The Race for Iran

The Foundation for Defense of Democracies (FDD), a Washington, DC-based neoconservative “think tank” that has consistently promoted hard-line policies against the Islamic Republic, came out today with what it describes as “a comprehensive report…identifying 10 major Chinese energy companies that continue to do business with Iran in spite of international sanctions.”  According to FDD, “The report…documents these companies and their Iranian ties in unprecedented detail.  It provides a glimpse into how Chinese companies do business with Iran while enjoying access to North American markets, and in some cases, even U.S. government contracts.” 

Among its other activities, FDD is the sponsor of an “Iran Energy Project, which has devoted a lot of energy to advocating tougher energy-related sanctions against Iran and cataloguing foreign companies doing business there.  So, the new report’s focus on Chinese companies’ involvement in the Islamic Republic’s energy sector is not surprising. 

However, when one actually reads the descriptions of the “10 major Chinese energy companies” doing energy-related business in Iran, it becomes clear that none of these companies’ activities in Iran are prohibited or restricted by any of the international sanctions authorized by the United Nations Security Council.  In fact, Chinese diplomats have been very careful to insist that draft language advanced by the United States and its European partners to limit energy-related business activities in Iran be deleted before Beijing would approve the final text of the various sanctions resolutions approved by the Security Council.     

Rather, these companies’ activities in Iran, in at least some cases, probably run afoul of U.S. secondary sanctions, as legislated by Congress.  In keeping with its longstanding position, FDD has issued to report to raise political pressure on the Obama Administration to “enforce” the most recent secondary sanctions law by imposing unilateral U.S. sanctions against Chinese energy companies doing business in Iran.

We have long been critical of congressional infatuation with Iran-related secondary sanctions bills—and successive U.S. administrations’ supine acquiescence to such measures.  We think, first of all, that secondary sanctions are bad Iran policy:  they do not generate anything approaching strategic leverage over Iranian decision-making, but help to undercut whatever credibility Tehran might still be willing to ascribe to American professions of interest in “engagement”. 

But, beyond this, secondary sanctions are lousy foreign policy:  they potentially antagonize some of America’s most important international partners, for no constructive purpose.  One of the more antagonistic qualities of secondary sanctions is that, as a lawyer would put it, they represent an extraterritorial application of national law—in other words, they are blatantly illegal.  America’s closest allies—including Britain along with the rest of the European Union—have made clear that, if Washington were ever so foolish as to apply Iran-related secondary sanctions to an “EU” company, the EU would file a complaint against the United States in the World Trade Organization. 

The United States would almost certainly lose such a case.  This is the consensus view of most trade lawyers, not just in Europe and other non-U.S. jurisdictions, but also in Washington, DC (including within the executive branch of the U.S. government).  That is one reason why, since Iran-related secondary sanctions were first authorized in U.S. law in 1996, no U.S. administration—not the Clinton Administration, not the George W. Bush Administration, and not the Obama Administration—has ever imposed secondary sanctions on a non-U.S. company over that company’s business activities in the Islamic Republic.  Not once.             

Now the same people who brought you the Iraq war and would like to see the United States go to war with Iran want the Obama Administration to sanction companies domiciled in the country that is America’s biggest creditor.  We are skeptical that Beijing would be amused by this—and, at this point, Beijing has multiple channels through which to express its displeasure over such action, in ways that Washington would notice. 

–Flynt Leverett and Hillary Mann Leverett

In response to the latest International Atomic Energy Agency (IAEA) report on Iran’s nuclear activities, issued last week, David Sanger and William Broad of The New York Times “reported” that “Three months after the United Nations Security Council enacted its harshest sanctions yet against Iran, global nuclear inspectors reported Monday that the country has dug in its heels, refusing to provide inspectors with the information and access they need to determine whether the real purpose of Tehran’s program is to produce weapons.” 

For a richly informed and, we believe, more accurate take on the IAEA report, we are pleased to publish the post below by Peter Jenkins, a former member of the British diplomatic service who served as the United Kingdom’s Permanent Representative to the IAEA from 2001 to 2006.  He is currently a partner in ADRg Ambassadors, a dispute resolution company, and an associate fellow of the Geneva Centre for Security Policy. 

–Flynt Leverett and Hillary Mann Leverett

From Peter Jenkins:  The IAEA’s latest report sheds no new light on whether Iran intends to manufacture or acquire nuclear weapons, in contravention of the NPT.  The most suggestive technical indications of a nuclear weapons intention (apart from the dual use potential of uranium enrichment, and the high plutonium-producing potential of the reactor under construction at Arak) remain Iran’s experiments with polonium 210 and uranium metal, its possession of a blueprint for uranium metal hemispheres, and what the IAEA refers to as “alleged studies” (see below). 

