and will be able to exploit the international black market economy.

The irony of the U.S. move is that it has been forced to go it alone with these sanctions even though there is little international dispute about the risks if Iran acquires nuclear weapons, or that it has been meddling in Iraq, Lebanon and the Palestinian territories. It may be that the U.S. has ignored what other countries realize and that is that only a serious international coalition opposed to Iran’s role in Iraq and its efforts to go nuclear can have any hope of success, and going it alone is pointless.

The result could that that this latest strategy will only serve to embolden Iran’s leadership. That could have serious consequences for Iran and global security. In 2008, when it becomes evident to George Bush and Dick Cheney that their Iran policy failed, they may opt for preemptive strikes against Iran’s nuclear facilities, or encourage Israel to undertake the strikes. As a result, Iran’s nuclear ambitions would be set back for five years but the price of oil would go sky high and Iran would retaliate. It would probably unleash Hezbollah to attack Israel and use Shia militias in Iraq to turn on the U.S. military.

In an ensuing tit-for-tat Israel could use the opportunity to invade Lebanon again and in Iraq the US military could find itself in the middle of a widening conflict without the manpower to respond.

As things stand now, this new batch of sanctions targets the Iranian Defense Ministry, the IRGC and its special operations Quds force, as well as three leading Iranian banks, which the U.S. Treasury claims have been funding Hezbollah in Lebanon, Shia militias in Iraq and Hamas in Gaza.

The banks are all state-owned and include Bank Saderat, Bank Mellat and Bank Melli. The aim of the sanctions is to deter international companies from doing business with the banks. Twenty Iranian companies closely aligned to the IRGC have also been identified as targets but they will still be able to conduct business with Russia, China and Arab states.

The U.S. set its sights on the IRGC because it is one of the most powerful parts of the Iranian military apparatus. Numbering around 130,000 personnel, it has 105,000 soldiers organized into one marine brigade, six mechanized divisions and six infantry divisions. It also has its own air force, navy and missile units.

But it is the elite Quds force that has most concerned the U.S. military in Iraq because it has equipped and trained Shia militias and insurgents in the use of improvised explosive devices that have caused untold U.S. casualties.

The Quds force was founded during the Iran-Iraq war and one of its early leaders was the current Iranian president, Mahmoud Ahmadinejad. It lost approximately one million soldiers during that conflict. It has since become a smaller, elite force designed to train Islamic movements such as Shia militias in Iraq, Hezbollah and Hamas. It even trained Iraqi Kurds to fight Saddam Hussein’s army.

It is believed Quds helped Hezbollah develop the tactics that halted the Israeli army’s push into Lebanon in 2006. It is unlikely sanctions of the kind now introduced will have any serious impact on the Quds or the IRGC, both of which have powerful allies at all levels of the Iranian government.

While Russia and China remain opposed to these latest U.S. moves and the EU remains lukewarm about U.S. Middle East policy, Dick Cheney and George Bush will probably plot other strategies for dealing with Iran.

Privately, George Bush has made it clear he will not leave office without ensuring Iran has no means of building a nuclear weapon. One has to ask if these latest sanctions represent his penultimate move before he authorizes stealth bombers to attack Iran’s nuclear and military facilities.

Former British foreign secretary, Jack Straw, has said that a year ago he would not have envisaged an attack on Iran, given that it would generate a “gargantuan mess.” But, now that he has seen what he calls the “horror” of Iraq, he says he can easily conceive of an attack on Iran.

Richard Walker is the nom de plume of a former mainstream news producer who now writes for AFP so he can expose the kinds of subjects that he was forbidden to cover in the controlled press.

(Issue #46, November 12, 2007)

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