Finance Committee Holds Hearing on Sanctions

The Senate Finance Committee held a hearing today on S. 970, the Iran Counter-Proliferation Act of 2007. William Reinsch and Phillip Gordon each presented critiques of the bill, while Danielle Pletka and Orde Kittrie expressed enthusiastic support. While Reinsch in particular questioned the effectiveness of unilateral sanctions, none of the panelists discussed the consequences of increased sanctions on average Iranians, nor did anyone broach the topic of what repercussions increased sanctions might have for the U.S. dollar.

The only panelist to oppose the passing of S. 970 was William A. Reinsch, President, National Foreign Trade Council and Co-Chairman of USA*Engage. He noted that the bill’s passage would come at a hefty price and “have serious unintended consequences which will be manifested rather quickly, and which would make our efforts to change Iran's behavior significantly more difficult.” A better approach, Reinsch said, would be to fund a high-level special envoy for Iran with the authority to engage in direct bilateral talks in partnership with the international community. Reinsch noted, “The United States has made some progress negotiating an end to North Korea's nuclear weapons program through direct diplomatic engagement. When it comes to Iran, there is already a framework for cooperation - security talks in Baghdad - and precedent - the United States and Iran cooperated in the past to support democratic governance in Afghanistan.” Reinsch also outlined concerns with several specific provisions in S. 970.

Phillip Gordon of the Brookings Institution said “Iranian nuclear weapons capability could embolden Iran as a destabilizing regional actor, threaten U.S. interests in the region, and stimulate further nuclear proliferation throughout the Middle East – increasing the risk of nuclear war and terrorism.” He applauded Congress’ efforts for increasing the cost on Iran to pursue this course and said he believes the only way to halt or even limit it involves presenting Iran with an enhanced set of incentives and disincentives to change its cost-benefit analysis of the issue.

Gordon did express concern over some measures in S. 970, including the “imposition of sanctions on U.S. subsidiaries of foreign companies…any measure in S.970 deemed to provide for mandatory secondary sanctions, especially if they limited the President’s authority to waive those sanctions, could turn out to be counterproductive.”

Gordon also expressed reservation over Section 6 of S. 970, which targets Russia. He said, “While it makes sense to leverage a 123 agreement with Russia to press it to further isolate Iran, it would be a mistake to take away all the administration’s flexibility in this area.” Regarding the section on World Bank loans, Gordon said, “Especially as the
World Bank has not made a new loan to Iran for over two years, such a broad sanction would have very little impact on Iran yet would set a bad precedent that other countries might use to promote their own foreign policy priorities.

Gordon noted that the provision in S. 970 to label the Islamic Revolutionary Guard Corps a terrorist organization “would have no further policy effect, but the act of deeming all the more than one hundred thousand members of the IRGC part of a terrorist organization might cause an unnecessarily nationalistic backlash in Iran, and inadvertently strengthen the regime.” Gordon also opposed the measure in S. 970 to “re-impose the total trade ban with Iran. With U.S. imports from Iran amounting to less than $175 million in 2007, this will not have a major impact on the overall Iranian economy yet would impact some Iranian farmers and textile workers.”

Gordon called for the bill to be strengthened “with elements to make clear not only that Iran must pay a price for its refusal to cooperate but that more flexibility on its part would be rewarded.” He said the bill “would do well to reiterate support for the measures in the August 2006 “EU3+3” (Britain, France, Germany, the United States, Russia and China) revised proposals to Iran,” which include “the reaffirmation of Iran’s right to develop nuclear energy for peaceful purposes in conformity with its NPT obligations, the commitment to give legally binding, multilayered fuel assurance to Iran based on partnership in an international fuel facility in Russia; a buffer stock of at least five years of fuel, and reliable access to a potential international fuel bank.”

Finally, Gordon said he “believes Congress should express support for direct negotiations between the United States and Iran over the nuclear program – or any other issue. Making such talks conditional on Iran’s suspension of nuclear enrichment has not worked and is unlikely to work. The success of direct talks with Iran is hardly guaranteed either, but such talks should not be seen as a ‘concession’ to Iran, nor would they constitute acceptance of its enrichment program. Any potential benefit to Iran would only come as a result of agreement at the talks, not in the form of the talks themselves.”

Danielle Pletka of the American Enterprise Institute demonstrated not only a complete lack of imagination for resolving the issue, but also a lack of understanding of Iran. Pletka went so far as to quote Thomas Jefferson saying that only three options can be chosen from – sanctions, war or capitulation. She noted that war should only be a last resort and capitulation is unacceptable, leaving sanctions the default position. She attacked opponents of sanctions against Iran saying “if sanctions are good enough punishment for making a cheap television set, presumably they are good enough for terrorists trying to make a nuclear weapon.” Pletka favors Section 6 of the S. 970 and targeting Russia for its cooperation with Iran.

Orde Kittrie began his testimony by evoking the image of hijackers on September 11, 2001. He then asked the panel to imagine a “nuclear 9/11” and quoted Graham Allison and Robert Galluci that such an attack on America is “more likely than not” in the next decade. He then took the scenario a step further saying, “The odds of such a devastating ‘nuclear 9/11’ attack on Tel Aviv may be as high or higher. Where would such a bomb most likely come from? Iran. The Iranian regime’s apocalyptic messianism and exaltation of martyrdom may make it impossible to deter Iran from using, or enabling its terrorist proxies to use, nuclear weapons to achieve its avowed aims of destroying the United States and Israel.” He went on to say that the price exacted on Iran for its pursuit of nuclear weapons and its support of terrorism has been too low. He conceded that “S. 970 would not likely in and of itself bring an end to Iran’s nuclear program. It is impossible to know what measure would be the tipping point that would convince Iran’s regime that the price for its nuclear program has become too high, that the risk from sanctions to the regime’s survival has become so great that the regime is better served by halting its nuclear program rather than further risking its grip over the Iranian people… Passage of S. 970 will immediately move us closer to achieving that tipping point.”

The Senate Banking Committee is also expected to have hearings on S. 970 sometime in the future. I will keep INW readers posted.