Meeting the Challenge: U.S. Policy toward Iranian Nuclear Development

Report of an Independent Task Force Sponsored by the Bipartisan Policy Center

Senators Daniel Coats and Charles Robb, Co-Chairs

Michael Makovsky, Project Director

The development of nuclear weapons capability by the Islamic Republic of Iran is one of the most critical national security challenges facing the United States. Over the past months, we co-chaired a bipartisan group charged with reaching consensus on a set of recommendations for U.S. policy toward the Islamic Republic’s nuclear development. The group was convened by the Bipartisan Policy Center (BPC), a new institution in Washington devoted to crafting prudent policy solutions to complex problems and, then, working to implement them. In the years we have spent in government, we learned that matters of such grave national importance must be met with thorough analysis, sober deliberation, and bipartisan cooperation.

After much deliberation, we have arrived at a series of findings and policy recommendations that we believe to be realistic, prudent and comprehensive. We have also elected to include a primer on the complex historical, political, social, economic, military, legal and technological issues that underlie and influence the current situation. We present this report to help inform public opinion, provide a comprehensive source of information for policymakers, advise the next president and his administration, and, above all else, avoid what we believe would be a strategically transformative event—Iranian acquisition of nuclear weapons capability.

Task Force Members

AMBASSADOR DANIEL COATS

Co-Chair

Senior Counsel, King & Spalding; Former U.S. Ambassador to Germany; Former U.S. Senator, Indiana

SENATOR CHARLES ROBB

Co-Chair

Former U.S. Senator, Virginia; Former Governor, Virginia

DR. ASHTON CARTER

Professor, Harvard University; Former Assistant Secretary of Defense for International Security Policy

ADMIRAL (RET.) GREGORY JOHNSON

Senior Military Fellow, Bipartisan Policy Center; Former Commander, U.S. Naval Forces, Europe and Joint Force Command

GENERAL (RET.) RONALD KEYS

Senior Military Fellow, Bipartisan Policy Center; Former Commander, Air Combat Command

DR. EDWARD MORSE

Managing Director and Chief Energy Economist, Lehman Brothers

MR. STEVE RADEMAKER

Senior Counsel, BGR Holding, LLC; Former Assistant Secretary of State

AMBASSADOR DENNIS ROSS

Ziegler Distinguished Fellow, Washington Institute on Near East Policy; Former Special Middle East Coordinator 

MR. HENRY SOKOLSKI

Executive Director, Nonproliferation Policy Education Center; Former Deputy for Nonproliferation Policy, Dept. of Defense 

GENERAL (RET.) CHUCK WALD

Vice President – International, L-3 Communications; Former Deputy Commander, U.S. European Command

DR. KENNETH WEINSTEIN

CEO, Hudson Institute

Task Force Consultants

DR. MICHAEL RUBIN

Resident Scholar, American Enterprise Institute

DR. KENNETH KATZMANN

Middle East Specialist, Congressional Research Service

Bipartisan Policy Center Project Staff

DR. MICHAEL MAKOVSKY

Executive Director, National Security Initiative

BLAISE MISZTAL

Senior Policy Analyst

NOAH WOLFE

Policy Analyst

EMILY HAWKES

Administrative Assistant

Acknowledgements

We gratefully acknowledge the assistance of several outside experts.  We wish to express our gratitude to Michael Rubin, who contributed significantly to both the writing and substance of the report, helping make it very informative and readable.  We also want to thank Adam Sieminski of Deutsche Bank for his insights regarding Iran’s economy, Matthew Levitt of the Washington Institute for Near East Policy for his discussion of U.S. financial tools, Greg Jones of RAND for contributing to our analysis and understanding of nuclear enrichment methods, Christopher Ford of the Hudson Institute for reviewing our discussion of Iran’s legal obligations under the NPT, as well as Terry Snell of King & Spalding, Aaron Lobel of America Abroad Media, and General (ret.) William Crouch for their comments on various portions of the draft paper and executive summary.  The section on the Islamic Revolutionary Guard Corps activities in the political and economic spheres borrows heavily upon the path breaking work of Ali Alfoneh at the University of Copenhagen.  The section on Iran’s economy draws from Patrick Clawson’s work in Eternal Iran: Continuity and Chaos (Palgrave, 2005), which he co-authored with Michael Rubin.  A bipartisan array of current and former U.S. government and military officials also contributed comments and suggestions, but cannot be acknowledged by name either because of their current positions or because they requested anonymity.  Finally, we thank Blaise Misztal of the Bipartisan Policy Center (BPC), for his most diligent and insightful research and analysis, as well as Noah Wolfe, Emily Hawkes, Karrie Pitzer, David Carlisle, and Ben Small of the BPC for their various important contributions.  Jeffrey Azarva of the American Enterprise Institute assisted in proofreading successive drafts of this report.

