U.S.-Iran Relations Event Transcript

U.S.-Iran Relations Event


  • Damon Wilson, Vice President and Director, International Security Program, Atlantic Council
  • C. Richard Nelson, Project Director, Reversing Relations with Adversaries Program, Atlantic Council
  • Kenneth Katzman, Specialist in Middle East Affairs, Congressional Research Service
  • Flynt Leverett, Senior Research Fellow, New America Foundation
  • George Perkovich, Vice President for Studies and Director, Nuclear Policy Program, Carnegie Endowment for International Peace
  • Judith Yaphe, Professor at the Institute for National Strategic Studies, National Defense University

March 9, 2010

DAMON WILSON:  Good afternoon.  Why don’t we go ahead and get started.  I think we’ll have Flynt joining us in just a few minutes.  But my name is Damon Wilson.  Welcome to the Atlantic Council.  I’m the vice president and director of the International Security Program here at the council.  Today we’re pleased to host this discussion on U.S.-Iran relations, preparing for the best case and the launch of our latest publication and analytic compendium of U.S. policies, laws and regulations.

We’re pleased to host the project’s author, Ken Katzman of the Congressional Research Service, the project director, Dick Nelson of the Atlantic Council and our distinguished panelists who served on the steering committee, George Perkovich, Judith Taphe, Flynt Leverett.  I’ll turn to Dick in just a few minutes to introduce our guests properly in a moment.

Today’s discussion is co-hosted by the council’s program on international security and our South Asia center, led by Shuja Nawaz, who’s with us today.  The project’s made possible by a grant from the U.S. Institute for Peace.  But today’s event is also part of a broader – two broader efforts here at the Atlantic Council.

First, for many years, the council’s managed an ongoing program on reversing relations with adversaries.  As part of this effort, we’ve produced publications on what practical steps would be required by the executive and legislative branches to undo restrictions and normalize relations with countries such as North Korea, Cuba and Libya.

Although controversial at the time of publication, the compendium on Libya served as a major resource document for policymakers during the period of normalizing U.S. ties with Tripoli.  The Atlantic Council also has a long history of work on Iran in particular.  Over the years, the council has published several Iran-related publications, including “Thinking Beyond the Stalemate of U.S.-Iranian Relations,” “Do Economic Sanctions Work?” and “Managing Proliferation Issues with Iran.”

Just last week, the South Asia center hosted a spirited date on engagement or regime change featuring Flynt Leverett and Michael Ledeen, moderated by David Ignatius.  The council is also launching a new project on Iran, which will be chaired by Stu Eizenstat and Chuck Hagel and led by Mark Brezinski on when change comes to Iran.

The objective of this project is to explore contingencies in the event that relations between Iran and the United States improve and assist U.S. policymakers in thinking through how the U.S. government and the private sector can maximize the potential of that improved relationship.

But today we will begin to focus on the implications of the best-case scenario in Iran.  The premise of this work is that adversarial relations are subject to sudden change.  And in cases where this has occurred, adjusting to that change has been more complicated than anticipated. 

After the U.S. defeat of the Taliban, it took a year to lift all sanctions against Afghanistan.  In the case of Libya, it took three years from Libya’s decision to end its WMD program and to compensate the victims of flight Pan Am 103.  U.S. sanctions on Iraq were mostly lifted within about one year after the fall of Saddam Hussein’s regime. 

So although the timing and conditions of a tipping point toward better relations with Iran cannot be foreseen – and although worsening of those relations is also possible, if not likely, it’s nevertheless imperative that policymakers begin to think about how we should proceed in a more positive direction.

So the council’s current publication is a compendium of the laws and regulations that govern the current U.S. relationship with Iran.  If conditions change, these are the same laws and regulations that policymakers must quickly examine and change in order to move forward with a more fruitful relationship.

With us today to discuss the compendium is our principle author, Dr. Kenneth Katzman.  I want to thank you for working on this crucial reference document.  And to moderate this event, we have with us Dick Nelson, the project’s director.  Dick served as the director of the council’s Program on International Security for many years and has a deep background of strategic issues as well as within the U.S. intelligence community.

Dick has been involved in our Reversing Relations with Adversaries program for quite a while, starting with our Cuba project in 1994.  So Dick, over to you to kick off the discussion.  Thank you.

DICK NELSON:  And I’d also like to thank the U.S. Institute of Peace for providing a grant to help make this publication possible.  As Damon said, we titled the event today “Preparing for the Best Case” and it’s not because we necessarily think relations are about to change or change for the better in that fact.

But we do think it’s useful to think about the process of change, if and when the circumstances change.  I think without question, this is the most authoritative reference on U.S.-Iranian relations.  It has the full text of all the relevant policies, laws and regulations.  So if you’re at all interested in at least how the U.S. side of the relationship is – is governed and managed – this is the best reference.

And nobody understands the structure of U.S.-Iranian relations better than Ken Katzman.  He’s been at the Congressional Research Service for a number of years.  He, before that, was a Persian Gulf analyst at the CIA.  His dissertation and book – resulting book – was on Iran’s Revolutionary Guard and he’s published a number of articles, both on Iran and on the Middle East.

And he’s also served on the House international relations committee, so he has a first-hand experience on ILSA and other famous pieces of legislation that has affected this relationship over the years.  So like I said, I don’t think anybody understands the structure of U.S.-Iranian relations from the U.S. perspective better than Ken.

So I’d like to have Ken give us an introduction, an overview of the compendium and then I’ll briefly call on the other steering group members to comment on the context of current relations with Iran and then open it up to questions.  We’ll adjourn promptly by 4:30.  So Ken?

KENNETH KATZMAN:  Thank you very much, Dick and I thank the council and USIP for the support for the project.  Just a standard disclaimer which CRS insists on:  I’m not speaking for CRS or the Congress today or anything.  I’ll be glad to answer questions about congressional initiatives without mentioning any specific member offices.

Before I got here, what’s it, about 3:00 today?  I’ve already had about 15 proposals bounced off me for more sanctions on Iran and it’s only 3:00.  So – (laughter) – you can tell how things are going in Congress, okay?

I’m very pleased with the compendium.  It’s about the fourth or fifth one I’ve done.  I didn’t do the one on Cuba, although since I’m retiring in Miami, I may want to rethink that.  Just to make a few comments on you know, what the compendium does and we’re, you know, obviously, there’ll be future updates, hopefully.  We have important pending legislation in Congress, as I mentioned the centerpiece would sanction. 

There’s a lot of time spent in the compendium on what’s called the Iran Sanctions Act – refer to it – originally, it was called ILSA, the Iran-Libya – Iran and Libya Sanctions Act.  Libya dropped off.  Libya was removed from the terrorism list and there was formal legislation to remove it.  So it only applies to Iran.  It is the Iran Sanctions Act.

MR. NELSON:  They graduated right?

MR. KATZMAN:  They graduated.  And the current legislative proposals that you’re reading about – so Mr. Berman’s bill, Dodd-Shelby bill – I said I wasn’t going to mention – well, these are public documents, but things that have not been introduced yet, I cannot identify who’s working on.

