David Albright, Karen E. Young, Michael Eisenstadt, Norman T. Roule
The following is a transcript of the ninety-third in a series of Capitol Hill conferences convened by the Middle East Policy Council. The meeting was held at the Dirksen Senate Office Building in Washington, DC, on July 20, 2018, with Richard J. Schmierer, chairman of the Council's board of directors, moderating, and Thomas R. Mattair, the Council's executive director, serving as discussant. The video can be accessed at www.mepc.org.
DAVID ALBRIGHT, Founder and President, Institute for Science and International Security:
For the last three weeks I've been crashing to finish a book on Taiwan's former nuclear-weapons program. And I can't help but contrast that with Iran's. It was an incredibly difficult, 20-year, intensive struggle the United States waged quietly behind the scenes to make sure that Taiwan didn't build nuclear weapons in the 1970s and 1980s. We had tremendous leverage; Taiwan was totally dependent on us for nuclear energy and military supplies. I can't help but draw the comparison: this is all about Iran's wanting to build nuclear weapons.
Despite comments from Iran, I remain convinced that that's what this is really about. I think the Trump administration recognized that the JCPOA (the nuclear deal) needed to be fixed in order to make that future less likely. While there were many strong aspects of the deal, on balance it was working to accomplish what it set out to do. But inherent in it were problems that reflect how difficult this issue really is to work on. So when President Trump gave his speech last January, I think he outlined three major problems that to this day require fixing.
One is the sunsets in the deal, that the deal was temporary. I can remember discussions in 2014 that the idea was to get a deal that would last 20 or 30 years. In reality, the limitations start to sunset after eight to 10. That was supposedly the best that could be gotten. Well, that's a problem. What happens then? In fact, the E3, as it's called — Britain, Germany and France — engaged quite rigorously with the Trump administration to work on these issues. And there was a tremendous amount of agreement that Iran's increasing its enrichment program is a threat.
There is no credible civilian reason for Iran to have a uranium-enrichment program that grows in size over time. So they couldn't agree on the modalities of that or what it means if, in the context of negotiations seven or eight years from now, Iran increases its centrifuge program, as it's allowed to do under the nuclear deal. What do you do? The U.S. set an "automatic" snap-back of all sanctions. The Europeans said, well, that would violate the JCPOA, and we want to do something else. But they were actually pretty close to a solution.
Another one that had rapid agreement between the E3 and the United States was another weakness in the deal. It didn't resolve past questions about Iran's nuclear-weapons work. As anyone who studies history knows, the present depends on what happened in the past. Iran had a robust effort to build nuclear weapons and hid it and lied about it. The deal did not ensure that that issue would be addressed before it was implemented. In fact, in a sense, the International Atomic Energy Agency was, for those of us who work in inspections, kind of thrown under the bus — put in a position that, if you demand Iran settle these past questions, this deal will go down. Of course, the IAEA is not a strong agency. It can confront when needed, but it has to have the support of the United States and the European countries. It blinked, so this issue was not settled.
In the E3-U.S. negotiations, within days a new arrangement between them was worked out to strengthen inspections, particularly to be able to get into some military sites, which Iran has generally refused to allow the inspectors to visit. Most of Iran's secretive activities took place at military sites or at sites of military contractors or parts of the military industry. So getting there is critical if you want to understand the nuclear-weapons program and make sure we at least have some assurance it's not restarting.
There was also something called Section T, which was not being implemented. This has to do, in its heart, with equipment you need to use if you're going to develop nuclear weapons. That equipment is fine for Iran to use for non-nuclear-weapons purposes — it could be military anti-tank experiments. But it has to be declared and monitored by the IAEA, and its use has to be subject to the approval of the executive body of the agreement, the joint commission. That has not been implemented at all, and clearly there was equipment that was covered by this.
But that was agreed. There was also quick agreement that an ICBM is really part of the nuclear deal. You can't segregate ICBMs from the nuclear deal. What would Iran put on it other than a nuclear weapon? So the E3 and the United States agreed that ICBM development by Iran would be a trigger for massive sanctions. Again, how you deploy those sanctions was really not worked out. So it was, in my view, a tragedy not to have finished this negotiation and fixed the deal. But it is what it is.
President Trump and some of his advisers decided that it was more important to confront Iran now — reapply the most critical U.S. sanctions — rather than have a fix that really pushes the problem off into the future. I will admit that the strategy of this fix was, essentially, to enforce it, improve the inspections, put down a marker on ICBMs, and then do nothing for six to eight years. It would just stay in place. Iran would get the message that at a future point, when it went to increase its enrichment program, in a sense all hell would break loose, and that would then trigger renewed negotiations or not.
The administration, or President Trump, decided that they wanted this confrontation now, so they've re-imposed all the sanctions. And we're faced with the question, what will Iran do? One of the interesting developments is that the United States decided not to bring down a deal. I don't have time to talk about this nuclear archive, but I'm sure you all saw it again in The New York Times, Washington Post, and The Wall Street Journal. Very dramatic evidence of Iran's past nuclear weapons program and efforts to keep it together, potentially to use in a breakout.
Whether Iran is going to live by the deal or not is unsettled. In some ways, the administration wanted to have its cake and eat it too. They reimposed sanctions, which are going to hurt Iran; there's no doubt about it. But they put Iran in a bind: if they violate the limitations of the deal, the EU will then reimpose sanctions. They've told them that formally in a joint commission. France and others announced to Iran, if you violate the limitations you will face EU snap-back, and there will also be snap-back of UN sanctions.
So what does Iran do? Most estimates, at least of people I work with, is that they're not going to violate these limitations this year. They're going to make all kinds of noises, talking about this and that, and making threats. But I think they haven't made up their mind; they'll wait to see how it goes with sanctions. The Trump administration thinks that's going to lead to a negotiation that'll create a deal that's more favorable. One of the things Secretary of State Pompeo put on the table, when this nonparticipation announcement happened, was that they now want zero enrichment in Iran. They've moved the goalposts from limited enrichment to zero enrichment.
There is an argument for that. If you look at Iran's enrichment program, there's absolutely no need for it. They'll never have an enrichment program that'll produce low-enriched uranium for nuclear-power reactors that'll be cheaper than what they can simply buy on the international market. In fact, that's what they're doing now with the Bushehr reactor and reactors they're planning in the future — to buy the fuel. So when the E3 and the United States agreed that an increase in enrichment doesn't have a credible civil justification, they actually mean it. Trump has gone farther, saying, let's just get rid of this enrichment. It certainly strengthens the U.S. hand in negotiating this with Saudi Arabia on the 123 Agreement. It puts North Korea on notice that there will be no Iranian-deal type of exemption on enrichment in North Korea, though North Korea will want the same thing.
Whether Iran can get this is an open question. One of the arguments that I hear in Europe is, OK, fine; you maximize the pressure. Iran really is going to resist violating the limits. But at some point, it may decide to do it. It'll look at North Korea and say, if we increase our nuclear effort, we'll have better leverage when we go to negotiate with the United States. But will Trump in the end actually negotiate? That's what they say, but is that what this is about?
I think there is a little bit of a train wreck coming. We don't know when, and hopefully it's put off. Iran will make the decision not to increase the sanctions on itself and will try to keep building an anti-U.S. mindset in places like Europe — which isn't hard to do right now — and, will try to weaken the U.S. position. But at some point, they have their own pressures and may not be willing to live with intensive sanctions and no nuclear increase.
Whatever happens with the future of the nuclear deal, and whatever Iran decides, inspections will continue. Iran signed the Nuclear Non-Proliferation Treaty. It has what's called a Comprehensive Safeguards Agreement. It has the additional protocol, which essentially gives the inspectors more tools, more prearranged inspections and information that would be delivered by Iran. Fundamentally, the Comprehensive Safeguards Agreement gives the IAEA the right to go anywhere it deems necessary in Iran. And I think one of the critical things to support is that the IAEA get to the bottom of Iran's past nuclear-weapons program.
I know that from experience with Taiwan. If you don't get to that program and make sure that it's halted, you will never stop them from building nuclear weapons. Going after the fissile material was critical. It's much more measurable than a nuclear-weapons program. But if they keep together the teams in the military to build nuclear weapons, there is a good chance those teams will eventually build nuclear weapons, unless they're stopped. The easiest, nonmilitary tool that we have now — in fact, one of the only nonmilitary tools to get to the heart of their nuclear-weapons program — is through robust, vigorous, confrontational IAEA inspections with Iran over this issue. I think the United States is willing, and I think the E3 is more than willing, to do this.
KAREN E. YOUNG, Senior Resident Scholar, The Arab Gulf States Institute in Washington; Adjunct Faculty Member in Political Science, George Washington University, Johns Hopkins (SAIS)
I agree with David. There are a lot of train wrecks happening these days. The title of this event seeks to the address options of the Trump administration after the withdrawal from the JCPOA. But I think the better question is, what options are there for the other parties to the agreement, and, more directly, what options are there for Iran and its neighbors in their current economic and political relations? The Trump decision to withdraw has indeed put Iran on watch, as it was intended to do, but I think it also increases the likelihood of conflict — the train wreck— between Iran and its neighbors, and has created or exacerbated tensions in trade and financial flows within the immediate Gulf. Most evident are the increasing strains of the GCC rift, weakening economic cooperation and integration and making Iran a go-to asset for food security — and, for Qatar, a co-guardian of its most precious asset in the South Pars gas field.