Disclaimer

This report is the product of a bipartisan Task Force of eleven members with diverse expertise and affiliations. Consensus was difficult.  No member may be satisfied with every formulation in the report, or any given recommendation if in isolation.  We have reached consensus on the report and recommendations as a package, which taken as a whole offers a balanced and comprehensive approach.

The findings and recommendations expressed herein are solely those of the Task Force and do not necessarily represent the views or opinions of the Bipartisan Policy Center, its Advisory Board, or its Board of Directors.

EXECUTIVE SUMMARY

I. Introduction

A nuclear weapons-capable Islamic Republic of Iran is strategically untenable. This report is about preventing the untenable.

While a peaceful, civilian nuclear program in Iran might be acceptable under certain conditions—including an external source of nuclear fuel and a stringent safeguards and inspections regime—it is the decided judgment of this group that continued Iranian enrichment of uranium and ineffectively monitored operation of the light water reactor at Bushehr threatens U.S. and global security, regional stability, and the international nonproliferation regime.  As a new president prepares to occupy the Oval Office, the Islamic Republic’s defiance of its Non-Proliferation Treaty safeguards obligations and United Nations Security Council resolutions will be among the greatest foreign policy and national security challenges confronting the nation.

We believe a realistic, robust, and comprehensive approach—incorporating new diplomatic, economic and military tools in an integrated fashion—can prevent Iran from acquiring nuclear weapons capability.  This comprehensive approach should feature a new diplomatic strategy underpinned by carefully calibrated financial and military leverage. We agree successful resolution of the Iranian problem requires laying a strong strategic foundation that consists of coordinating with our allies and other international players, building adequate diplomatic, financial and military leverage and then strategically applying such leverage within the context of diplomatic engagement. There are no magic formulas or silver bullets that will resolve this grave challenge easily, and all courses of action or inaction carry serious tradeoffs. Instead, the Iranian threat requires a serious bipartisan strategy that is coordinated with our allies, addresses concrete realities and advances U.S. national security. 

II. Findings

Threat

Iran’s nuclear development may pose the most significant strategic threat to the United States during the next Administration.  A nuclear-ready or nuclear-armed Islamic Republic ruled by the clerical regime could threaten the Persian Gulf region and its vast energy resources, spark nuclear proliferation throughout the Middle East, inject additional volatility into global energy markets, embolden extremists in the region and destabilize states such as Saudi Arabia and others in the region, provide nuclear technology to other radical regimes and terrorists (although Iran might hesitate to share traceable nuclear technology), and seek to make good on its threats to eradicate Israel. The threat posed by the Islamic Republic is not only direct Iranian action but also aggression committed by proxy. Iran remains the world’s most active state sponsor of terrorism, proving its reach from Buenos Aires to Baghdad.

Even if Tehran does not actually build or test a nuclear weapon, its establishment of an indigenous enrichment capability places the region under a cloud of ambiguity given uncertain Iranian capacities and intentions.  Such ambiguity will give the Islamic Republic a de facto nuclear deterrent, which could embolden it to reinvigorate its export of revolution and escalate support for terrorist groups.  We note with concern that the Russian contingent at Bushehr is expected to increase substantially. 

We do not believe that analogies to Cold War deterrence are persuasive, and its proponents appear to us to have underestimated the difficulties of applying it to Iran.  First, nuclear deterrence was less effective than commonly assumed; the United States and Soviet Union nearly stumbled into nuclear conflict on several occasions. Secondly, the Islamic Republic’s extremist ideology cannot be discounted.  While most Iranians care little for the theological exegesis of their rulers, the nuclear program remains within the grasp not of the President, a transient figure in Iran’s power structure, but rather with the Islamic Revolutionary Guards Corps and the Office of the Supreme Leader, proponents of extreme ideologies.