These bills would expend the authority of the Iran Sanctions Act and as you’ll see in the compendium, even today, there’s tremendous confusion about the Iran Sanctions Act versus the U.S. ban on trade with Iran, which was imposed by executive order in May of 1995.  That is a big feature of the compendium.  It’s a centerpiece. 

It is worked by – through trade regulations that are amended every so often by the Office of Foreign Assets Control of the Treasury Department, which administers trade regulations when there is a ban on trade, as there is with Iran.  There have been a few modifications of that ban which are in the compendium. 

At the time, Mohammad Khatami was president of Iran.  President Clinton wanted to reach out to Khatami, try to engage, try to enhance the prospects of moderate forces in Iran so there were a few modifications. 

One was to allow for the exportation of food and medical products on a cash basis, no financing.  And another second modification to allow for luxury imports, carpets, caviar, dried fruits, nuts.  Those loopholes that were allowed remain in force.  Some of the pending legislation in Congress now would seek to reverse those modifications and restore a full trade ban.

The Iran Sanctions Act is a different animal because U.S. firms are already banned from investing in Iran under the trade and investment ban.  So the Iran Sanctions Act really was not meant to apply to U.S. firms because they were already banned under this executive order that I mentioned.

The Iran Sanctions Act was intended to sanction foreign companies that are investing in Iran’s energy sector.  And there have been, you know, billions of dollars – I have in one of my CRS reports, a chart on, you know, investments in Iran’s energy sector and there have been many.  Some were just memoranda of understanding that have not been implemented.  Others have proceeded to full production of oil and gas fields.

So the Iran Sanctions Act was intended to impose a series of penalties on these foreign companies that make the investments in Iran’s energy sector.  There was only one project ever determined to have violated the Iran Sanctions Act.  This was the Total, Petronas and Gazprom deal in 1998.  But that was – penalties were waived.

So one project was determined to have violated but no penalties were imposed.  Since then, no projects have been even determined to have violated it.  And some of these projects are hanging since 1999, these investments were made and still, more than 10 years later, there has been no determination that they violated the Iran Sanctions Act.

So this has stirred up, you know, congressional sentiment.  Let me be diplomatic.  You know, there is some proposals – some of them came across my desk today, you know – ways to demand that the administration determine a project to be sanctionable or not.  There were previous legislation – I have in the compendium the Iran Freedom Support Act of the 109th Congress, which the first version attempted to set a firm deadline that the administration must determine sanctionability within 90 days.

The administration didn’t like that.  It wasn’t flexible enough.  It was modified to a sense of Congress that the administration should determine sanctionability within 180 days.  So not to get too deep into the weeds, but basically, the tone I think you’ll find in the compendium, particularly the last section on winding sanctions – and that’s really what we’re talking about today – were there to be some rapprochement with Iran, some change in relationship.

The bottom line is the administration, despite, you know, we have, here a book’s worth of sanctions laws.  The administration still has a lot of flexibility to unwind these sanctions very quickly, if indeed there was a dramatic change.  A few examples we’ll mention just in the intro, you know, Afghanistan.

Once the Taliban were out, sanctions were unraveled fairly rapidly.  Saddam was overthrown, sanctions on Iraq went away very rapidly.  Libya – Gaddafi decided to give up WMD programs, sanctions did unwind fairly quickly, although a little lower.  See, the compendium has terrorism – sanctions that are imposed by consequence of Iran’s designation as a terrorism state sponsor.

And as you’ll read in the compendium, if Iran were to be removed from the terrorism list, a lot of sanctions would instantly go away because a lot of them are not specific to Iran, they are just sanctions that are imposed on any country that is on the terrorism list.  Therefore, if Iran is taken off, a lot of the sanctions instantly go away.

The ban on foreign assistance goes away, the presumption of denial for exports of dual-use items goes away, the requirement that the United States vote against IMF and World Bank loans goes away.  All these requirements instantly dissipate.  So really, taking a country off the list is a key to unwinding the sanctions.

Now, the law provides – and you’ll see this in the compendium, a president can take a country off the terrorism list almost immediately if there is a change of regime.  If there’s a change of regime, it can be almost instant.  If there’s not a change of regime, there is a 45-day waiting period. 

The president has to certify to the Congress, the regime has not changed.  However, they’ve changed their stripes, da, da, da.  They’ve turned over a new leaf, whatever, whatever.  And I’m taking them off the terrorism list.  That happened with Libya.  Gaddafi is still in power, but Libya was taken off because it had given up the WMD and then there were some other things involving the Pan Am issue.

So it’s harder to take it off if the regime is still in power.  So with Iran, unless you know, the Green movement somehow triumphs, which is certainly possible, although one of the speakers may disagree at some point, but then Iran could conceivably be removed from the terrorism list fairly quickly, if there is a change of regime. 

If we are engaged with the current regime and there were a wholesale change in relations, it would be slower.  Now, in any event, Congress has the ability to pass a joint resolution saying Mr. President, we disagree.  We do not think this country should be removed from the terrorism list.  They can pass a joint resolution.

However, the president can veto that joint resolution and therefore, Congress would have to override the veto.  So in practice – and administration has quite a bit of latitude to take countries off the terrorism list.  The trade ban, as I’ve said, is by executive order.  Any president, theoretically, can decide tomorrow to issue new regulations.

I see no more reason for a ban on trade with country X, it’s not justified anymore and OFAC can issue new regulations unwinding the trade ban.  The Iran Sanctions Act, which I know the diplomatic community is very, you know, obviously animated about and our foreign partners – that is a little bit of a different issue because Congress has really, as I’ve said, focused on the Iran Sanctions Act.

Not only does a country have to be removed from the terrorism – not only does Iran have to be removed from the terrorism list, not only does it have to be certified to not have WMD programs, but to make the Iran Sanctions Act non-applicable, the president has to certify that Iran no longer poses a threat to the United States or its allies.

So it’s a very high threshold to make the Iran Sanctions Act inapplicable.  Just to wind up, as I said, the current legislation pending in Congress now would expand the authorities of the Iran Sanctions Act.  As I said, currently, Iran Sanctions Act sanctions foreign companies that invest in Iran’s energy sector.

It does not sanction trading with Iran.  It does not sanction sales to Iran.  It does not sanction financing to Iran.  It only sanctions investments in Iran’s energy sector, not any other sector.  However, the definition of investment is not just to take an equity stake.  It’s also if a company is responsible for managing a construction project in the energy sector.  That is considered an investment under the Iran Sanctions Act.

That’s why there’s been a lot of you know, newspaper articles about different companies.  Some companies say, we didn’t invest anything.  We didn’t put any money into this.  Well, they’re managing a construction project in the energy sector.  That meets the threshold of investment.  So they are vulnerable to being sanctioned.

So the current legislation would expand the authority to make sanctionable, not only investing in Iran’s energy sector, but selling gasoline to Iran or selling equipment that Iran can use to expand its own refining capacity.  And the pending legislation would set up three new sanctions on such companies that are determined to do that.