Oman and Kuwait are also put in difficult diplomatic and economic positions. Saudi Arabia and the UAE are pushing for a confrontation with Iran, through increased financial sanctions, but also as a way, I think, to create leverage with the United States in oil markets. As they need the United States to back any escalation in the region with security assurances, the United States now needs cooperation on oil markets. This places major oil producers in the Gulf and, arguably, also Russia in an interesting position vis-à-vis U.S. policy in Iran.
Iran is now effectively cornered and isolated; its economy will surely suffer in ways that we have seen under previous sanctions regimes. I'll share some evidence of recent experience with sanctions between 2012 and 2015, but I believe this time is different. America's choice will also punish its allies in Europe, further exacerbate tensions within the GCC, and give China and arguably India, Russia and even Turkey more mediating power within south-south financial flows and new financial institutions.
Key sanctions to be reimposed, as you know, in August will hurt the trade sector most in construction materials, aluminum and steel, and any large currency transactions in U.S. dollars on behalf of the Central Bank. We're seeing a number of preemptive corporate exits from Iran, of Asian, American and European firms, mostly the latter. The oil and gas sector, along with shipping, will be most affected with sanctions on November 4, in addition to transactions by foreign financial institutions with the Central Bank of Iran. I think this is the death-knell for the Iranian economy.
But it's not just Iran that will suffer. The fissures will be transatlantic and within the GCC and will work to the advantage of those Asian consumers of Gulf energy products that are beneficiaries of the U.S. security umbrella in the waters of the Gulf and also the Bab al-Mandab. Saudi Arabia and the UAE will likely encourage U.S. financial pressure on Iran, and they are anticipating and willing to accept greater risk of confrontation between U.S. and Iranian actors in the Gulf, particularly in transit waterways. While the JCPOA was no panacea, we're sliding towards confrontation with very little regard for what a collapse of Iran — with 80 million people, many young and already agitated — might do to the wider MENA region.
The European Union emerges as less able to intervene on behalf of Iran; we've seen the withdrawal of many private firms. The beneficiaries in the short term are those states that can manage to continue buying Iran's oil, or withstand U.S. pressure. This happens to be a U.S. adversary, China. China is Iran's number-one customer, gradually increasing its share of Iranian oil exports since 2011, where it held 20 percent of exports. Now it accounts for nearly 40 percent of Iranian exports. China imports about 700,000 barrels of oil per day, and Iran produces just over 3 million. India's an important bystander, with about 550,000 barrels a day.
There are some efforts to provide a lifeline to Iran; we've seen some proposals involving the European Investment Bank. But this is not going to be sufficient to create the amount or kinds of finance that Iran requires to create jobs and build infrastructure. Moreover, the EU political commitment to engaging and lending doesn't obligate EU financial institutions, like the European Investment Bank, to actually allocate programs. They've made the wise choice that it's not a business-savvy thing to do. Open liberal economies have their limits in these political crises.
Even if the EU is able to create a lifeline to Iran through export lines of credit or targeted investment, or a third way of EU members facilitating payments by formal Iranian-government accounts in the central banks of EU members, this is risky. It's not going to be easy, because the United States will very likely place sanctions on staff members of those central banks, as they have done to staff members of the Central Bank of Iran. I think the EU is right, however, to preface the option to Iran with demands for transparency and reforms in its banking sector, but, again, it's not likely to be a popular moment inside Iran for these kinds of measures.
The EU doesn't really need to trade with Iran. It's not at risk of losing a major market share for its exports. Iran's not a major trading partner. Trading goods to Iran was about 10 billion euros in 2017, which is 0.1 percent of the euro area's gross domestic product. In the case of Russia, I think the reimposition of sanctions on Iran and those countries and entities doing business with Iran is definitely more complex. Iran, under the terms of the JCPOA, stood to become a major competitor to Russia in supplying gas to Europe. Iran requires massive investments in its gas production, and the construction of a new pipeline via Turkey to make that competition a reality. But in the current political situations, Iran is mothballed, the EU will continue to pursue alternative energy-supply strategies, including renewable energy, even coal power plants, and trying to reduce its dependency on Russia.
Russia and Iran then become frenemies, in this respect, at least in their Middle East strategies. Russia is playing an interesting game with Iran, particularly in new promises of foreign direct investment in its oil and gas sector. The recent announcement of a $50 billion commitment — which I think was more likely to be about $5 billion in the near term — would allow Russia to be a stakeholder in any transition or future opening of Iran to global markets. It's like walking past a going-out-of-business sale and buying something just because you think you might need it in the future, not because you need it now.
In the short term, there are some clear winners and losers in the U.S. reimposition of sanctions. I think the America-first confrontational posture includes a very clear protection of Chinese economic interests in the region, though maybe not on purpose. A case in point is Iran's South Pars gas field and new development there. Because Total withdrew, it basically gives a 70 percent ownership to the China National Petroleum Corporation in development there. This was clearly an unintended consequence. China has been a consistent investor in Iran, even under previous sanctions regimes. China was a major investor in Iranian infrastructure between 2005 and 2015 and ramped up again in 2016.
China's export-import bank has financed many transport programs in Iran, including a subway system, railways and roads. China has also taken advantage of being able to settle purchases of Iranian oil and non-oil products in local currency, avoiding U.S. financial institutions. They're creating new financial products and new institutions preemptively, before the U.S. withdrawal from the deal, including a new yuan-denominated crude-futures contract on the Shanghai Energy Exchange, which started in April, before the U.S. withdrawal.
For the Gulf states, the economic outlook and repercussions from the U.S. sanctions are mixed. Both Oman and the UAE saw an increase in trade with Iran between late 2016 and 2017. According to IMF data, UAE-Iran trade increased from $2 to $7 billion in this period. In Oman, it also doubled, but the numbers are much lower — from $100 to $200 million. The regional outlook for the GCC is, therefore, very mixed after the U.S. withdrawal. The political-risk premium has risen considerably. Oil prices are reflecting that anxiety, providing some short-term gain and fiscal balances for oil exporters. But I think the medium-term outlook is less clear.
For the euro area, this points to a potential decline in GDP, though GCC oil exporters are moving into fiscal surplus this year. This means weakening the political momentum for economic reforms. But I don't think it's the rising comfort with higher oil revenue that increases the risk of confrontation between Saudi Arabia and the UAE and Iran. The displacement of oil markets is just one area of economic cooperation between Saudi OPEC and the United States; however, this should not be seen as a quick fix. It's not just Iran that affects oil markets; we're dealing with production crises in other places, like Venezuela and Libya.
The other political-risk factor is in transit points, notably the Strait of Hormuz. But I think the Bab al-Mandab is important too, a crucial point for the Saudi-Emirati war against the Houthis and, some would argue, their Iranian supporters in Yemen. Thirty percent of global sea-borne oil goes through the Strait of Hormuz, but so does 11 percent of rice. The Bab al-Mandab sees 18 percent of rice traded globally, 15 percent of global wheat, and 32 percent of global fertilizers. So crisis in either of these transitways affects more than oil. It's going to create food crisis.
Inside Iran, we should be bracing for an economic collapse, likely more severe than the recession that occurred after 2012, when GDP per capita fell sharply by 10 percent year on year. Like its neighbors across the Gulf, Iran has a serious unemployment problem, especially among young people. It will struggle with a currency devaluation, erasing the savings of the middle class. This matters in Iran, but it also reflects weaknesses in other regional economies. Youth unemployment is about 30 percent in Iran, but it's 44.5 percent in Saudi Arabia. Just as the current protests in Basra among unemployed young people demonstrate that many of the structural grievances that motivated the 2011 Arab uprisings remain unresolved in the region, this is a shared problem. Agitation about economic crisis is certain to pick at scabs from these regional wounds.
Baiting Iran will have regional and international consequences, and I think they are likely to be very destabilizing.
MICHAEL EISENSTADT, Director, Military & Security Studies Program, Washington Institute for Near East Policy
Let me start with a few comments about my take on the administration's strategy towards Iran. I think we've had at least two authoritative policy statements thus far on Iran strategy — first by the president last October, when he rolled it out and talked about countering Iran's destabilizing regional activities, its support for terrorist proxies and its proliferation of missiles, and on fixing the serious flaws in the JCPOA. At the time, he was largely silent about the specific steps he intended to take to achieve these goals or how the various parts of the strategy fit together, and how to prioritize and phase these various elements — although, to be fair, most public-strategy documents don't go into much detail about such things.
Secretary of State Pompeo's statement in May of this year put some flesh on the bone with his 12 points. Yet, I would argue that the strategy is a work in progress. We have an unbalanced strategy, based almost entirely on a single pillar: sanctions. What we need is a more comprehensive approach that effectively utilizes all the instruments of national power. I would also say that, to a certain extent, some of the major decisions made thus far have been driven by politics and the president's campaign promise to withdraw from the JCPOA.
Politics, policy and strategy will always be intertwined; that's just a fact of life. But timing is everything. I have no inherent objection to the idea of withdrawing from the JCPOA; I just would quibble with the timing of this decision. I guess it comes down to whether you think it would have been better to have had this crisis now or later. If Iran had remained compliant with the JCPOA and, 10 years from now, started ramping up its nuclear program again, we might have decided to withdraw then. But we decided to withdraw now. Again, as some of the other speakers have said, it is what it is, and we are where we are. We have to find the best way to move forward.
