4 March 2015

The Right Way to Squeeze Iran

March 3, 2015 

To get across the finish line, the U.S. should offer Iran bigger sticks AND more carrots.

The likelihood that the Tehran leadership will agree to a deal constraining its nuclear program far more tightly than the current interim deal depends on how much it values a “yes” compared with the cost of a “no.” To increase the odds of the “yes” sought by the P5+1, the value to Tehran of the desired agreement should be boosted while an Iranian “no” should prove much more painful to the regime.

Negotiation 101 suggests that, with stronger positive and negative incentives in place, skillful diplomacy has the best chance of making the right deal. Yet, the U.S. team could do better on both the value-enhancing and cost-imposing elements of its negotiation strategy.

Thus far, the Congress has almost exclusively focused on inflicting greater pain if Iran fails to agree to suitable terms. Primarily this has been through the threat of more severe oil and financial sanctions as proposed in various legislative proposals (e.g.,Menendez-Kirk, Boxer-Paul, Corker). The bills differ in some respects and present something of a moving target for analysis. Yet most would trigger tougher “conditional” sanctions if the talks fail to reach an acceptable result sometime after the March 24 deadline for an agreed framework of a final deal or the June 30 limit for agreement on technical details.

In sharp contrast, President Obama has threatened at least three times—most prominently in his January State of the Union message—to veto any new sanctions, even conditional ones, during the ongoing talks. Why? The atmosphere might sour; Iranian hardliners might undercut the negotiators; Iranians might retaliate by walk away, scraping the interim deal limitations, even expanding their nuclear program; the U.S. might be blamed for breaking up the talks; allies might stop cooperating on sanctions; and so on.

So who’s right? Would sharper sanctions be deal enablers or deal killers?

As discussed below, a new approach to tighter sanctions could be an enabler, but more pain in the event of no deal is only one part of Tehran’s equation. A largely neglected aspect of the P5+1 negotiating strategy is boosting the value of a “yes” to the Iranian regime. Under current law, President Obama can at most offer Tehran temporary executive branch waivers on some sanctions. Such waivers could easily be revoked, especially by a future president. This limitation greatly reduces Tehran’s incentives to make the kind of irreversible cuts in its nuclear program sought by the P5+1.

To sharpen the stick and sweeten the carrot in the interest of getting an acceptable nuclear deal, two complementary moves should be made. The administration should shift its oppositional approach to the Republican Congress on the issue of sanctions. The Congress should reciprocate by promptly working with the administration on a two-part package of sticks andcarrots to strengthen the U.S. hand in the nuclear talks. To put it mildly, these moves would be politically challenging in today’s adversarial climate. Yet together, these actions should advance the national interest.

The first part of these executive-legislative negotiations should result in Congress being ready to pass a tough pre-negotiated sanctions bill and a very public presidential commitment to sign this specific bill by a clear deadline, such as July 7, if a satisfactory deal with Iran is not then in place.

For maximum effectiveness, the administration should simultaneously embark on parallel negotiations to bring as many of the P5+1 on board with these tougher sanctions in the event of negotiations unravel. As Gary Samore notes, this means putting U.S. and allied pressure on Iran’s major oil customers—such as Japan, Korea, and India—to cut their purchases of Iranian oil in the event that new sanctions are triggered. It also means persuading oil producers like Saudi Arabia and the Emirates to produce at sufficient levels to fill the gap.

As the second, linked part of an agreement on a harsher no-deal outcome, the president should obtain Congressional authority to permanently lift key sanctions on a phased basis if an Iranian nuclear deal meets certain tough criteria, and if Tehran scrupulously adheres to its commitments. This new authority should be part of the same bill as the sharpened sanctions. The two-part package should be readied for passage and signature by a realistic deadline, such as July 7, for the talks to have concluded.

If successful in this supremely tricky quest, President Obama would have a much more potent diplomatic arsenal to achieve the results with Iran desired not only by the administration, the Congress, and the P5+1, but also by the Israelis, Saudis, and other stakeholders.

This novel two-part approach—aspects of which have been discussed byMichael Singh and Trita Parsi, often political opposites—raises many questions. In particular, how could new sanctions be structured to help, not blow up, the delicate ongoing negotiations? Moreover, in today’s polarized environment, how could Congress be induced to give additional negotiating authority to a president whom it deeply distrusts?

How could more sanctions function as deal enablers rather than deal killers?

With few exceptions, most observers credit the Obama-led early sanctions, which slashed the value of the Iranian currency in half, as critical in driving Iran to the table. Even those who oppose any new sanctions—including the foreign ministers of the UK, France, Germany, and the EU as expressed in a recent op-ed—share this assessment of the power of oil and financial sanctions. Properly designed, additional sanctions would make a continued “no” by the reluctant Iranian leadership even more costly, thus boosting the relative appeal of a “yes” to tighter nuclear constraints.

