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Today's revelation that Iran has been building -- in secret -- a uranium enrichment plant should dispel any doubts about the true nature of Iran's nuclear program. Why would Iran hide such a site -- capable of fueling weapons as well as reactors -- if it is merely civilian in nature?
If the United States and its partners fail to win an immediate and total freeze of uranium enrichment when they sit down with Iran on October 1, then a policy of economic and diplomatic isolation is in order.
There are only three options at this point. The best is strong sanctions applied by a coalition of like-minded countries, led by the United States. The other two are living with a nuclear-capable or nuclear-armed Iran, or bombing those nuclear and military sites in Iran that we know about.
Given Iran's belligerence toward the United States and Israel, its support of terrorism, and its bloody repression of domestic opposition, allowing Iran to get the bomb is simply too dangerous. Attacking Iran's nuclear sites would start another war in the Middle East that is hard to see the end of, and the chance that a bombing campaign would destroy all of Iran's nuclear sites is slim. This leaves sanctions, which, to have any chance of causing Iran to give up its nuclear work, will have to be put into place quickly.
The first, and easiest, would be to end public subsidies of economic development in Iran through loan guarantees. All developed countries (Japan, the E.U., etc.) should stop using taxpayer money to guarantee investments in Iran. Many governments have cut back on such guarantees -- they should now end them.
Foreign governments should also prohibit their companies from undertaking large infrastructure projects in Iran, especially in the energy sector. If foreign companies do pursue such projects, they should be prohibited from doing business in the United States -- either selling their products or accessing U.S. capital markets.
Second, all exports of refined petroleum products to Iran should be banned. Congress is now considering legislation that would penalize companies that defy such a ban, including shipping companies and insurance companies that cover these shipments. The legislation should be adopted, and U.S. trading partners should pass similar laws. A shortage of fuel could have a quick and negative effect on the ruling regime.
Finally, Iran's banking sector should be further squeezed. Euro-zone countries could follow the example of the United States and prevent Iranian entities from using the euro. Without the dollar or the euro, it would be costly and difficult for Iran to move hard currency around the world, and would further raise the cost of doing business for the Iranian government and Iranian companies.
Sanctions are a blunt instrument and will undoubtedly hurt Iranian business and individuals. But given the dreadfulness of the other options now available, sanctions are our best bet.