July 12, 2019 | Foreign Policy

Trump’s Iran Policy Hasn’t Failed—Yet

Maximum pressure could still deliver strategic outcomes.
July 12, 2019 | Foreign Policy

Trump’s Iran Policy Hasn’t Failed—Yet

Maximum pressure could still deliver strategic outcomes.

It has been more than a year since U.S. President Donald Trump withdrew from the 2015 Iran nuclear deal. From the beginning, the controversial decision to leave the accord has faced more than its fair share of criticism. Among critics, a primary line of attack has focused on the administration’s heavy dependence on sanctions as the primary tool of its maximum pressure campaign. They have made three major arguments: First, that in the absence of international support, unilateral U.S. sanctions would not be able to muster a sufficiently powerful blow to Iran’s economy. Second, that even if sanctions proved more potent than anticipated, they were incapable of achieving any of the administration’s vague, maximalist objectives. And third, that unilateral sanctions pursued over the vocal opposition of other world powers risked causing a backlash that could fatally undermine the United States’ future ability to wage economic warfare against its adversaries.

It’s worth evaluating each of these criticisms in turn—especially in light of the dangerous spike in U.S.-Iran tensions since early May. The charge now is not simply that the maximum pressure campaign won’t produce positive changes in Tehran’s behavior but that it has actually made things worse by triggering escalation on the regime’s part and increasing the risk of a disastrous new Middle Eastern war.

Whether the administration or its detractors have the better part of the argument when it comes to the maximum pressure strategy is obviously critical to the near-term success or failure of Trump’s Iran policy. But how the debate is ultimately resolved will also have broader implications for the future of U.S. foreign policy more generally—especially regarding the role of economic coercion as a central pillar of U.S. statecraft.

While it’s still too early to make definitive judgments about many elements of the administration’s still unfolding Iran strategy, that’s definitely not the case when it comes to assessing the power of U.S. unilateral sanctions. Without a shred of support from the world’s other major powers—indeed, often in the face of their active resistance—U.S. sanctions have on their own proved devastating to the Iranian economy. Iranian President Hassan Rouhani acknowledged as much in early May when he made the stunning admission that Trump’s maximum pressure campaign had inflicted more economic damage on Iran than it had suffered during its eight-year war with Iraq in the 1980s.

Faced with the risk of losing access to the world’s most important market and reserve currency, foreign companies and financial institutions have abandoned Iran in droves—with essentially no regard for the protestations of their own governments. Thanks to the global supremacy of the dollar, unilateral U.S. sanctions have in practice been multilateralized—not by choice but by necessity.

Though clear in hindsight, the ability of the United States operating on its own to wreak so much havoc on Iran’s economy so quickly was anything but obvious a year ago.

Though clear in hindsight, the ability of the United States operating on its own to wreak so much havoc on Iran’s economy so quickly was anything but obvious a year ago. At the time, a fierce debate raged among Washington’s top sanctions experts over whether the United States could possibly hope to re-create the same level of economic pressure against Iran that multilateral sanctions had generated in the period leading up to the nuclear deal. Absent European backing, “the U.S. sanctions regime will be a fraction of what it was in 2012,” Richard Nephew and Ilan Goldenberg agued in a piece for Foreign Policy in May 2018. Even a year later, David Mortlock, a former deputy coordinator for sanctions policy under President Barack Obama, continued to suggest that because of the lack of international support, “the Administration is unlikely to achieve pressure greater than that which existed in 2012.”

Though claiming zero expertise on sanctions, I freely admit to having had at least one foot in the skeptics’ camp, with a strong bias toward believing that willing partners were necessary for sanctions success. The only thing pulling me in the opposite direction was having the benefit of being colleagues at the Foundation for Defense of Democracies with Richard Goldberg and Mark Dubowitz—the leaders of a small band of Iran hawks who were absolutely convinced that where the United States led on sanctions, others would have no choice but to follow. At least on this critical, albeit narrow question, they’ve been proved stunningly correct over the past year. It has been as close to a laboratory-style experiment of competing hypotheses as you’re likely to get in the foreign-policy world.

