Hitting Iran Where It Hurts

Tough new U.S. economic sanctions raise tensions with Iran--and talk of war.

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Secretary of State Condoleezza Rice and Treasury Secretary Henry Paulson announced new sanctions against Iran.

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In an aggressive move to ratchet up pressure on Iran, the Bush administration today announced the toughest sanctions to date on Iran for its nuclear programs and for what U.S. officials say is crucial support of anti-U.S. militants operating in Iraq. The primary targets of the new sanctions are the Iranian Revolutionary Guard Corps, its Quds Force foreign-operations unit, and the Iranian Defense Ministry itself.

U.S. officials describe it as an effort to put teeth into diplomatic efforts to draw Iran to the negotiating table once it suspends nuclear work. It also appears to serve as a warning to U.S. diplomatic partners in Europe and elsewhere to lean harder on Iran now or expect even harsher steps in the future. Yet skeptics, including some European officials, worry that taking on core parts of the Iranian regime—the first time the United States has done so—means that military confrontation will grow more likely and diplomacy will face even longer odds.

The moves were announced at a joint press conference by Secretary of State Condoleezza Rice and Treasury Secretary Henry Paulson. Rice called the steps part of "a comprehensive policy to confront the threatening behavior of the Iranians." They are also clearly a sign of deepening frustration with Iran's unwillingness to shut down, even temporarily, its nuclear fuel activities or turn off the spigot of support that U.S. military officials say is training Shiite militant groups in Iraq and arming them with deadly roadside munitions.

The IRGC as a whole—a 125,000-person force—and the Defense Ministry were designated as proliferators of weapons of mass destruction and ballistic missiles. The IRGC's Quds Force was named under a separate executive order as a "specially designated global terrorist" group; beyond Iraq, it is active in supporting groups elsewhere that the United States considers terrorists: Hezbollah in Lebanon as well as Hamas and Palestinian Islamic Jihad in Gaza and the West Bank. In all, more than 20 Iranian entities will be sanctioned, including banks, other firms, and individuals. The state-owned banks targeted are Bank Melli, Iran's largest; Bank Mellat, which allegedly provides services to Iran's nuclear entities; and Bank Sanderat, which allegedly has been used by the Iranian government to send funds to Hezbollah, Hamas, and Palestinian Islamic Jihad.

Administration officials plan to use the designations to accelerate an ongoing campaign to dissuade companies in other countries from doing business with Iran. That effort has succeeded in reducing European investment in and financing for Iranian companies, but today's sweeping designations are likely to generate tensions with some European governments. Paulson said countries doing deals with Iran most likely "are doing business with the IRGC."

Today's moves also touched off immediate debate as to whether they bring the United States closer to military conflict with Iran—or make such conflict less likely. "Those kinds of targeted sanctions represent our best chance to influence Iran's action so as to be able to avoid military action," Sens. Joseph Lieberman and Jon Kyl said in a joint statement. "In fact, anyone who hopes to prevent military action against Iran should applaud the Bush administration's decision today."

Some analysts don't buy that. "The two countries are edging closer and closer to war," Fawaz Gerges, a Middle East scholar at Sarah Lawrence College in New York, said on National Public Radio. He predicted that Iran would view the designations as "basically a declaration of war" and perhaps step up IRGC activities in Iraq, Lebanon, and elsewhere. "Those sanctions today will likely stiffen the resolve of the Iranian leadership," he said.