ARMS CONTROL ASSOCIATION
On October 21, 2003, Iran vowed to sign and abide by the Additional
Protocol to the Safeguards Agreement, to suspend all uranium-enrichment
and reprocessing activities voluntarily, and to cooperate fully with
the International Atomic Energy Agency (IAEA) in resolving questions
regarding Iran’s nuclear program. Since then, however, concerns
over Iran’s nuclear activities have increased. The latest resolution
adopted by the IAEA Board of Governors on March 13, 2004, suggests
that Iran has failed to fulfill its stated promises and has hidden
important aspects of its nuclear program that could betray Iran’s
intentions to develop nuclear weapons capabilities.
If Iran is found to be in noncompliance, the international community
will be compelled to respond, or else the nonproliferation regime
will be jeopardized. Military force should be the last resort for
preventing or rolling back proliferation. Various forms of sanctions
inevitably should be considered first.[1]
Still, any decision to place new sanctions on Iran for its nuclear
weapons behavior will not take place in a vacuum. The United States
has imposed sanctions on Iran for 25 years, punishing the Islamic
republic for various transgressions ranging from support of terrorism
and opposition to the Middle East peace process to violations of human
rights and other transgressions.
Yet, the very breadth of the sanctions has limited their effectiveness.
Applying new sanctions atop this jerry-rigged structure would not
solve the “Iran problem” because the problem is so broadly
and confusingly defined. Simply piling on more sanctions in the vague
hope that the cumulative weight will lead to regime change in Tehran
is misguided. U.S. policymakers need to clarify to themselves and
Iranian decision-makers what are the one or two most important issues
to resolve and then focus positive inducements and/or coercive measures
to this end. Given the threat to regional and global security, ending
Iran’s nuclear program should be the foremost objective of the
United States and will require urgent action. Effective sanctions
need to be designed that could be quickly implemented and rapidly
affect Iran’s nuclear behavior in the event it wavers in fulfilling
its commitments.
Current U.S. Sanctions Against Iran
Since the Iranian Revolution and hostage crisis of 1979, the United
States has unilaterally imposed an extensive sanctions regime against
Iran.[2] Initially, sanctions
were imposed to punish Tehran and force the release of 63 U.S. embassy
personnel by a group of militant Iranian students. Subsequent sanctions
have aimed to prevent Iran from supporting terrorist organizations,
hindering the peace process in the Middle East, and pursuing weapons
of mass destruction (WMD). Yet, U.S. officials have not assessed the
effectiveness of existing sanctions before adding new ones.
Since the Reagan administration designated Iran a state sponsor of
terrorism in 1984, the United States has imposed sanctions on any
trade with the Iranian government of arms and dual-use materials.
In addition, the United States has banned Iran from receiving U.S.
financial aid not exclusively directed toward humanitarian relief
purposes. Washington also has forbidden international organizations
such as the UN[3] from
providing U.S.-derived funds to Iran. Likewise, Iran has been barred
from direct loans, credits, insurance and export-import bank guarantees,
and indirect assistance from U.S. contributions to multilateral development
banks.[4]
In 1987 the Reagan administration issued Executive Order 12613, which
prohibited all imports from Iran to the United States. The restriction
also applied to Iranian crude oil, although trading oil overseas was
still permitted.[5]
On March 15, 1995, the Clinton administration sanctioned most U.S.
transactions related to the development of Iranian petroleum resources.[6]
The only exceptions were licenses that, in effect, allowed U.S. firms
to enter into oil swap deals with Iranian companies. Two months later,
Executive Order 12959[7]
banned U.S. investment in any area of Iran’s economy and prohibited
most trade relations with Iran.[8]
The enactment of the executive orders, however, did not prevent other
countries from investing in Iran’s energy industry. Thus, in
1996 Congress approved the Iran-Libya Sanctions Act (ILSA), which
would sanction foreign companies that invest more than $20 million
in developing Iran’s energy sector.[9]
Secondary sanctions have been highly controversial because of their
alleged extraterritorial jurisdiction. In 1997 the Clinton administration
waived sanctions against a consortium of European, Russian, and Malaysian
firms investing in Iran in order to avoid a potential trade conflict
between the United States and Europe. In exchange, the European Union
(EU) and Russia agreed to increase their efforts in nonproliferation
and counterterrorism.