I would argue, though, that it would be desirable to have a more structured process, where at least the tradeoffs and the cost and benefits of the various decisions we make are more explicitly highlighted and the risks involved in the policy of maximum pressure are made more explicit. It seems that there's also a need for a Plan B here, more hedging measures in case the strategy does not work as intended. If, for instance, maximum pressure is not sufficient to cause Iran to come back to renegotiate a new nuclear deal, and contributes to even greater unrest — but the regime is still able to keep a lid on things — then what?
If Iran is able to economically muddle through and it stays in the JCPOA, that's fine. But that's not the administration's goal. I'm not sure how they'll handle it at that point. If Iran decides to push back by exceeding the JCPOA limits and restarting its nuclear program, despite the possibility that the Europeans and others might snap back sanctions, then what do we do? Is the only option then the military instrument? Is this administration willing to go that route? It's not clear to me that it is. Of course, it may be their idea that the Israelis will handle it at that point, but I think we saw in 2012 that their preference is not to do this kind of thing alone if they have to do it.
I see a gap in the logic, at least as I understand it, in the administration's current strategy. You need to have some kind of other nonmilitary instruments to backstop the current policy and strategy that we're pursuing. One of the things we could perhaps consider is what some people refer to as political warfare or a kind of policy of destabilization to further foment instability domestically, in order to generate additional pressure, to create diplomatic leverage, not regime change; I'm skeptical of our ability to induce regime change from outside. But we could perhaps focus on certain pressure points in order to increase pressure domestically to incentivize the regime to come to the negotiating table. Again, I'm kind of skeptical of all this. I'm not sure these kinds of ideas have been thought out. I'm still working out my own thinking on how this would be accomplished.
Another thing we have to consider is that in response to American nuclear pressure, Iran might push back in the regional arenas: Syria or Afghanistan or Iraq — where, since 2011, their proxies haven't been attacking American personnel. What happens if Americans are targeted in a more focused way going forward? Then what do we do? One of the things we could do — and I think the message has already been passed. I think Mike Pompeo said when he was CIA director that he passed a message on to Qasem Soleimani, last year that, if Americans in Iraq were targeted by Iran, we would hold him and Iran accountable. I think that point needs to be underscored once again going forward.
There also needs to be a regional component to our pressure. Syria is the arena where we could do that most effectively, although I think by abandoning the opposition we've given up the most potentially useful tool in this regard. But by staying in northeast Syria, at least we deny the Syrian regime access to the most fertile land in the country and its oil resources. If we combine that with pressure in the form of sanctions on the Syrian regime, maybe that will force the Iranians and others to further increase their financial assistance to the regime and impose costs on the regimes that have to support Syria and keep the Assad regime afloat. Maybe that should also be part of our strategy.
We should also keep in mind that the other guy gets a vote. In the past, in response to our pressure campaigns, we've seen that Iran has often responded to pressure by incrementally increasing its enrichment capabilities and threatening even more dramatic progress to convince its adversaries of the futility of their efforts. It's quite possible that at first they'll go up to JCPOA limits, but it's possible that they'll eventually go past them, if the pressure becomes sufficiently onerous. We have also seen in the past that they've accepted temporary freezes on their activities when the pressure is heavy enough. So they are tactically flexible, and it's possible that they might go up to, but not exceed, the limits of the JCPOA.
In the past, we've seen that, as foreign pressure intensified and broadened, they generally responded in kind. In response to cyber attacks launched by the United States and Israel, and in response to sanctions on their petroleum sector, they responded with cyber attacks on Aramco and then distributed denial-of-service attacks on American banks and financial institutions, and with threats to close the Strait of Hormuz. They're doing that again now. I think, however, that's something they would do only in extremis; they depend on the Strait for the export of just about all their oil and import a lot of the necessities of life through it. But I think the threat is very useful as a form of psychological pressure on their enemies. Then, in response to assassinations of their nuclear scientists, they launched attacks on Israeli diplomats in 2012. In response to a surge of American UAV overflights in 2011-12, they attacked American UAVs in the Gulf. So expect pushback.
We have to be prepared. As I mentioned before, they've tended in the past to decouple their regional activities in Syria, Iraq and Afghanistan, from their nuclear pushback. But in the future, they might link those together in ways they haven't in the past, especially in Iraq, where we haven't been attacked since 2011. That's something that could ultimately — I'm not saying immediately, but down the road — be one of the rungs on the escalation ladder that the Iranians might choose to take advantage of.
One of the other things we have to keep in mind is that we've had, of course, a long history of interacting with the Iranians. As a result of the way we've responded to past Iranian attacks — whether it be the Beirut bombings in 1983, the Khobar Towers bombings in Saudi Arabia in 1996, the support for insurgents attacking Americans in Iraq after 2003 — Tehran has learned that it can wage proxy warfare against us without risking, at least until now, a military response. As a result, I would argue we have something of a credibility gap in dealing with the Iranians. This is something that could come into play in the way we shape or don't shape Iran's response to the pressure campaign we're waging now.
I would argue that the pushback the United States has conducted in Syria in the last year has been helpful. The things we did to respond to their pressure against U.S. forces at Tanf, with the rebel forces there, and in the east by Deir ez-Zor — the attack in February on Syrian Democratic Forces, where we ended up killing a couple of hundred pro-Iranian, pro-regime militiamen, including some Russian mercenaries — has gone part of the way to giving Iran pause in terms of how it deals with the United States and causing them to back off, at least in Syria.
However, I think that in response, they've intensified the pressure on our allies Israel and Saudi Arabia. From their point of view, at least until February, that was perhaps safer. But they're still likely to continue the pressure in Syria, even after the Israeli strikes in May. There's work to be done in terms of enhancing the credibility of the military instrument in dealing with Iran, and the role the military plays as a backstop to American diplomacy.
Finally, the last point I'm going to make, is the need to strike the right balance in the way that we use our pressure on the Islamic Republic. On the one hand, we need to use sufficient pressure to impose costs that will bring them back to the negotiating table. I'm kind of skeptical about the possibility of that. In fact, as Karen made clear, it's not obvious how all these sanctions are going to work out in terms of the kinds of costs it's going to impose on Iran and how effective the sanctions will be. But we have to impose sufficient pressure to get them back to the negotiating table, without prompting Iranian actions that we are ill-prepared to deal with or that could spark a broader conflict.
I don't know if there's a policy sweet spot here, but I would argue that you don't want to exert, to the degree that we're able to do so, maximum pressure. You want something less. It actually would be desirable from the point of view of American policy not to completely eliminate Iran's oil exports or its ability to recover its money from overseas. I'm not sure we have the ability to completely zero out Iranian oil exports, but even if we did, it wouldn't be desirable, simply because they've always said: If we can't export oil, nobody's going to export oil from the Gulf. That simply incentivizes them to engage in destabilizing actions.
Likewise, with regard to regime change, I don't think this should be an explicit element of American policy. It is not thus far, though there are clearly people in the administration who would like to make it such. But, again, if they believe they are facing not just what they think is an American "soft war" to undermine the regime, but an active campaign to overthrow it, that'll cross an Iranian red line. It will incentivize them to use the military instrument against us, and to engage in military escalation.
The administration's policy might work. I'm skeptical, but we're entering into a kind of terra incognita here. So it might work. But there are always unintended consequences, as some of the other speakers have said. I think we also need to have a Plan B in case it doesn't. We have to hedge and be ready for what the Iranians might do in response. It's not clear to me that all the possibilities have been thought through as well as they should have been.
NORMAN T. ROULE Former Officer, Central Intelligence Agency; Former National Intelligence Manager for Iran (NIM-I), Office of the Director of National Intelligence; Senior Adviser to the Counter Extremism Project and United Against Nuclear Iran
I'd like to join my colleagues in thanking the Middle East Policy Council for holding this distinguished panel of experts today to discuss a very complicated issue. I would also like to thank those of you in the audience who have left what I know are very busy schedules to attend this, and to the C-SPAN audience. This is an important topic, and it requires an informed citizenry and policy dynamic. Finally, just to put a plug in for those of you who are not members of the Middle East Policy Council and get their magnificent journal, please sign up and subscribe. I've been reading it for decades.
I'd like to take my comments in a slightly different direction today as we look at the JCPOA deal and the ramifications of the withdrawal. Policy makers here, in Iran and elsewhere, will shape their response to the U.S. withdrawal from JCPOA within the context of other Iranian activity.
I'd also like to begin by offering two concepts that I ask observers of the Iran issue to keep in mind: First, unlike any other foreign policy problem, the threat posed by Iran is simultaneously strategic, urgent and lethal. If you're a policy maker, you can't escape this. Aside from the nuclear issue, it is strategic because it touches the Bab al-Mandab and the Persian Gulf and thus impacts oil prices. It is lethal because Iran conducts terrorism fairly routinely, as we have seen in recent actions in Europe. It requires urgent solutions because an Iranian-enabled missile from Yemen that might strike a target in Saudi Arabia could take Middle Eastern policy suddenly into a dramatically new direction.
Second, an effective Iran policy requires bipartisan and multilateral support. Perhaps one of the few comments I would offer on policy is that in the last few years we have had a less bipartisan approach to the Iran issue, which is unfortunate. We need our European partners and our Arab partners to be standing next to us. In the absence of this bipartisan or multilateral support, Iran's leadership will likely believe that any pressures will be incomplete and, thus, endurable.