The Senate bill is more expansive.  There has to be – to make this law, both chambers have to pass the same bill.  You can’t have two different bills, so they have to reconcile the differences.  And the Senate bill is much more expansive.  As I said, it would re-impose these modifications, so the trade ban – it recommends sanctions on Iran’s central bank and it would apply the trade ban to foreign subsidiaries of U.S. companies.

Right now, the trade ban does not cover foreign subsidiaries of U.S. companies because they are legally considered entities of the companies where they’re incorporated.  So the Senate legislation would say that these foreign subsidiaries are held to the same standard as the parent company.  So it would impose a trade ban, essentially, on foreign subsidiaries of U.S. companies.

So there’s big differences between the two bills.  The issue is, you know, Congress – as I’ve said – as I’ve said, it’s only 3:00 and I’ve had 15 proposals on more sanctions on Iran today.  The Congress is inclined, you know, let me be frank, the Congress is inclined to find every which way to squeeze – Iran is not popular in the U.S. Congress.  I don’t think I’m saying anything that – (chuckles) – that anybody doesn’t know already.

They are looking for every which way to squeeze and you know, I would not be surprised if the more expansive Senate bill, you know, elements of that end up in a final – in a final package.  But you know, I can’t really be any clearer on how the Congress feels about Iran and Ahmadinejad and the supreme leader.

There are other pending – there is other pending legislation that I didn’t get too deep into.  I have some democracy and human rights stuff in here, but a lot of this is pending, you know.  Finding ways to sanction companies that are selling Internet-monitoring gear to Iran, finding ways to have a travel ban on any Iranian official who is committing human rights abuses.  You know, further funding for U.S. broadcasting to Iran to get the U.S. democracy message out.

There is even one bill introduced by Sen. Brownback and Sen. Cornyn basically saying if this law is passed, it shall be the policy of the United States government to overthrow the regime in Iran.  There is very, you know, a lot of congressional ferment right now and luckily, after this, I’m going to go home and not worry about it.  But tomorrow morning, I’ll have to worry about it again.  So I think I’ll end there.  Thank you.

MR. NELSON:  And I encourage you don’t.  Now, I’ll turn to our steering group members.  First, Dr. Judith Yaphe.  She’s a distinguished research fellow at the Institute of National Security Studies at National Defense University.  She has over 20 years experience as a senior analyst at CIA on the Middle East and Persian Gulf.  And as most of you know, she’s widely published on Iran and international security affairs.  Judith?

JUDITH YAPHE:  I just want to – can you hear me?  I’m loud anyway.  I just want to make a few points picking up on one or two things that Ken said.  But first of all, we do owe him a vote of thanks.  He did a tremendous job and he fought me really well because as he well knows, I sometimes get carried away and – little too close to the policy.

But the remarks I want to make now are, in effect, I think an extension and in support of the great job that he did.  And whether you believe there’s going to be change or not, I think you have to look at what sanctions mean and what they – why they are so important, even if they are not always powerful.

Many who like the idea of sanctions think that if we’re going to deprive Iran of American-made goods, technology, of the best the West has to offer, that’s going to be sufficient cause for regimes to fall.  Well, it doesn’t happen that way.  I think in our eyes, or if you’re looking at it through Iran’s eyes, it certainly will – I think sanctions.

And you know, we talk about sanctions.  It’s carrots and sticks.  And we think that’s a nice way to put it.  But imagine if you are Iran or anyone else being described as needing carrots and sticks to modify your behavior, that’s the way you treat a donkey and it is insulting.  But that’s, I guess, the intention.

The point I want to make is Iran will still see us – they think about sanctions – as a 19th-century imperialist power determined on modification of a regime’s behavior and if it won’t modify it, change it.  And sanctions, I think, in this sense here, reflect a mentality which says, those mad mullahs.  They must be crazy, they don’t agree with us.

Not to quote any official in the U.S. government, but Iran has now been taken over by the military, meaning the IRGC, the Islamic Revolutionary Guards.  That Ahmadinejad, he sure is crazy and that supreme leader?  Out of touch.  Well, there may be elements of truth in all of that, but again, I think the point is people think sanctions are an easy and cheap way to punish – to get a government to change its point of view, to do things differently or to see things the way we do.

And it just doesn’t happen that way.  Is Iran ready for a change?  They seem quite worried about what advanced sanctions might mean.  A higher level of sanctions, as the Europeans like to say, but sometimes it sounds like – I don’t know if you remember when you were a child, the story of the – was it Br’er Rabbit?  You know, don’t throw me into the tar patch – the tar baby?

And he doesn’t want it so bad because that’s where he really wants to go.  So if he says he doesn’t want to, I’m sure going to do that.  I’m sure going to put sanctions on you.  One point I want to – sanctions don’t just end that easily.  And I would point out that Iraq is still under sanctions, maybe not American sanctions, most sanctions have been removed.

But Chapter 7 has not been removed from sanctions and we don’t seem to be able to do a whole lot to get them removed.  That is sort of the ultimate in a way because it’s the barrier that keeps Iraq from, what?  Rebuilding its military?  Ken will always correct me on this – you know, for purposes of full disclosure, Dick, we once worked together.  So I just have to tell you – (laughter) – you are surrounded.

But I think the point I want to make is that sanctions are loved by people who think that they can do what we want.  They can really change the regime.  They can modify it.  Just by wishing so doesn’t make it so.  That doesn’t make policy.  We haven’t changed Cuba in how many years?  Is it 50 years of sanctions on Cuba or less?

Iraq was under sanctions for 13 years and still faces some sanctions which have to deal – unless you pay up everything you owe to Kuwait and make full amends, they’re still on.  Iraq, too, will be shopping for weapons.  They already are.  Are there still sanctions on them acquiring whatever they want to not?

What will sanctions mean for Iran?  Again, in the realm of be careful what you ask for, the impact on Iraq was to hit the population at large – the middle class, that which we hoped will bring change and moderation and growth and all those good things.  But in Iraq, it didn’t hit the poor that much and it certainly hurt Saddam because he benefited from it.

So be careful what you – as I say – what you ask for.  I would have one other question to think about and that is, what do you need to remove sanctions?  Now, Ken lays out a lot of the law and of course, he’s right.  But the question in my mind is, just one step further, would regime change be sufficient to get sanctions removed?

Simply because Iran has a new government, whatever it is, would that be enough to get sanctions taken off?  And I just have a feeling – some people are very happy because we tend to personalize that which we fear or hate or want to change.  So the personification of Iranian evil is Ahmadinejad and the weapon is sanctions.

But would regime change be sufficient?  Because what this gets to is the issue of nuclear power and the roll – well, if you believe it’s rollback or whatever – George will talk about that.  But if you look at the opposition such as it is to Ahmadinejad and his nuclear policy, it’s not over nuclear policy.  So I think one has to be careful.

A regime change is one thing, but that may not mean a change in policies that we could live with.  Now, in conclusion, I love cartoons.  And I pulled this one out of a drawer today and it’s a couple years old, but it has three hard-line clerics surrounding each other.  They’re reading over the Iranian election results.