But the experiments took place prior to the uncovering of Iran’s clandestine programme in 2003, and the blueprint has been in Iran’s possession since the late 1980s.  So these could as well be indications that Iran once had the intention of manufacturing nuclear weapons as that Iran still has that intention.  And all these pointers can as well indicate an intention to acquire a “threshold” or “break-out” nuclear capability as an intention to produce weapons. 

The report indicates that the inspectors are no further forward in their investigation into allegations that Iran has undertaken research that implies an interest in manufacturing nuclear weapons (the “alleged studies”).  Iran continues to state that the evidence on which these allegations are based has been fabricated. 

It has been made known that this evidence comes from Western intelligence agencies.  While it seems unlikely that Western agencies would fabricate evidence, it is not inconceivable that these agencies have been taken in by forgeries.  A classic instance of their falling for a forgery occurred in 2002-03 when they were presented with a document that suggested Iraq had procured or tried to procure uranium from Niger.  It took many months for them to concede that the document was a forgery—by when the damage was done—even though Westerners with experience of purchasing uranium from Niger could see instantly that the document was not authentic.

In any case, even if this evidence is authentic, which on balance it probably is, it dates back five years or more.  It does not necessarily imply a current Iranian intention to violate NPT obligations.

The report suggests that Iran is continuing to adopt an ultra-legalistic view of its safeguards obligations, complying with the letter but not the spirit of its agreement with the IAEA.  The wisdom of this policy is questionable, since an ultra-legalistic approach encourages the inference that Iran has something to hide.  But that inference is not necessarily correct.  In this case ultra-legalism can equally well be seen as a consequence of Iran’s belief that IAEA reporting of Iran’s pre-2003 safeguards violations to the UN Security Council was unjust (and that the subsequent reaction of the Security Council to those violations has also been unjust)—as retaliation for injustice, in other words.  And it is not in itself illegal for states under safeguards to restrict cooperation and access for inspectors to the letter of the standard NPT safeguards agreement.

It continues to be the case that Iran refuses to apply or bring into force a “model additional protocol”.  This too is something of an “own goal”, but is not illegal except in so far as the Security Council has required it of Iran under chapter VII of the UN Charter (see below).  It is an “own goal” because the IAEA is only able to confirm the absence of undeclared nuclear material or activities in a state if that state has brought into force an additional protocol.  Iran has not applied the additional protocol since the IAEA reported its pre-2003 safeguards breaches to the Security Council (March 2006).

Given that international pressure for Iran to apply the additional protocol has been intense, it is not surprising that since 2006 IAEA reports have stressed that the agency is not in a position to confirm that all nuclear material is in peaceful use (or that there is no undeclared nuclear material in Iran).  This statement is designed to add to the pressure.  Beyond that the statement is no more than a necessary consequence of Iran’s refusal to apply the additional protocol.  The same words could be used by the IAEA Director General if he were producing a report on another state that has declined to bring an additional protocol into force, e.g. Israel, Egypt or Brazil.  The phrase cannot, and should not, be taken to imply that the IAEA has (or has not) specific grounds to suspect the presence of undeclared material, or the existence of undeclared activities.

What the Director General can confirm in a case such as Iran’s is that all declared nuclear material is in peaceful use.  Director General ElBaradei and Director General Amano have given this confirmation consistently in recent years.  Declared material is material that a state has notified to the IAEA and placed under safeguards.  The standard IAEA safeguards agreement applies only to declared material, it being assumed that NPT non-nuclear-weapon states will comply with their NPT obligation to place all “source or special fissionable” material in their possession under safeguards.

It is noteworthy that although both the present Director General and his predecessor have dwelled on the inadequacies of Iranian cooperation since 2006, on Iran’s failure to implement the modified Code 3.1 of the subsidiary arrangement to the safeguards agreement (early provision of design information), and on the difficulties Iran has made over the nomination of inspectors, neither Director General has so far characterised these failings as the sort of “non-compliance” that the Board of Governors might see fit to report to the Security Council under article XII.C of the statute.  This could imply that they are not certain they would be justified in doing so, either because the legal rights and wrongs are murky or because the failings are not seen as grave enough to warrant a “non-compliance” report.

