Maximize Pressure on Iran: Fortify the Sanctions Wall

The Islamic Republic of Iran is in crisis. U.S. sanctions have crippled the country’s economy. Protests over the regime’s failed policies continue. The Islamic Republic has reportedly even reduced force levels in Syria, thanks to punishing Israeli military strikes and U.S. economic pressure. These developments come as the coronavirus continues to ravage Iran, infecting roughly 140,000 people and causing more than 7,500 deaths, according to official statistics, and many times those numbers, according to reports.

Iran’s economic and military misfortunes reflect the success of the Trump administration’s maximum pressure campaign, which began in May 2018 following the president’s decision to withdraw from the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA). The Trump administration has adopted a policy of maximum pressure to address the full range of threats from the Islamic Republic. The administration’s objective is a better agreement that addresses the JCPOA’s fatal flaws. The way to secure such an agreement is to escalate all forms of pressure on the clerical regime until it faces a stark choice between its own survival and the abandonment of its nuclear ambitions, foreign aggression, and grave human rights violations.

From the beginning of his 2016 presidential campaign, Donald Trump insisted that the JCPOA was a bad deal. Rather than permanently blocking Iran’s pathway to nuclear weapons, the deal opened a patient path; if the JCPOA endures until its key provisions expire (or “sunset”), Tehran would emerge around 2025 with an industrial-scale nuclear program, a short path to a bomb, ballistic missiles to deliver that bomb, a conventional force newly equipped with foreign weapons, and its economy immunized against future sanctions.

The administration also dispensed with the fiction adopted by its predecessor that the nuclear agreement would moderate the mullahs by flooding them with cash and integrating them into the global economy. That theory of “moderation through economic seduction” failed miserably with the Chinese Communist Party and Russian President Vladimir Putin. The Islamic Republic has been at war with the United States for decades, murdering Americans and seeking to dominate the Middle East through its terrorist proxies. The JCPOA only super-charged such malign conduct by returning tens of billions of dollars for Tehran to fund its destructive activities. The Islamic Republic no longer had to make painful budgetary choices between guns for the Islamic Revolutionary Guard Corps-Quds Force (IRGC-QF), Lebanese Hezbollah, and pro-Iran militias in Iraq, as opposed to butter for its citizens. Cash did little to transform the Islamic Republic’s leaders into more responsible global citizens or improve their treatment of the Iranian people.

By contrast, the Trump administration has drained hundreds of billions of dollars from the Iranian treasury. U.S. sanctions did not need support from allies to work, as JCPOA defenders had long maintained. Put to the choice between the U.S. market and the U.S. dollar on the one hand and the Iranian market on the other, multinational companies cut their ties with the Islamic Republic. The key economic indicators demonstrate clearly: from GDP to inflation rates, oil exports, accessible foreign exchange reserves, the value of the Iranian rial relative to the U.S. dollar, and more, U.S. unilateral sanctions have inflicted a greater cost – and in less time – than previous multilateral penalties. Market forces, even more than political consensus, can sometimes achieve national security objectives.

The administration also broke taboos long observed by Washington’s foreign policy establishment, including an aversion to designating the IRGC in its entirety as a Foreign Terrorist Organization (FTO), blacklisting Iran’s supreme leader, Ayatollah Ali Khamenei, and sanctioning Mohammad Javad Zarif, Iran’s foreign minister. These were political “firsts” that further boxed in the regime. President Trump’s decision to kill IRGC-QF commander Qassem Soleimani intensified the operational and psychological pressure while avoiding the “World War Three” that his critics predicted. In addition, the administration’s successful campaign to get the United Kingdom and Germany to blacklist Hezbollah as a terrorist organization demonstrated that both pressure and diplomacy could work against Tehran’s most deadly Arab proxy.

Despite these successes, the current policy has vulnerabilities. Europe remains committed to defending the JCPOA as it hunkers down in the hope that former Vice President Joe Biden will succeed Trump as president and return America to the deal. A Biden administration might prefer to employ America’s newfound leverage to negotiate a better agreement, rather than rushing back to the JCPOA. And it might find that leverage diminished if Iran reaches the JCPOA’s first sunset – the expiration of the UN arms embargo – this October.

Indeed, on its campaign website, the Biden campaign assiduously avoids committing itself to a return to the JCPOA. Instead, the campaign talks about “rejoining a diplomatic agreement to prevent a nuclear-armed Iran, if Iran returns to compliance with the JCPOA.” That could be a return to the JCPOA or a return to something like the interim agreement, or Joint Plan of Action, reached in 2013, which provided more limited sanctions relief.

Still, either way, the Trump administration should do more to strengthen its “sanctions wall of deterrence,” whose purpose is to deter market players from returning to business with Iran even if the United States rejoins the JCPOA. The designation of the Central Bank of Iran for funding terrorism, the designation of the IRGC as an Foreign Terrorist Organization (FTO), and the redesign of many of the sanctions to make them based on terrorism, missile proliferation, or connections to the IRGC will pose significant risks to all multinational companies. Few believe the risks of Tehran’s illicit conduct will diminish, even if a Biden administration lifts sanctions.

More lawmakers can reinforce these political and market risks by supporting Senate and House resolutions introduced in May 2019 marking the one-year anniversary of the withdrawal from the JCPOA and co-sponsored by 22 Republican members of Congress. Each resolution “rejects the reapplication of sanctions relief provided for in the JCPOA.” This would underscore how companies will be whipsawed again, as they were between 2015 and 2018, if they return to Iran without bipartisan support for a new agreement that addresses the JCPOA’s fatal flaws.

