Iran Policy Options Part I

This is the first in a series of post on US policy options for dealing with Iran. The format is similar to the last series on North Korea. But I’ll begin with a caveat, I do not claim that all of the options are entirely my own work. They are compiled from a variety of sources, however, this format of paper does not require sourcing thus there is none.

The aim of this series is to provide some background on Iran, clarify what our assumptions about Iran are, list US policy objectives and then weigh different options for achieving those goals based on the given background and assumptions. Thus, you will not find minute details of each policy but rather a broad description of it and its pros and cons. Since the series is big picture oriented, forgive any omissions the reader may not find. The series is as follows:

Part I: Background
Part II: Assumptions and U.S. Objectives
Part III: Option 1: Gulf war II: Iran
Part IV: Option 2: Collapsing Iran
Part V: Option 3: Containment
Part VI: Option 4: Grand Bargain
Part VII: Discussion & Recommendation

Background:
Mistrust of the West & International Norms:
- Iran experienced repeated foreign intervention, meddling and occupation the last three centuries.
- US/UK embargoed Iranian oil after it was nationalized in 1951, supported a coup 1953.
- 1979 Iranian Revolution instigated by resentment towards West and the Shah as a puppet ruler. Led by anti-Western, anti-imperialist ideology bent on exporting Islamist revolution.
- Post-revolution isolation by West furthers Iranian mistrust and paranoia.
- Iraq uses chemical weapons (CW) against Iran in Iran-Iraq War (1980-88). West is silent.
- West tolerates Israel’s nuclear weapons and not signing the NPT while very upset at Iran’s program.
- Inclusion as part of the Axis of Evil in 2002 and 2003 invasion of Iraq heightens fear of US attack.

Nuclear History:
- Interest in civilian nuclear power began in 1957, signed NPT in 1968, ratified in 1970.
- Iran-Iraq War and Iraq’s use of CW led to Iran’s interest in WMD.
- Nuclear program stopped in 1979, begins importing nuclear material in 80s, cooperating with China, Pakistan and North Korea for nuclear technology and facilities.
- 2002: It becomes public Iran has uranium enrichment facility at Natanz , heavy water facility at Arak.
- 2003: US begins Proliferation Security Initiative (PSI) to interdict maritime WMD shipments.
- 2003: Iran offers to negotiate nuclear matters and support for Palestinian groups with US. US rejects.
- 2004: EU begins negotiating with Iran, civilian technology for halting uranium enrichment. Iran rejects.
- IAEA has said Iran has failed to declare all its activities but also no evidence of weapons program.
- 2007: NIE claims Iran halted nuclear weapons program in 2003, but is keeping nuclear options open.
- In July 2008, the US sits in on EU-Iran talks signaling a possible turnaround in policy.
- Current US and UN sanctions target Iran’s banks most imports/exports, arms sales, financing purchases, asset freezes, inspection of air cargo to Iran and nuclear technology imports.
- Iran continues to enrich uranium.
- North Korea continues to defy the world, negotiating for years and breaking its obligations and developing a nuclear capability showing Iran it too can defy the world without serious consequences.

Economy:
- Semi-developed country, World’s 4th largest oil exporter, OPEC’s 2nd largest exporter.
- 85% of government revenue comes from energy sector. 80% of Iranian exports are oil.
- Major export partners: UAE (17.1%), Germany (13.6%) and Italy (6.7%).
- Major import partners: Germany (12%), China (10.5%), U.A.E. (9.4%), France (5.6%), Russia (4.5%)
- Iran is China’s third largest oil supplier, exporting about 400,000 barrels a day.
- High oil prices insulated Iran against foreign pressure/attack. Dramatic drop to $72 is major concern.
-Iran has a a limited indigenous refining capability, must export and reimport much of its oil.

Other:
Iran’s presidential elections take place in June 2009. The US and Iran began direct talks mid 2007 in Baghdad about Iraq. They have been on and off. The US Treasury Department licensed an NGO (American Iranian Council) to open an office in Iran in Oct. 2008, another unexpected policy change. The US currently has 701 million barrels of oil in its Strategic Petroleum Reserve (SPR). France,Germany and Italy agreed to share their strategic reserves with each other in case of emergency, as have the US and Israel.

Stay tuned for Part II. I’ll be posting the next installment daily.