Iran Sanctions Need to Drive a Wedge

LAST Monday the European Union approved more punitive measures against Tehran.

These came six weeks after the UN Security Council passed Resolution 1929, slapping new sanctions against Tehran. More than anyone else in the international community, the EU has enormous leverage on Iran: their robust bilateral relation is worth more than €20 billion ($28bn) a year in trade volume.

These figures reflect Iran's dependence on European technology – industrial machinery and equipment constitute more than half of Europe's exports to Iran – but do not tell the whole story: Iran has heavily penetrated Europe's economic structure by opening front companies and procuring technology for its illicit nuclear program through European-based middlemen. It has established joint ventures in the energy, finance, services and logistics sectors to exploit Europe's proximity, technological edge and prime rate banking. And it has relied on European ports and jurisdictions to move procurements around.

Given this context, European measures are a heavy blow to Iran: Europe sanctioned dozens of Iranian banks – both in Iran and overseas – alongside insurance companies, financial holdings and commercial entities; it barred its companies from conducting any new investment, technical assistance or technology transfer in Iran's strategic oil and gas sectors – with special emphasis on refining and liquefied natural gas technology; it blacklisted the Islamic Republic of Iran Shipping Lines and all its overseas offices and subsidiaries; it went after Iran Air cargo; it forbade bunkering services to ships and technical assistance to cargo planes suspected of complicity in Iran's procurement efforts; and it imposed stringent measures to stop Iran from exploiting European jurisdictions through locally registered front companies and joint ventures.

By dramatically expanding UN sanctions and promising a tight enforcement of these measures, Europe sets a high benchmark for the international community – one the Australian government should strive to emulate.

But no matter how broad and sustained are these measures, sanctions – both in their more limited UN version and their tougher European counterpart – have a major flaw. They are aimed at persuading the Iranian regime to return to negotiations and hopefully convince rulers in Tehran to change their nuclear policy. The international community would be perfectly content if the mullahs' regime survived, as long as it renounced its pursuit of nuclear weapons. This is remarkably naive. Eight years of negotiations accompanied by sanctions failed to yield results – Iran crossed every red line and ignored every ultimatum set by the international community. For Iran, diplomacy served one purpose only: to buy time while conceding little on substance. There is no reason to believe it would be different now, especially given the internal fragility of the regime.

Shaken by an unprecedented crisis of legitimacy and challenged from within both by democratic opposition and disgruntled elements of the clerical and revolutionary power structure, the regime is hardly in a mood to show moderation. Especially in such circumstances, concessions are a sign of weakness. One year after Iran's rigged elections and the wave of repression that followed, Western nations – the countries at the forefront of the sanctions' efforts – should finally recognise their best allies against the looming threat of a nuclear-armed Islamic Republic are the Iranian people and their aspirations to live without fear under a different regime. Sanctions should therefore have two purposes: delay Iran's nuclear program by sabotaging its procurement efforts and driving a wedge between the regime and the people.

This should not be an arduous task: since years of incompetent economic mismanagement and growing repression have created an already unbridgeable gap between the regime and its people, sanctions should aim to broaden that gap even further. Economic pressure must increase the already widespread discontent.

Sanctions, therefore, should be designed and enhanced to serve a different purpose – not so much a change of behaviour but rather a change of regime.

Critics no doubt will say that tougher economic measures could harm ordinary Iranians and send them into the arms of the regime. They forget how deadly the regime's embrace is. Ordinary Iranians, by contrast, know it all too well. Despite four years of international sanctions, they hardly blame the West for their economic distress.

If accompanied by a robust public diplomacy effort designed to keep the Iranian public informed, sanctions can further alienate them from their rulers. With this in mind, the West must ratchet up the pressure even further while speaking directly to the Iranian people about its goals – that ultimately, its own security and long-term strategic interests of preventing a nuclear-armed Iran are best served by the overthrow of the Islamic Republic and the restoration of ordinary Iranians' fundamental freedoms.

That, and not more pointless negotiations with Iran's ruthless rulers, should be the guiding principle of Western sanctions policy.

Emmanuele Ottolenghi is a senior fellow at the Foundation for Defence of Democracies and the author of the forthcoming book Iran: The Looming Threat