So this is a couple years ago.  And there’s someone who looks like, well, you know, it could be the supreme leader.  It could be an old Ahmadinejad, but the point is he’s saying, agreed, we now call ourselves the reformers with results.  (Laughter.)  I’ll leave it there.  Thank you.

MR. NELSON:  Now, we’ll call on Dr. George Perkovich.  He’s vice president for studies and director of the Nuclear Policy Project at the Carnegie Endowment for International Peace.  As most of you know, he’s an expert on nuclear weapons and nonproliferation and has done a lot of work on Iran.  Prior to joining Carnegie and the nonprofit world, he was a foreign policy advisor to Sen. Joe Biden.

GEORGE PERKOVICH:  Thanks, Dick.  And I want to begin by congratulating the council and Kim for this volume because it really is useful.  It’s not exciting reading; it can be a sedative.  But it is very useful as a reference and as a resource guide to have it all in one place.

And picking up on what Ken and Judith said and how Dick started us off, I mean, it seems to me that the best case with Iran is that the worst case doesn’t happen.  And that’s about as good as we can hope.  And I think focusing then on sanctions makes some sense because that is the policy that I think right now is being pursued because we don’t know what else to do.

The other alternatives actually are a lot worse and you can’t do nothing.  Therefore, let’s do sanctions.  And so just to keep moving – and so that the sanctions are incremental; they’re not enough to really bite.  Everybody knows that.  But you’ve got to do something.  And the military and anybody who looks at it carefully, you know, doesn’t want to do military strikes.

The favored, desirable option would be somehow regime change in Iran.  I’ll leave it to other people who are more expert.  My sense is from the people I talk to that that’s extremely likely for a variety of reasons.  But I would also remind that we don’t – in history, as far as I know – have an example of what it is we would want in terms of regime change.

So the people – a lot of people advocating it now kind of cite the Soviet Union, the fall of the Soviet Union.  Well, yeah, the Soviet regime is gone.  But the KGB is still running the country.  They got renamed but it’s the same guys making the same money controlling the same things.  Different policies in some regard; much more humane, but not necessarily a friend of the United States – certainly not democratic in a meaningful way.  We can go through the list of things that are still problematic.

And so in the case of Iran, when people are talking about regime change, what it seems is missing in the discussion is the theory of how the Revolutionary Guard actually would get displaced in Iran and put out of business, lose power, displace so that you would have a genuine regime change in Iran.  And so I think that there’s a lot of wishful thinking on that, to which I’m sympathetic.  But not clear to me how far that goes.

So that leaves you back with sanctions.  And there I think a couple of points are important.  When I and when others advocate stronger sanctions, which I do, people say, but that’s not going to change their nuclear policy.  It’s not going to change their determination to continue to enrich uranium, not to comply with the IAEA resolutions, all of these things, which legally and otherwise they’re required to do.

And my response to that is actually that’s right.  Ideally, sanctions would change behavior.  But in the case of Iran, they’re not.  But there’s another reason to sanction states, which is to punish them.  And it may not change your behavior; but there is a cost for this action.  And in part, we want to communicate to other states, potential other actors who may be looking at what you’re doing as a model – maybe contemplating acquiring fuel cycle capabilities, hedging their bets, doing other things and looking at Iran and saying, well, you can get away with it.  The price isn’t very high.  The risk is relatively low, so let’s do it.  And for that reason, you could do sanctions to punish, even though you don’t have an expectation that there is going to be regime change.  And I think we need to deconflate those arguments.

Having said that, in general, I would think if Congress were an empirical organization that believed in empiricism, which it’s decidedly not, it would look back at history since 1979 and say, gee, this actually really isn’t very effective.  And you wouldn’t keep doing it.  But as a friend of mine once said, there’s no Iran in our Iran policy.  It isn’t about changing Iran.  It’s about how Congress makes itself feel good or shows resolve without responsibility or a whole bunch of things one could say.

But I think the idea that with all of the challenges that we face domestically and in the world – Ken’s getting 15 proposals a day on sanctioning Iran – tells you it’s not a very serious enterprise in the sense of people really thinking through what  it is they’re doing and what the consequences would be.  It’s a cheap shot.  It’s free.  And so it’s done.

And I think there are people working very seriously on this challenge in the executive branch as there were in the Bush administration.  And this whole kind of push for sanctions and congressional determination of the what the executive does predated Obama.  It was being done in the Bush administration too.  And so, what I would say in the Bush administration, I would say now, which is look, the executive branch isn’t full of Iran lovers.  They’ve got a pretty tough mentality.  Give them some discretion to figure out what is smart and what is not.

And as Ken has documented here, if you do it legislatively, you really take away flexibility that makes it much harder to accomplish your objectives in many ways.  So you know, in an ideal world, I would think Congress would cease and desist.  But that’s not the world we live in.

In which case – last point I would say is that we really need to think long term, because I don’t think there’s a short-term solution to any problem in Iran.  And so, the long term, it seems to me, is mostly to contain the damage of what Iran might be doing.  That’s not just contain Iran, but also to be thinking about steps that we can take or that internationally can be taken to make it harder for other states to follow in Iran’s footsteps.  And those can be both kind of restrictive things on nonproliferation but reassurance measures in terms of security.  There are other steps, I think, but all with the mindset of containing the potential damage if you can’t change Iran’s behavior.

Let me stop there.

MR. NELSON:  Thank you, George.  Your remarks remind me in 1999 we did a related study on Iran.  And the co-chairs were Brent Scowcroft, Jim Schlesinger and Lee Hamilton.  And so we had a draft and talking about this kind of stuff.  And Schlesinger’s comment was, while emotionally satisfying, this isn’t working.  And I think that sort of captures it.  You have to do something.

Now I’ll turn to Flynt.  Dr. Flynt Leverett is a senior research fellow at the New America Foundation.  He was senior director for Middle East affairs at the National Security Council, counterterrorism expert at the State Department’s policy planning staff, and a CIA analyst.  Looks like we have several CIA analysts here.

MR. PERKOVICH:  For the record, I was – (inaudible, laughter).

MR. NELSON:  Flynt?

FLYNT LEVERETT:  Yeah, we’ll believe that, George.  (Laughter.)  Thank you, Dick.  Thanks to all of you for coming.  And I’m sorry I’m joining you a little bit late.

When I was asked to serve on the advisory panel for this effort, you know, this is the kind of thing where if you’re an academic or you’re in the think tank world, this kind of activity falls under the rubric of public service.  You know, you’re essentially acting to help further a project that’s going to contribute to better public debate or public knowledge.  And so that’s called public service.  And I certainly think that the Atlantic Council and Ken Katzman have done a real service by putting this volume together.

But I have to say, in all honesty, I had a real self-interested motive in helping with this project, namely my personal copy of the previous edition of this effort – which Ken also put together in two volumes 10 years ago – my personal copy of that is so thoroughly worn out by the nearly constant reference that I’ve made to it over the last 10 years that I thought it was really time that I get a new copy of one of these.  But that meant we were going to have to do a new edition.

I at least have always thought this was an incredibly valuable reference and research tool that Ken had put together.  And I’m really pleased that there’s now this new, updated edition and that I could contribute in a small way to helping that project along.

