A number of restrictions on doing business with the Islamic Republic that had been suspended by the 2015 nuclear deal went back into effect this week, and more are on their way. While the American withdrawal from the agreement has already had a significant impact on Iran’s feeble economy, adding fuel to popular protests against the regime, Richard Goldberg argues that it won’t be enough to bring Tehran to its knees:
Sustained political warfare, robust military deterrence, and maximum economic pressure will all be necessary. Pressure will build steadily as our re-imposed sanctions take hold. . . . Sanctions, [however], are only effective if they are enforced. The sooner the Trump administration identifies a sanctions-evading bank and cuts it off from the international financial system, the sooner a global chilling effect will amplify the impact of American sanctions. The same goes for underwriters and gold-traders.
Beyond enforcement, the Trump administration will need key allies to implement this pressure campaign fully. The Saudis, under attack by Iranian missiles from Yemen, should be a willing partner in the effort to drive down Iran’s oil exports—ensuring Saudi production increases to replace Iranian contracts and stabilize the market. Saudi Arabia, the United Arab Emirates, and Bahrain should also combine their market leverage to force European and Asian investors to choose between doing business in their countries and doing business in Iran.
President Trump will also need Europeans to act on one key issue which, given their opposition to his withdrawal from the deal, may present a diplomatic challenge. Under U.S. law, the president may impose sanctions on secure financial-messaging services—like the Brussels-based SWIFT service—if these services provide access to the Central Bank of Iran or other blacklisted Iranian banks.
In 2012, when Congress first proposed the idea, the European Union ordered SWIFT to disconnect Iranian banks, which closed a major loophole in U.S. sanctions. Now that Trump has left the deal, SWIFT must once again disconnect Iran’s central bank. If SWIFT refuses, Trump should consider imposing sanctions on the group’s board of directors. Trump’s Iran pivot from appeasement to pressure offers America the best chance to change fundamentally Iranian behavior and improve our national security.