As best I can tell, the sanctions hawks simply had a much deeper appreciation than their critics for how much the U.S. Treasury’s development of financial sanctions in the early 2000s—in essence, the weaponization of the U.S. dollar—had revolutionized the world of economic warfare. Whereas the skeptics would cite failed U.S. efforts in the 1990s to unilaterally sanction adversary states as useful precedents for predicting the likely fate of Trump’s sanctions in 2018, the hawks saw two fundamentally different regimes at work that bore little relation to each other. For them, the history of economic warfare could be divided into two very distinct eras: before financial sanctions and after financial sanctions.

The purpose of pointing this out is not to claim bragging rights for one side or the other. Rather, it’s to highlight the importance of the lesson that future U.S. policymakers should internalize. They shouldn’t waste the time and energy that my colleagues and I in the George W. Bush administration did in the early 2000s endlessly arguing in interagency meetings about whether unilateral U.S. sanctions could bite and build leverage for U.S. diplomacy against hostile states. That debate should be over. The real questions worth arguing about today are of the second-order variety: Even if U.S. sanctions can inflict devastating economic pain on an adversary, are they also capable of achieving favorable political objectives? What mix of sanctions, diplomacy, and other measures are needed to maximize the chances for policy success? And how severe are the costs to U.S. interests, unintended or otherwise, of using sanctions to coerce not just adversaries but allies as well?

With the issue of unilateral sanctions’ ability to mete out economic punishment resolved, Trump’s critics like Nicholas Miller and Ali Vaez have moved on to precisely these sorts of questions. In particular, they have zeroed in on the claim that for all the damage that sanctions are doing to Iran’s economy, they have failed to achieve any of the administration’s presumed objectives while encouraging escalation toward armed conflict. The Iranian regime has not collapsed, they point out. Nor has it complied with any of the 12 demands that Secretary of State Mike Pompeo set out shortly after Trump’s withdrawal from the nuclear deal. The aggressive activities of Iran and its proxies across the Middle East have not appreciably declined. On the contrary, as the recent escalation of tensions attests—the attacks on oil tankers and Saudi critical infrastructure, the shootdown of U.S. drones, rockets fired near U.S.-linked facilities in Iraq, and actions to break free of the deal’s nuclear constraints—Iran’s behavior may in fact be getting worse as it lashes out against unrelenting U.S. economic pressure. Rather than returning to the negotiating table to discuss a new deal that would improve on the flawed old one, Iran’s supreme leader, Ayatollah Ali Khamenei, has repeatedly rejected the idea of diplomacy with Trump.

What looks like failure could quickly turn to progress and success within a relatively short time frame. 

These points are all valid, as far as they go. But I’d argue that they don’t yet support the conclusion that many of Trump’s critics are so eager to render—that the strategy of maximum pressure has failed and should be abandoned to avoid imminent disaster. In the first place, it’s worth remembering former Democratic Sen. George Mitchell’s quip about his years spent trying to broker peace in Northern Ireland: Before one day of success, the negotiations failed for 700 days. That’s often the nature of foreign policy. It requires time for a strategy to take hold. The process is often not linear. What looks like failure could quickly turn to progress and success within a relatively short time frame.

Former President Ronald Reagan’s decision early in his first term to ditch detente and pursue a far more confrontational policy toward the Soviet Union offers another historical example. Moscow broke off arms control negotiations. Superpower tensions escalated to a fever pitch. Reagan was condemned widely as a warmonger leading the world to the precipice of nuclear ruin. His support for diplomacy was dismissed as insincere. Until, of course, new Soviet leaders realized that Reagan wouldn’t back down, their strategy of escalating tensions had failed, and the only hope for salvaging their regime was returning to the negotiating table and trying to work out a new accommodation.