I think in terms of my own perspective on sanctions and U.S. policy toward Iran, I mean, I think many of the comments that Judy and George have made about the relative lack of efficacy of our sanctions policy over many years, I would certainly agree with that.  There are observations about how in many respects this is largely motivated by domestic politics here and feeling good that we’re doing something about Iran.  I would certainly agree with all of those statements.

But, I’d like to step back for a minute and hopefully look at an even bigger picture and say I think that our policy toward Iran and the sanctions component of it is a big piece of this.  I think that our sanctions policy, our larger Iran policy, even under the Obama administration, is increasingly detached from reality.  And the main reality that it is detached from is that the United States is in relative terms a declining power.

The United States still possesses utterly unique capabilities to project large amounts of military power, conventional military power, into the Persian Gulf or other critical arenas.  But in virtually every other political or economic sphere, our influence is, in relative terms, declining.  And even at this point, if we want to project large amounts of conventional military power into the Persian Gulf or anywhere else, we’re going to have to do it on borrowed money.  We won’t be paying for it ourselves.  We will be relying on Chinese, Saudis, and other major creditors of the United States to loan us the money to do it.

Our Iran policy, especially the sanctions part of that policy, is designed for some other planet than the one I just described, a planet in which the United States is this uniquely hegemonic power and can, through largely unilateral actions and initiatives, shape the world and shape in a determinative way the strategic choices that other countries make.  That world may indeed have existed for a while in the 1990s.  I would contend it doesn’t exist today.  Our Iran policy is increasingly at odds with the reality of the world we live in today.  And if anything, it’s going to get less effective for that reason not more effective.

Just to illustrate that point, I’d highlight one part of our sanctions policy – and there is a very good section on this in Ken’s volume – dealing with secondary sanctions, namely those sanctions, which the United States threatens to impose on third country entities or individuals that are investing in various types of projects in Iran, particularly upstream energy projects or pipeline projects.  We have legislated secondary sanctions of this sort since 1996.  Congress is currently trying to tighten the application and enforcement of such sanctions.

We, of course, bar U.S. energy companies from doing business in Iran by executive orders.  But by law, we also threaten to impose sanctions on non-U.S. energy companies that would do business in Iran.  I’ll tell you a couple of dirty little secrets about secondary sanctions.

Dirty little secret number one is it’s a house of cards.  It’s a bluff.  Since 1996, when secondary sanctions were first authorized in U.S. law, the United States – not the Clinton administration, not the George W. Bush administration and not this current Obama administration – has ever imposed secondary sanctions on a non-U.S. company investing in Iranian energy projects, not once.  In 1998, the Clinton administration determined that a joint venture investment by Total, Gazprom and Petronas in Iran constituted a sanctionable investment but waived the actual imposition of sanctions.

No administration has wanted to go down this road because the foreign policy consequences of doing so would be quite bad for the United States.  And on top of that, the European Union, including Her Majesty’s government, have made clear that if we ever tried to do that to an EU company, they would haul us into court in Geneva saying that this was a violation of the United States obligations under the WTO.  And while I’m not a trade lawyer, my sense is that most professional trade lawyers who have looked at this think the United States would lose that case in Geneva, that in fact secondary sanctions are a violation of America’s obligations under the WTO.

No administration has wanted to go through that.  And after the Clinton administration had to go through the domestic political blowback of waiving the imposition of such sanctions in 1998, the preferred way of dealing with this has simply been never to conclude an investigation into the energy investments that Total, Statoil, ENI, and a whole bunch of other non-U.S. companies have made in the Iranian upstream over the years.  Just don’t ever conclude an investigation so you don’t ever have to make a determination, that in order to avoid all the foreign policy consequences of imposing sanctions, you’ll just waive it.  But then, you catch hell from Congress.  Okay, the secondary sanctions policy is a joke.

But it is worse than that in that at this point it is really, really seriously detached from reality.  For maybe the first decade we did this sort of stuff, we could kid ourselves and say, well, we keep U.S. companies out of Iran.  And if we can at least limit the enthusiasm for big European companies to go into Iran, maybe we’re accomplishing something in terms of limiting Iran’s capacity to develop its own hydrocarbon reserves.

But guess what?  The United States and the Europeans aren’t the only players on the block anymore.  The biggest new contracts for investments in the Iranian upstream, the development of Iranian hydrocarbons right now, are coming from the Chinese and from other non-Western companies.  And if you want to talk about a policy that is detached from reality, what do you think the odds are that the United States is going to impose secondary sanctions on a Chinese energy company for doing business in Iran right now?

It is a joke.  But it is a joke we are going to continue to play for some time to come.  We will play this joke until we realize that we are no longer a uniquely hegemonic power and that if we are going to accomplish things that we want to accomplish in the world, whether with regard to nonproliferation or conflict management in critical regions like the Middle East, we are going to have to do it by dealing with key countries as they exist, not as we would wish them to be.  And we’re going to have to deal with them in a way that actually accommodates some of their interests.

I don’t think we are there yet.  I’m afraid we’re going to have to have some more rather negative encounters with reality before we really start to think like that about our foreign policy.  I do hope that this very, very well executed, thoroughly assembled and compiled compendium will at least make it easier for people to reflect on what they need to reflect on when they get ready for a serious discussion of how America deals with the Islamic Republic of Iran.

And that, I think, does constitute a real public service.  And again, I will commend both Ken Katzman and the Atlantic Council for putting this out.  Thank you very much.

MR. NELSON:  Thank you.  Before we turn to questions, I’d like to excuse Dr. Yaphe.  She has a previous engagement she has to run to.  And we’ll open it up to questions.  I’d like to start off by asking Ken a question about claims.

It seems in all of the other cases we’ve studied about reversing these adversarial relationships, one of the common themes or claims on both sides – and certainly with regard to the U.S. and Iran, it goes clear back to the hostage crisis and the Algiers tribunal.  It’s a longstanding issue.  There’s a process to some extent dealing with claims.  And then we have the complicated factor of the victims of terrorism legislation where individuals can sue the government of Iran, which of course it does not defend itself in U.S. courts.  But it results in further claims.  And so you have a pretty complicated picture here.

And of course, we still have some assets that are frozen.  I guess Iran under the Shah purchased some U.S. military equipment, which was never delivered.  They paid for it but the funds haven’t been returned.  So there’s some assets there.  But there are a lot of claims.  So it’s a fairly complicated, controversial picture.  How is that managed?  And how might it be handled?

MR. KATZMAN:  Well, you’re quite right.  It is very complicated.  And when he was president, Rafsanjani used to raise repeatedly the issue of frozen assets as an obstacle to better relations.  And to some extent, it’s still raised by the Iranians.

What happened was Iran’s former embassy, which is up here on Massachusetts Avenue – it’s worth about $25 million – that’s frozen.  And then, there’s about $400 million in a Defense Department escrow account.  What happened was the shah purchased military equipment and there was Iranian military equipment here being fixed by DOD, being repaired; $400 million was sitting in DOD accounts to pay for the equipment and the repairs.