Achieving nuclear capability would make the Islamic Republic not only a regional threat, but also an international one.  A nuclear Islamic Republic would, in effect, end the Non-Proliferation Treaty security regime.  Many, if not most, regional states might feel compelled to develop their own indigenous nuclear capability or accept coverage from another state’s nuclear umbrella.  Given historical instability in the region, the prospects of a nuclear Middle East—possibly including Iran, Saudi Arabia, Egypt, and Turkey—are worrying enough, even before the proliferation cascade continues across North Africa and into Southern Europe.  Iran’s continued nuclear development also endangers global non-proliferation by exposing weaknesses in the Non-Proliferation Treaty and the inability or unwillingness of the international community to enforce the Non-Proliferation Treaty or United Nations resolutions on non-proliferation.

State of Play

While we agree that diplomacy should underlie U.S. strategy, we also acknowledge that the current U.S. and European diplomatic approach and several United Nations Security Council resolutions have not succeeded in stopping Iran from developing its nuclear capacity.  Since exposure of its clandestine enrichment program in 2002, the International Atomic Energy Agency (IAEA) has found that the Iranian government has installed 4,000 centrifuges in a facility designed to hold 50,000.  We recognize that IAEA inspections are insufficient.  By the IAEA’s own mandate, the organization can only inspect declared nuclear facilities.  Even if Iranian authorities are discovered to have constructed parallel but clandestine enrichment facilities, IAEA inspectors would not necessarily be authorized to monitor them without Iranian consent.  In addition, much of the Iranian enrichment debate overlooks the possibility that Iranian officials could produce plutonium in their heavy water plant at Arak or divert nuclear material from spent reactor fuel, whether from Bushehr, Arak or other nuclear plants.

While the 2007 National Intelligence Estimate reported that Iran suspended warhead design work in 2003, the National Intelligence Estimate does not leave room for comfort.  Its artificial separation between military and civilian technology contradicts a reality where such distinctions cannot be made.  Despite Tehran’s protestations, we do not believe its program is inherently peaceful in nature.  Tehran has a long record of cheating and deception, and its extensive, if neglected, pipeline infrastructure suggests that Iranian officials would have far greater energy security had they invested a fraction of their nuclear program’s cost in further development of their natural gas fields and facilities, refinery construction and distribution network. Accordingly, we reject the Islamic Republic’s claim that its nuclear program is motivated only by energy concerns. 

We also agree that the Iranian government’s legal argument that the Non-Proliferation Treaty allows its current nuclear development is not credible.  The IAEA found that the Islamic Republic is not compliant with its Non-Proliferation Treaty safeguards agreement and four United Nations Security Council Resolutions demanded cessation of Iranian uranium enrichment.

Commonly Discussed Solutions Won’t Work

Too often policymakers and commentators discuss strategy in isolation, segregating diplomacy, economic sanctions, and military options.  As a result, recent U.S. and international diplomatic efforts have lacked both a comprehensive strategy and vigorous execution, and have in any case been met by Iranian defiance. We believe this is unwise, as only a realistic, robust, comprehensive approach can succeed.   The strategy we lay out focuses as much on what the United States must do to prepare for negotiations with the Islamic Republic as on the nature and objectives of these negotiations. The Iranian challenge permits no magic formula to allow the new president to pull one policy lever at a time. Any U.S. strategy should uphold the DIME paradigm and incorporate simultaneous diplomatic, informational, military, and economic strategies.

There are no risk-free solutions. The current diplomatic approach has not succeeded.  Iran has crossed various redlines that the United States and the international community have set down, thereby eroding Iranian credibility as well as ours. There is ample evidence that Iranian leaders have accelerated their defiance of international norms even as the European Union, United States, and other powers have improved their incentive packages.  The 2007 National Intelligence Estimate’s finding that the Islamic Republic maintained a nuclear weapons program until 2003 coincides with the European Union’s period of critical engagement and former Iranian president Mohammed Khatami’s call for a “Dialogue of Civilizations.”  Indeed, we specifically note the admission of Khatami’s former spokesman, Abdollah Ramezanzadeh, on June 15, 2008, that a strategy of insincere dialogue provided cover for the Islamic Republic to import technology used to further the Islamic Republic’s covert nuclear program.  We also note Tehran’s rejection of guarantees of nuclear fuel and enrichment outside the Islamic Republic, both of which would meet the needs of any program motivated solely by energy concerns. 

