The funny thing about windows of opportunity is that they have a way of closing.
Over the past year, spurred by mounting worries over Iran's nuclear ambitions, Congress has taken up the issue of economic pressure against the Islamic Republic in earnest. The result is a series of sanctions bills aimed at targeting what is commonly viewed as the regime's economic Achilles' Heel: its deep dependence on foreign refined petroleum.
The appeal of this approach is obvious. Despite its massive oil output, Iran still relies on gasoline imports for approximately 40% of its total annual consumption. By attacking this dependency, the U.S. and its allies have the ability to generate enormous pressure on Iran's government. Even a partial gasoline embargo would force Iran's ayatollahs to deplete hard currency reserves in the quest for new sources of refined petroleum, and bring commerce within the Islamic Republic to a virtual standstill. Such a blockade, if robust and sustained for long enough, also could dramatically exacerbate the widespread unrest now visible on the Iranian "street."
Iran understands this very well. Since taking office in 2005 Iran's firebrand president, Mahmoud Ahmadinejad, has matched his bellicose rhetoric with a sophisticated plan for his own particular brand of energy independence. On his watch Iran has launched a three-pronged initiative to "sanction-proof" its energy economy. It has enacted a rationing plan establishing strict monthly quotas on gasoline for ordinary Iranians, while simultaneously attempting to institute steep cuts to its petrol purchases from abroad.
Even as it draws down demand, Iran is building up supply, upgrading the majority of its nine existing refineries and building at least two new ones. Iran is also diversifying its energy usage, converting most existing vehicles in Iran to run on natural gas and making all new ones "flex fuel" (able to operate on both oil and natural gas). If these measures make progress, gasoline sanctions against the Iranian regime are liable to have far less impact than when they were first conceived several years ago.
None of this, of course, means that gasoline sanctions are dead in the water. The idea commands considerable support on both sides of the aisle in Congress, and coming months will almost certainly see new movement toward such an embargo within the Washington Beltway. However, Iran's efforts to limit its dependence on foreign refined petroleum, coupled with newfound hesitance on the part of the White House to apply "crippling" sanctions on the Islamic Republic, mean that in order to remain relevant, U.S. sanctions policy will need to adapt as well.
But where, exactly, does Washington go from here? With the official deadline for diplomatic "engagement" now just a memory, administration officials are under mounting pressure to put together a serious strategy for pressuring Iran economically over its runaway nuclear ambitions. Fortunately, two targets of opportunity are readily apparent.
The first is the Islamic Revolutionary Guard Corps (IRGC). Over the past half-decade Iran's feared clerical army has metamorphosed into something much more--an economic juggernaut involved in virtually every sector of the country's economy. The ascent to power of Iranian president Mahmoud Ahmadinejad, himself a former Guardsman, has only accelerated the IRGC's dominance. The IRGC is now arguably the major economic force within the Islamic Republic, in command of numerous construction, industrial, transportation and energy projects, as well as various commercial enterprises valued in the billions of dollars.
All of which tracks neatly with administration plans for more "targeted" measures aimed at bad actors within the Iranian regime itself. Accordingly, the Treasury Department is said to be working up a list of companies linked with the Corps that could be targeted as part of a new sanctions squeeze. This is undoubtedly good news, given the IRGC's importance to the stability and security of the regime in Tehran.
But Washington still lacks a comprehensive understanding of the interlocking web of individuals, assets and companies--to say nothing of the foreign firms that do business with them--that make up the IRGC's global economic footprint. In order to squeeze Iran's Revolutionary Guards effectively, the administration will first need to put together such a master "entities list," relying on inputs both from the relevant U.S. agencies and departments and from allied foreign governments.
The second, and less understood, area of potential pressure relates to Iran's mammoth natural gas sector. With estimated reserves totaling 948 trillion cubic feet, Iran is a bona fide energy superpower, second only to Russia in global natural gas wealth. Iran's ayatollahs, moreover, clearly see their economic and geopolitical future in this field. That is why they have put into motion a sophisticated strategy to gain market share--and political acceptance--in Europe and Asia via their most abundant strategic resource.
Over the past several years the Islamic Republic has quietly insinuated itself into plans for Nabucco, becoming an indispensable part of the Western-supported natural gas pipeline that, once constructed, will help provide Eurasian energy to much of the Old Continent. More recently it has also pushed the idea of a pipeline to bring Iranian gas to South Asia via Pakistan--an initiative that could make the Islamic Republic a key energy supplier for the Indian subcontinent and its 1.3 billion inhabitants.
These moves matter a great deal. If Iran succeeds in cementing its emerging energy ties to Europe and Asia, it will drive a wedge between Washington and some of its most important allies, and make containment of the Islamic Republic a virtual impossibility. If, however, it is able to successfully target Iran's vast natural gas sector and the companies currently doing business in it, the Obama administration can dramatically increase its economic leverage over the regime in Tehran.
What is already clear is that in order to derail Iran's nuclear drive without resorting to force, the Obama administration will need an economic warfare strategy that is as agile and adaptive as Iran's economy has proven to be. And the time to craft one is running out.