The revolution happened.  An arms ban, a trade ban was put on Iran by President Carter.  The arms could not be shipped therefore back to the new Khomeini regime.  And these arms were sold to other buyers and the money was put into this DOD escrow account, which got to about $400 million.

So the legislation allowed successful claimants to be paid and to draw against that escrow account.  So the escrow account is pretty much gone.  The DOD account is pretty much empty.  So the money cannot be returned to Iran as part of the reconciliation because the money has been given out to the terrorism victims already.

So I believe the law – I’ll have to look at it a little more.  This is not sort of a mainstream thing that comes up every day.  But I think the law says, if there is a deal with Iran – there is an improvement; a rapprochement with Iran; relations are restored and there’s an agreement that yes we do owe Iran the $400 million back – then Congress would have to just appropriate money to replenish the account and the money would go back to Iran.  So essentially, the U.S. Treasury would have been paying the claimants of these terrorism judgments.  That’s the net effect.

MR. NELSON:  Questions?  Harlan?

Q:  I’m Harlan Ullman with the Atlantic Council.  Thanks for commenting –

MR. NELSON:  There’s a microphone here.

Q:  Two questions.  First, could you share with us whatever evidence you may have that suggests that the Iranian Revolutionary Guard are indeed seizing greater influence or power or perhaps they are not?  And second, for Flynt, I want to test your proposition about declining U.S. influence.  Is that because of the overall diffusion of power in your judgment?  Is it because of poor statecraft on our part, a broken government, ideology or some other factors?  How do you account for that conclusion?

MR. KATZMAN:  I’ll start off on rev. guards.  I guess I did write a book on the rev. guard.  I’m in a little bit disagreement with the analysis that it’s becoming, you know, the rev. guard has taken over or there’s been some sort of quasi-coup d’état and the guard is, you know – I don’t go that far.  But you know, the guard obviously at the height of the protest has issued statements saying this will not be tolerated.

Khomeini, when he was alive, had a fairly strict policy that the military, including the guard, shall not intervene in politics.  And he was pretty strict about that.  Now, since he’s died – and he’s dead well over a decade now; two decades, ’89, so two decades he’s dead already – that’s been eroded.  And the guard has increasingly sort of stepped up in terms of statements, threats in political affairs.  And I would say certainly the Supreme Leader obviously seeing a challenge has relied more heavily on the Pasdaran, the guard, to keep the regime in power.

But I, as an expert, would not go as far.  I think Gen. Petraeus called it a “thugocracy” yesterday.  I mean, the rhetoric coming out of the administration gets increasingly shrill.  You know, I don’t think I would go that far.  But it has intervened politically to a greater degree than Khomeini allowed when he was alive.

MR. NELSON:  Flynt?

MR. LEVERETT:  Yeah, I would just add to that, the idea that the Revolutionary Guard or entities associated with the guard are assuming a greater role in the Iranian economy, there’s nothing new about that.  That’s a trend that started back, I mean, not all that long after Khomeini died, when Rafsanjani was president.  And it was part and parcel of Rafsanjani’s planning for reconstruction in Iran after the Iran-Iraq war.  So there is this trend of entities affiliated with the guard assuming more of an economic role.  But it’s like a 20-year trend; it’s not something that just started happening.

And in terms of political influence, part of it is a generational thing.  You had an eight-year war with Iraq in the 1980s in which a very, very high percentage of men of a certain age participated in that war.  And these are men who are now of an age where they’re getting to the top of their professions.  They’re the ones who are running for parliament and entering higher levels of political life.  And so sometimes speak ominously about how many members of the parliament have rev. guard backgrounds – I mean, that’s – I don’t really find that all that ominous given the Islamic Republic’s history.

In terms of your question to me, how much of what I see as the decline of the United States relative power – I mean, I think it’s a mix of structural factors, which would be in play whether our policy was smart or not.  But it has certainly been exacerbated by what I think is bad statecraft, bad policy, a fiscal policy that is a joke.  So I think it’s a mix of both structural and contingent or policy choice kinds of factors.

MR. NELSON:  Right here in the – oh, I’m sorry.

Q:  That’s quite all right.  Good afternoon.  I’m Tom Trimble with Science Applications International.  Thank you for a really interesting exchange.  For George or for any member of the panel, late last year, President Sarkozy and Gordon Brown, shoulder to shoulder, spoke with urgency, an urgency almost like that of a national emergency or a declaration of war – just a notch or two down – of the need to impose some pretty strident and immediate sanctions on Iran. 

And certainly, President Obama has at least intimated that in the January timeframe of this year, we would be seeing additional sanctions.  This may be very difficult to do and get through the Security Council.  And there could be a whole variety of reasons it seems to be moving a bit slowly.  But is the administration changing course or setting a new strategy based upon these challenges?  I know activities are going on in Congress.  But the administration must be planning for this delay.

MR. PERKOVICH:  My sense is they’ve been pushing for some time now for the strongest sanctions possible and working very closely with the French and U.K.  And the French are very resolute and very determined on this.  But there is a determination that the most important variable again to maintaining or trying to capture momentum, as it were, on the international community side is for there to be U.N. sanctions, not just Western sanctions.

And so they’re willing to have Russia and in particular China and now others – Brazil and others on the Security Council – work to dilute kind of the sharpness or power of potential sanctions in order to make them U.N. rather than the other way around because that’s – the logic is that that’s both important to the broader international community to show Iran where the momentum is but also in Iranian political discourse to make it the government’s legitimacy further questioned, because it’s not just the West who you expect.

I mean, hell, the U.S. has had sanctions since 1979.  It’s not a new story in Iran when Congress adds another sanction.  But when the U.N. Security Council, when the Chinese go along with it, when others go along with it, then that causes more legitimacy problems in Iran.  And so that’s part of, I think, the strategy.

Now, what plan B is, I assume they’re working on it, because again, if the objective is to get Iran to desist from enriching Iran, which has been the stated objective, there is no indication – or there’s little indication – that Iran is going to choose to do that.  So one of the plans is obviously covert action or other efforts to try to break up that capability.  And then what else is going on, I don’t know.

But in any case, I think it would be much smarter – whatever else is going on – that we not know about it, which is another reason why I think Congress is better off for the republic staying out of these things, because they don’t keep secrets.  And much of what you would want to do to influence the Iranians, you’d want the Iranians to know you’re doing it but privately.  You wouldn’t want it to be public because then it’s like waving a red flag in front of them to charge it.

MR. KATZMAN:  Yeah, I would just add that not only do they want it to be a U.N.-led process, they want it to be unanimous in the U.N. Security Council also, which is complicated.  They’ve moved from crippling sanctions, which was what we heard – what you were referencing – where the proposals were to sort of internationalize the Iran Sanctions Act – in other words, the U.N. would ban all investment in Iran’s energy sector.  That was an idea.  Other ideas, you know, banning all weapons sales to Iran, banning shipping insurance to Iran – these were things that were considered.  Now, I think to get unanimity, to get more consensus, it’s been reduced.  The goals, the proposals, of what’s going to be in a resolution have been reduced, mainly to target the Revolutionary Guard and its commanders and businesses.

