Bush Seeks 'Follow the Money' Strategy on Iran
"Follow the money" is a strategy that law enforcement follows in going after bad guys. Now the Bush administration, and its more hawkish allies, are looking closely at taking that approach toward Iran. Military action against Iran looks untenable, tempting a range of unpredictable responses from Iran, rage against the United States in the Islamic world, and another huge burden on Washington. At the same time, diplomacy, even with the international sanctions already approved by the United Nations Security Council, may be insufficient to pull Iran back from pursuing its nuclear programs, in the view of many analysts.
And so, Washington's attention is increasingly focused on the role of economic pressure in attempting to persuade Iran to suspend its nuclear work and come to the negotiating table with key countries, including the United States. Quiet jawboning with foreign banks and governments to cut off Iran's access to international financing and veiled threats of U.S. sanctions against foreign companies with American subsidiaries that make large investments in Iran have become a key facet of the Bush administration's overall squeeze strategy on Iran--albeit with little publicity from the White House or State Department.
Now, some hawkish groups and activists are studying ways to deepen the pressure on Iran. The latest case in point comes from the American Enterprise Institute, an influential Washington think tank that nurtures neoconservative policy analysis and that played a key role in establishing the case for invading Saddam Hussein's Iraq. Last week, AEI launched a project called Global Investment in Iran: Interactive that aims to summarize major investments in Iran by country, company, and sector. Using data from publicly available sources, AEI cites more than $150 billion in contracts as well as government and private lines of credit since 2000. Most dramatically, AEI says, in 2007 to date more than $45 billion in new business dealings with Iran have been reported. Most investments have gone into the oil and gas sector, construction, military, and transportation.
The clear policy implication of the effort is that highlighting investment flow into Iran will focus attention on using economic levers to pressure it. "Iran is deeply tied in to the rest of the world" economically, says Danielle Pletka, vice president for foreign and defense policy studies at AEI.
Some U.S. officials were surprised at how U.S. Treasury Department measures against a single bank in Macao that held suspect North Korean accounts led to a broader shunning of Pyongyang by international financial institutions, cutting off its ability to make financial transfers across borders in at least some cases. The experience appears to have whet the administration's appetite for tightening economic pressure on Iran.
So far, the administration has sent officials across Europe and Asia to urge governments and financial institutions not to issue credit guarantees or lines of credit to Iran, citing the U.S. dollar's central role in international transactions--and worries over Iran's nuclear weapons program and alleged ties to terrorist groups--as justification. That trend was already evolving before the administration's recent lobbying; Germany's export credits for Iran are said to have dropped by more than one third last year.
Under Secretary of State for Political Affairs Nicholas Burns, in an interview earlier this year, said the U.S. thinking on Iran is: "You need to do more to make an impact on them." The administration has also told some companies that large energy investments in Iran risk being targeted by unilateral U.S. sanctions--a prospect that has angered some European executives and government officials. But some lawmakers on Capitol Hill are pressing the administration to do just that.
Treasury and State Department officials have also reportedly urged some European firms to hold off on investing in Iran's gas and oil sector. Iran's production capacity in oil has fallen as foreign companies have, over the years, showed reluctance to do business there. Iran's state-dominated economy is also thought to be vulnerable by dint of huge economic subsidies for some staples and for gasoline--one fourth of its overall national output. Efforts to raise gasoline prices and introduce gasoline rationing are hugely unpopular, and Tehran has had trouble paying public sector workers, including teachers. Despite large revenues from oil exports, "the Iranian government is very tight on money," says one proponent of economic pressure, Patrick Clawson, a Middle East analyst at the Washington Institute for Near East Policy.
The movement is not all of Washington's making. In the United States, Missouri has moved to divest from companies doing business in Iran. New Jersey, Florida, and California are looking at similar measures. Some in the administration are hoping the campaign will take off.