Under ILSA, the U.S. government also may proscribe any U.S. financial
institution from offering Iran loans or credits of more than $10,000
within a 12-month period.[10]
In addition, no U.S. entity may procure any goods or services from
an Iranian person or institution.
In March 2000, sanctions on Iranian imports to the United States were
eased. Current exceptions include gifts valued at $100 or less, information
and information materials, carpets, and some food products.[11]
Overall, the effects of U.S. sanctions on the Iranian economy have
been mixed. Iran’s economic performance has certainly been less
than is needed to cope with a fast-growing population (65.9 percent
working age): Iran suffers from a 16-21 percent unemployment rate
and widespread poverty.[12]
Yet, factors other than sanctions—war, corruption, and the lack
of modernization policies—are the main causes for Iran’s
economic woes. U.S. sanctions have intensified economic pressures
by slowing, although not fully, curtailing badly needed foreign investment
in Iran’s energy industry, which has not been able to take full
advantage of periods of high oil prices.[13]
U.S. sanctions also have prevented international lending institutions
from funding development projects in Iran. Hence, Iran has been forced
to undertake difficult fiscal reforms that have translated into important
social dislocations.
Despite U.S. sanctions, Iran has been able to maintain a measure of
economic growth by diversifying its trading partners and by heavily
relying on oil exports.[14]
Recent higher oil prices have allowed the government to begin restructuring
the economy, enact new investment laws, and establish a stabilization
fund for times of economic hardship. ILSA sanctions have not prevented
non-U.S. foreign investment from flowing into Iran’s energy industry,
and none of the executive orders has prohibited U.S. companies from
importing Iranian oil refined in third countries.
Most importantly, U.S. sanctions have not prompted Iran to change
its behavior or governmental leadership along the lines desired by
U.S. policymakers. Iran remains in the list of state sponsors of international
terrorism, is still suspected of violating its obligations under the
nuclear Nonproliferation Treaty (NPT), and has not moved beyond veiled
rhetorical changes in its relationship with Israel. Perhaps no sanctions
regime could motivate Iran to make the changes desired by the United
States, but U.S. policymakers have imposed sanctions that are excessively
rigid, that lack clear policy objectives, and that have failed to
attain multilateral collaboration. In short, they have been astrategic.
The astrategic management of sanctions reflects a broader confusion
in U.S. policy toward Iran, which has shifted from containment to
behavior change and, at times, regime change. This has led to contradictory
and self-defeating U.S. policy pronouncements. For example, rather
than rewarding Iran for its cooperative attitude in the U.S. military
campaign to oust the Taliban and during the Bonn negotiations on Afghanistan’s
transition, President George W. Bush cast Iran as part of the “axis
of evil” in his 2002 State of the Union address.
The clumsiness of U.S. policy stems partly from the fact that sanctioning
authority has been vested in two different power centers: Congress
and the executive branch. Congress has often superimposed sanctions
and conditions for their removal without a proper assessment of existing
measures or consideration of their compatibility with evolving strategies
toward Iran.
The question now is how can a sanctions-based strategy be improved
so as to become an efficient policy tool against a defiant Iran. Certainly,
if the goal were just to punish the Iranian leadership, no particular
strategy would be needed. Iran’s decision to go nuclear, however,
would have such global repercussions that we must search for effective
ways to reverse such a decision or demonstrate to watching actors
that Iran should not be mimicked.
Imposing Additional Sanctions: Defining the Goals
Should Iran resume its uranium-enrichment program, whose current suspension
Iran insists is only temporary, or fail to implement the Additional
Protocol and satisfy IAEA demands, the United States and others will
have to react. Would regime change be justified? Can the United States
cause or even facilitate it? Would a U.S. role in regime change not
encourage an anti-American, anti-Western backlash? The Central Intelligence
Agency has suggested that Iranian interest in nuclear capability spans
from reformers to hard-liners, casting doubt that regime change, even
if desirable for other reasons, would solve the nuclear problem. Alternatively,
is behavior change in the current leadership possible?