Q:  Barry Schweid of AP.  Ken Katzman, would the new sanctions that Congress might adopt be – the squeeze as you put it – would the squeeze be directed on investment or do you think there would be new ways?  And if either way, what would you expect are the two or three most likely, if there are that many, pieces of legislation in the near future, you would expect?

MR. KATZMAN:  Well, the main –

Q:  How does this message get – how does this project a good message to the Iranian people?

MR. KATZMAN:  What’s under serious discussion is to sanction foreign firms that sell refined gasoline to Iran or equipment that Iran can use to expand its own ability to refine oil into gasoline.  So that is the thrust of what is going to be probably reconciled in both chambers.  Both chambers have passed bills that do that.  The Senate bill does more than that and so there has to be a discussion as to getting one bill that both chambers would agree to.

There is separate legislation that would not be part of that process, other legislation going in a different direction to sort of name and shame various Iranian figures who are involved in efforts to suppress the democracy movement.  Yes, sir.

MR. NELSON:  Is there not –

MR. KATZMAN:  Identify?

Q:  (Inaudible.)

MR. KATZMAN:  No, it would work like most U.S. sanctions.  In other words, one section is the president shall prepare to Congress a report on Iranian officials who are suppressing the democracy movement.  Then, part two, the following sanctions shall be imposed on the named officials in that report.  It would be sort of like that.

MR. NELSON:  But isn’t that a current trend where they’re more targeted sanctions.  So you see these long lists of individuals and organizations in Iran where they’re trying to target very specifically and then go after them through financial institutions, banks and stuff like that.  So on the executive side of it –

MR. KATZMAN:  It is a trend.  However, until now, the named designated entities have been only proliferation or technology-related persons or entities.  The new trend is to go after who Iranians who are not necessarily involved in weapons issues, but in human rights abuses and things like that.  I’m sorry?

Q:  Would this process –

MR. KATZMAN:  You mean, would he be named?  Would he be named under this?

(Cross talk.)

MR. KATZMAN:  Oh, would the gas sanctions hurt?  Well, you know, that every economist I talk to has a different opinion on that.

MR. PERKOVICH:  I grew up in LA in the ’70s during the Arab oil embargo.  And LA is a car culture.  And I remember waiting in line for hours with my parents.  And I don’t remember anybody saying as they sat in line, You know what?  Those Arabs are right.  We ought to change our policies.  It was basically, bomb them.  And I don’t know that the Arab oil embargo actually changed U.S. policy towards Israel, the Palestinians or anything.

MR. (?):  (Inaudible) – there wasn’t one bad word said about Israel in that period.

MR. PERKOVICH:  So I’m wondering about if we sanction Iranian – so the lines get longer in Iran that the public is going to say, gee, let’s get rid of our government.  Those Americans are right.  And moreover, for economic reasons, they actually need to raise the price of gasoline because right now the price is so low that it’s inefficient but also encourages smuggling and everything else.  And so this becomes a great pretext for the government to say, well, they’ve got to raise prices on gasoline.

So I’m sure there’s some really good reasons why this is being proposed.  Also, it helps the smugglers when you sanction products like this.  Then the smugglers make more money.  And who are the smugglers – the Revolutionary Guard. But I’m sure it’s a good idea.

MR. NELSON:  This lady right back here.  No, right behind you there.

Q:  Thank you.  Anne Penketh from – excuse me – British American Security Information Council.  Basic question for Ken Katzman:  What is the timeline or a timeframe that you get from the Congress action, which clearly would irritate the allies that you need for the U.N. process?  Is it possible that the Congress may be persuaded to hold off until there’s some U.N. action?  Is there that kind of coordination going on?

MR. KATZMAN:  Usually when my phone starts ringing this way, usually that means it’s about to – there’s action.  So I would say we’re looking not too far in the future.  That’s all I can say about timeframe

But I would say the administration is working hard to exempt – provide an advanced exemption – that the president would not have to grant a waiver.  But the legislation itself would exempt categories of firms belonging to U.S. allies such that to try to avoid this conflict with partner countries.

Now, some in Congress don’t like that idea.  They want to keep the legislation as it is.  Others agree that there needs to be this exemption.  That’s all I’ll say for now.

Q:  Hugh Grindstaff.  I wondered of the panels comment on the New York Times article on Saturday listing 74 companies such as Bayer, Bosch, ABB, Lucent doing business with Iran.

MR. NELSON:  What was your question?  I’m sorry.

Q:  What are your comments, the panels’ comments on those 74 firms who are still doing business with Iran and quite a bit of business.

MR. LEVERETT:  My comment would be so what?  Most of those firms are doing business in sectors that aren’t even covered by American secondary sanctions laws.  So unless the Congress wants to try and criminalize all business in Iran, I mean, so what?  So there are companies that do telecoms in Iran.  There are companies that do medicines or chemicals in Iran. 

U.S. secondary sanctions laws relate to, at the moment, upstream energy and pipelines.  And as Ken said, there may be an effort to extend that to the downstream, to refined products or to investments or transfers of equipment and so forth that help Iran develop its own downstream capability.  You know, the world does not accept American policy preferences regarding Iran in this area.  I mean, there’s nothing new about that.

MR. NELSON:  All right, well, right here.

Q:  Howard LaFranchi with the Christian Science Monitor.  Flynt, I was just wondering if you – do you extend your characterization of the secondary sanctions as a joke to international sanctions – how you view those and the process now for additional sanctions on Iran.

MR. LEVERETT:  Yeah, I would respectfully disagree with George that there are other – I mean, if I understood George correctly, George acknowledged that neither U.S. unilateral sanctions nor multilateral sanctions have had any strategically determinative effect on Iranian decision making and are probably very unlikely to do so in the future.  But George would say, there’s still good reasons to do it in terms of sending a message to others.  Maybe this contributes in some way to bolstering the broader global nonproliferation regime and so forth.

I mean, for myself, I would not be so kind.  I think that this is bad policy on both a national level and a multilateral level.  All it has done is to open up – you know, it’s taken American companies out of Iran.  Over time, it has eroded the willingness and ability of European companies to do business in Iran and has created marvelous new market opportunities for Chinese companies and for companies from other rising economic powers, primarily in Asia.

You know, I was just in Iran two weeks ago.  Notwithstanding the global economic crisis that broke in 2008, Iran since then has never gone into recession.  They still are experiencing growth.  The primary effect of the global financial crisis on the Iranian economy as far as I could tell would be that their inflation rate has come down, which is actually a positive thing for them.  Stores are very well stocked.  You can buy all kinds of foreign products, whether it’s personal computers, any kind of high-end Asian electronics you want, you can find quite readily.

The idea that this is an economy somehow teetering on the verge and if we just put a little more pressure on them, you know, this is really going to push them over, it’s ludicrous.  It’s bad policy.