The report states that Iran now possesses 2800 kg of low enriched uranium (LEU).  This suggests that P5+1 insistence last autumn on Iran surrendering at least 1200 kg of LEU in return for fuel rods for the Tehran Research Reactor, and their rejection of an Iranian offer to surrender a smaller amount, was unfortunate.  The goal of the P5+1—to deprive Iran of sufficient LEU for one nuclear explosive device – was idle since it would have taken Iran only a few months to increase its stock of LEU from the 600 kg that would have remained in its possession, had it surrendered 1200 kg last autumn, to 1200 kg.  On the other hand, had the P5+1 cut a deal last autumn, they would have deprived Iran of a pretext to start enriching LEU to 20 percent—a move, in April 2010, which increased the nervousness of those who believe Iran is intent on acquiring nuclear weapons.

It may not be too late, though, for the P5+1 to obtain an end to the 20 percent enrichment campaign.  Iran made clear on 17 May, through Turkey and Brazil (whom the Islamic regime manifestly finds it easier to do business with than the United States, or even the EU and Russia, presumably for historical and cultural reasons) that it remains interested in an LEU-for-fuel deal.  Vice-President Salehi and Foreign Minister Mottaki have since signalled that in return for a deal Iran would cease enriching to 20 percent.

The report makes clear that Iran is continuing to defy the will of the Security Council.  That puts Iran on the wrong side of the law, since UN chapter VII resolutions are legally binding on UN member states.  Iranian representatives would no doubt argue that legal obligations freely entered into (e.g. NPT obligations) are different in nature from legal obligations imposed on a state against its will, especially obligations imposed by an instance that Iranians may well think of as a “kangeroo court”.  Iran could also point out that it is not the only UN member state to have defied the will of the Security Council.  Some others (e.g. Israel) appear to have been able to do so with impunity.

In connection with the release of his memoirs, former British Prime Minister Tony Blair has given a number of interviews this week in which he endorses the first-use of military force to stop Iran’s nuclear development.  Blair’s statements on the matter prompted us to reflect on where European policies toward the Islamic Republic are really headed. 

We start with the following exchange, from Blair’s interview with Charlie Rose that was broadcast on Tuesday, September 7, as a representative statement of the former Prime Minister’s views on Iran: 

TONY BLAIR:  [T]ake Iran—I completely understand the view that says—and there are friends of mine, friends of mine that I see in the U.S. who say to me, look, of course Iran shouldn’t have a nuclear weapon.  But are you crazy?  Are we really going, after everything we’ve been through, to take this on as well?  Why not just manage the situation?  We bring it about with sanctions.  Why should the regime be so stupid as ever to use nuclear weapons?  Look, it’s a situation that’s bad, we know, but it’s manageable, and it’s better to manage it than the alternative. That’s a perfectly sensible argument. I’m not going to sit here and say that’s a stupid argument.  I can understand the leaders taking that view. 

CHARLIE ROSE:  The argument is we can contain an Iran with weapons. 

TONY BLAIR:  Yes. 

CHARLIE ROSE:  As we did Russia with weapons. 

TONY BLAIR:  Yes.  In the end, my view is no, this regime is qualitatively different in their makeup.  I see them now exporting terrorism, instability around the Middle East.  I think the risk of not them so much using a nuclear weapon, because I agree that’s a remote contingency although, you know, you can’t ignore the fact the president of the country says Israel should be wiped off the map.  If you were an Israeli, you’d worry about it. But there’s the risk of the leakage of the technology.  Would they give that technology to one of these terrorist groups?  I don’t know.  So I can’t be sure.  Now—OK, so you’ve got a situation you can manage it.  You confront it.  Who’s right?  It’s really difficult. 

CHARLIE ROSE:  But your fear is that it’s unacceptable for them because they may lose it to some—or give it to somebody. 

TONY BLAIR:  Yes, yes…If in the end sanctions fail, diplomacy fails, I do not think it is acceptable for Iran to have a nuclear weapon, and I think you can’t rule out military action, and, indeed, it would come to that if they continue and sanctions and diplomacy simply can’t work.  So, yes, it’s a very difficult balance. 

CHARLIE ROSE:  So what do you think the chances of sanctions and diplomacy working here based on what you know so far? 

TONY BLAIR:  I think it depends, actually, on how serious they think we are…I think the Iranians—I think if they actually understand the seriousness of intent, then I think you have a greater likelihood—I don’t say you’ll stop them, but you have a greater likelihood of stopping them.  And that’s why it’s so important to send a clear, strong, and unequivocal message. 

CHARLIE ROSE:  What would you do about the diplomacy not being done? 