Assuming that the United States and other NPT members do not simply
accept cohabitation with a nuclear Iran, the choice between regime
change and behavior change must be made in the near term. A strategy
of regime change, meaning a change of leadership, implies that dealing
with the current government is out of the question.[15]
According to regime-change-first proponents, bargaining would be seen
as granting legitimacy to an adverse government and, furthermore,
would prolong its staying in power. Some argue that dealing with the
current authoritarian government in Iran would conflict with the U.S.
mission to promote democratic change in Iran and the greater Middle
East. Yet, it should be possible to advocate human rights and democracy
in Iran while seeking specific changes in the nuclear- and terrorism-related
policies of current decision-makers. After all, the United States
achieved security-enhancing arms controls with the Soviet Union while
still seeking regime change from communism to democracy.
The biggest problems with a regime change strategy are that Iran might
develop nuclear weapons before any significant changes of leadership
occurs and, even if a new government emerged, it might also wish to
retain nuclear-weapon options.
Thus, the U.S. objective today should be to prevent or, if that fails,
reverse an Iranian decision to seek nuclear weapons. This requires
increasing the costs of noncompliance to the Iranian leadership, regardless
of who is in power. The implementation of new sanctions would, therefore,
be directed toward behavior change in the areas that most immediately
threaten U.S. and regional security interests.
The most robust way to apply effective new sanctions would be through
a UN Security Council resolution under Chapter VII (Chapter VII sanctions
are binding on all states). If Iran failed to comply fully with IAEA
demands, such a resolution should be feasible given that the Security
Council has previously declared that proliferation is a threat to
international peace and security.
Such new sanctions must have a mechanism for their suspension if and
when Iran complies with established demands. That is, if Iran provides
a complete account of all of its nuclear activities; ratifies and
implements the Additional Protocol unconditionally; and agrees to
give up fuel-cycle technology that is perceived, thanks to Iran’s
pattern of deception, as inherently suggestive of nuclear weapons,
then these sanctions would be withdrawn.
Identifying Iran’s Vulnerabilities
New sanctions should be pursued only to the extent they are likely
to be applied by a decisive collection of countries and can be adjusted
if and as Iran’s nuclear policies improve. The focus should be
on Iran’s energy industry and, more specifically, on restricting
any foreign investment geared toward its development. Curtailing Iranian
oil and natural gas exports as well as its imports of gasoline for
domestic consumption would also be high-impact measures, but the United
States would find few partners in pursuing such sanctions. Banning
Iran from receiving credits for development projects from international
financial institutions and blocking Iran’s membership in relevant
trade agreements constitute additional pressure areas. Finally, curbing
Iran’s most important non-oil export and import products would
also send a strong message, particularly because the country is increasingly
trying to diversify its trade. The key to all of the proposals would
be to gain at least the cooperation of the EU and Japan in such sanctions.
Forty to 50 percent of the revenue of Iran’s central government
comes from oil exports and they constitute about 80 percent of Iran’s
total export earnings.[16]
In order to remain a profitable source of revenue, however, the oil
industry needs to be modernized, and new oil fields have to be developed.
Iran is counting on approximately $5 billion per year in foreign investment
to update onshore fields and develop new ones, and it requires $8-10
billion to develop its offshore fields. Similarly, Iran expends about
$1 billion a year in oil imports, mainly gasoline, because it lacks
the infrastructure and technology to produce its own.[17]
Blocking the flow of gasoline imports would, therefore, constitute
an additional pressure measure.
Iran also possesses the second-largest natural gas resources in the
world. Although it now lacks the capacity and infrastructure to export
significant amounts, Iran could become a leading exporter of natural
gas in coming years. Sanctions on natural gas exports would send a
strong message, but they would not cripple Iran’s economy significantly
in the short term. Curtailing foreign investment in this industry,
however, would more dramatically increase the cost of Iran’s
noncompliance with the demands of the international community.