Regarding the overall nature of the Iran threat to the United States —and despite Iran's adoption of the nuclear deal, Tehran has grown from a largely-localized threat in 2011 to a significant and region-wide threat with offensive capabilities, generally deployed via proxies, that impact multiple U.S. international interests and partners. Directly or via proxies, Iran in its capacity to exert pressure on the Strait of Hormuz and the Red Sea economic corridor, which Karen so eloquently described, has the potential to disrupt global trade and to impact the economies of such Red Sea states as Egypt, but also southern Europe.
We see a stream of almost daily press reports showing that Iran recruits, trains and, to varying degrees, directs a seasoned transnational Shia militancy, capable of fighting against different opponents on disconnected battle spaces simultaneously. This is significant and unprecedented in the history of the region. Iran's Revolutionary Guard Quds Force, often in conjunction with Lebanese Hezbollah, has enabled a missile war against Riyadh and threatens the United Arab Emirates. The Quds Force is attempting to establish a more sophisticated missile and drone architecture in Syria to threaten Israel. The same element has armed Houthi proxies with explosive boats along, again, this critical Red Sea commercial corridor. Finally, the Quds Force has empowered terrorism in Bahrain, the home of thousands of U.S. military personnel. And Quds Force leader Qasem Soleimani has repeatedly appeared in social media to show that he is attempting to influence the political future of Iraq.
Iran's missile force is now the largest in the Middle East and includes hundreds of short- and medium-range missiles. Some of these systems are capable of carrying nuclear warheads, should Tehran ever decide to pursue this technology. In a disturbing and unprecedented development, Iran has provided advanced missile technology to Yemen's Houthis and Lebanese Hezbollah, dramaticall increasing their lethality. This means that their adversaries (and thus targets) may decide to undertake a preemptive attack or counterpunch that could take the region into dramatic new areas.
Iran's acts of terrorism have spiked in the last year. Recent press reports highlight what certainly appears to have been an aborted Iranian attack on an opposition conference in Paris, using an explosive supplied by an Iranian intelligence officer in Vienna. In June, the Netherlands expelled two Iranian diplomats, apparently also for involvement in terrorism. In January, Germany announced arrests relating to, again, an Iranian-led effort to target Israelis and Jewish facilities in Germany.
Iran has continued to build its offensive cyber capability. It is one of the top four cyber threats to the United States — I would argue, it's probably number three on that list. And we're likely to see it increase its cyber activities against its Arab neighbors and the United States as sanctions are reintroduced.
The absence of an effective international response to these actions, in my view, has contributed to Iran's sense that its aggression and its defiance of the international community can be conducted at little cost. For those who are looking at how to reconstitute or to reenergize the nuclear-deal process, this needs to be kept in mind. Iran, in continuing to undertake these aggressive actions, also risks miscalculating Western or regional red lines and could spark a broader conventional conflict.
Regarding the nuclear deal, and per multiple IAEA reports, the JCPOA successfully constrained Iran's nuclear program, at least temporarily. Per David's excellent comments and I would agree, there are important aspects of the deal that are permanent. The deal extended the amount of time it would take Iran to produce its first weapon's worth of highly enriched uranium, were it ever to decide to take that route, from a couple of months to about one year. That's significant. Iran also destroyed the critical element of its plutonium reactor at Arak, effectively destroying the reactor. The deal also introduced an unprecedented level of international scrutiny of Iran's civilian nuclear enterprise, important elements of which were intended to be permanent.
But perhaps the most important aspect of the nuclear deal is that the end of nuclear-related sanctions allowed the Iranian people see that it was their own government's mismanagement and not international sanctions that lay behind the erosion of their standard of living. When you recall the demonstrations in January, you will note that protests included few calls of "death to America" or "death to Israel." Their complaints were, rightfully, against their government's mismanagement.
However, in light of Iran's egregious behavior in non-nuclear areas, it is not unreasonable to say, if you can't trust them anywhere else, how can you trust them on this issue? The Israeli capture of a vast amount of weaponization documentation, which is not in itself a nuclear program — papers and CD-ROMs are not a weaponization program — shows that Iran at least kept open the option to restart nuclear weaponization. Therefore, it's certainly reasonable to insist that any deal's provisions be further tightened, and that we ask Iran to reveal details of the previous military dimensions of its nuclear program.
I believe that any future nuclear deal will almost certainly draw upon most, perhaps all, of the major provisions of the JCPOA and its oversight architecture, in large part because it represents — no matter your views of the deal — a tremendous amount of hard diplomacy by policy staff, policy makers, diplomats, Department of Energy personnel, and other smart people. But in the wake of the U.S. decision, we need to consider how Iran will respond in coming months. Tehran will continue to maintain a posture of defiance and victimization, and press Europe, Russia and China to ignore U.S. sanctions. It will also gradually expand or at least claim it is expanding — because Iran is a master of embellishment — their nuclear equipment and facilities.
Iran will likely stay within the bounds of the JCPOA — if only to signal to Europe its willingness to stay in the deal and demonstrate the ineffectiveness of external pressure. Tehran will maintain heavy diplomatic engagement with sympathetic European partners to place further stress on European-U.S. relations. It is often said that hardliners in Iran chafe at JCPOA restrictions and oppose the deal. That is certainly the rhetoric, but it's not the reality. Hardliners understand that Iran's political and economic stability depends upon the sanctions relief provided by the deal. Despite their statements in which they urge Iran's withdrawal, Iran is unlikely to make such a decision until it believes the deal no longer provides the economic benefits that are so important to sustaining regime political stability.
There is little reason to believe, however, that Iran's leadership will negotiate further on its nuclear program in the foreseeable future. It's not just that distrust of the United States is high or that pressure is not yet perceived as unilateral. Iran is going through a leadership transition period, and this is not the time for anyone in Iran to stand up and say, "I think we should make concessions to the West," or "I think we should deal with the Americans." Iran's decision on this issue will depend on how its leaders perceive their own domestic stability. Hence, it may well take several years of multilateral sanctions and diplomatic pressure, as well as the arrival of a new supreme leader, before Iran returns to the negotiating table.
In the near term, Iran is unlikely to establish weaponization or covert nuclear sites, especially in light of the recent Israeli seizure of Iran's nuclear-weapons archives, an intelligence coup of extraordinary proportions. Iran's leadership, one must imagine, is probably thinking, "Can any aspect our nuclear program be kept secret from the West? If we undertake these activities, how long before they appear at a press conference at the United Nations?" Any such weaponization efforts, they know, would not only undermine their ongoing diplomatic strategy, but would risk a military attack by the West.
Regarding Iran's regional behavior, it's certainly an overstatement to say that Iran controls all events in Iraq, Lebanon, Syria and Yemen. But Tehran's actions have exacerbated the instability and extended the conflicts in these countries. Its proxies, which often seek to dominate the key security and policy institutions in their capitals, are changing the DNA of the region. That is also inescapable. Iran's goal remains to be a dominant, if not the dominant, player in the Middle East while simultaneously reducing the influence of the United States and Sunni countries.
Iran has exploited the ongoing turmoil to sustain or attract new allies, to establish itself as the sole protector of the region's Shia population. The West should step in here and also stand up for the beleaguered Shia of the Middle East. Iran also hopes to bleed our partners in Saudi Arabia and the Emirates in the Yemen conflict as well as to confront Israel with new and more capable enemies. I am skeptical of reports that U.S. and Israeli engagement with Russia will convince Moscow to pressure Iran to leave Syria. Iran is unlikely to reduce its presence in Syria, for multiple strategic reasons. And there is no evidence of which I am aware that Russia has the influence or the political will to compel Iran to pull out of one of its most strategic locations in the Middle East.
The openness by which Iran undertakes its regional operations is remarkable. Iran now insists it has the right to undertake these interventions, a powerful statement of how Tehran views its role in Arab capitals in which it has had no influence in modern history. This new determination is likely driven, in part, by Iran's recent and extensive financial and personnel investments in these conflicts. Iran's Revolutionary Guard leaders routinely express pride in the service of their personnel in Syria. The image of Qasem Soleimani, the head of the Quds Force, has been splashed all over the Internet. In a worrying development, Lebanese Hezbollah and Iraqi Shia militias have now adopted an expeditionary profile. And we should consider how these external operations of the Iranian personnel and the militias will change their own perspectives on their role in their country and impact their long-term evolution.
But all is not well for Iran abroad. Iran's operations in the region remain vulnerable to the disruption of their logistic chain, but doing so would inevitably invite tough policy decisions. As the Quds Force is learning from ongoing events in Basra, it's much easier to empower military groups than it is to solve the economic and political challenges in proxy territories. We've seen that Iran's population is increasingly unhappy with the expenditure of Iran's forces outside of Iran. But they only know about these events through what information leaks into Iran. I think it would useful if we could push more data into Iran to show the Iranian people what these conflicts cost in blood and treasure.
Iran's domestic and political foundations continue to erode as a result of new sanctions. Its economy is also reeling from decades of mismanagement and political infighting that have made decision making very difficult; environmental problems that touch the lives of many Iranians; unprecedented corruption; and a crumbling infrastructure. Protests have been fairly common in Iran over the years. Iran is actually a protest-rich culture. These are now magnified by social media, and they represent a drumbeat of despair.