Nevertheless, it is not too late for diplomacy to succeed.  However, we believe it would be a mistake to acquiesce to Iran’s demand that it be permitted to enrich uranium under international inspections in Iran.  Given the Islamic Republic’s history of nuclear deception and its ambition to obtain nuclear weapons and the limits of IAEA safeguards and procedures, we see no combination of international inspections or co-ownership of enrichment-related facilities inside Iran that could provide meaningful assurance to the international community that such facilities will not contribute to the nuclear weapons capability that Iran seeks. Given that Iranian officials have thus far shown themselves uncooperative in open-ended diplomatic processes and that the Islamic Republic is already on its way to nuclear weapons capability, any diplomatic engagement must occur within a pre-determined, short-term, specified timeframe.

There are three components to a nuclear weapon—the actual explosive device, delivery method, and fissile material—the latter of which is the most technically difficult to develop and most crucial to nuclear weapons capability. Therefore, we take “nuclear weapons-capable” to mean possession of 20 kilograms of highly enriched uranium or roughly 6 kilograms of plutonium, both conservative estimates of how much fissile material is necessary for a crude nuclear device. According to a study commissioned by this Task Force, under certain conditions, it would be technically possible for the Islamic Republic to enrich 20 kilograms of highly enriched uranium in four weeks or less; this could easily occur between IAEA inspections and make it difficult for the IAEA to detect.  If nothing else, Tehran’s progress means that the next administration might have little time and fewer options to deal with this threat.

However, it is not too late for sanctions and economic coercion to work.  Despite near record oil prices, Iran’s economy remains weak.  While the United States, its European partners, and the United Nations have imposed some sanctions upon Tehran, each has a range of more biting financial tools at their disposal.

We recognize that a military strategy poses many difficult challenges.  The U.S. military is capable of launching a devastating strike on Iran’s nuclear and military infrastructure—probably more decisively  than the Iranian leadership realizes—and could set back significantly the Islamic Republic’s nuclear program. However, unless sustained by repeated strikes against rebuilt or newly-discovered sites over a period of years, military action alone is likely only to delay Iranian nuclear development while entailing risks of retaliation and regional destabilization which could quickly escalate to full scale war.

III. Recommendations

We believe that a new and comprehensive diplomatic strategy, with calibrated financial and military leverage, will be the next administration’s best option. We seek a diplomatic solution to the Iranian challenge, involving Washington’s direct engagement with Tehran, but only under the right conditions.  We also recognize that a new President might need to turn to less optimal solutions if diplomacy fails within a reasonable timeframe. This report is concerned primarily with the resolution of American and international concerns with Iranian nuclear development.  While a “grand bargain” resolving all issues between Washington and Tehran would be an attractive outcome, the United States does not have the luxury of time given the intractability of issues and the Iranian government’s decision to accelerate its nuclear program.

Close coordination and allied support is critical to build the strength and leverage necessary for a viable diplomatic solution. Thus, before we can begin talking directly to the Iranian leadership, there are a number of steps that we must take to build leverage to use against Iran and coordinate more closely with our allies and other international players.

Alliance-Building

First, the new President should clarify to the Europeans that only by standing firmly together diplomatically and ratcheting up the pressure on the Islamic Republic can we improve the chance to avoid more robust action.  The Europeans make war more likely if they do not strengthen sanctions against Iran and effectively end all commercial relations.

Secondly, the White House will need to make every effort to convince regional allies like Saudi Arabia and the Persian Gulf emirates to pressure China and, eventually, Russia to join the United States in ratcheting up the diplomatic pressure on Tehran, both to achieve United Nations Security Council consensus and to assuage European concerns that Moscow and Beijing seek to capitalize on European commercial disengagement.  (Of course, the conflict in Georgia has made Russian cooperation more challenging.) Given increasing demand for Middle Eastern oil and gas, especially in East and South Asia, states such as Saudi Arabia and Qatar have unique leverage over China and India. 

Such a strategy will not be easy to implement, but it is necessary to pursue.  To be successful, though, and to signal how deeply the United States prioritizes resolution of the Iran conflict, Washington should initiate and sustain dialogue with regional rulers at a presidential, vice presidential or national security advisor level.  In addition, the urgency of the challenge suggests that, upon their election, representatives of the new administration, with the blessing and cooperation of the current administration, might quickly begin the necessary outreach to U.S. allies.  The Islamic Republic and the international community should both understand that U.S. policymakers will not sacrifice months of increasingly limited time during a transition between administrations. 