Washington needs to establish clear red lines to head off further Iranian escalation as the maximum pressure campaign continues. Last summer, Washington did not respond to Iranian regional and nuclear escalation, culminating in a cruise missile and drone strike on Saudi Arabia that knocked offline almost 6 million barrels of daily petroleum production. While the killing of Soleimani shocked Tehran after its militias killed an American in Iraq, Washington since has absorbed repeated rocket and mortar attacks from pro-Iran militias, even after two American and one British solider were killed. The red line against the taking of American lives must be enforced. But even this high bar for the use of force can make allies skeptical about American staying power in the region while incentivizing Iran-backed Shiite militias to continue their attacks.

The administration has adopted the right policy, but it must safeguard gains and add to its wins. First, it should not offer Tehran any premature sanctions relief. Diminishing American leverage led to the fatally flawed JCPOA in the first place and has not worked in the administration’s negotiations with North Korea, in which Trump’s summit diplomacy undermined the pressure campaign. Washington should defend its sanctions wall against a new administration by designating more Iranian entities and economic sectors under multiple sanctions authorities. The Treasury Department should enhance audit and due diligence requirements for any firm auditing the books of a company that maintains ties with Tehran. This will deter companies that may not do business with the United States or in the U.S. dollar but do need audited financial statements from accounting firms, which will not be able to meet this enhanced standard. The most immediate sanctions target is to tighten the noose on Iran’s regional and non-oil trade, which is where Tehran is generating revenue while under sanctions.

Washington also needs to step up its support for the Iranian people, whose disdain for the regime is growing with more frequent and broad-based protests, to which the regime has responded with even greater violence. There are numerous ways the United States can show its support: more targeted designations for human rights abuses and corruption; platforms to help Iranians circumvent Internet restrictions; humanitarian relief efforts through international non-governmental organizations to bypass the regime; public messaging that supports a peaceful democratic Iran; and respect for human rights as a key condition of any comprehensive agreement. Such a policy of “maximum support” will reinforce maximum pressure.

Finally, Washington faces a showdown on Iran at the UN Security Council, where the administration can either strengthen its maximum pressure campaign and sanctions wall of deterrence or have them undermined by Russian and Chinese intransigence. In line with a request by 387 members of the U.S. House of Representatives, Secretary of State Mike Pompeo is preparing a diplomatic campaign to maintain the international arms embargo on Iran. The end of the arms embargo is one of the many key international restrictions on Iran scheduled to expire over time.

Yet it makes little sense to lift an arms embargo on a regime that has steadily increased its violent behavior over the past year, ranging from cruise missile strikes on Saudi oil infrastructure to mine attacks on tankers in the Persian Gulf and rocket attacks on American and British forces in Iraq. Meanwhile, the regime continues to support terror and proxy groups in Lebanon, Syria, Iraq, Yemen, and the Gaza Strip, all of which perpetuate conflicts and add to regional instability and civilian suffering. The Pentagon reports that Beijing and Moscow are planning to sell Iran fighter jets, main battle tanks, attack helicopters, and modern naval capabilities. Tehran is also likely to step-up its proliferation of this advanced weaponry to the likes of Lebanese Hezbollah, Shiite militias in Iraq, Hamas and Islamic Jihad in Gaza, and the Houthis in Yemen.

Accordingly, the first phase of Pompeo’s plan is to propose a new UN Security Council resolution to extend the arms embargo on Tehran indefinitely. Russia and China are expected to block the proposal, because the end of the embargo will unshackle their efforts to employ billions of dollars in arms sales as a means of turning Iran into a client state.

Phase two of Pompeo’s plan circumvents Russian and Chinese obstruction. He intends to use the self-destruct – or “snapback” – mechanism of the nuclear deal to block the sunset of the arms embargo, removing the need for an extension. This mechanism gave all original parties to the nuclear deal – including the United States – the right to snap all UN sanctions and embargoes back into place if the Iranian regime ever breached its nuclear commitments. Such breaches are now indisputable. The International Atomic Energy Agency (IAEA) reported in March that Iran has tripled its production of enriched uranium since November and is denying nuclear inspectors access to suspicious sites.

Even though the Trump administration withdrew from the nuclear deal, it retains the right to initiate a snapback. Specifically, UN Security Council Resolution 2231, which put the UN imprimatur on the nuclear deal, defines the term “participant State” to include the United States. According to a State Department legal opinion, Resolution 2231 does not contemplate a change in that definition even if America ceases participating in the agreement. This was not an accident, but a rare case of foresight on the part of the nuclear deal’s negotiators. Indeed, the Obama administration heavily marketed this unconditional snapback prerogative as a key feature of the plan in 2015. Unsurprisingly, Russia and China object to this interpretation. They are hoping Europe will persuade Washington to relent. London, Paris, and Berlin readily acknowledge the flaws of the nuclear deal, especially its sunsets, but they remain wedded to the belief that engagement on any terms can empower purported moderates and divert Tehran from its decades-long quest for nuclear weapons capabilities.

Time is running out for the Trump administration as the November election looms. A second Trump term will likely give it more time to realize its maximum pressure campaign against a regime in Iran suffering political, military, economic, and health crises and a challenge to its domestic legitimacy. But to prevent a Biden administration from reversing its extraordinary gains against the Islamic Republic, the Trump administration must double down on the pressure and fortify its sanctions wall of market and political deterrence.

Mark Dubowitz is the chief executive officer of the Foundation for Defense of Democracies (FDD). Behnam Ben Taleblu is a senior fellow at FDD where he conducts Persian-language research on Iranian security and political issues. Richard A. Goldberg is an FDD senior advisor. He most recently served as director for countering Iranian weapons of mass destruction for the White House National Security Council. This essay integrates recently published work by the three authors. Follow Mark and Richard on Twitter @mdubowitz and @rich_goldberg.