However, Iran's unrest appears leaderless, rudderless. The protests seem disconnected and generally driven by local economic complaints. Security forces appear to be cohesive and well-resourced. And the harsh sentences given to women, outrageously, for dancing and refusing to wear the hijab represent the hardline leadership's refusal to tolerate even a modicum of liberal reform.
Having endured severe sanctions under the Bush and Obama administrations, Iran's leaders certainly recognize that impending sanctions will impact stability. The flight of international companies, especially banks and oil firms, is entirely predictable. I have never understood those pundits who said this would not happen. Companies vote to protect their shareholders, and that's that. This process appears unstoppable. European efforts to develop alternative financial mechanisms outside of the sanctions' reach will likely have little impact on this trend. Iran's oil exports have declined, and Tehran's limited influence in OPEC was highlighted in the recent Vienna conference. Iran has few options to restore confidence in its currency, and unemployment and inflation are creeping upward.
In addition to its diplomatic activities, the regime's primary focus in coming months will be to import as much hard currency as possible, as well as key commodities to sustain the illusion of self-reliance and the resistance economy, and prevent further domestic turbulence. It will also seek to retain its remaining oil contracts and establish new commercial relations with China and Russia. Although Iran will have difficulty overcoming the pain of sanctions, Iran's relationships with small and medium-size Russian and Chinese commercial partners with no exposure to the U.S. financial system — and there aren't many of those — will offer at least propaganda opportunities and modest sanctions relief.
In the medium term, Iran's leaders have much reason for concern. The revolution has aged badly, and few maintain the fiction that its failure to achieve fundamental social goals is due to U.S. interference. All of the regime's leaders, to include President Rouhani, the Supreme Leader and even the popular Quds Force leader Soleimani were heavily criticized in recent demonstrations.
Iran's security forces have no doubt monitored demonstrations to identify ringleaders behind the protest, and will use whatever force is necessary to quell serious unrest. There is no indication that the regime will collapse in the near future, but there is also no evidence that it is capable of arresting the erosion of its long-term stability. The selection of Iran's next supreme leader will be a critical inflection point for the regime. Khamenei has already shaped the selection architecture to ensure the appointment of a hardliner who can be trusted to sustain the ideals he supports and to protect key regime stakeholders.
Let me conclude with a few thoughts on potential policy options. The primary goal of U.S. policy should always be one thing: to develop a multilateral effort to encourage debate within Iran's society and inner leadership as to whether a nuclear program with a domestic-industrial enrichment capacity, terrorism, regional interventions, an unreasonably large ballistic-missile program, the detention of U.S. and other nationals are worth the pain of economic sanctions that will inevitably erode Iran's economic and political stability. If the Iranians do come to the table, we need to be ready to engage Iran the with incentives to encourage their cooperation.
A word of caution here: Governments usually don't arrive at the negotiating table when they are at the point of collapse. They first come when they fear they might collapse in the future. When Iran came to the table for the JCPOA deal, they did not come ready to accept any deal. That is why the negotiations took so long. So, when Iran does come the table, it will arrive seeking hard bargains.
We need Europe and the Arab world at our side. Our relations currently are strained and must be repaired. But Europe must also be prepared to demand more restrictions on Iran's nuclear activities and employ severe sanctions to deter other malign activity. It makes no sense to offer Iran relief from all significant sanctions in return for its sticking to JCPOA. Doing so means that the only sanctions targets available to punish Iran for other activities are minor officials and expendable companies. Policy makers usually have only three primary options for engagement with an adversary: diplomatic demarches, economic sanctions or military conflict. We cannot eliminate the second category simply to protect the nuclear deal alone.
We also need a clear and consistent public-diplomacy campaign and so I support Secretary Pompeo's efforts to engage the Iranian Diaspora and the international community. In addition, Tehran must understand that any effort to develop a nuclear-weapons program will be met immediately by a military response. Iran must also understand that a cyber attack in the coming months against the United States or regional partners will be met by an equally severe response.
Finally, it is up to the Iranian people to choose the direction of their country. I am not a believer in regime change by outsiders. But the Iranian people also have the responsibility to press their government to end its intervention in other countries. Iran chooses its own government; it doesn't have the right to choose other governments.
Next, the United States should launch an international campaign against Iran to end the activities — indeed, the external existence — of the Revolutionary Guards Quds Force. If there is one thing that can be done against Iran that would change the paradigm of what Iran's leadership can get away with and demonstrate Western resolve, it would be this. The organization is unique on the planet. Its sole goal is to enable terrorists, to create militia groups, and to defy the proliferation of sanctions. Its activities violate multiple international standards and the principle of Westphalian sovereignty. We need a multilateral process to dismantle Iran's regional militia structure. Iran's creation of foreign militias not only impedes the development of stable societies in these countries; its success here allows Iranian hardliners to say: "Look what we can get away with; look how the West does not respond."
Finally, two points.My final comment regards detainees. With Europe as a partner, Iran needs to understand that its continued detention of Americans and other nationals will deny its entry into the international community. The detention of such innocent individuals as Princeton graduate student Xiyue Wang and Iran's refusal to cooperate on the missing American Robert Levinson cannot be forgotten.
Q & A
THOMAS R. MATTAIR, Executive Director, Middle East Policy Council
I believe you said that the Trump administration is going to seek zero uranium enrichment if there is a new negotiation, but you're not even sure that the administration is willing to have any negotiations. On this question of uranium enrichment and the military plans that have been discovered, how long would it take Iran to move from enrichment at almost 4 percent uranium-235, to the 19.75 percent they had mastered a few years ago, to the 90 percent enrichment that would be required for a nuclear weapon? How long would it take for the IAEA to discover it? Would they have any incentive to do that if they don't have nuclear designs perfected for the warhead and the placing of the warhead on a ballistic missile, and the technical aspects of detonating the weapon at the right time? Would they ever risk anything like that?
MR. ALBRIGHT: It's hard to answer all those questions. The breakout timeline is based on the idea that Iran makes a decision to race to being able to produce enough, weapons-grade — greater than 90 percent — enriched uranium in as short a time as possible. There's quite extensive debate on that. I was just in a European capital several weeks ago where their view is that the breakout time is 13 to 15 months; if they start now, that's what it'll take. They assume that advanced centrifuges wouldn't be deployed in that breakout. Our breakout estimate is seven to 12 months, or maybe even a little longer. But there are some who think it's three months, I've heard.
One of the things we're facing is that the uncertainty about their centrifuge program is growing. We don't know how many they have hidden away or, partially constructed. Would they trust their advanced centrifuges? A lot of their program is a disaster. We know that from the International Atomic Energy Agency. They went off to build advanced centrifuges, many different types, when most programs would focus on a few. Many of them have failed. Something they used to talk about a lot is the IR-8. I don't think it'll ever be built, the way it's developed. So they have real problems. They may not want to build up their program too much. The other day, Ali Akbar Salehi, who certainly has been around a long time and knows the program probably better than anybody, talked about the IR-6. We know the IR-6 itself probably doesn't work; it's four or five years from deployment. There's a variant of it called the IR-6S that maybe they could build and deploy.
DR. MATTAIR: Is that a centrifuge?
MR. ALBRIGHT: Yes. But I think they're faced with a serious development issue. I would agree with Norm, though I'd maybe say it a little differently, emphasizing the fissile material. I don't think they're in a position to want to try to break out to nuclear weapons. If you look at the South African case, to use their terminology — my back's the wall all bets are off. To emphasize what Mike said, I think you don't want to pressure them too much, to where they feel that their only out is to build nuclear weapons. I don't know how you balance that because this administration wants to increase the pressure. As you've probably all seen, it turned down a recent request from the Europeans for exemptions on the sanctions. So it wants to drive Iran's oil exports towards zero. My institute is often in the mode of, "we can see problems." We have a harder time visualizing the solutions. But I think one of them would be that we need to think through what it is we're trying to accomplish, and to make sure, as Michael said, that there is a Plan B in place to help us in case it doesn't work out quite as we expected.
DR. MATTAIR: Is there in the materials that have been discovered, seized in the warehouse, or that were known to our intelligence agencies in 2007 about prior military dimensions of their work, any evidence that they actually have the capability to build a warhead?
MR. ALBRIGHT: Could they deliver it on a Shahab in a reliable manner? It's not clear. But I think this information shows a bigger, more advanced program than was understood. I think they could build a nuclear weapon. I mentioned that the French could tell you, if they had the fissile material, they could do it in three months. There certainly would be arguments — as there have been with North Korea — on whether they could deliver it reliably on a ballistic missile, and are willing to take the risk that it may just miss or pre-detonate or not detonate at all.
DR. MATTAIR: Well, you'd have to test before you take a chance like that.
MR. ALBRIGHT: No, you don't. On this kind of weapon, you'd have to flight test, but you don't have to test the nuclear device. They won't have to do that. Their program, from what I understand, was designed to avoid that. Part of the information is that they were looking to at least consider building an underground nuclear test site; they picked five possible locations. But I don't think their first device would have needed that kind of test.
DR. MATTAIR: Someone from the audience is asking about the negotiations with the E3, and whether they got close to some agreement with Iran, and what the Trump administration's view of it was.