TONY BLAIR:  Do what we’re trying to do, which is to gear it up and make it work.  But it’s hard.  It’s hard.  It always is hard because countries have their interests, and some countries take the first view which is, look, there are other things in the world to worry about, manage it. There’s a line of political argument that runs like that, and that’s why I say it’s such a difficult issue, this, because you can’t say that’s a stupid thing. Now, on balance, my view is it’s a risk not worth running…

That Blair would say these things about Iran does not really surprise us—this is the same man who says that he “can’t regret” the Iraq war.  But we are struck that, while Blair’s position would put him squarely in the middle of the American foreign policy establishment regarding Iran, it is—in principle, at least—quite “un-European”. 

Blair seems to advocate—in terms similar to the arguments of John Bolton, Reuel Marc Gerecht, and other Iran “hawks” in the United States—that the United States engage in “preventive war” against Iran because of a perceived risk that it might begin converting its (internationally safeguarded) nuclear activities into a weapons program and, then, give nuclear weapons to terrorists.  (Blair says he believes that, if Iran had a nuclear weapon, it would not use it.  Why he doubts Iran would be sufficiently rational to refrain from giving a nuclear weapon to others who would use it is not clear.  But that’s another issue.)  Blair’s “case” for launching a “preventive war” against Iran is certainly not the “mainstream” European declaratory position.  Virtually all of the senior “continental” European officials with whom we’ve spoken agree with us that there is only a diplomatic path for addressing issues connected with the Islamic Republic’s nuclear program.  From their perspective, for the United States or Israel to attack Iran because it is enriching uranium would be profoundly counter-productive, imprudent—and illegal.        

This reading was confirmed on Charlie Rose’s broadcast the very next evening, by an observer whose insights are always interesting and often on the mark—John Micklethwait, editor-in-chief of The Economist. 

CHARLIE ROSE:  [Blair] believed that Saddam had to be taken down, whether he had weapons of mass destruction or whether he maintained the potential to do it because of plans.  He also believes that if Iran has nuclear weapons there’s a possibility they’ll fall into the hands of people who will use them, not Iranians but whoever else, and that therefore you cannot allow it. And he’s prepared to say that if sanctions and diplomacy and everything else doesn’t work then you have to have a military attack. 

JOHN MICKLETHWAIT:  Again, I think he’s coming out of his closet—if I can put it that way—more about Islam. He’s coming out and saying things more directly than he would perhaps do in office. But I think it’s there.  Blair again has always had this deep abiding worry about nuclear weapons, about what people could do with them. And the history is very clear.  This predates George Bush by a very, very long way. It’s something he was badgering Bill Clinton about. It’s part of him. And I think, again, give him some credit. He’s not actually meandering. He’s not pandering to people. These are not popular things to say. Nobody on this side of the Atlantic is gunning to go for Iran. 

Of course, most “continental” European states took a similar view of the U.S.-led invasion of Iraq in 2003—that the Bush Administration’s decision to take military action against Iraq, with the strong support of Tony Blair’s government in London, was fundamentally illegitimate.  But, once the deed was done, those European states which had opposed the war—and whose judgments were roundly vindicated by the disastrous course of America’s post-Saddam occupation—rushed to “make peace” with the United States.  Indeed, many of these states have taken their own Iran policies in deeply dysfunctional directions at least partly out of a desire to make the Iranian nuclear issue an arena in which U.S.-European cooperation could be restored.    

That raises a series of questions which, for us, prompt serious doubt about Europe’s capacity to have a genuinely independent foreign policy.  (Interestingly, many of our Iranian interlocutors have already given up on this prospect.)  What would Europe do if Israel and/or the United States were to initiate military action against Iranian nuclear facilities?  Say that the action was illegal?  And then?  How quickly would Europe seek to “make peace” with America after an attack on Iran?  

–Flynt Leverett and Hillary Mann Leverett

Dear Readers,

Some of the comments posted recently have used hateful language and included provocations designed to derail discussions away from a substantive debate.  Other comments have had important substantive content in some areas but crossed the line into a personal attack on those with whom the commenter disagreed.  We will be more vigilant in removing those comments from this site. 

Please take a moment and review the “Rules and Regulations for www.RaceForIran.com” that we have posted in the sidebar at all times.  They are reposted below for your convenience. 

Best regards, Flynt and Hillary

Rules and Regulations For www.RaceforIran.com

We are very grateful to all our readers for their interest and dedication to an informed debate on www.RaceForIran.com. As we elaborated in our manifesto when we started this blog, we launched www.RaceForIran.com to track and understand the “race for Iran”, in all of its myriad dimensions. In practical terms, www.RaceForIran.com seeks to serve three main purposes:

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We noticed a small news item yesterday, see here, reported from Tehran, which we think deserves more media attention and reflection in the West than it received. According to the story,

“Chinese Transport Minister Liu Zhijun is expected to visit Iran Sunday to sign a $2 billion contract to build a 360-mile-long railway linking key Iranian destinations that could later join to existing Iraq and Syrian railway networks and extending to the Mediterranean Sea.

