Iran Democracy Monitor: No. 99

A SHIFT OF FOCUS IN WASHINGTON...
For months, the Obama administration has been engaged in sustained outreach in an effort to convince Iran to reverse course in its nuclear drive. But repeated Iranian rebuffs, and little tangible progress on the diplomatic front, has shifted the public policy debate in Washington steadily in favor of pressure. The crowning blow came on February 10th, when the New York Times – long a staunch opponent of serious measures against Iran – used its editorial page to advocate sanctions against the Islamic Republic. “President Obama was right to offer to negotiate with Tehran. Washington and its allies were right to look for possible compromises even after Tehran was caught — again — hiding an enrichment plant,” the Gray Lady wrote in a house editorial. “Enough is enough. Iran needs to understand that its nuclear ambition comes with a very high cost.”

Team Obama has taken notice. The U.S. is now said to be pushing for a new UN Security Council resolution on Iran “within a matter of weeks” – a move that would set the stage for a further imposition of sanctions on Iran by the world body. That step, according to President Obama, is the start of a larger drive for serious economic pressure against the Islamic Republic. "What we are going to be working on over the next several weeks is developing a significant regime of sanctions that will indicate to them how isolated they are from the international community as a whole," the President has told reporters.

The Administration has matched its rhetoric with quiet action. On February 10th, the U.S. Treasury Department sanctioned one individual and four companies connected with Khatam al-Anbiya, the construction conglomerate run by Iran’s powerful Revolutionary Guard Corps. "As the IRGC consolidates control over broad swaths of the Iranian economy, displacing ordinary Iranian businessmen in favor of a select group of insiders, it is hiding behind companies like Khatam al-Anbiya and its affiliates to maintain vital ties to the outside world," Under Secretary for Terrorism and Financial Intelligence Stuart Levey said in announcing the measure. "Today's action exposing Khatam al-Anbiya subsidiaries will help firms worldwide avoid business that ultimately benefits the IRGC and its dangerous activities." (Reuters, February 9, 2010; Department of the Treasury, February 10, 2010; New York Times, February 10, 2010)

...BUT ONE STEP FORWARD, ONE STEP BACK ABROAD
But can the Obama administration count on a “coalition of the willing” of international partners in its efforts to pressure Iran? The answer is unclear. In recent weeks, a spate of recent commercial deals between Iran and foreign companies that have lessened the Islamic Republic’s international isolation. In mid-January, for example, Iran’s National Iranian Oil Company, or NIOC, signed a one billion euro ($1.44 billion) deal with an unnamed German firm – rumored to be Siemens – to construct 100 gas turbo-compressors, giving Iran a major shot in the arm in its efforts to further develop its mammoth natural gas sector. Less than a month later, the China National Petroleum Corporation concluded an agreement to develop “phase 11” of Iran’s South Pars natural gas project – a pact that could see the Chinese state company start drilling for gas as early as next month as part of a $4.7 billion arrangement between Tehran and Beijing.

Nevertheless, some signs of change are visible. Among them is the recent decision of Italy’s ENI energy firm to cease commercial relations with Iran following the conclusion of two current natural gas contracts. German firms are beginning to do much the same. Already, Siemens, currently a key player in Iran’s telecom sector, has said that it will stop signing new commercial deals with the Islamic Republic beginning in mid-2010. And more may be coming down the pike in response to stricter governmental scrutiny over commercial dealings with the Iranian regime. These decisions have been further buttressed by the evolving European position toward the Islamic Republic. In recent days, the European parliament has begun lobbying telecommunications firms like Nokia and Siemens to sever economic ties to Tehran entirely over its violations of human rights and censorship practices. (Agence France Presse, January 20 and 27, 2009; New York Times, February 2, 2010; Washington Post, February 4, 2010; Reuters, February 10, 2010; Radio Netherlands, February 10, 2010)