"Iran, The Deal and New Sanctions - The End Game is in Sight"

Sydney M. Williams

Thought of the Day

“Iran, the Deal and New Sanctions – The End Game is in Sight”

May 19, 2010

Tensions in the Middle East ratcheted up a notch yesterday, as Iran signed a deal to ship half their nuclear fuel – 2,640 pounds of low-enriched uranium – to Turkey where it would be stored for one year. In return Iran has the right to receive about 265 pounds of 20%-enriched uranium from other countries, allegedly for use in a reactor that makes isotopes for treating cancer patients. (Weapons-grade uranium is enriched to 90%.) Brazil negotiated the deal. Of course, the idea to transfer some of their uranium abroad was originally conceived by President Obama last October, when he called for a freeze on Iranian enrichment activity in conjunction with the transfer. The coy Mr. Ahmadinejad refused, but simply bided his time and continued to enrich uranium. The Wall Street Journal reported yesterday: “…in the previous agreement Iran would have halted its efforts to enrich uranium to a level of no more than 3%-4%. The current deal does not call upon Iran to freeze its enrichment program.
While the deal does have to be approved by the International Atomic Energy Agency of the U.N., it is obvious that the Iranian President, with an assist from Turkey and Brazil, has out-foxed his American counterpart. In the wake of Monday’s announcement, the U.S. announced a new level of sanctions with Russia and China (conditionally) on board. A table in today’s Wall Street Journal compares what was sought versus what they got. Compliance has given ground to volunteerism. Additionally, the same article reports: “The resolution avoids measures against Iran’s biggest economic driver, its energy industry.” The Financial Times reported yesterday that the proposed deal “is seen as having dealt a blow to U.S. efforts to get United Nations agreement on further economic sanctions against Tehran over its nuclear programme.” While that forecast appears to have fallen short, the new sanctions are unlikely to “bite”, to quote our Secretary of State. China hailed Iran’s deal with Turkey, as one that would “help promote the peaceful settlement of the Iranian nuclear issue.” David Sanger of the New York Times writes: “Rejecting the new deal, however, could make President Obama appear to be blocking a potential compromise.”

“White House officials,” according to the New York Times, “were clearly angered at the leaders of Turkey and Brazil, whom Mr. Obama had met with personally in Washington at last month’s Nuclear Security Summit…” But the motives of the two countries seem clear – to raise their status and to expand their geo-political influence. Both are significant trading partners, with Turkey sharing an approximate 200 mile border along Iran’s northwest and with Brazil enjoying a $1 billion trade surplus with Iran. The difficulty of getting tough sanctions devolves to economics. Giving up trade, always difficult, is even harder in tough economic times. Like Brazil and Turkey, Russia and China especially are reluctant to sacrifice so much. It reminds one of the inherent truth expressed by Felix, the CIA official, speaking to James Bond in “Quantum of Solace”, “…if we refuse to do business with villains, we’d have almost no one to trade with.”

Interestingly, Israel’s response has been mute. While one official described it as a “trick”, Prime Minister Netanyahu, apparently, instructed his ministers to make no public announcement until they had agreed upon a public response. The silence from Israel is eerily similar to that in the June days of 1981 preceding, and after, the attack on the nuclear reactor at Osirik, 18 miles south of Baghdad, an attack the Prime Minister, Menachem Begin never discussed.

Iran has pledged to “wipe Israel off the map”, and there is little doubt that this deal increases the likelihood that Iran will have the capability to carry out that threat. Like many other problems facing our Country and the world, there are no easy answers. A nuclear-empowered Iran is a risk, not only to Israel, but to the world at large. An airstrike by Israel would be difficult at best, and would likely result in attempts to close the Straits of Hormusz, which separates the Persian Gulf from the Gulf of Oman and the Indian Ocean and through which flows almost all Mid East oil.

It is surprising to me that oil futures appear unconcerned with events in the Middle East. Since May 3, futures are down 21%, now at the same level they were a year ago. Perhaps they are telling us something about the possibility of success of the sanctions, or a possible double-dip in the world economy? I don’t know, but my guess is that oil is oversold. I do believe, however, as for the likelihood of a nuclear-armed Iran, the options for the West are narrowing. Sanctions appear as empty today as they were four years ago and Iran seems as belligerent as ever. If Israel does not succeed militarily, where we appear to have failed diplomatically, the world must learn to live with the consequences of a nuclear-armed Iran…but perhaps that outcome is favorable to the risk of a military strike…either way, a Hobson’s choice.