Investment in Oil and Natural Gas
Without new investment, aging oil fields and growing domestic demand
will force Iran to become a net importer of oil by 2010.[18]
Despite the threat from U.S. secondary sanctions, several countries
have already invested in Iran’s oil industry, and more companies
are expected to take advantage of the latest deals presented by the
National Iranian Oil Company, a state-owned enterprise offering 16
new “buyback” contracts.[19]
In the next two decades, world energy demand also will shift from
oil to natural gas. North America, Europe, and Asia are expected to
count for 60 percent of this growth.[20]
Because of its proximity, Iran hopes to become a key supplier of European
and Asian countries. Despite its vast resources, however, Iran needs
large amounts of foreign investment to develop treatment facilities,
pipelines, and liquefied natural gas (LNG) tankers for transportation.
Moreover, many of these deals are still being negotiated, providing
the option of stopping investments before they begin rather than the
more difficult task of reining in projects already underway.
Still, a new natural gas sanctions initiative would have to encourage
a large number of current and prospective investors to turn away from
a nearly unparalleled supplier. China Petroleum & Chemical Corporation
(SNP), which has shown interest in bidding for Iran’s latest
offers, has already stated that it will not yield to Washington’s
pressure.[21] Further,
despite growing concerns over Iran’s nuclear program, Total (France)
and Petronas (Malaysia) recently have agreed to invest $2 billion
for the creation of Pars LNG Company, which will manage the production
of 8 million tons of LNG a year.[22]
By contrast, steps have already been taken toward building a coalition
to block new investments in Iran’s oil sector, where Iran might
have tremendous natural resources but is certainly not the only place
to invest. Russia and the nearby Caspian oil fields of Kazakhstan
and Azerbaijan are potential destinations for foreign investors.
After three years of negotiations, Spanish companies have pulled back,
alleging commercial issues. John Browne, BP chief executive, has also
expressed his concerns over investing in Iran given the current international
political environment.[23]
Although a Japanese consortium has recently agreed to develop the
vast Azadegan oil field, negotiations took four years in part because
Japan shares U.S. interests in nonproliferation and also did not want
to jeopardize U.S.-Japanese trade relations.
Oil Exports
Iran’s key oil customers include Japan, China, South Korea, Taiwan,
France, Germany, and Italy. These countries are among the world’s
top petroleum net importers, and together they receive about 1.2 million
barrels per day (mbd) out of the 2.6 mbd that Iran exports daily.[24]
Although German and French demand for Iranian oil has decreased in
the last decade, Japanese, Chinese and South Korean demand has increased;
even Italy still imports about 8.8 percent of its oil from Iran. Establishing
sanctions on Iranian oil would entail convincing these countries to
stop oil trade with Iran or at least significantly decrease it. Even
if they could find alternative suppliers, keeping Iran’s oil
off the market would raise prices, thereby harming the global economy,
particularly the economies of oil importers. This unwanted prospect
would keep key importers from supporting a UN sanctions resolution
in the first place.
Approximately 1.2 mbd would have to be added to the market and redirected
to this group of countries.[25]
One possible source is Saudi Arabia, which on its own has an excess
capacity of 1.4-1.9 mbd as of 2003.[26]
Venezuela, too, has the capacity to expand production by 1 mbd with
stable foreign investment.[27]
Other OPEC[28] countries
such as the United Arab Emirates (U.A.E.), Kuwait, Nigeria, and Libya
also have the capability to increase production at no significant
additional cost.[29]
Moreover, non-OPEC countries such as Norway, Mexico, and, more importantly,
Russia, would be prime sources of substitute oil supply. Without almost
one-half of its oil exports revenue, the Iranian central government
would be seriously depleted of important resources.
Yet, such a reallocation of market share could be seen as an indirect
reward to substitute supplier countries that are less than democratic.
This could further undermine international will to cooperate with
sanctions. More likely, countries whose participation is necessary
for effective sanctions against Iranian exports—European states—would
be reluctant to endanger their important non-oil trade relations with
Iran. China and Japan import such large fractions of their overall
oil supply from Iran that they would be highly reluctant to join sanctions
on Iranian exports.
In sum, sanctioning Iranian oil exports would require many major states
to put nuclear counterproliferation ahead of economic well-being,
at least in the near term. In democracies, elected leaders would have
to calculate whether voters would care more about the security implications
of Iranian nuclear weapons than increases in their cost of living.
