U.S. officials hardened their conflict with Europe over sanctions against Iran and other troublesome countries at an industry conference last month as the European Union made clear it doesn't intend to change.
Officials from the U.S. National Security Council and Department of State told a Dallas conference sponsored by Petro-Hunt Corp. and Southern Methodist University's Institute for the Study of Earth and Man the European policy of "critical dialog" with Iran won't work.
"They have little show for this policy of engagement, something that in other times we might have called appeasement," declared Robert Deutsch, director of Northern Gulf affairs at the State Department's Bureau of Near Eastern Affairs.
"Dialog without consequences is ineffective," he said.
Acknowledging that sanctions against Iran have created costs for companies denied access to opportunities in the Islamic republic, he said, "The behavior we are trying to change also has long term costs."
He and Stephen Grummon, director for Near East/South Asian affairs at the National Security Council, each described five objections to Iranian behavior: support for terrorism, opposition to Middle East peace, efforts to develop weapons of mass destruction, a build-up in conventional arms, and violations of human rights, including mistreatment of minority groups.
At the conference, the sanctions policy received strong support from Manouchehr Ganji, an opposition leader who lives under heavy security in Paris and is the father of Darab Ganji, Petro-Hunt's international director. But it also came under pointed attack from critics who say sanctions hurt only U.S. companies.
Since then the European Union's ambassador to Washington has written to U.S. congressional leaders to oppose legislation seeking to punish countries that allow companies to violate U.S. trade restrictions against Iran and Libya.
The EU also has asked for formal consultation under auspices of the World Trade Organization, an indication that it would consider enactment of third-party sanctions a violation of international trade agreements.
Due largely to U.S. sanctions and threatened indirect sanctions, Iran has attracted little interest in the 11 major oil and gas projects it made available to international investment last November (OGJ, Feb. 19, p. 18; Feb. 26, p. 40).
A rogue regime
No one at the Dallas conference disputed characterizations of Iran's theocracy as a regime responsible for international terrorism. But views were mixed about other dimensions of Iran's behavior and what world leaders should do about them.
There was nothing unclear about the senior Ganji's view of what he called a "renegade regime" in Tehran, which he said threatens the country, the region, and the world.
Ganji said people who hope sanctions will turn the ruling mullahs into moderates are "profoundly and dangerously mistaken." The role of sanctions, he said, is to give Iranians the incentive to overthrow the regime.
"Our people will be hesitant to make the necessary commitment to change until they are convinced that the major powers are serious in want- ing to see an end to the existing regime and are not playing games," said Ganji. He is a minister of education in the government overthrown by the Islamic revolution of 1978-79 and now head of the opposition Flag of Freedom Organization of Iran.
"The major powers can prove their seriousness by implementing an effective and comprehensive sanctions policy."
Ganji said 84 opponents of the Islamic regime have been killed outside of Iran. There have been nine attempts on his life, he said, and 70,000-80,000 executions in Iran.
"It's against the nature of the world that the regime should survive," he declared.
Countries and international companies "making short term gain and propping up the ruling mullahs should expect to ultimately pay a price for obstructing the Iranian people's aspiration for democracy," he said.
"We will most definitely remember our friends and foes during these hard times."
Other views
Other speakers doubted that an overthrow of the Iranian theocracy is likely or even possible and said sanctions might have reverse effects.
The sanctions policy, said former Sec. of Commerce Robert Mosbacher, "hurts the very people we're trying to help, and it helps the people we're trying to hurt."
Hashem Pesaran, professor of economics at the University of Cambridge, London, said sanctions helped the Iranian government by forcing it to begin solving its international debt problem, which developed after 1989.
He and others said growing debt, which the government rescheduled under hard terms in 1993, condemns Iran to a period of economic growth no greater than population growth.
And political factionalism, Pesaran said, creates "zig-zag policies" that make solutions difficult.
Mohsen Fardi, a World Bank economist, said Iran's gross domestic product is growing at about prerevolutionary rates but is dissipated through consumption rather than channeled into production through investment.
And Esfandiar Maasoumi, professor of economics and statistics at Southern Methodist University, cited a crucial source of Iranian instability: More than half of Iran's 60 million people are younger than age 15.
Factionalism stressed
Many Iranian analysts considered factionalism within Iran to be more important than did the U.S. officials and Ganji, who insisted that "when it comes to the final analysis there is one guy."
Hooshang Mirahmadi, professor and graduate director in the Rutgers University urban planning and policy department, said that since 1989 Iran has been torn by a power struggle between factions that want to modernize and traditionalists, who benefit from sanctions.
The U.S. government, Mirahmadi said, has ignored Iran's steps "away from Islamism and toward secular nationalism."
Because Iranians are "fiercely independent minded," he said, U.S. pressures might push Iran into a corner from which an "ultranationalist resurgence" might be the only escape. Comparable reversals elsewhere in the Eastern Hemisphere could lead to an alliance among Iran, Russia, China, and India.
Russia's growing influence in Iran is something U.S. policy doesn't address, noted Kenneth Timmerman, director of the Middle East Data Project and publisher of the Iran Brief, who otherwise supports sanctions.
The hope that sanctions might lead to overthrow of the Islamic government attracted doubts.
"It will be a long time before the Iranian people generate the energy to stage another revolution," said Marvin Zonis, professor of international political economy in the University of Chicago graduate school of business.
And Ahmad Ghoreishi, professor in the Naval Postgraduate School's department of national security affairs, said, "The average Iranian thinks the United States is supporting the mullahs."
He said Iran is "a long way" from becoming a nuclear power. And its conventional arms build-up is understandable in view of regional politics and smaller than those of other Persian Gulf states.
Furthermore, he said, Iran's human rights behavior, while "very bad," isn't as bad as that in other countries on the gulf.
Sanctions effective?
Brent Scowcroft, national security adviser in the administration of President Bush, didn't oppose sanctions aginst Iran but criticized the foreign policy of which they are part.
"We have established a common policy" for Iran and Iraq "for different purposes," he said. While Iran's government is "reprehensible," it is different from Iraq, where misbehavior is clearly concentrated in President Saddam Hussein.
"One clear accomplishment (of sanctions) is we're penalizing U.S. business," Scowcroft said.
He compared the U.S. spurning of Iran with its efforts to change North Korea's behavior by allowing shipment to it of nuclear plants.
"What is different about Iran and North Korea that we should have very different policies toward two rogue states?" he asked.
U.S. policy toward Russia and China, meanwhile, changes with the "shifting winds of domestic politics." Such inconsistency makes it "difficult for allies to align with directions set by the U.S.," he said.
Scowcroft said the Bush administration considered "extreme sanctions" against Iran at a time when a major sale of crop dusters was pending but left the decision to the incoming Clinton administration in part because of concerns expressed by European governments.
One critic of sanctions, Apache International Inc. Pres. Bijan Mossavar-Ramani, faulted the oil industry for not taking a stronger stand.
"Industry is remiss in pursuing its goals by its silence on sanctions," he said. Mossavar-Ramani, an associate of opposition leader Ganji in prerevolutionary Iran, said the country's oil production could increase to 5 million b/d within 5 years from less than 4 million b/d now and to 6-7 million b/d within 7-8 years under conditions favoring international investment.
But sanctions would have to disappear, and Iran would have to offer commercial terms currently unpalatable to the Islamic regime.
"It's time for industry to get involved," he said.
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