Third, so long as Tehran feels confident that it enjoys Moscow’s support and protection, the likelihood of a diplomatic solution to the Iranian crisis diminishes. The United States must prioritize its effort to motivate Russia to step up its support for international efforts to pressure Iran to abandon its quest for nuclear weapons.  One point of friction between the United States and Russia is the U.S. initiative to install missile defenses in Eastern Europe.  The United States insists that these defenses are directed against the emerging nuclear and missile threat from Iran.  Moscow, however, has strongly objected to U.S. missile defense in the Czech Republic and Poland on grounds that they pose a threat to Russia.  The United States should make clear to Moscow that operationalization of the initial missile defense capability, as well as any future expansion of it, will depend on the evolution of the nuclear and missile threat from Iran.  Should Russia contribute to successful international efforts to restrain the Iranian threat, it will lessen the need to further develop and expand missile defenses in Europe.

Another potential source of U.S. leverage over Russia relates to bilateral nuclear cooperation.  Such cooperation is potentially valuable to Russia, not only with respect to commerce with the United States in nuclear goods and technology, but also with respect to the possible storage or reprocessing in Russia of U.S.-origin spent nuclear fuel.  By some estimates, Russia could earn in excess of ten billion dollars from the handling of such spent nuclear fuel.  In order for U.S.-Russian nuclear cooperation to proceed, it is necessary for a bilateral agreement pursuant to section 123 of the Atomic Energy Act (a so-called “123 Agreement”) to enter into force.  The Bush Administration submitted such an agreement to Congress for review on May 13, 2008.  Many members of Congress have spoken out against this agreement because they believe it is premature to extend the benefits of nuclear cooperation with the United States to Russia so long as Russia is not doing more to contain the Iranian nuclear threat.  It is unclear whether Congress will act to block entry into force of this agreement, and even if it does not, Congress may adjourn for the year before the agreement can enter into force in 2008 under the procedures of the Atomic Energy Act.  Even if the agreement enters into force, however, the United States should condition the delivery to Russia of substantial financial benefits under this agreement (e.g., from the storage of U.S.-origin spent nuclear fuel) on fuller diplomatic cooperation by Russia with regard to Iran.  Such cooperation should include not only support for tougher sanctions on Iran in the U.N. Security Council, but also the denial of additional assistance to Iran’s nuclear and missile programs and advanced conventional weapons to Iran.

Additionally, the next President should maintain a constant dialogue with Israel. U.S. policymakers must recognize the grave and existential danger that the Islamic Republic poses to Israel. Believing its existence threatened, Israel could feel compelled to launch a strike to deny the Islamic Republic nuclear weapons capability.  We recognize that Israeli politicians do not believe that a nuclear Iran can be contained.  Only if Israeli policymakers believe that U.S. and European policymakers will ensure that the Islamic Republic does not gain nuclear weapons will the Israelis be unlikely to strike Iran independently.  It will be up to the President to consult with Israel and provide sufficient assurance so that they do not feel compelled to undertake unilateral action.

Leverage Building

To build additional leverage, states and international organizations should apply both unilateral and multilateral sanctions before and during any diplomatic rapprochement.  These can be lifted as Iranian officials comply with their obligations. Such sanctions should include not only further broad UN Security Council resolutions, but also more targeted sanctions against Iran’s financial and energy sectors.  When considering sanctions, the next President will need to decide whether to target them to specific individuals and industries or more broadly across Iranian society in order to encourage domestic pressure on the Iranian leadership.

Fortunately, the next U.S. administration has many financial tools at its disposal.  The U.S. Treasury Department’s quiet diplomacy with European banks should continue.  Many European banks and companies have stepped back from operations in Iran when confronted with evidence of the Islamic Republic’s deceptive financial practices.  Washington should press for expansion of sanctions upon Iran’s banking sector.  Even without European acquiescence, the next occupant of the Oval Office should consider applying Section 311 of the U.S.A Patriot Act to designate additional Iranian banks up to and including Bank Markazi, the central bank, because of their involvement in deceptive financial practices.  Such action would, in effect, remove Iranian banks from the international financial stage.  Negotiations could commence immediately to achieve greater transparency in Iranian financial dealings.

