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www.pomed.org ♦ 1820 Jefferson Place NW ♦ Washington, DC 20036 IRAN: Recent Developments and Implications for U.S.

Policy U.S. House of Representatives Foreign Affairs Committee Hearing 2172 Rayburn House Office Building July 22, 2009 10:00am In a Foreign Affairs Committee hearing chaired by Rep. Howard Berman (D-CA), the House held its first committee discussion on the recent political crisis in Iran since its June 12 elections. Testifying before the committee were: Patrick Clawson, Washington Institute for Near East Policy; Suzanne Maloney, Brookings Institution; Abbas Milani, Iran Democracy Project and Stanford University; Karim Sadjadpour, Carnegie Endowment for International Peace; Michael Rubin, American Enterprise Institute; and Orde F. Kittrie, Iran Energy Project, Foundation for Defense of Democracies. Rep. Berman (who sponsors the H.R.2194 Iran Petroleum Sanctions Act) opened the discussion with a statement that ended with an expression of solidarity with the courage of Iranian protesters, “have no doubt the American people stand with you.” He presented a range of questions that set the tone for the context of the hearing, asking about the Iranian government’s legitimacy, the elite divide, the regime’s durability and U.S. policy implications in preventing Iran’s covert nuclear capabilities. On the policy issue, he asked about continuing a line of engagement and how to garner international support. The hearing took these issues, and others, into a debate that focused on how sanctions might pressure the Iranian nuclear program in light of Iran’s political upheaval. Patrick Clawson surveyed the weaknesses in the Iranian economy resulting from years of mismanagement. He argued that Iran’s economic fragility puts it in an optimal position for sanctions, “This is a good time for sanctions. We are in the position for taking credit for an economic crisis in Iran that is going to happen anyway.” Nevertheless, he emphasized that there is no need to rush to engage Iran, rather, the U.S. should “wait for their phone call.” Abbas Milani noted that Iran is in a state of flux, where each opposing side lacking the power to dislodge the other. Moreover, the Revolutionary Guards have become a “state within a state” with intelligence systems, prisons and trade relations. The “republic” in the Islamic Republic has been lost, and the Supreme leader, he argued, has lost the divine godfather-like authority accorded him in the past. Unsure of whether the government will survive the crisis, Milani recommended that the U.S. “wait for the dust to settle” before engaging Iran, to see with which (hopefully democratic) leader the U.S. should engage. Michael Rubin credits Iran for the failure of previous American overtures. Dialogue has failed because it “takes two to tango,” he insisted; Iran does not confers enough authority on its diplomats to actually yield progress in negotiations. Rubin advocated a U.S. policy position that will apply immediate pressure on the Iranians, sanctions will “amplify diplomacy,” he insisted.

www.pomed.org ♦ 1820 Jefferson Place NW ♦ Washington, DC 20036

Suzanne Maloney emphasized that cleavage in the political elite, some of whom support what is a genuine but embryonic mass opposition movement, may underpin the opposition’s sustainability. Beyond the election results, the opposition’s grievances are rooted in the opportunity costs of economic mismanagement in Iran over the past four years, a time of record high oil prices. Political instability, she urged, is already reducing Iran’s competitiveness and dissuading investors. These events, however, have not changed American interests. “The U.S. still needs to engage with an increasingly paranoid and dogmatic regime with a leadership schism.” In this context, dealing with Iran means coordinating with U.S. allies to implement comprehensive multilateral sanctions. Karim Sajadpour opened by highlighting the Administration’s dilemma in determining how to deal with a disgraced regime that presents serious foreign policy challenges, while also supporting Iran’s courageous population. Obama’s overtures to Iran based on “mutual respect,” accentuated a deep internal division in Iran and increased pressures on hardliners for a dialogue. Yet, Sajadpour argued that premature engagement in Iran would implicitly endorse the elections, tip the balance to Ahmadinejad and disenfranchise the popular movement for change. Orde Kittrie focused on how sanctions could be used to leverage economic vulnerability in Iran. Sanctions could, he argued, change the cost-benefit analysis for Iran. Sanctions in Libya and Iraq worked in eliminating weapons programs. He suggested three ways to increase pressure on Iran and convey American seriousness: the implementation of the Iran Petroleum Sanctions Act, Congressional pressure on petrol suppliers to Iran and a tightening and divestment of trade with Iran (under former President Khatami, sanctions were eased in 1996). Although aggressive unilateral sanctions could have positive impact, reaching out for European help will he useful. Much of the hearing focused on Focusing on “crippling” sanctions, Rep. Burton framed this issue in terms of the nuclear threat: “this is a world threat in my opinion. It is extremely important that all sanctions get put in place as quickly as possible…it worked with Libya and it will work [in Iran].” Milani emphasized that the Revolutionary Guards are in control as much as Khamanei is, so there is little room for concessions to be made on the Iranian side at this point. Clawson argued that Iranians want nuclear weapons, but at no cost; if getting the bomb means international isolation, popular sentiment will forfeit it. The greatest benefit of sanctions, agreed the panel, is a drop in oil prices. This loss of windfall oil revenue is likely to have the greatest impact on the regime. Moreover, there is already popular dissatisfaction with economic mismanagement and corruption. A loss in oil income would hurt Ahmadinejad’s short term populist policies, Clawson said. Sajadpour noted that a $1 drop in oil prices translates to a $900m loss per year for Iran. Rep, Delhant asked about the rise of Iranian nationalism caused by sanctions; Kittrie disagreed that this would occur, yet Milani insisted that a rally around the flag would be a likely result. In this regard, Milani suggested that U.S. strategy should be to pursue unconditional talks on “every issue”. The U.S. has pursued this, but needs Chinese and Russian support. Most of the panel conceded that multilateral sanctions are necessary to pressure the regime. Rep. Acosta (D-CA) expressed concern with the regional reaction to Iran. Maloney noted in particular, that cooperation form the UAE in crucial, because Iranian funds are invested in Dubai banks. Rubin noted that the Gulf Security Strategy, although flawed, is one attempt to work with
www.pomed.org ♦ 1820 Jefferson Place NW ♦ Washington, DC 20036

Iran’s regional neighbors. Avoiding an arms race is important, though, argued Maloney, because the Gulf’s historical security strategy has been to balance threats. Re. Ellison (D-MN) expressed that he was unconvinced that sanctions on a September deadline are the best tool for pressuring Iran without properly looking at international diplomacy. Milani recommended waiting, since it is unclear who will be in power in Iran. He argued that sanctions must be a last resort. Agreeing to wait, Sajadpour emphasized that sanctions are designed to agitate a population, but Iranians are already stewing. Rep Royce (R-CA) enjoined the panelists to suggest what other strategies are available for pressuring Iran. Clawson recommended targeting regime figures and their families with travel bans to Europe. Rubin added that international focus on Iran’s local press will keep Iranian leaders uneasy. Sadajpour and Rubin noted that Iran is the client of Western companies such as Nokia and Siemens, which should be pressured to pull their business out of Iran. Maloney reminded the group that the West cannot prevent Chinese technology from aiding the regime. The U.S. should rather provide communications support to the opposition. All six panelists rebuffed suggestions that force or covert operations be used to overthrow the Iranian regime, which would likely entrench the hardliners’ position and extend the life of the regime indefinitely.

www.pomed.org ♦ 1820 Jefferson Place NW ♦ Washington, DC 20036

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