Carrots, Sticks, and Carrot Sticks
A recent Wall Street Journal op-ed begins with these two questions:
What can the Bush administration do to persuade Iran's leaders that their bid to develop nuclear weapons will exact an unacceptable price on their regime? What can it do, that is, short of launching air strikes?
The author, Brett Stephens, then goes on to detail four actions that the adminstration can take to "independently to alter Iran's calculations." Interestingly, three of the four were economic in nature. That is to say, they target Iran's economic rather than military or political assets and infrastructure. Two of the economic actions are clearly "sticks":
Target the regime's financial interests. Since Mr. Ahmadinejad came to power, (the) ayatollah-oligarchs have been running for financial cover: Capital outflows from Iran surpassed the $200 billion mark in the past year alone. Much of that money has made its way to banks in the United Arab Emirates, many of which have correspondent banks in the U.S. "We are preventing financial transactions going to the Palestinian Authority because banks are scared they'll be hit by U.S. terrorism-financing laws," says a source who closely tracks the Iranian economy. "Why can't we do the same thing with Iran?"
Threaten Iran's gasoline supply. Iran is often said to have an oil weapon pointed at George Bush's head. Rob Andrews, a Democratic congressman from New Jersey, notes the reverse is closer to the truth: Because Iran lacks refining capacity, it must import 40% of its gasoline. Of that amount, fully 60% is handled by a single company, Rotterdam-based Vitol, which has strategic storage and blending facilities in the UAE. The regime also spends $3 billion a year to subsidize below-market gas prices. With Illinois Republican Mark Kirk, Mr. Andrews has introduced legislation calling for the quarantine of gasoline imports should Iran continue to flout Security Council resolutions. "If gas prices were to soar in Iran," he says, "the regime would be destabilized, the possibility of internal change would increase and the regime would find a way to back away from the precipice."
There is no way to know in advance whether and to what degree these sanctions would be effective. Such measures can be countered in a variety of ways, not the least of which is to portray sanctions as not hurting the regime but as hurting ordinary Iranians. A few well-placed stories about the human cost of sanctions and one could see that the more impact the sanctions have, the worse it is for those imposing them.
Still, I understand if not fully appreciate Mr. Stephens' palpable frustration with the pace and apparent lack of pay-off from US and EU diplomatic efforts over the past few years. As of last week, it appears that the administration, or at least the State Department, is still trying both carrots and sticks:
At a meeting at the Waldorf-Astoria in New York on May 8, Rice won agreement from Russia, China and the three European countries on a strategy to show the Iranians the fork in the road. If Iran agrees to stop its enrichment effort and returns to negotiations, the coalition will support a light-water reactor, possible joint enrichment with Russia and other economic benefits that would bring Iran into the global economy. The goal is to craft a package of goodies that will be irresistible to the Iranian people. If Iran refuses, it will face a yet-to-be-specified set of "disincentives." The plan is for the Europeans to present the carrots and sticks while Russia and China join in a new Security Council resolution tamely urging Iranian cooperation -- without mentioning sanctions or the use of force.
As readers of the blog well-know, I am not a political economist. I do know that there is some debate about whether and when sanctions work but have no way to predict what the ones proffered by Stephens or hinted by the State Department would eventuate. I don't even care to speculate. What I also know is that regardless of what would happen in this instance, economic sanctions are becoming an ever more important foreign policy tool. That having been said, I am puzzled at what to make of one of three economic "sanctions" which Stephens mentions, the one which does not appear to be either carrot or stick:
Support an independent labor movement. On May Day, 10,000 workers took to Tehran's streets to demand the resignation of Iran's labor minister. And despite last year's $60 billion oil-revenue bonanza, the Iranian government routinely fails to pay its civil servants, leading to chronic, spontaneous work stoppages. Workers' rights got a boost in January when Tehran's bus drivers went on strike to demand the release of their imprisoned and tortured leader Mansour Ossanloo. In a state that bans independent labor unions, the strike was an unprecedented event, calling to mind the 1980 Gdansk dock strike that became Poland's Solidarity movement. That movement succeeded largely thanks to the support of Lane Kirkland's AFL-CIO, which in turn received funding from the National Endowment for Democracy. The same model needs to be energetically applied to Iran today. "The neat thing about the labor movement is that wherever it goes, it's welcomed," says a source familiar with Iranian workers' groups. "It actually makes America look good."
As readers of the blog also know, I haven't had a lot positive to say here about labor unions. That should not, however, be taken to mean that I irrevocably or implacably oppose what they stand for. I think the while the labor union has many enormous contributions to workers rights in the past, today's labor movement has largely lost its way. They have too frequently thrown their lot in with any number of anti-capitalist and anti-American groups, the result being damage to their essentially noble cause. Nothing would more quickly redeem them in my eyes than to take an active role in supporting union and labor and worker's rights as part of a larger effort of supporting democracy. Such rights are an integral institution of free society's and no freedom-loving person could oppose workers' efforts to organize on their own behalf.
More over, supporting the labor movement in Iran would seem to have sevreal benefits. If done correctly, it would hurt the regime's oligarchs while minimizing damage to, if not actually strengthening the hand of, working people. And for those intent on politicizing such matters, support for labor rights would not have to be seen as support for the Bush administration's policies toward Iran or the wider region. There is very little reason that I can see why the Democratic party, with its large labor union constituency, couldn't get ahead of the administration on this issue and gain much need credibility on how democracy abroad should be cultivated. Labor rights would not be the only issue, or even the core, but it could play a vital role in defining a third way, one neither wholly carrot nor stick, but carrot stick.
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