The 2007 U.S. troop surge in Iraq is also instructive. The press and foreign powers pilloried Bush for his decision not to bow to the weight of world opinion by declaring the war lost and withdrawing U.S. forces. The first months of the strategy’s implementation were among the bloodiest of the war. The leading Democratic candidates for president rushed to declare the surge a failure. But in less than a year they were eating those words as the policy took hold and levels of violence in Iraq plummeted.

Finally, with Iran itself, recent history leading to the nuclear deal offers reason to believe that all may not be lost for Trump’s approach. In the deal’s aftermath, Obama’s negotiators readily acknowledged that along with the president’s willingness to grant Iran a limited ability to enrich uranium, the intense pressure imposed by U.S.-led sanctions played an essential role in getting Iran to the negotiating table. Especially critical were draconian measures passed by the U.S. Congress in December 2011 (and, notably, opposed by the administration initially for being too provocative) designed to punish Iran’s Central Bank and restrict its oil sales. One former Obama official, Robert Einhorn, subsequently described oil sanctions as the key factor that “tipped the balance,” resulting ultimately in the election of Rouhani in June 2013 with a mandate from Khamenei to reach a deal with the United States that would ease sanctions. Once Rouhani actually assumed office in August 2013 and got a close look at Iran’s finances, he found that the country was perilously close to a balance of payments crisis and needed urgent relief. Within two months, an interim agreement was concluded that suspended further U.S. efforts to restrict oil sales while allowing Iran to repatriate at least $700 million per month in much-needed hard currency.

That timetable is worth highlighting. U.S. sanctions were passed at the end of 2011. Due to a grace period, they didn’t actually go into effect until six months later, in mid-2012. Only one year after that, Rouhani, known as the “diplomatic sheikh,” was elected. Five months on, an interim nuclear accord was finalized. So all told, more than 22 months passed between the time the harshest U.S. sanctions were made law and an initial agreement. Measured from the time that oil sanctions actually began to be implemented, it still took 17 months for the process to unfold.

The fact that Trump’s goals have not yet been realized is certainly grounds for concern and legitimate criticism. But perhaps not yet for panic and despair.

By comparison, Trump announced his intention to reimpose sanctions against Iran’s Central Bank and oil sales about 14 months ago. Those only went into effect in November 2018, about eight months ago. By the yardstick of the process that ultimately led to the Iran deal, Trump’s maximum pressure campaign is therefore still in its early stages. It doesn’t seem unreasonable to suggest that some caution is warranted before rushing to pass final judgment on the administration’s strategy. The mere fact that Trump’s goals, so far as those can be discerned, have not yet been realized is certainly grounds for concern and legitimate criticism. But perhaps not yet for panic and despair.

Since withdrawing from the Iran deal, the administration has been imprecise about articulating a clear set of goals for Iran. Pompeo’s 12 demands set an exceedingly high bar that critics—not entirely without justification—have seized on not as an opening bid in a drawn-out game of coercive diplomacy but as a veiled call for regime change. With that as the standard for success, it’s no doubt true that the odds are very long indeed that maximum pressure will work.

But in the thicket of competing and contradictory signals that have emanated from the administration about its endgame, it’s possible to identify another set of more limited, arguably more realistic goals. These have increasingly come to the fore in the context of the current escalation in tensions, especially as Trump has more pointedly clarified his own priorities—with regime change explicitly excluded. In the first instance, maximum pressure appears designed to starve Iran of resources, to force on its leadership an increasingly painful guns versus butter choice, to make it harder over time for the regime to finance its malign activities and threaten U.S. interests. Second, Trump aims for this dramatic intensification of economic pressure to force Iran back to the negotiating table in search of relief, with the aim of working out a new agreement that addresses U.S. interests better than the 2015 deal—first and foremost by enhancing restrictions on Iran’s nuclear activities but also by constraining its missile program, regional aggression, and support for terrorism.

