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An Economic Coalition of the Willing

[Wall Street Journal, 26Sep06] Ilan Berman - Washington has not yet seriously tackled the economic dimension of the current Iranian nuclear crisis, or explored the financial levers by which Iran can be confronted. Iran's first vulnerability is its dependence on foreign investment. The regime in Tehran currently needs $1 billion a year to maintain current oil output levels, and $1.5 billion to increase them. Without it, Iran could quickly become a net energy importer. By complicating the flow of foreign investment into Iran, the U.S. and its allies can force the regime to draw down its hard-currency reserves, reducing the resources that it has available to forge ahead with its nuclear program - or to fund radicalism in the region. Iran's second weakness stems from its centralized economic hierarchy. The vast majority of the regime's wealth remains concentrated in the hands of a very small number of people. The extended family of former Iranian president Rafsanjani, which practically controls copper mining, the lucrative pistachio trade, and a number of profitable industrial and export-import businesses, is just one example. Far and away the biggest chink in Iran's economic armor is its reliance on foreign gasoline. 40 percent of gasoline in Iran now comes from foreign sources. A comprehensive gas embargo could quickly wreak havoc on Iran's industrial sectors. Instead of relying on the UN, the White House should be thinking creatively about an economic "coalition of the willing" capable of implementing the specific financial levers that are most likely to alter Iranian behavior, and of doing so without further delay. The writer is vice president for policy at the American Foreign Policy Council.
2006-09-26 01:00:00
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