With low oil prices gutting Iran’s finances to an extent comparable to that of current sanctions—and with Iran spending billions on pro-Assad Syrian activities—the blunt effects of additional sanctions could be disproportionately large. The moment is ripe to prospectively ramp up the pressure on Iran in the event that no deal is reached.

However, if it is too costly or humiliating for the Iranians to avoid threatened sanctions, such measures cease to be effective incentives. For example, tougher sanctions would likely be a deal killer if they required that Iran’s nuclear program be entirely dismantled and that it stop supporting regional allies. For negative incentives to have their intended effect, the trigger must be feasible.

A sanctions trigger that is too stringent or detailed could block creative diplomacy that could meet core P5+1 interests. Instead of detailed specifics, the criterion for a nuclear deal should be that it verifiably prevents Iran from advancing toward what Graham Allison has characterized as an “exercisable nuclear option” without being detected well in advance.

Various mechanisms could be devised to certify that such a deal meets this criterion, thus avoiding new sanctions—and ensuring against a “bad deal.” Beyond presidential certification, the IAEA might be required to declare that all of its outstanding questions about Iran’s nuclear program have been satisfactorily answered. A bipartisan panel of former national security officials might be required to concur. A supermajority vote, say two-thirds of the Senate, might be sufficient to overturn a presidential certification and thereby trigger the enhanced sanctions.

As adversaries without official communication for over three decades, both Iran and the United States see compliance with the interim deal as something of a test. So far, the U.S. has lived up to its commitment to “refrain from imposing new nuclear-related sanctions.” For the U.S. to impose new sanctions now would clearly signal bad faith. Further, the administrationtestified that this could even be true for “conditional sanctions” that would only go into effect if the talks fail to produce a satisfactory result.

Enacting such sanctions now would give Iranians who oppose any deal, as well as some Iranians who current support it, a powerful argument against a yes. If the U.S. makes a nuclear deal, they would argue, the deceitful Americans won’t honor it. In a close domestic contest, Ayatollah Khamenei’s stance would be decisive. Given his longstanding, deep suspicion of U.S. motives, passing new legislation—even if its sanctions were conditional—while the interim talks are ongoing, could tip the Iranian balance toward “no” with potentially far reaching consequences.

Hence the argument for the approach outlined above: sanctions pre-negotiated by the president and the Congress but only to be passed and signed if the P5+1-Iranian talks failed to reach an acceptable deal by an agreed upon deadline.

Many observers worry that just as negotiations are entering a critical phase, even just talking about sanctions could sour the atmosphere. Of course, it hardly helps the negotiating atmosphere that, during the talks, Iran upped the threat to a Washington Post reporter long-held without charges and announced two new nuclear reactors. Yet, despite these and other provocations, the P5+1 can be counted on to hang in there as long as a worthwhile nuclear deal appears feasible.

The Iranians, in their turn, profess to be offended by threats of any new sanctions and could stage a walkout, blaming the U.S. Yet this oft-articulated “atmospheric” concern is usually overblown. The only reason Iran is at the table is because it has calculated that it is in its national interest to negotiate. More acute threats to Iranian interests will likely keep it there if a deal offers a way out with material advantages (which would, by the way, be enhancedunder the recommended inducement of more permanent sanctions removal).

Some observers feel profoundly uneasy about both “talking and threatening.” This was a common concern during Richard Holbrooke’s far more aggressive—and successful—“talk and bomb” strategy with Slobodan Milosovic. Yet, in many contexts, such a two-sided negotiating approach is commonplace and often necessary. Without “threats”—filing a lawsuit, holding a strike vote, or buying shares in a target company—genuine desire for a negotiated resolution will often get nowhere.

A bit of perspective relative to these fairly mild examples: the Iranians, active backers of Hezbollah and Assad, have arguably sought, sometimes covertly, the most destructive weapons on the planet, whose acquisition would almost certainly lead to highly dangerous regional proliferation. Relative to these stakes, how worried should P5+1 be about Iranian sensibilities versus Iranian assessments of tangible interests?

One fair critique of the “pre-negotiated sanctions” approach is that the president has already and repeatedly issued such sanctions threats. So have his Secretary of State and other senior administration officials. For example, beyond references to military options, President Obama threatened in December 2013: “if negotiations fail . . . new and harsher sanctions will be put into place.” As recently as January, Deputy Secretary of State Blinken testifiedthat “should Iran refuse a reasonable deal . . . the Senate and House could impose additional measures in a matter of hours. The Administration would strongly support such action.”

Notably, if explicit threats of harsher sanctions would truly wreck the atmosphere, these ominous administration statements would have alreadyscuttled the interim talks. However, the real issue is not the atmospheric implications but how credible the Iranian leadership perceives threats of dire consequences if an acceptable deal is not reached by a clear deadline.

While the administration has stated its willingness to intensify sanctions in the event of no deal, its actions to date—visible to the Iranians and the Congress alike—have mainly been to vociferously head off all such measures while urging repeated extensions of the interim deal.

