Fighting It– Economic Approaches

Ilan Berman writes in the WSJ of some measures that the US and an “economic coalition of the willing” can enact on Iran that could pressure that regime to be less radical and delay nuclear development.  Again he addresses the concern that the UNSC is not going to do anything to stop Iran, not with Chirac, Russia, and China impeding US led efforts.


An Economic Coalition of the Willing – Ilan Berman
(Wall Street Journal, 26Sep06)

  • …Iran’s first vulnerability is its dependence on foreign investment. The regime in Tehran currently needs $1 billion a year to maintain current oil output levels, and $1.5 billion to increase them. Without it, Iran could quickly become a net energy importer. By complicating the flow of foreign investment into Iran, the U.S. and its allies can force the regime to draw down its hard-currency reserves, reducing the resources that it has available to forge ahead with its nuclear program – or to fund radicalism in the region.
  • Iran’s second weakness stems from its centralized economic hierarchy. The vast majority of the regime’s wealth remains concentrated in the hands of a very small number of people. The extended family of former Iranian president Rafsanjani, which practically controls copper mining, the lucrative pistachio trade, and a number of profitable industrial and export-import businesses, is just one example.
  • Far and away the biggest chink in Iran’s economic armor is its reliance on foreign gasoline. 40% of gasoline in Iran now comes from foreign sources. A comprehensive gas embargo could quickly wreak havoc on Iran’s industrial sectors.
  • Instead of relying on the UN, the White House should be thinking creatively about an economic “coalition of the willing” capable of implementing the specific financial levers that are most likely to alter Iranian behavior, and of doing so without further delay.The writer is vice president for policy at the American Foreign Policy Council.


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