MR. ALBRIGHT: I think they got very close, certainly on the reimposition of sanctions. But I know from the legislative side of this, which was a parallel effort, there was no intention to require an automatic snap-back of sanctions. That was the rhetoric publicly, underneath it, there was a recognition that a president doesn't want to give up that kind of power. Neither does Congress. So there would have been, as we call them, off-ramps for the automatic snap-back of sanctions. The Europeans wanted certain assurances and certain approaches. There was also a sticking point in the language over this idea of a 12-month breakout, I was one of the developers of — and wrote the legislative part of — using that as a criterion. But it had been interpreted and developed, not as a theoretical concept of estimating the breakout timeline. It was defined as, if Iran does this, builds this number of centrifuges or enriches this amount of uranium — so it was quantified in a very specific way. So I think that distance between the Europeans and the United States could have been managed if given a little more time.
But I think this administration decided that they want a conflict now. They think now is better than later. And they think they want these fancy financial and other sanctions the U.S. Congress created. They want them out of the Cabinet and fully deployed. And they did not like, in the end, the idea of fixing the deal. So the problem for those of us who believed in fixing the deal is, can we trust the next thing President Trump does? If you're in European capitals and hear this, can you trust the bureaucrats who are everybody but him? Do they have credibility to articulate a policy? That's one of the unfortunate casualties of the way this has worked out.
DR. MATTAIR: Norman, do you want to comment on any of that?
MR. ROULE: I would have a different view on a few points. This president came into office with stark views on the nuclear deal; his current posture should surprise no one. On October 13, the president of the United States gave a speech stating his intention to terminate the deal. Europe's response is mainly silence, although there has been robust diplomatic discussion between the United States and our European partners. In January, the president reiterated his position on Iran's actions in the region, again with little European response. I don't think our negotiations with Europe ever resolved the issue of which sanctions would be lifted in return for the nuclear deal but not be imposed for other malign activity. Likewise, I don't think the issue of the so-called JCPOA sunsets was ever resolved.
Simply to say that Iran agrees not to build an ICBM is important but not critical. What is critical is to say whether any deal will allow you to trust this country over the years. Let me also highlight two aspects of the deal that are not often discussed. In October 2020, the JCPOA deal notes that restrictions on Iran's conventional-weapons program will end. Does anybody think it would be safer for Iran to sell conventional weapons to Hezbollah openly? Similarly, in October 2023, the UN restrictions on Iran's missile program will expire. Does anybody think the world would be safer if Iran could openly purchase ballistic missile parts and sell them to Lebanese Hezbollah?
DR. MATTAIR: The complaint about the agreement was that it was limited to the nuclear program itself and did not sufficiently restrain Iran's development of other weaponry. It certainly did not restrain Iran's other behaviors in the region. We needed a strategy that would be more comprehensive and address all those issues. Whether we needed to withdraw from the agreement or not is debatable, but we have. What is the strategy? Michael was talking about needing one. Part of it certainly is the economic pressure. Karen believes this is really going to be successful. You are basically predicting collapse.
DR. YOUNG: I don't think it's successful. (Laughs.)
DR. MATTAIR: I used the wrong word, but what you mean is the sanctions are going to be so severe that there are going to be severe economic repercussions in Iran, possibly economic collapse. Somebody from the audience was asking, is there any way China can rescue them from that?
DR. YOUNG: No.
DR. MATTAIR: And maybe India.
DR. YOUNG: No. The Indians are very divided between the government and the business community, so they're not going to help very much at all. China can help create a bit of a cushion, but they can't save the Iranian economy. I think there are some possible innovative ideas. As I mentioned, I think a lot of the challenges of the Iranian economy are shared on both sides of the Gulf, in the delivery of electricity, for example. There are also electricity shortages in Saudi Arabia, across the Gulf. But there is the ability to build new plants, to invest in them. There are many South Korean firms that had begun investment inside of Iran. South Korean firms that actually received investments themselves from Saudi Arabia. So, ironically, there was cooperation between the Gulf states and Iran in terms of energy — electricity delivery.
They also have massive youth-unemployment problems that are shared, and just basic service delivery. In Iran, the banking sector, as Norman mentioned, is really a mess. There could be ideas for intermediation, perhaps even from international financial institutions with help from the EU to clean up some of these practices and create a cushion for some structural reforms in Iran. So I think there are avenues that could alleviate what it seems like we're walking into, a very severe situation. The reason I think it's not successful, I should say, is because it doesn't punish the right people. It destroys the savings of the middle class. It hurts the youthful generation, which is well-educated, especially the women. Why would the United States want to alienate these people across the Middle East, but in Iran in particular? That's, for me, very much the downside.
DR. MATTAIR: Michael, while this is taking place, while Iran is suffering economically, what are your major proposals for dealing with Iran's behavior in the region, if they have a history of pushing back under circumstances like this? Is it likely that we are going to see, as Karen has said she fears, actual conflict?
MR. EISENSTADT: Let me just say that, in the past, they have decoupled pushback in the regional arena from their nuclear pushback. By and large, they responded to nuclear pressure by moving forward with their nuclear program, to demonstrate, as Ayatollah Khomeini was fond of saying in the '80s: "America can't do a damned thing." We're going to continue to move forward, and your sanctions are ineffective. They responded to American cyber and Israeli cyber with their own cyber as well. My concern is that they might do stuff in the naval arena, though since last year they haven't been engaged in what the United States NAVCENT would call unprofessional and unsafe behavior.
DR. MATTAIR: In the Strait of Hormuz.
MR. EISENSTADT: In the Strait of Hormuz and in the Gulf. They could ramp that up again. If you remember, before the JCPOA was concluded, there were a couple of incidents where they diverted a tanker — it was related to a dispute with a company. There were a number of incidents in the Gulf before that. But by and large, I don't think that was related to nuclear pressure or pushback against American nuclear pressure. But that could change. So I would argue that there needs to be a credible military option in order to limit Iran's options for pushback. If they feel they could push back without significant risk, they'll do so in those domains. Again, what we did in Syria last year I think has been helpful, even though it was very constrained and related to force protection, in response to actions by pro-regime militias against the United States advisers who were embedded with rebel forces. I think it had a useful impact.
I think we need to continue along those lines. Statements by the president that we're going to withdraw from Syria are not helpful in that regard, although it seems that at least for now he's backtracked and he's done an Afghanistan, so to speak, in northeastern Syria. He was perhaps convinced by his senior military officers that it's not a good idea for us to leave. It's useful to have us there, and the precedent we've set in the last year is useful. But I think it's not enough just to set red lines; you have to tend to them.
Despite the reports that Mike Pompeo, when he was CIA director, sent a message to Qassem Soleimani — don't attack American forces in Iraq or else — they're effectively attacking U.S. forces in Afghanistan and Syria at this point by supporting the Taliban and their tests last year at Tanf and in the east. But we don't want that to happen in Iraq. So, again, we should set these red lines, tend to them, and convey credibly that if they target our people, we'll target their people. We have a whole decade and a half of targeting al-Qaeda and ISIS leaders in the region. We have very robust capabilities in this area that we've never turned against the Iranians. We should indicate to them, for deterrence purposes, that unless you want this turned on you, don't touch our people. That's what I would argue are elements of a policy to deter them from pushing back in the regional arena against us in response to pressure on their nuclear program.
DR. MATTAIR: Norman, can you comment on that? Iran's behavior in the region is already a problem for us in Syria, Lebanon, Yemen and Iraq. Somehow this pressure on Iran, by imposing sanctions and withdrawing from the JCPOA, is meant to help us restrain Iran in the region. What do you expect them to be doing? And what do you think we should be doing while we wait for them to come back to the table? You said you wouldn't expect them to come back for several years.
MR. ROULE: I still maintain that position. The impact of sanctions will be gradual. Iran is a large economy, and I don't anticipate that there will be sufficient pressure in the near term on the regime to cause the supreme leader and others to seek new negotiations.
Regarding the regional conflict, Iran has established one-way front lines against all of its adversaries in the region. When we talk about a conflict in the Middle East, we have Iran and Hezbollah, as per the statements of the State Department and our UN ambassador, enabling missiles to be fired upon Saudi Arabia, where there are thousands of Americans and other foreign nationals. So we have a missile war underway. They are sending armed drones into Israel. And they have used drones, as stated earlier, against U.S. forces in Syria. Thus, we have a drone war underway. They have also enabled explosive boats used by the Houthis in the Bab al-Mandab and the Red Sea. We have a naval conflict underway.
I think the question of conflict is often shaped in terms of another Gulf War, whereas we would be better off to view regional conflicts as a gray zone or hybrid-war conflict. Our response to that shouldn't just be attacking the fellow on the other end of the drone; Iran needs to feel the pain for these operations as well. Karen made the excellent point that the sanctions don't strike the right people. It's something policy makers have deliberated over for hundreds of hours in meetings that I've attended in my career. But if anyone has the name of the company that we can sanction that won't do that, I'm sure the State Department and Department of Treasury would welcome the suggestion. The IRGC and others have so corrupted the economy that they have become large portions of Iran's economy.
In terms of Iran's response to pressure, they will first react by testing our will. Tehran is willing to put serious skin in the game. According to press reports, they have lost a couple of dozen flag-ranked officers in the conflict and simply replaced them. We have to recognize that, as we push, they will push back to test our fortitude.