MR. PERKOVICH:  I don’t anything about economics, but that won’t stop me, because it seems to me that all may be right but then there’s a problem in saying that the U.S. is the declining economic power for all these reasons that one can cite but that somehow Iran with all its structural problems isn’t kind of like suffering or long-term weakening in its economy, due to lack of investment and the problems in the energy sector and so on.  So I’m just wondering kind of long term.  I mean, things are nice now.  But the kind of brittleness or long-term problems that are partly the result of the lack of capital and technology you can only get from the West to develop their energy infrastructure.  Isn’t that a problem?

MR. LEVERETT:  Well, I think you’re right certainly in that Iran faces a number of very serious long-term economic, socioeconomic challenges.  Their authorities would be the first to admit that, I think.  That being said, I’m not really sure that sanctions have all that much of an effect on constraining Iran’s options for trying to deal with those long-term challenges.

Iran has its own politics about these issues.  And you know, they will have to sort out for themselves what their posture is ultimately regarding foreign investment, what their posture is regarding other sorts of economic issues.  I mean, for whatever it’s worth, an executive with a large American oil company – I won’t say the name of the company – but an executive with a large American oil company told me that if a magic wand were waved and his company could go into Iran tomorrow and start concluding business deals, given the terms that are on the table for foreign energy companies right now, he didn’t think his company would be signing deals.

So I mean, the Iranians are going to have to work out for themselves how they want to deal with the outside world on economic issues, what their posture is.  But I don’t think that sanctions really limit their options all that much.

MR. NELSON:  Okay, back here?

Q:  My name is Arshad Mohammed.  I cover the State Department for Reuters.  I had a question for Mr. Katzman.  It was my impression that although the administration has been thinking very hard about the question of sanctions related to refined petroleum products that it wasn’t really all that interested in seeing those.  And it had seemed to me to be almost a sort of kabuki where it’s useful for the Hill to pass legislation.  And they can brandish that and you know, try to scare Iranians – but that they really don’t want to see this see the light of day. 

Am I mistaken in that, because it seemed to me that you were suggesting that although they were trying to weaken it and provide exemptions in advance so there is a waiver authority that there is somehow any more desires of seeing this come to light?

And then secondly, to address the question that George, you know, raised.  I’m sad that I was also alive during the Arab oil embargo and I remember the lines.  But I wonder if perhaps in Iran something may be different now post-June of last year and that there may be more of a divergence between the regime and the people and that therefore additional sanctions might – and I have no idea – but might be viewed by the Iranian people as, you know, they might blame their authorities rather than the author of the sanctions, in this case the United States, if you actually saw this legislation passed and signed into law.

MR. KATZMAN:  On the bills that are under consideration, if we judge just by the numbers, they would appear to have very, very substantial support in the U.S. Congress.  And therefore, the administration has realized that there is this sentiment to pass this legislation.  And perhaps apparently they’ve chosen to try to modify it in some way rather than to sort of try to stop a very heavy train that is moving.

So that may account for – you know, I think many in Congress – the Refined Petroleum Sanctions Act was conceived before the June events.  And so, it’s sort of a carryover from before.  Since the June events, as I’ve said, there is this other trend of legislation to try to prevent companies from selling Internet censorship gear, monitoring gear, this name-and-shame legislation that I discussed.  And the people I talk to in Iran through various media, the view is that that may ultimately be more significant than perhaps the oil sector type sanctions, which were conceived before the June issue.

MR. PERKOVICH:  Arshad, my sense is from talking to Iranians – and I haven’t been to Iran in four years – but people who come out who are from the opposition, the ones I talk to, don’t favor the gas sanction.  They favor other kinds but not those because the argument would be why are you punishing the Iranian people?  Why not the bad guys?  I mean, they’re going to have to wait in line.  And they know that the Revolutionary Guard who are the bad guys are going to get rich on the sanctions.  So it’s like, wait a minute.  Why are you guys doing this?

MR. NELSON:  Right down here in front.

Q:  Steve Hurst with the AP.  Flynt, we heard you discussing last weekend and referencing again today a position of a much deeper and greater outreach to Iran as the sensible larger policy.  And in your last presentation, you referenced again Nixon in China, Nixon, Kissinger in China.  What I am wondering is even if in a United States with declining power, if one agrees with that, an administration – whether this or the next or the following – can do that politically, given the political climate right now that races across all the issues affecting American lives and Congress.

MR. LEVERETT:  It’s certainly extremely challenging.  An administration would have to – a president would have to view it as a very high strategic priority, would need to be prepared to run considerable political risks to pursue it.  If you look at the Nixon to China case as a precedent, one thing that strikes me whenever I go back and look at that case – and you know, the relevant documents are now I think pretty much all declassified.  But one of the things that strikes me is that Nixon was well aware of the domestic political obstacles to what he wanted to do.

In Congress, there was a very powerful Taiwan lobby working in Washington at the time.  He knew what he was up against.  And his way of dealing with that was essentially to work for two years, effectively in secret, to prepare the ground for the opening to China.  He didn’t even do it as a normal sort of interagency process within his own administration because he knew it would leak.  It was literally a half a dozen people working at the White House with Henry Kissinger who prepared the groundwork for the opening to China.

The secretary of state was almost literally informed relatively late in the day that there were going to be some changes in our China policy.  And Nixon, to a large degree, sprung a fait accomplit on the American political system.  And there were enough deliverables there and enough tangible benefits and prospective benefits that people could appreciate, once the opening was unveiled, that the predictable opposition to it was largely marginalized.

I’ve not seen from President Obama that he really sees this as a high strategic priority.  I’ve not seem from him that he’s willing to run real domestic political risks to accomplish it.  He’s put together a national security and foreign policy team that for the most part is ill-equipped to help him do it.  And he is not, it would seem, prepared to do this in a kind of Nixonian way.  I mean, among other things, he’s stuck himself with a secretary of state that I think it would be very hard for him to do with his secretary of state what President Nixon did with William Rogers on China.

I think it is possible.  I think it is strategically imperative for the United States.  But it will take a president who sees it as a priority and is willing to run some risks to do it.

MR. NELSON:  And finally, Damon?  Yes, as a final request, thank you all for coming and joining us in this event.  In the front of the compendium, there is a note asking for your feedback on the compendium.  So I’d ask that you give us your feedback on the compendium.  I’d very much appreciate it.

MR. WILSON:  Thank you, Dick.  Just with a tad of irony that I think we’re having this discussion, that we’re launching this report at a time as folks are saying that the pendulum in Washington, and perhaps the international community, is shifting towards more sanctions, stronger sanctions, and potentially a worsening relations. 

But I think what Flynt just alluded to in his concluding thoughts is that change can happen quickly and unexpectedly.  And I do think the compendium functions.  It provides a useful reference and baseline.  It can be a baseline informing those that might be advocating next steps in the sanctions regime or a baseline informing advocates of unwinding the restrictions on the relationship on Iran.  In many respects, as you started off by saying, it does provide a neutral public service.

So I want to thank Ken, Ken Katzman, for leading this effort, Dick for helping to organize this series of work in this project area, and to George, Flynt, and Judith for serving on the steering committee.  Thank you for the conversations today.  Thank you for the U.S. Institute for Peace for sponsoring the work as well.  And thank all of you for coming today.  (Applause.)

Transcript by Federal News Service, Washington, DC

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