Iran is forging ties with neighbors such as Tajikistan, Iran and Afghanistan as a strategy to rebuild itself as a trade center, ultimately forging a regional alliance that could support it against NATO countries.”

The article also quotes Nicklas Swanstrom, who heads Johns Hopkins University’s Central Asia-Caucasus Institute, on what the project means from a Chinese perspective.

“It also makes political sense, because while technically the U.S., Europe or Russia could block China’s sea routes, it would also have a land route. And by tying your neighbor’s infrastructure to you, it brings them closer.”

All of this, of course, is playing out in the wake of the most recent United Nations Security Council resolution imposing sanctions on Iran, the latest round of Iran-related unilateral and secondary sanctions by the United States, and the adoption of “national measures” by a growing number of U.S. allies (e.g., the European Union, Japan, Australia, Canada, and South Korea). China voted for the most recent UN sanctions and has said that it will abide by them. But Beijing has also made clear that it does not consider itself bound by sanctions defined unilaterally by other states outside the Security Council—and that, indeed, it considers such measures to be wholly lacking in legitimacy.

None of the initiatives discussed in the news report cited above violate UN sanctions against Iran. In fact, we cannot see how these efforts would even violate U.S. or other unilaterally-defined national sanctions against the Islamic Republic. Nevertheless, there have been other indications in recent weeks that China is not going to let a U.S.-led push to maximize Iran’s international economic isolation get in the way of Sino-Iranian economic ties. India has taken a similar position, see here, and may, like China, be acting to strengthen its economic and strategic ties to Iran.

Since the latest round of sanctions was adopted, China has stepped up its “economic diplomacy” and its concrete commercial ties with Iran in tangible ways. For example, China committed last month to new investments in Iranian petrochemical projects. As we have noted before, since 2004, all major investment contracts for new energy projects in Iran have been concluded by non-Western companies—primarily Chinese companies. We suspect that Chinese energy companies will conclude additional new investment contracts on Iranian energy projects in coming months.

These kinds of deals do potentially violate U.S. unilateral and secondary sanctions vis-à-vis the Islamic Republic (if Washington is foolish enough to push the point). The willingness to take advantage of such opportunities suggests that, while China’s leadership still does not want an open confrontation with the United States, Beijing is prepared to be more assertive in pursuing its interests in—and around—Iran.

While Western media, by and large, paid little or no attention to China’s commitment to build new railways in Iran, non-Western commentators did. As C. Raja Mohan, dean of India’s strategic commentariat, wrote in The Indian Express, “As the United States steps up the effort to isolate Tehran, China is penetrating deeper into the Iranian plateau.” Describing the railway deal as “an agreement on one important segment of this new Silk Road between the Far East and the Mediterranean”, Mohan argues that “Like the British Raj and the Russian empire that extended their railways into remote inner Asian frontiers more than a century ago as part of the Great Game, China wants to push transport corridors into all corners of Eurasia”.

But we are even more interested in what recent events indicate about foreign policy assessments and calculations in Tehran. On the Iranian side, these developments suggest that the current direction of Western policy toward the Islamic Republic—imposing more sanctions, rolling back previously established economic ties, getting ever more exercised over whatever sensationalized human rights case du jour is attracting the most Western media attention—is accelerating Tehran’s exploration of what can be described as “regional” and “Eastern” options for Iran’s foreign policy.

The Islamic Republic’s relations with regional neighbors—e.g., with Turkey, Iraq, Syria, Turkmenistan and other Central Asian states—are clearly becoming more prominent aspects of Iranian foreign policy. Likewise, Iran’s ties to China and other “rising” Asian states are taking on greater strategic as well as economic significance.

There is a human dimension, as well, to the “Eastern option” in Iranian foreign policy.  When we visited the University of Tehran in February, we had the opportunity to tour the university’s Confucius Institute, sponsored by the Chinese government to provide Chinese-language instruction and facilitate opportunities for Iranian students to study in China. There is clearly growing interest among young Iranians in such opportunities; we were told that the Confucius Institute’s offerings are the fastest-growing foreign language program on the campus.

More broadly, a number of our academic colleagues in Iran have described to us how the population of young Iranians studying abroad is shifting from Western locations (North America, Australia, Britain, and elsewhere in Europe) to places like China, India, and Malaysia. Ultimately, this trend could have a profound impact on the international orientation of the next generation of Iranian businesspeople, government officials, and thought leaders.

–Flynt Leverett and Hillary Mann Leverett