Iran Won't Lose Sleep Over Sanctions

This column was written by the editors of National Review Online.

Bush signed two executive orders bringing the new sanctions into effect. One designates the Iranian Revolutionary Guard Corps (IRGC) a proliferator of weapons of mass destruction (this on the basis of the IRGC's ballistic-missile program). The other designates the Quds Force - the IRGC's elite foreign-operations division - a terrorist organization.

That the Islamic Republic engages in terrorism is beyond dispute. It has a long and bloody history of murdering civilians around the world. Hezbollah would not exist without it. It is a vital source of funds and weapons for Hamas and Islamic Jihad. More recently it has turned to Iraq, where it trains and arms Shiite extremists, the better to kill civilians and American soldiers alike.

The IRGC - a force of at least 125,000 - controls up to 40 percent of the Iranian economy, and the sanctions target its financial support structure. Several Iranian companies, as well as three state-run Iranian banks, are named. The sanctions forbid anyone under U.S. jurisdiction to do business with the targeted Iranian entities, and allow the confiscation of any assets these entities have in the U.S. Since Iranian-American commercial ties are all but nonexistent, this by itself won't achieve much. But the sanctions also apply to foreign companies that do business with Iran. If, for example, a German conglomerate channeled money through one of the Iranian banks, the conglomerate's American division would come under sanction.

Because the Iranian economy is dependent in the extreme on foreign investment, this aspect of the sanctions could theoretically inflict serious damage. The trouble is that the targeted Iranian entities are sure to create new front companies, making it hard for the U.S. government to link them to their foreign enablers.

In addition, the Banco Delta Asia fiasco will undermine perceptions that dealing with Iran jeopardizes one's access to the U.S. market. Banco Delta Asia, you may recall, is a Macanese bank with ties to the regime of Kim Jong Il. The U.S. decision to place it under sanction earlier this year set off a chain of events that promised to isolate North Korea from the global financial system. Banks around the world were suddenly disinclined to return Dear Leader's calls, fearing that they too might be sanctioned.

Subsequently, the administration decided to lift BDA sanctions in exchange for Kim's promise (probably a lie) to shut down his nuclear program. This whole affair was something less than a study in aggressive enforcement, and foreign companies could be forgiven doubts as to whether we are serious this time around.

One risk of these particular sanctions is that they might further entrench in policymakers' minds a fallacious distinction between the IRGC and the Iranian regime itself. In reality the two are inseparable, as the IRGC takes its marching orders from the senior leaders of the Islamic Republic. The administration's decision - probably in deference to European squeamishness - to designate only the Quds Force (not the IRGC) a terrorist organization is even more sophistical.

In moments of rhetorical clarity, President Bush has seemed to recognize that the Islamic Republic is one big sovereign terror network. But career bureaucrats at the State Department remain determined to let an all-carrot-no-stick "diplomatic track" drag on from now until the end of time. It makes sense to talk to your enemies when you expect to get something in return. But such expectations became unreasonable in Iran's case a long time ago - not only because of its relentless march toward the bomb, but also because it stepped up its attacks in Iraq after the Iranian ambassador there participated in two rounds of talks with his American counterpart.

So the big picture on Iran is, alas, still gloomy. The U.N. is impotent, perhaps incurably so. The Bush administration, in its waning months, is struggling to escape the corner into which it painted itself by acquiescing so long in la diplomatie pour la diplomatie. And much of America's political class labors to assure Iran's rulers that we would never go to war with them: a position that, by sundering diplomacy from the threat of force, makes it less likely that anything short of force will resolve the impasse. Yes, the new sanctions will help. But all things considered, it's hard to imagine the mullahs losing much sleep.
By the editors of National Review Online
Reprinted with permission from National Review Online