Closing existing U.S. and international sanction regime loopholes, through which Iran can procure technology and equipment for its energy sector is as important as utilizing new financial tools against the Islamic Republic.   For example, Washington should end the provision in U.S. trade regulations that allows subsidiaries of U.S. corporations to conduct relatively normal trade with Iran.   Under U.S. trade law, subsidiaries are incorporated under the laws of the country in which they are located, and therefore are not bound by the provisions of the 1995 Executive order (12957) banning U.S. trade with and investment in Iran.     Therefore, U.S. subsidiaries can, without violating U.S. law, export to Iran oil drilling equipment and other goods that contradict the intent of U.S. policy, which is to deny the Islamic Republic the means to develop and exploit its energy sector.  The group therefore supports initiatives, such as those in pending legislation, to apply to U.S. subsidiaries all provisions of the trade and investment ban as if they were U.S. corporations.

Another loophole is that there is no time limit in the Iran Sanctions Act for any administration to determine whether an investment in Iran’s energy sector is a violation of the Act.    Because of this loophole, no determinations have been made as to whether at least a dozen major investments in Iran since 1999 constitute sanctionable violations. 

A third loophole involves re-exportation of U.S. goods.   Under the 1995 U.S. trade ban, knowingly re-exporting U.S. goods to Iran is prohibited.  Implementation, however, depends on enforcement, which has been lax, due at least in part to resource constraints.  The Commerce Department should deploy a greater number of export control officers to well known hubs for re-export of U.S. goods to Iran such as Dubai.     

Diplomatic Engagement

Embarking upon a diplomatic solution with Iran will force a number of additional policy decisions.  First, there is a question about what incentives the United States, Europe, and the international community will present to the Islamic Republic to encourage its compliance.  We believe that the incentives already offered to Iran—an end to isolation, spare parts for its aging aircraft fleet, upgrades for its domestic oil and gas production, political cooperation—should remain part of any future package.  Calibrating lifting of sanctions with Iranian compliance is another incentive, as are potential security guarantees and assurances. The President will need to balance any offer of new incentives with the knowledge that Iranian officials may see such offers as weakness to exploit.  Both the Iranian regime and other potential proliferators may also interpret willingness to offer new incentives as rewards for Iran’s defiance.

Second, the new President will need to determine whether to maintain the policy of the Bush Administration and the EU-3 against negotiating with Tehran over the nuclear issue unless the Islamic Republic suspends its enrichment-related activities, or drop this precondition to negotiations.   Any formal dialogue with Iran absent suspension of enrichment could backfire:  Not only would the United States implicitly void all UN Security Council resolutions demanding a cessation of Iranian uranium enrichment, but Iranian authorities are likely to interpret U.S. flexibility as acquiescence to the Iranian position that it must be permitted to enrich—all the more reason to increase multilateral sanctions as any new incentives are contemplated.

Should the new President decide, however, that the only way to test Tehran’s seriousness about resolving the nuclear dispute is to drop all preconditions to negotiation, several principles should be observed:  First, the United States should only enter negotiation from a position of strength.  This means that the United States must act in concert and with the full support of its Allies.  It must be able to show either that it and its Allies have already ratcheted up economic pressure on Iran, or are prepared to do so in a meaningful manner should the Islamic Republic not agree to abandon its quest for nuclear weapons. Second, it must be clear that any U.S.-Iranian talks will not be open-ended, but will be limited to a pre-determined time period so that Tehran does not try to ‘run out the clock.’

We believe that an intensive diplomatic effort of this kind is necessary to demonstrate a united front and create new leverage against Iran.  Direct negotiations with the Iranian regime can only succeed if we receive the cooperation needed by European allies, as well as key Persian Gulf countries, China, and India.

If Diplomacy Does Not Succeed

Should diplomatic engagement not achieve its objectives within the set timeframe, the next President must turn to more intensive sanctions. While the most effective sanctions would target Iran’s oil and gas  industries—Tehran’s chief source of income—the new President will need to balance the need for effective strategies with real world political and economic concerns about any action that would significantly impact the supply and price of oil. Some have proposed an embargo of gasoline exports to Iran but, in practice, there are too many suppliers to enforce fully without a blockade.  However, even a partially effective embargo might have a psychological impact on the Iranian people, representing a cost for the Iranian leaders. An actual blockade of Iranian gasoline imports would have a much greater impact since, despite rationing, the Islamic Republic still must import about 25 percent of its refined petroleum needs, the majority of which enters Iran through sea ports. The Iranian regime feels vulnerable about its stability and a tighter rationing of gasoline or a spike in gasoline prices would likely spark further social discontent and political upheaval. Blockading Iranian gasoline imports would be a significant measure, and should only be employed should diplomatic engagement fail in its objectives. Should a blockade of gasoline imports not persuade Tehran, the next President would want to consider extending the blockade to Iran’s oil exports, thus cutting off the source of 80 percent of the government’s revenue. A blockade of Iran’s current two million barrels per day of oil exports would likely be the last sanction possible prior to an escalation into military action. It might prove crippling to the Iranian government, but it could only be imposed for a very short period of time given the consequences it would have on the oil market, various net energy-importing countries and the global economy. Estimates suggest that removing two million barrels per day of supply, combined with the perception by markets of dramatically increased geopolitical instability, could induce an unprecedented spike in the global price of oil.