In particular, the administration pulled out all the political stops to successfully defeat the Menendez-Kirk sanctions bill in 2014, and again acted aggressively to forestall the 2015 version of this bill. These actions, taken at considerable domestic political cost, have certainly signaled to its Iranian counterparts a willingness to negotiate seriously. Yet they may have come at a cost in administration credibility to impose and implement new sanctions.

After all, solemn pronouncements by multiple U.S. administrations—not just that of president Obama—and their allies about firm deadlines lack credibility given years of steadily receding “red lines.” Over decades, the Iranian nuclear program advanced to points that the United States and its allies first declared to be unacceptable . . . and then, when Iran crossed those red lines, effectively accepted as a fait accompli.

Of course, the Iranians fully understand the overwhelming likelihood that the Republican Congress would pass a sanctions bill if negotiations fail—and quite likely beforehand. That does not, however, mean that new sanctions would hit Iran. In the interest of “giving further negotiations a chance,” the president could still veto such a bill and, if his veto was overridden, could drag his feet in implementation.

If the Iranians, let alone the Republican Congress, doubt that yet another red line means much, how could this threat be made more credible? Clearly, the Congress and administration must visibly be on the same page on this issue. A pre-negotiated Executive-backed sanctions bill with a Congressional commitment to pass it on a certain date coupled with a very public and personal presidential commitment to sign this specific bill by this specific date under these precise circumstances would remove much of the ambiguity.

This approach should permit the administration to have it (most of) both ways: a continued and evident willingness to negotiate seriously, by holding off Congressional sanctions, while setting a real deadline for higher costs to Iran in the event no deal is reached.

Sanctions opponents often claim that, without negotiations, the P5+1 would face two very unpalatable alternatives: a nuclear-capable Iran or war. Yet, if no satisfactory deal with Iran emerged by the deadline and more stringent sanctions do go into effect, this would not necessarily spell the end of negotiations facing the P5+1. If anything, the Iranian regime would have an even greater incentive toward a deal. If the parties decided to keep pushing forward, which seems likely, the tighter sanctions would function as a higher cost inducement for Iran during continuing talks.

Why would a Republican Congress conceivably grant permanent sanctions relief authority to a President whom it doesn’t trust?

A central Iranian complaint about P5+1 proposals thus far has been the inability of the United States to deliver on sanctions relief promised at the bargaining table. Currently, President Obama can at most offer Tehran temporary executive branch waivers of some sanctions, which could easily be revoked by a later administration. This limitation greatly reduces Tehran’s incentive to make the kind of irreversible cuts in its nuclear program sought by the P5+1 as well as the Congress. (This Iranian complaint also applies to sanctions imposed by Europeans and the U.N.—which should be handled analogously to what’s recommended here.)

How might president Obama gain such authority from a suspicious and hostile Republican Congress? Suppose the president does an about-face and actively works with the Congress on the “pain” side of the ledger. Suppose he is credibly willing to impose more stringent sanctions rather than fighting them, as has been the case until now.

While not quite Sadat to Jerusalem or Nixon to China, such moves by the Obama Administration should heavily assuage Congressional concern about a president too eager to make almost any nuclear deal. The mechanisms proposed above as part of the sanctions bill would make it very difficult for the president to accept an inadequate deal that leaves Tehran with an exercisable nuclear option. Indeed, the president should be seen by Iran and the Congress alike as much less willing to even consider a “bad” deal. This should increase his bargaining leverage.

And a real deadline would then exist with the almost certain passage of such a bill, diminishing Congressional fears of indefinite extensions of the already-twice-extended interim deal.

These elements of “downside protection” should be linked to a Congressional grant of authority to the president to permanently lift key sanctions on a phased basis if an Iranian nuclear deal meets certain tough criteria and if Tehran scrupulously observes its implementation commitments. It is hard to even imagine such a Congressional grant to the president on the “carrot” side without an Administration commitment to sanctions.

If the president had such authority, credibly offering a more valuable deal to Tehran could, with skillful diplomacy, elicit greater Iranian concessions and abetter agreement from a P5+1 viewpoint. Ironically, such an agreement could also be more to Congressional liking. If this happened, Tehran could enjoy more permanent benefits; if not, sharper sanctions, the result of an explicit executive-legislative deal, would await.

Of course the Congress might fear that the administration would be outnegotiated, just “giving away” more permanent sanctions relief in return for little. The safeguard against this outcome or other “bad deals,” however, lies in the bill’s tough criteria that a nuclear deal must meet to avoid sanctions.

On balance, this approach offers the prospect of a president with every incentive to hang tough with Iran as well as the ability to offer inducements to that country in return for a more satisfactory nuclear deal. This might be sufficient for the Congress and the Administration to find agreement. It would sharpen sticks and sweeten carrots while imposing a real deadline. This course of action, while devilishly tricky to negotiate, should materially improve the prospects for a better deal with Iran.

James K. Sebenius is the Gordon Donaldson Professor of Business Administration at Harvard Business School, Director of the Harvard Negotiation Project, and member of the Iran Working Group at the Belfer Center at Harvard’s Kennedy School.

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