DR. MATTAIR: Do other panelists agree with Karen about economic collapse? Do we have disagreements about how long this will take and how long Iran will be able to continue with its current behavior, and how long they'll be able to wait before there's a political crisis and they're willing to negotiate? Karen, how long do you think this will take?
DR. YOUNG: When I said collapse, I really didn't define that. What I mean is severe damage — severe currency crisis, an inaccessibility to have foreign exchange. That essentially creates hyperinflation, and hurts ordinary people. But I agree with Norm's point about the saturation of the Iranian economy by the Revolutionary Guards. That's true. I think it's widely understood how deeply corrupt and ineffective the Iranian financial system currently is. But I see this as a point of entry, a point of leverage for multilateral negotiation. The European Union is trying to use that right now, and I think they're right to do it. So in order to allow the Iranian Central Bank to have funds in the European Union, member-banks would be adopting some measures in financial transparency. This doesn't fix everything, but it would be an inroad. I think it's a very good policy idea, one of the few we have on the table right now.
MR. ALBRIGHT: I agree with Karen. When I look at collapse, though, the issue arises of how repressive the regime can be. You look at North Korea in the 1990s, where there was wide-scale famine; they were expected by the United States administration at the time to collapse. But they didn't. In Iran, they are probably capable of repressing dissidents and intimidating the others. So I wouldn't want to link economic collapse to regime change or regime collapse. I think they probably will stay in power. That is what our experts or the people I listen to would say. We're not quite like the Soviet Union in the mid-to late 1980s. We're not quite at that point yet.
DR. MATTAIR: There is a question from the audience asking if regime collapse is really what we're aiming for, and whether that is realistic, given their monopoly of use of force and their longevity.
MR. EISENSTADT: I think that the way the administration has thought about it is that if maximum pressure works to create greater instability domestically, that's another pressure point on the regime that might cause them to finally yield and decide to reengage with diplomacy. If they don't agree to reengage, it might then lead to regime change or at least massive unrest, which then forces Iran to focus a great deal on its internal situation.
DR. MATTAIR: And pull back from Syria.
MR. EISENSTADT: The Quds Force, the Iranian contingent in Syria, as far as we know, is only a couple thousand IRGC fighters. Subsidizing the Syrian government has cost them a lot more. The estimate that the administration puts out in public is $16 billion. I have no ability to judge that, but it's a fair sum of money. The point is, if you put them on the horns of a dilemma — if they don't negotiate, they have to deal with the possibility of greater unrest. If the unrest grows to the point that they're worried about its getting out of hand, maybe that will cause them to come back to the negotiating table.
I would like to elaborate on Dave's point in that regard. Because Iran's current leadership once made a revolution, they know how a heavy-handed response by the security forces can exacerbate things. That's in a way what happened with the shah's forces; they were killing protestors, and then they had a 40-day mourning period, and they'd come back, and the protest would snowball. They've been trying to avoid that in 1999, in 2009, and more recently.
You haven't seen a Tiananmen Square type of response, where tanks are out in the street and roll over people. They've tried to use nonlethal means, by and large. I'm not saying people haven't been killed — they have, by snipers and others — but by and large, it's hand-to-hand fighting. As a result of what happened last December, however, it was reported that the Majlis quadrupled funding for the purchase of weapons for law enforcement. So I think they realize things could escalate in the future, and next time they won't come out with just truncheons and chains. They'll have firearms.
Also, in the past, they had concerns about the reliability of the security forces. The Revolutionary Guard was a conscript force and reflected the society at large and the trends within it, so they had questions about its reliability. That's another reason why I think they didn't push too hard when they responded on the streets. They protracted the conflict and used indirect means to deal with it. But now they've been doing things in terms of recruiting for the IRGC only from the Basij, people who are Basij members. They're trying to ensure the reliability and the capability of the security forces, because they realize things might get worse in the future, when they will use more force. Never underestimate the ability of these kinds of regimes to hang on. You saw it in Iraq in the '90s, though Iraq was very different. David mentioned North Korea, which is also very different. But, never underestimate the resiliency of these regimes. On the other hand, there are fissures in the system. So it could go either way.
MR. ROULE: There are a couple of points I'd mention. First, this regime will have no compunction about using whatever coercion it deems necessary to put down unrest. But there's a calculation that goes into how they will shape these operations, and Iran has been careful not to over react. You don't necessarily need tanks to put down unrest. Thus far, they have used what appears to have been a small, capable force to respond to the relatively small demonstrations in January that saw crowd sizes in the thousands, not the millions. Iran also inhibited unrest by severing such social media channels as Telegram and using cameras to identify ringleaders in the crowds.
Even a complete economic breakdown may not lead to a meltdown of the regime. We have a failed economy — I'm not sure you can even call it an economy — in North Korea, and it hasn't changed the North Korean government. We have watched the unprecedented collapse of Venezuela; this hasn't changed the government. Economic pressure is important, but a broader policy is needed. As they say, sanctions are a tool, not a policy.
Iran's future leadership is uncertain. Its supreme leader is facing mortality. His successor will lack his iconic stature, likely his religious status, certainly his political influence, which includes his relationship with the IRGC. Iran also is approaching a presidential election in 2020.
Looking at Iran from a regional perspective, it is hard not to sense that events in Jordan, Iran, Tunisia and Iraq had common themes: unemployed youth, a lack of foreign investment, and a lack of public services. The seeds of the Arab Spring remain spread throughout the region. The Iranians are aware of this, and for that reason they are going to try to calibrate the level of force they use to put down unrest. Sanctions, therefore, remain the best route to compel a debate among Iran's leaders as to whether they want to risk the stability of the regime at this challenging period.
DR. MATTAIR: One topic we haven't touched on yet is the role of our partners and allies in the region, and why they were so critical of the JCPOA, and what role they're willing to play with us now in dealing with Iran on the ground. Are they willing to put skin in the game if we take ours out? Do they think that somehow our relationship with Russia can be leveraged to help them get Iran out of the region?
MR. ROULE: As I mentioned earlier, we currently lack a bipartisan approach to some regional issues. In regard to our Arab partners, it seems that observers are either "for them or against them." We have asked our Arab allies in the region to handle their own problems. They're doing it. The Yemen War is taking a very long time, and it's a tragedy, but wars in the Middle East always consume calendars as well as lives. How long did the Iraq War take? How long is Afghanistan taking? The Saudis and Emiratis understandably insist that they will not allow Iran to establish a Hezbollah-type entity on the southern border, next to the strategic Bab al-Mandab, through which about 15 percent of the globe's trade goes every day. And they're putting their lives and treasure on the line to handle this problem.
The Emirates this week — in a fascinating development that's not receiving enough coverage — are dramatically upgrading their commercial relationship with China. This may be, in part, an effort to offset China's relationship with Iran. Riyadh is also working with Moscow on oil issues, probably also as part of an effort to weaken Iran's leverage with Russia. Iran's performance at the last OPEC conference was weak. They arrived sounding tough, but left with little because of this new Saudi-Russian relationship.
Are all of these developments going to be positive for the region? No. Will some take a lot longer than people would like? Absolutely. But these countries are moving in the right direction, and they're not asking Americans to die to protect their interests.
DR. MATTAIR: In Yemen, yes, absolutely.
MR. EISENSTADT: I think the Israelis have emerged as perhaps our most effective proxy, if you will, against the Iranians in Syria. They found themselves backed into this position; they would have preferred to work with the United States in Syria against the Iranians. But they concluded that, by and large, the administration is leaving it to them. As a result, we've seen greater coordination, at least, between the Israelis and the Russians in terms of the parameters inside which the Israelis can operate in Syria against the Iranians to prevent them from transforming Syria into a platform for power projection in the Levant.
We've seen a series of strikes in response to Iranian UAV overflight and then Israel's response to the Iranians response, in which they basically tried to destroy all of the military infrastructure that Iran has been building in Syria in recent years — logistical sites and barracks and intelligence-collection sites that were directed against Israel, but part of Iran's emerging infrastructure there. I think that's the way that the administration prefers to deal with it, to have our allies act as proxies and on their own. Thus far, Israel has been very effective in this role, but it will depend going forward on Russia's continued acquiescence.
It serves Russia's purposes right now to have the Iranians cut down to size in Syria. But that could change. If it does, Israel's ability to play this role will potentially suffer, we're going to have to figure out what to do about it. So I think it's in our interest to reinforce the message that the Israelis have been sending to the Russians — that it's very important for us that Israel be able to have continued military freedom of action in Syria. I'm not sure that's being sent at this point, not publicly, at least, it seems.
DR. MATTAIR: Norman, is that enough for Gulf Arab states?
MR. ROULE: No, but I'm not sure what else we would ask them to do. Are we asking for an Arab military force to invade Syria? I'm not sure that's the smartest thing. But the Saudis and Emiratis have engaged Muqtada al-Sadr. That represents diplomatic boldness and creativity. In regard to Moscow, Israeli actions in Syria — like our missile strikes against Syria — drew no Russian response, which I think perhaps shows Russian weakness but, at the same time, Russia's unwillingness to risk its other regional relationships for Iran.
As we look at activities in the region, we should not forget other allies standing with us. Bahrain is under routine attack by trained personnel from Iran, often trained by Iraqis, according to their reporting. So you have this growing collaboration among Iran's surrogates. However, we also have an increased cooperation by our partners in the region. Iran's regional conflicts are relatively inexpensive, but the Iranian people should know that every tanker of oil Tehran delivers to Syria takes $250 million from their pockets. Do they want that money spent in Syria or improving the water facilities of Khorramshahr? That's the decision the Iranian people have to make. Our Arab partners can help communicate that message to Iranians .