The Islamic Republic would almost certainly claim such blockades were acts of war, and would likely respond by attempting to destroy, either directly or by proxy, southern Iraq’s oil export facilities, which supply close to two million barrels per day for the global market. Iran could also respond by reducing or ceasing its own oil exports. Iranian forces would also be expected to try to disrupt the passage of oil tankers through the Strait of Hormuz, through which twenty percent of the world’s oil transits.

Any blockade of Iranian energy imports or exports should be accompanied by a coordinated International Energy Agency announcement to release if necessary government strategic oil reserves. We caution that U.S. Strategic Petroleum Reserve might not be able to release its nameplate amount of 4.4 million barrels per day for 90 days; the actual drawdown might be closer to half that number, or 2.2 million barrels per day. The new President could also improve the psychology of the market by announcing initiatives that, if implemented, would reduce demand for oil and increase supply.

The President would have to also coordinate any Western action to sanction or restrict Iran’s energy sector with senior leadership in Saudi Arabia and other Persian Gulf emirates to encourage those countries to pump more oil and store it in key consuming areas. The United States should also work with those countries to improve the security of their facilities.  In addition, Washington should work closely with Riyadh to upgrade the trans-Arabian pipeline and the IPSA pipeline to enable Persian Gulf states to transport their oil to the Saudi port of Yanbu on the Red Sea.  This would mitigate some risks and vulnerability to possible blockage of Strait of Hormuz, although it risks increasing Saudi leverage over U.S. policies.  Working closely with the Iraqi and Turkish government to refurbish the two pipelines from northern Iraq to Turkey would also reduce the reliance on the transit of crude through the Strait of Hormuz.  Moreover, before it imposed any energy blockades on Iran, the U.S. and its allies would have to first move sufficient military assets to the region in anticipation of kinetic action against Iran and in order to secure shipping lanes in the Strait of Hormuz. 

Informational Campaign

Simultaneous to all such diplomatic and economic efforts must be a concerted informational campaign.  Investment in Radio Farda and Voice of America should be increased multifold to a level commensurate with the strategic threat which the Islamic Republic now poses.  More care should also be taken to ensure that U.S.-funded Persian-language broadcasting remains relevant to ordinary Iranians wishing to better understand the U.S. position and concerns.

We also recognize that while the Islamic Republic’s nuclear efforts pose a threat, the Iranian people are unfortunate victims of a situation over which they exert little or no control.  It is in the long-term interests of the United States to see the far more moderate core of Iranian society increase its influence over their government.  It is not the place of Washington to support any political groupings outside Iran or ethnic interests inside the country.  However, the next president should recognize the importance of an independent civil society and trade union movement inside Iran and encourage their growth through any appropriate means.

Military Options

There are two aspects to the military option: boosting our diplomatic leverage leading up to and during negotiations, and preparing for kinetic action. For either objective, the United States will need to augment its military presence in the region.   This should commence the first day the new President enters office, especially as the Islamic Republic and its proxies might seek to test the new administration.  It would involve pre-positioning additional U.S. and allied forces, deploying additional aircraft carrier battle groups and minesweepers, emplacing other war materiel in the region, including additional missile defense batteries, upgrading both regional facilities and allied militaries, and expanding strategic partnerships with countries north of Iran such as Azerbaijan and Georgia in order to maintain operational pressure from all directions.

While current deployments are placing a strain on U.S. military assets, the presence of U.S. troops in Iraq and Afghanistan offers distinct advantages in any possible confrontation with Iran. The United States can bring in troops and materiel to the region under the cover of the Iraq and Afghanistan conflicts, thus maintaining a degree of strategic and tactical surprise.  The United States can also more easily insert Special Forces and intelligence personnel into Iran and protect key assets of our regional allies. Some augmentation of U.S. regional assets should be done overtly and publicly, to signal to the Iranians and to our regional allies American seriousness over the Iranian nuclear issue. Thus, for example, the United States would want to carry out a show of force, including the deployment of additional carrier battle groups to the waters off Iran and the conduct of broad exercises with allies. Such plans and deployments would also be part of an effort to demonstrate to the Islamic Republic that it would lose more than it would gain by becoming nuclear weapons-capable.