These calculations would in turn be affected by national threat perceptions
and the process by which sanctions would be authorized. Would a nuclear
Iran be seen as a threat primarily to Israel and U.S. forces in the
Persian Gulf and therefore not sufficiently threatening to Iran’s
largest oil customers to warrant sanctioning? Would key EU states
feel more threatened by Iranian nuclear weapons or by inflation? Major
Asian importers of Iranian oil probably would not feel directly threatened
by Iranian nuclear weapons and therefore would be reluctant to cooperate
with sanctions. This reluctance would be greater still if sanctions
were seen as primarily a U.S. “project.” Thus, it would
be vital to obtain UN Security Council authority for such sanctions,
in order to broaden the legitimacy of such action.
As a matter of principle, the United Kingdom, France, Russia, and
China, as permanent members of the Security Council, should support
decisive sanctions against any state that defies IAEA demands because
the effectiveness of global nonproliferation efforts is at stake.
Indeed, the viability of multilateral institutions and a rules-based
international system would be threatened if the Security Council did
nothing while Iran acquired nuclear-weapon capability after having
been caught violating its NPT-related obligations. Unfortunately,
the United States’ selective support of these same international
institutions weakens Washington’s credibility in rallying others
to take an appropriately firm stand against Iran.
Even if the prospects of an oil embargo are exceedingly dim, sanctions
on foreign energy investment in Iran may well be possible. Other forms
of international isolation should also be considered.
Tackling Credit
As a state designated a supporter of terrorism, Iran has been denied
U.S. contributions via international financial institutions since
1984. The U.S. government also has lobbied other country members of
such international bodies to withhold their donations. Between July
1993 and May 2000, a coalition among the Group of Seven world’s
wealthiest states blocked all contributions from the World Bank to
Iran. Consensus broke, however, when European partners adopted an
engagement strategy with Iran. Since then, the World Bank has awarded
four loans for development projects in Iran: $145 million for the
Tehran Sewerage Project, $87 million for the Primary Health Care and
Nutrition Project, $20 for the Environmental Management Support Project,
and $180 million for the Earthquake Emergency Recovery Project. In
addition to these, $150 million will be directed to establishing a
local development fund, $80 million for a low-income housing project,
$120 million for a water supply and sanitation project, and $295 million
for a “de-urbanization” project.[30]
As major contributors to international financial institutions and
as trade partners with Iran, European countries could exert leverage
by withholding these contributions if Iran violates its nonproliferation
commitments. Their amounts might be insignificant, but restrictions
on international credits could symbolically manifest Iran’s status
as a nuclear pariah.
It should be noted, however, that, despite economic pressures throughout
the last three decades, Iran has never applied for assistance from
the International Monetary Fund (IMF). Although other countries have
chosen to receive loans from the IMF’s Contingency and Compensatory
Financing Facility, Iran has implemented arduous structural reforms
that, in the long term, have helped the country ensure economic growth.[31]
Iran’s non-oil exports constitute about 15 percent of the country’s
total export revenues (about $6 billion in 2003). Products include
carpets, fruits and nuts, and chemicals. The U.A.E., Germany, Azerbaijan,
Italy, Japan, China, and India are among Iran’s major customers.
If a ban on exports from Iran were multilateral, it would also intensify
the international isolation that Iranian society clearly wishes would
end.
Perhaps as significant and difficult to achieve as a multilateral
ban on Iranian non-oil exports would be to restrain other countries’
exports to Iran. Although Iran managed to find new providers to substitute
for banned U.S. imports, the cost that Iran has incurred in value
and quality, particularly on high-tech products, has been significant.
Iran is presently in great need of machinery, transportation vehicles,
chemical products, iron, and steel. Current major suppliers to Iran
include the EU with 37.2 percent of Iran’s total imports, Russia
with 5.6 percent, the U.A.E with 5.5 percent, and Japan with 5 percent.[32]
The EU position here is very strong. On December 12, 2002, the EU
and Iran began negotiations on a “Trade and Co-operation Agreement.”