DR. MATTAIR: It's good that you pointed that out, because I think not everyone is aware of how extensive Iranian support for proxies is in the region, including inside Bahrain.
MR. ROULE: When you define what it takes to make a proxy group, you need specific training, weaponry, financial aid, as well as intelligence and cyber support. It's more than just giving somebody a bag of money and a gun. If I were to ask you to name a proxy group run in that fashion by a Sunni Arab state, you can't name one. If I were to ask you to name all of the Iranian proxy groups in the region in one breath, you can't do it. Iran is also ecumenical, in that they work with Sunnis: elements of the Taliban, Hamas and Palestine Islamic Jihad, in addition to their many Shia militia partners.
We need to consider how these groups will evolve. What happens to the Shia Kataeb Hezbollah in the political evolution of Iraq? Will they give up their weaponry? Napoleon often stated, you can do anything with a bayonet except sit on it. If you were the Kuwaitis, how would you feel about having an armed Kataeb Hezbollah on your border? These are realities in Iran's activities in the region. It's unprecedented. I can't think of another country in the last century that has enabled such activity.
DR. MATTAIR: Michael, you've written a lot about Iranian conventional capabilities, asymmetric capabilities that they can use in the coming years while they're undergoing economic distress. How would you evaluate our ability to deal with that, thinking back to the 1980s, when everything we did in the Gulf conformed to international law and what was necessary and proportionate. What do you anticipate in the next few years in terms of actual encounters between the United States and Iran and our ability to handle that?
MR. EISENSTADT: We've been focused on this target as Norm knows a lot better than I, for a great deal of the past 30 or 40 years and developing capabilities to deal with the threat they pose. Since 9/11, the counterterrorism capabilities we've developed to deal with al-Qaeda and ISIS also have been very important. The relationships we've built with other countries in terms of intelligence sharing and cooperation have also helped us vis-à-vis Iran, and it's been a lot more difficult for Iran and its proxies to engage in terrorism in recent years. Efforts by Hezbollah and Iran to retaliate for the killing of Imad Mughniyah have been, with one exception, largely thwarted. Likewise, their efforts to employ proxies in the Gulf have often been disrupted. So we've done very well in that area.
I think we're facing the possibility in the long term that the Gulf will become a very dangerous environment for our Navy. Eventually during times of crisis, we might not want to put carrier strike groups in the Gulf. We might want to keep them outside the Gulf because the capabilities that Iran is developing, and the constrained geography, may make it too dangerous for them to operate safely there. That's just a fact of life. It doesn't mean that in the end, we can't deal with the threat. It'll just be more complicated in the future.
The most important thing we are dealing with now is that we've been able to focus on the Middle East almost uninterruptedly for several decades. That's no longer the case. History has returned. We have the Russians and the Chinese and the North Koreans now vying for the resources of our military, our intelligence resources as well as the attention of our decisionmakers. And as a result, we can no longer focus on this part of the world as exclusively as we did in the past. Our resources are going to be split, to a greater extent than in the past, among several theaters.
This is a fact of life. It's a more challenging international environment; the preparations for the possibility of a conflict with North Korea have had a big impact on what we're willing to do in the Middle East. There are countervailing factors, however. Regional missile defenses have improved dramatically in the last 15 years, but Iran's ability to threaten our allies has outstripped the ability of missile defenses to be effective. These defenses can be saturated or overwhelmed. We've made some improvements; in some areas, the Iranians have not been able to respond. In others, they probably have outstripped what we're trying to accomplish. And it's a much more complicated international environment today than it was in the past.
DR. MATTAIR: Final comments?
MR. ALBRIGHT: Listening to this discussion, which I found fascinating, one of the challenges is, how do you ensure Iran roughly abides by its nuclear limits, even if the nuclear deal fails? If you don't think they're going to break out and build nuclear weapons, and you don't think they want to negotiate in the short term, you still want to keep them to a very limited nuclear program. And it seems like that's doable. One way to help is to reinvigorate the confrontation at the International Atomic Energy Agency, particularly at the Board of Governors meetings, over Iran's past secret nuclear-weapons work, part of which may continue.
That tactic was used very effectively in 2003 and '04 to elevate the issue, to put Iran on the defensive, and to find some time for a diplomatic solution to take place. If Iran is on the defensive, in the sense that it's being accused of violating or potentially violating the NPT, its Safeguards Agreement — certainly one can argue it's violating the JCPOA — you're in a better position than just letting things go quiet and hoping for the day negotiations start.
DR. YOUNG: I think maybe the way we've framed this question and the way that we do in the U.S. policy communities — Iran versus the United States — is not really the strategic landscape right now. In the Middle East, there are seismic shifts happening to other players — Russia and China are importantly involved. Our allies, especially within the Gulf states, are taking responsibility for their own security, increasing their interventions in the neighborhood, and not seeing the United States as pivotal or centered in the region. That was of our choosing, but the region has kind of moved on without us.
So if our view of the region is that, well, this is our choice, and we are confronting Iran, so be it. But we need to take in mind that regional leaders see their neighborhood in much more complex terms. They're paying attention to different kinds of allies and relationship building than they did a decade ago.
MR. EISENSTADT: If you look at past Middle Eastern wars, there's always a kind of action-reaction dynamic in the aftermath that ensures that whatever achievements were won by war have often been undermined within a few years by the social and political forces set loose by that war. We saw that in '91 after the U.S. defeat of Iraq in Kuwait, where we were at a high-water mark in terms of U.S. influence in the region. Within a few years, there was anti-Americanism and sanctions fatigue vis-à-vis Iraq. Then, because of our presence in Saudi Arabia, you had the rise of al-Qaeda. Then in 2003, again, a great American military victory. But within a year or two, we were mired in an insurgency that both Iran and Syria were helping.
Iran is now at its high-water mark. I would argue that we're seeing elements of a kind of reaction forming. But the Middle East is not self-organizing. We have to play a role if we want to roll back Iranian influence. I'm one of those who believe that Iran's enhanced influence in the region will in the long run be profoundly destabilizing. In order to roll that back, we have to play an organizing role, the lead role, just as we did in rolling back the Soviets in Afghanistan — although, of course, there was blowback in that case, and there's going to be blowback here, no matter what we do.
But it seems that we're intent on disengaging from the region. That's the general trajectory not just of this administration, but of the previous one. So I have great concerns. I think there is the potential to make sure this is the high-water mark reached by Iran, and that it will be pushed back over a period of years to reduce its influence and restore a kind of equilibrium in the region. But if we're not willing to play a lead role, I think we can look forward to more instability in the region. As I always say, if you don't visit the Middle East, it will visit you. We're going to have to deal with this, whether we want to or not. I think it's better to do it on our own terms and be more proactive in doing it.
DR. MATTAIR: Norman, you know our Arab partners have concluded that we're not going to be more involved and they have to take matters into their hands. But would they like us to be more involved? What would they like us to be doing?
MR. ROULE: I agree. And building on all of that, I'd like to begin by saying this is a perfect reason why everyone should pay more attention to the Middle East Policy Council. These are all going to be broad issues that are beyond any one country and will involve the economies, energy sectors, political and military programs of the region as a whole. The United States must engage, but our engagement doesn't necessarily have to be with troops on the ground. I'm a strong believer that we need to do everything we can to push Yemen to a political agreement. And we should provide whatever support is needed to protect our Arab allies in achieving this. But that doesn't necessarily mean boots on the ground. It may mean intelligence and logistical support, technological assistance and training
The Middle East — and this is a subject, perhaps, for an entirely separate session — is going through a period of redefinition, Saudi Arabia being the perfect example. This brand-new modernization program will take it someplace very different if it succeeds, and we all hope it does. It's a period of reassertion, of pushing back in different ways and defending interests. Hybrid war is how routine in the Middle East, though Middle East militaries are structured for conventional wars. As I mentioned, the seeds of the Arab Spring are strewn throughout the region: high unemployment and dissatisfied youth are pretty common.
We have new alliances forming: Bahrain, the Emirates, Saudi Arabia and Egypt; Qatar, Turkey and Iran are also in a sort of loose alliance. And the GCC organization, though it still is important, seems less relevant. We have an ongoing engagement on political Islam in the region, of which the Qatari fracture is a large part. Can you have peace with Izz ad-Din Qassam Brigades in Gaza? Can you have peace with Kataeb Hezbollah in Iraq? We have shattered economies. The United States must play a role in restoring stability. Support for nation building is unpopular these days in Washington, but if you want to prevent ISIS 2.0 and to push back on Iranian adventurism, we have to find a way to engage on Yemen, Iraq, Syria and Libya.
Finally, we have the issue of the impending change of leadership throughout the region. Consider the countries with leaders over the age of 78 or in ill health. The list includes Algeria, Tunisia, Oman, Kuwait, Iraq, Iran, Lebanon and Saudi Arabia. We are facing a shift in the region's leadership. It is possible this will bring such dynamic leaders as Mohammad bin Salman. Or we could see bureaucrats who try to sustain the system. But can you say we will not have a Qadhafi or a Saddam Hussein? So as you look at the Iran issue, recognize that regional pressures will also shape its future.