If all other approaches—diplomatic, economic, financial, non-kinetic—fail to produce the desired objective, the new President will have to weigh the risks of failure to set back Iran’s nuclear program sufficiently against the risks of a military strike. We believe a military strike is a feasible option and must remain a last resort to retard Iran’s nuclear development, even if it is unlikely to solve all our challenges and will certainly create new ones. Whether to pursue a military strike remains, of course, a political decision. When confronted with the possibility that the Islamic Republic may transition into a nuclear weapons state, the next Administration might feel that the risks of a military strike are outweighed by the transformative dangers of living with a nuclear-armed Iran—such as dominance over the Persian Gulf region and its vast energy resources, a sustained spike in energy prices, nuclear proliferation throughout the Middle East, a radicalization and possible destabilization of the region, increased terrorist action in the region and beyond, possible provision of nuclear technology to other radical regimes and terrorists, and possible action to eradicate the State of Israel.  We also understand that the nature of intelligence is that it seldom gives as full or as certain a picture as desired when it comes time to make a decision.  No matter how much the next president may wish a military strike not be necessary, it is prudent that he begin augmenting the military lever, including continuing the contingency planning that we have to assume is already happening, from his first day in office.

A military strike would have to target not only Iran’s nuclear infrastructure, but also its conventional military infrastructure in order to suppress an Iranian response.  However, it is important that any planning also occur simultaneously for the period immediately following, both providing food and medical assistance within Iran, as well as protecting regional allies from either direct or indirect Iranian response.  Because there will be political, diplomatic, and strategic fallout from military action, it is important that plans be in place to contain such fallout as much as possible.

Military action against the Islamic Republic would incur significant risks, whether such action involves a limited air strike or a more sustained air and naval campaign such as the imposition of no-fly zones and a full blockade.  Any military action would run the risk of significant U.S. and allied losses, rallying Iranians around an unstable and ideologically extreme regime, triggering wide-scale Hezbollah and Hamas rocket attacks against Israel, and producing unrest in a number of the Persian Gulf states.  An initial air campaign would likely last several days to several weeks and target both key military and nuclear installations. It should not target civilian facilities, and might not require ground troops beyond Special Forces. While a successful bombing campaign would retard Iranian nuclear development, Iran would undoubtedly retain its nuclear knowhow. It would also require years of continued vigilance, both to strike previously undiscovered nuclear sites and to ensure that Iran does not resurrect its military nuclear program.

IV. Conclusion

It may be too late to keep Iran from becoming a nuclear power state, but it is not too late to prevent the Islamic Republic from becoming a nuclear weapons threat. There are no easy solutions.  Any diplomatic solution requires a comprehensive strategy involving economic, military, and informational components undertaken in conjunction with allied and regional states.  It is up to the government in Tehran to determine what travails the Iranian people must endure before such an agreement is made.  The stakes are enormous.  They involve not only U.S. national security, but also regional peace and stability, energy security, the efficacy of multilateralism, and the preservation of the nuclear non-proliferation treaty regime.

Any agreement, however, marks not the end of the crisis, but the beginning of a sustained phase for which the United States, its allies, and international agencies must also prepare.  Iranian compliance with its commitments must be verifiable, and any Iranian nuclear activity must be monitored comprehensively and in real time, not just by periodic inspections.

Iran is an important country and we would welcome its return to the international community if its government adheres to its international obligations.  Because Iran is a unique and strategically significant country with a rich history, it is essential that the new President and other policymakers understand its complexities.  Likewise, the technicalities of nuclear enrichment are often discussed in the abstract, but the details of different enrichment methods and capacities matter.  Accordingly, in addition to formulating a strategy to resolve the Iranian nuclear crisis, we have also endeavored to provide a resource to better understand not only the complexities of the Islamic Republic’s governance and decision-making, the often divergent attitudes of the Iranian regime and public, and the pros and cons surrounding many of the strategies so often discussed by policymakers. Finally, we strive to provide a technical analysis of both past and potential future Iranian nuclear enrichment strategies.

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