The treaty is contingent on Iran’s compliance with European demands
on issues related to terrorism, support for a peaceful resolution
of the Middle East conflict, clearance over Iran’s WMD programs,
and human rights. These prerequisites are “interdependent, indissociable,
and mutually reinforcing elements of the global approach which is
the basis for progress in the EU-Iran relations.”[33]
Because the World Trade Organization keeps denying Iran entry, the
proposed EU-Iran agreement represents Iran’s best bridge to the
West. Isolation by Europe and the United States would dramatize the
cost Iran would pay for seeking nuclear-weapon capabilities. Russia,
too, would be forced to collaborate with this multilateral sanctions
regime or face the possibility of being left without its privileges
at the Group of Eight negotiation table.[34]
Regardless of their differences with the United States, France, Germany,
and the United Kingdom must prove that they are truly committed to
the basic premises of the Trade and Co-operation Agreement and the
conditions they insisted that Iran agree to in October 2003. If Iran
decides to restart its uranium-enrichment program or impede IAEA inspections,
French, German, and British firms will have to forgo significant potential
profits (based on 2002 data, about $1.109 billion, $1.807 billion,
and $666 million in exports, respectively). Again, these states would
have to decide if upholding the norms and terms of the nonproliferation
regime were important enough to penalize Iran for defying them.
Conclusion
Iran’s resumption of its uranium-enrichment program or failure
to satisfy IAEA demands fully will present a crucial challenge to
the preservation of the nonproliferation regime. In that case, upholders
of nonproliferation norms should pursue a sanctions-based strategy
that has as an immediate priority to reverse Iran’s threatening
decision. Such a punitive measure would be intended to increase the
costs of noncompliance for the Iranian leadership. It would also require
that U.S. policymakers honestly acknowledge the primacy of this goal
in their relations with the Islamic republic. This article has suggested
the most (and least) promising targets of potential sanctions.
Ultimately, a broader strategy of engagement and domestic political
changes in Iran are the only solutions to the country’s nuclear
aspirations. Sanctions should be understood as just one tool that,
in this case, should be used with the very specific goal of redressing
threats to international peace and security. The daunting prospects
of rallying international support for sanctions if Iran violates its
commitments not to pursue nuclear-weapon capabilities should only
deepen leading states’ determination to prevent this development
from occurring in the first place.
NOTES
1. Although other types of sanctions might be
imposed and/or more rigorously implemented (i.e. sanctioning foreign
companies trading WMD materials and expertise with Iran), this paper
examines only the feasibility of new economic sanctions on Iran. Parallel
sanctions on arms and technology sales also should be considered.
U.S. Undersecretary of State for Arms Control and International Security
John Bolton recently stated that 13 companies will be sanctioned for
providing WMD technology to Iran. See Michael Eisenstadt, “Russia
Arms and Technology Transfer to Iran: Policy Challenges for the United
States,” Arms Control Today, March 2001; John Bolton,
testimony before the House International Relations Committee, March
30, 2004.
2. For a more expanded explanation, see Meghan
O’Sullivan, Shrewd Sanctions: Statecraft and State Sponsors
of Terrorism (Washington, DC: Brookings Institution Press, 2003);
Hossein Alikhani, Sanctioning Iran: Anatomy of a Failed Policy
(New York: I.B. Tauris, 2000). For a compilation of U.S. sanctions
against Iran, see Kenneth Katzman, U.S.-Iranian Relations: An Analytic
Compendium of U.S. Policies, Laws and Regulations (Washington,
DC: Atlantic Council, 1999).
3. The only exceptions are U.S. contributions
to UNICEF and the IAEA. Also, the Foreign Assistance Act of 1961 forbids
U.S. foreign assistance to countries on the U.S. terrorism list. This
provision was added by the International Security and Development
and Cooperation Act of 1985. Nevertheless, under Section 620A, the
U.S. president might waive restrictions on the basis that doing so
is in the U.S. national interest. Katzman, U.S.-Iranian Relations,
p. 59.
4. Ibid., p. 64
5. Executive Order No. 12613, October 30, 1987.
6. Executive Order No. 12957, May 15, 1995.
7. Clarified by Executive Order No. 13059, August
19, 1997.