Viewed in this light, Trump’s maximum pressure strategy may still seem ambitious but hardly fantastical. Indeed, at least as far as constraining the regime’s resources, it’s impossible at this point to argue that the policy is not making progress. The regime is systematically being denied billions of dollars that it heretofore was using to both subsidize its domestic stability and finance its imperial ambitions. As its revenues continue to shrink, choices about resource allocation have grown increasingly difficult. While the tightening squeeze may not yet have translated into a noticeable retrenchment of its regional activities, the regime’s day of reckoning is almost certainly coming as the specter of financial insolvency looms on the horizon. It is lashing out now precisely because it feels the walls closing in and hopes to force the United States to back off before its situation becomes much more perilous. Iran’s decision to escalate is, paradoxically, a sign that the maximum pressure campaign may be working, not failing.

Iran’s decision to escalate is, paradoxically, a sign that the maximum pressure campaign may be working, not failing.

Whether Trump’s policies will bring Iran back to the negotiating table is more uncertain. But it’s interesting that some very well-respected Iran experts, both of a more hawkish and more dovish bent, believe that is where the situation is probably headed. Rather than a march to war, Iran’s recent threats and violence are perhaps better understood as risky but integral steps in a larger diplomatic dance—an effort by the regime to save face and build leverage in advance of eventually succumbing to Trump’s call for new negotiations.

It remains to be seen whether the president is capable of mustering the necessary resolve and diplomatic skill to deter a larger conflict while convincing Iran that diplomacy is its only realistic option for escaping America’s ever-tightening economic chokehold. A slide to war, inadvertent or not, would obviously confirm Trump’s critics’ worst fears about the recklessness of his maximum pressure campaign. The eventual resumption of negotiations largely on Trump’s terms would prove that there is a method to the president’s madness. For now, at least, both outcomes—catastrophic failure and genuine success—remain wide open.

A third criticism lodged against Trump’s use of unilateral sanctions is that it is seeding the ground for a backlash against U.S. dominance of the global financial system. The fear is that in response to perceived U.S. overreach—in particular, the threat of secondary sanctions against foreign companies for dealing with Iran—other great powers, including China, the European Union, and Russia, will band together to reduce their dependence on the U.S. dollar as the world’s most important reserve currency and dominant means of conducting international business.

There is real logic to this concern that certainly merits Washington’s attention. That said, warnings of this sort have been circulating for years. While potential efforts to displace the dollar make sense in the abstract, when push comes to shove it’s much more difficult to identify where the real-world threat would come from. Under the cloud of Brexit, rising nationalism in Europe, and perpetually simmering debt crises in various member states, the future of the EU is in as much doubt today as at any point in its history. Will people really bet on the euro? Or on China, with its authoritarianism, rampant corruption, lack of transparency and rule of law, and phony statistics? Russia, with its anemic economy smaller than the state of Texas? To ask these questions is to answer them.

Trump has staked his Iran policy on the coercive power of U.S. unilateral sanctions. His bet that they could inflict unprecedented economic pain on Iran has been proved right. The chances that the European Union or other world powers will be capable of circumventing the U.S. sanctions wall, now or in the foreseeable future, are slim. What remains in serious doubt, however, is whether Trump’s maximum pressure policy can be translated into strategic outcomes—by significantly eroding the regime’s ability to project power and forcing it back to the negotiating table to work out a new agreement that substantially improves on the 2015 deal. All, of course, while containing Iranian escalation and avoiding a costly war. Trump’s critics are betting that it can’t be done. They could eventually turn out to be right. But for now, that judgment remains premature. The ultimate success or failure of Trump’s Iran policy, as well as the utility of economic coercion as a strategic weapon in the U.S. foreign-policy arsenal, is still very much an open question.

John Hannah is a senior fellow at the Foundation for Defense of Democracies, focusing on U.S. strategy. During the presidency of George W. Bush, he served for eight years on the staff of Vice President Cheney, including as the vice president’s national security advisor.


Iran Iran Global Threat Network Iran Nuclear Iran Politics and Economy Iran Sanctions Sanctions and Illicit Finance