Smart sanctions vs. dumb bombs

U.S. foreign policy has its own fads and fashions. They change more slowly than Oscar-night sensations, but get reputations that are harder to shake. At the moment, economic sanctions have a bad rap. And that’s a shame, because financial sanctions are getting better and we need them more than ever, this time to avoid war with Iran.

Sanctions got a failing grade in the 1990s. Remember those malnourished Iraqi children, and the protests against the United States for allegedly doing as much damage as Saddam Hussein? And when we tried “smart sanctions” to punish Hussein but not the Iraqi people, we ended up with the notoriously corrupt U.N. Oil for Food program.

Then Bush administration officials spent most of this decade declaring sanctions ineffective. They said (wrongly) that international sanctions were not thwarting Hussein’s quest for weapons of mass destruction. And they argued (rightly) that sanctions wouldn’t stop North Korea from getting the bomb unless China got religion and converted to chief enforcer.

So it’s surprising to hear U.S. officials crediting the seizure of North Korean bank accounts in Macao with bringing Kim Jong Il back to the bargaining table after 18 months of intransigence. Now, Chinese pressure may have had more to do with Kim’s about-face than we know. (The Chinese aren’t saying.) And those Banco Delta Asia accounts only held about $24 million. But that appears to have been Kim’s personal slush fund—money he used to buy goodies for and the loyalty of the North Korean elite, and there’s no question Pyongyang was enraged. As part of the tiptoe-toward-disarmament deal signed earlier this month, the U.S. has pledged to begin unfreezing the accounts.

There are a number of lessons from Banco Delta Asia that could be applied to Iran. First, the freeze sent shock waves through the Asian banking establishment. Nobody wants to risk doing business with a bank that might find itself branded a money launderer or a financier of terrorism. Even if the government’s accusation turns out to be wrong, the bank’s assets get frozen—and possibly your assets with it.

The beauty of the Bush administration’s strategy is that even though all the necessary foreign governments didn’t agree to impose the stiff economic sanctions the U.S. wanted against North Korea, private firms shut Pyongyang out of the international financial system to protect their own bottom line. (The danger is that if the administration overreaches in future and is seen as abusing for political purposes its considerable powers over the international financial system, the backlash could be horrific.)

But the central lesson of the Banco Delta Asia case is that U.S. sanctions really are, finally, getting smarter. They can be highly effective when, instead of trying to clobber an entire “rogue” government, they target the conduct only of people and organizations that are engaging in the behavior we find reprehensible—in Iran’s case, those trying to build a nuclear bomb.

Moreover, Washington is more likely to get cooperation from foreign governments and from private companies if it drops the bellicose rhetoric about the “axis of evil” and focuses its efforts on naming and shaming those directly responsible for the scary behavior.

Consider the latest Treasury Department sanctions against three Iranian companies controlled by the Atomic Energy Organization of Iran, which in turn reports to the Iranian president. Or the Treasury action against Iran’s Bank Sepah, which allegedly has been financing the Iranian missile program.

The U.S. argues that that under the latest U.N. Security Council resolution against Iran all governments are obliged to take steps to counteract Iran’s proliferation activities—and that includes shunning the state-owned Bank Sepah. But a Treasury official reports that private companies are already severing their ties with Sepah.

Intelligence is clearly getting better. For years, the U.S. has tried to get at the assets of dictators and other bad guys around the world, or keep them from traveling. But now it’s also able, officials believe, to keep bad guys from sending their children to school in Switzerland or their wives to shop in London.

Will such steps be enough to keep Iran from developing a nuclear bomb? No. But a State Department official who has long toiled on nonproliferation issues believes the combination of sanctions against Iran, however imperfect, has delayed Tehran’s march to nuclear weapons by two to five years. And the more political support even limited sanctions get around the world, the more likely they are, over time, to alter the political calculus in Tehran about whether the benefits of a nuclear weapons program outweigh the pain.

Iran is a big, powerful country with oil, and the U.S. has little leverage against it. It’s true that sanctions are slow, and they won’t work without the cooperation of the Europeans, Russians, Chinese and Japanese, who range from reluctant to ideologically opposed to punitive measures. But these countries may be persuaded to support—or at least not veto—very smart sanctions, if persuaded that the alternatives are a nuclear-armed Iran, or a U.S. or Israeli war with Iran, or both. And those horrible choices look increasingly likely.

It’s time for a new campaign for very limited, very targeted sanctions against the Iranian nuclear actors, to be enforced by the entire international community and given a long period of time to work. If the Bush administration is too diplomatically damaged to make that case to the world, the Europeans should.