8. These executive orders invoked the powers
vested in the president by the International Emergency Economic Powers
Act and the National Emergencies Act, although EO 12959 was also based
upon the authority provided by the International Security and Development
Cooperation Act. For further explanation of the sources of authority
for U.S. unilateral economic sanctions, see Alikhani, Sanctioning
Iran, pp. 32-56.
9. Congress reauthorized the ILSA on August
3, 2001.
10. These measures were reinforced in 1992
by the Iran-Iraq Non-Proliferation Act and expanded in 1996 to apply
to any other state helping Iran attain weapons of mass destruction.
Under the Foreign Assistance Act of 1961 the United States has also
prohibited exports of arms-related materials and dual-use items.
11. Office of Foreign Assets Control, U.S.
Department of the Treasury, “What You Need to Know About U.S.
Economic Sanctions.”
12. CIA, World FactBook; Iran Statistical Center.
13. O’Sullivan, Shrewd Sanctions, pp.
67-71.
14. Iran’s gross domestic product has
gone from 3.4 percent in 1999 to 2.0 percent in 2000, 5.3 percent
in 2001, 5.9 percent in 2002 and an estimated 6.7 percent in 2003.
“Islamic Republic of Iran: Statistical Appendix,” IMF Country
Report no. 03/2003, September 2003.
15. Tactics for regime change include military
invasion and removal of the unwanted government, support of armed
anti-government forces, aggressive military/political/economic pressure,
international propaganda, and so on. The United States has displayed
this range of tactics historically to mixed effect against Iran (1953),
Chile (1973), South Africa (1980s), and the Soviet Union (Cold War).
Today, however, regime change will not solve the security challenge
posed by Iran’s nuclear program.
16. Energy Information Administration (EIA),
“Iran,” Country Analysis Brief, November 2003.
17. Ibid.
18. Kenneth Katzman, “The Iran-Libya Sanctions
Act (ILSA),” CRS Report for Congress, updated July 31, 2003,
p. 2.
19. Arrangements are made possible by the 1987
Petroleum Act whereby foreign firms fund and manage the development
of oil and gas fields in exchange for a pre-accorded share of production.
All production operations are eventually transferred to the National
Iranian Oil Company.
20. Bob Tippee, “Worldwide Gas, LNG Demand
Poised to Surpass Oil,” Oil & Gas Journal, September 22,
2003, p. 28.
21. Sally Jones, “Sinopec Wants Iranian
Oil Deal Despite U.S. Pressure—Exec,” Dow Jones Newswires,
January 29, 2004.
22. “Iran Wins $2bn Gas Deal with Total
and Petronas,” DailyNews, February 26, 2004.
23. “Iranian Oilfield Bids Soldier on
Despite Set-Back” Daily Times, January 30, 2004.
24. The United States tops the list, with Spain
and India in seventh and eighth places, respectively.
25. Based on 2003 production levels and not
including Taiwan’s data.
26. “The New Geopolitics of Oil,”
National Interest, Winter 2003/04 (Internet version).
27. EIA, “International Energy Outlook
2003: World Oil Markets,” May 1, 2003.
28. OPEC countries: Algeria, Indonesia, Iran,
Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab
Emirates, and Venezuela.
29. EIA, “International Energy Outlook
2003.”
30. William E. Schuerch, testimony before the
House Financial Services Subcommittee on Domestic and International
Monetary Policy, Trade and Technology, October 29, 2003.
31. O’Sullivan, Shrewd Sanctions, p. 70.
32. European Commission summary: “Trade
Issues: Bilateral Trade Relations, Iran.”
33. “EU-Presidency and Commission Joint
Press Release on the Opening of the Negotiations With Iran,”
Brussels, December 12, 2002.
34. Patrick Clawson, “Can ILSA Help Stop
Iranian Proliferation and Terrorism?” statement before the House
International Relations Subcommittee on the Middle East and Central
Asia, June 25, 2003 (enforcement of ILSA and increasing security threats
from Iran).
George Perkovich is Vice President for Studies at the Carnegie Endowment for International Peace. Silvia Manzanero is a Junior Fellow at Carnegie working in the Nonproliferation and U.S. Leadership Projects.