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Speeches and Papers

Can Sanctions Stop the Iranian Bomb?

by Gary Clyde Hufbauer, Peterson Institute for International Economics
and Jeffrey J. Schott, Peterson Institute for International Economics

March 2006



The ayatollahs are nothing if not determined. They have been building their A-bomb for more than two decades—despite diplomatic entreaties, limited economic sanctions, and the threat of military strikes. Iranian leaders believe that nuclear weapons will bring them regional dominance and international respect. In these beliefs, they are strongly supported by the majority of the people. Iranians watched and learned as the fig leaf of “peaceful nuclear purposes” shielded India and Pakistan from serious international consequences.

A country as rich and dedicated as Iran will eventually test a weapon that could destroy Tel Aviv. The operational question is whether sanctions can make a difference measured in five years or longer—long enough for the possible evolution of Iran to a less belligerent posture. It is worth looking at the record of economic sanctions to shed light on this difficult question.

Since the Nuclear Non-Proliferation Treaty entered into force in 1970, four countries have acquired nuclear weapons: Israel (a nonsignatory), India (likewise), Pakistan (likewise), and North Korea (withdrew in 2003). Leadership changes in all four countries made no difference to the passionate national goal. Three of the nations were subject to significant US sanctions and some multilateral measures. But economic sanctions made little or no difference. What slowed the four countries in their rush to join the nuclear club was the collective denial by Western powers of key ingredients to the bomb maker’s art—reprocessing technology, centrifuges, tubing, metallurgy, timers, and much more.

Advocates of a broad sanctions approach cite four other cases: Taiwan, South Korea, Brazil, and Ukraine. But the first three were mere flirtations not passions, and Ukraine was happy to trade the leftover Soviet arsenal for hard cash. In none of the four cases was the acquisition of nuclear weapons an overriding national goal.

The best precedent for using economic sanctions as a nuclear deterrent is Iraq. Between the first Gulf War when Saddam was clearly trying to acquire the bomb along with chemical and biological weapons and 2003 when the United States dispatched troops on a quest for weapons of mass destruction (WMD) that no longer existed, it appears that economic hardship changed Saddam’s priorities. In the crunch, palaces and police were more important than WMD. But to enhance his power at home and abroad, Saddam either concocted or tolerated a massive deception that fooled the CIA, two presidents, and several prime ministers.

Whatever success sanctions had in stopping Iraq’s quest did not come cheap or easy. Despite extensive oil smuggling with the complicity of Jordan, Turkey, and Iran and despite widespread corruption under UN auspices, the Iraqi sanctions were among the harshest of the past century. The great powers, even including China, Japan, and Russia, generally respected the UN resolutions. Iraq’s foreign exchange was sharply curtailed, and sophisticated weapons were shelved. In addition, the sanctions disrupted Iraq’s already stumbling economy, but the victims of “collateral damage” were not Baghdad’s elite but other segments of the Iraq population already suffering under Baghdad’s rule.

Since the sanctions coincided with low oil prices, little economic pain was felt in the world at large, even though Iraq oil shipments were sharply curtailed. This fact was crucial to global cooperation in enforcing UN sanctions for more than a decade.

In some ways, sanctions against Iran would echo the Iraq episode, but in other ways the differences would be sharp. As in Iraq, harsh sanctions would punish the Iranian people—not the Tehran elite, the army, or the police. Thanks to decades of ayatollah mismanagement and corruption, Iranians are poorer now than in the 1970s, with per capita income about one-third the level in Israel. Harsh sanctions would inflame Iranian nationalism while accelerating mortality among infants and the elderly.

What about the bomb? If harsh sanctions could be imposed and sustained for a decade—isolating Iran from the global economy—that might arrest the WMD ambitions held dear by the Ayatollahs, as seems to have happened with Saddam in Iraq.

But broad economic sanctions, comparable to the isolation of Iraq in the 1990s, are simply not feasible. Unlike the cheap oil of the 1990s, oil today is near record highs. Europe, China, and Japan are not about to risk Iranian retaliation that drives the world price above $100 per barrel and the world economy into recession. In UN deliberations, these powers may talk the talk, but they will not walk the walk. Any sanctions they endorse will be paced and mild, not sudden and harsh. And whatever position it takes in the UN Security Council, Russia will continue to cultivate Tehran as its best foothold in the Middle East.

For the past two decades, while Iran has variously supported terrorism, spouted epitaphs against the “Great Satan” and “death to Israel,” and pursued its WMD quest, European powers have pursued policies of engagement rather than confrontation. Iran is much closer to building a bomb than it was a decade ago, but $60-per-barrel oil reinforces European skepticism about action beyond limited sanctions. Indeed, many Americans would question harsh measures that might push oil above $100 and trigger a world recession.

What options does our assessment leave? Most immediate and obvious is continued denial of critical components, such as cascade centrifuges. As with CoCom efforts against the Soviet Union in the Cold War era, denial is already standard practice, apparently with the cooperation of Russia and China.

Beyond denial, the most plausible option is limited economic sanctions—sanctions that do not split the Atlantic alliance or push Russia, China, and Japan into the pursuit of distinctly separate diplomatic paths. What form might limited sanctions take? A boycott on shipments of luxury goods (cars, clothes, air conditioners) to Tehran and a freeze on the assets held abroad by Iran’s religious, civilian, and military leaders and “charitable” organizations are among the possibilities. To be sure, sanctions short of Iraq-style isolation will have no impact on Iran’s financial ability to carry on a bomb project. The goal here is to isolate Iran and administer financial punishment on the elites in an effort to delay the day when a bomb is tested, in hopes that less hostile minds will eventually acquire influence in Tehran. The strategy of limited sanctions, accompanied by coordinated diplomacy, is to let time mellow Tehran’s nuclear intentions, not derail its capabilities. In the meantime, the strategy seeks to avoid an oil crisis that throws the world into recession and destroys the cohesion of a fragile UN alliance.


 


RELATED LINKS

Book: Economic Sanctions Reconsidered, 3rd edition (hardcover plus CD-ROM) May 2008

Paper: Case Studies in Economic Sanctions and Terrorism May 2008
Revised June 2012

Policy Brief 01-11: Using Sanctions to Fight Terrorism November 2001

Working Paper SPECIAL: US Economic Sanctions: Their Impact on Trade, Jobs, and Wages April 1997

Policy Brief 98-4: Sanctions-Happy USA July 1998

Op-ed: The Snake Oil of Diplomacy: When Tensions Rise, the US Peddles Sanctions July 12, 1998

Peterson Perspective: Legislation to Sanction China: Will It Work? October 7, 2011