Australia/Israel & Jewish Affairs Council

Dealing with Iran after the NIE

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Update from AIJAC

December 21, 2007
Number 12/07 #06

Iranian President Ahmadinejad is claiming that the controversial US National Intelligence Estimate earlier this month, which asserted that Iran had stopped its nuclear weaponisation efforts in 2003, was a US "declaration of surrender." Iran is also hailing the Russian delivery of nuclear fuel for the Bushehr reactor a "great achievement".  This Update is devoted to analysing how the NIE actually affects US and Western policy toward Iran.

First up is Washington Institute scholar Matthew Levitt. Writing for the German version of the Financial Times, he makes a strong case that current economic and especially financial sanctions are effective and remain badly needed. He also takes on the false dichotomy of sanctions versus "engagement" or diplomacy, and makes a good case for additional sanctions, through the UN if possible, outside it if not. For Levitt's complete argument, CLICK HERE. Levitt's piece was of course written primarily for a European audience. Recent speeches by German, British and French representatives at the the Washington Institute show these governments, at least, largely agree with him on the need for more sanctions, something the US government also asserts it has been told by European interlocutors.

Next up is former US Secretary of State and foreign policy intellectual Henry Kissinger, who argues that the NIE represents as much a step into a policymaking role as an intelligence report. He says the emphasis on phrasing about the "end of Iran's nuclear weapons program", when in fact the report defines this term extremely narrowly and in contradiction to the dominant debate over recent years about enrichment, represents the contamination of intelligence with conjecture and public advocacy. He also says it elides the key policy issues about where the line is drawn about the nuclear program before it should be a policy to oppose it. For Kissinger's argument, CLICK HERE. Others who have raised questions about the intelligence in the report and its relationship to policymaking include former Jerusalem Post editor Bret Stephens, New York Times columnist Tom Friedman, author and journalist Christopher Hitchens, former US Defence Secretary James Shlesinger, military historian Victor Davis Hanson,  the JINSA thinktank, and Iranian dissident groups.

Finally,  Gideon Rachman, the veteran chief foreign affairs columnist for the London Financial Times, takes on the frequently heard argument that a negotiated grand American-Iranian bargain on all issues is the solution to the Iranian nuclear conundrum. He points out that there is almost no chance of such a bargain coming into being because, firstly, the NIE will reduce the incentive of Iranian hardliners to compromise, and secondly, Iranian leaders are deeply committed to both a bomb and a hegemonic role in the region. He concludes that an Iranian bomb looks very likely. To read his full reasoning, CLICK HERE. Also making some good arguments about the illusion that "dialogue" with Iran will solve everything is Lebanese editor and commentator Michael Young.

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The Clock Ticks: Sanction Iran Now

 Matthew Levitt

Financial Times Deutschland, December 19, 2007                                                                                             
                                                                                                                                                          
A German translation of this article appears in Financial Times Deutschland with the title, "Die Uhr Tickt."
                                               
The latest U.S. National Intelligence Estimate (NIE) on Iran's nuclear intentions and capabilities has been the subject of much analysis, most of which has been off point. The new estimate opens with the startling judgment that Tehran halted its nuclear weapons program in the fall of 2003, which has led some to conclude sanctions are no longer necessary. They are. Indeed, the estimate's more significant conclusion is that the most likely tool to successfully alter Iran's nuclear calculus is targeted political and economic pressure, not military action.
                                               
Iran continues to produce fissile material and the ballistic missiles needed to deploy a weapon. According to IAEA director Mohamed ElBaradei, Iran could produce a nuclear weapon in "only a few months" once it completes the fuel-cycle facilities it is building. The answer is to sanction Iran now, before it reaches this critical threshold.
                                               
 That is exactly what the U.S. government did in October, even as new intelligence was shaping the soon-to-be-released NIE, when the Treasury and State Departments announced sweeping designations of Iranian entities and individuals involved in proliferation and terrorist activities. Though unilateral, the designations have effectively cut the affected parties off from the U.S. - and by extension the international -- financial system. European officials were pre-briefed on these designations, and were likely supportive. Indeed, the European Union is now debating whether or not to impose sanctions of its own targeting Iran. It should.
                                               
Publicly identified as pariahs, the illicit activities of the Iranian banks, leaders, military institutions and companies identified by the Treasury and State Departments were exposed in a fact sheet that accompanied the designations. Focused on these illicit activities, these targeted financial measures represent the strongest non-military tool available to convince Tehran to change its behavior. All those interested in averting a military confrontation with Iran must rededicate themselves to employing a robust regime of smart sanctions targeting Tehran's illicit activities.
                                               
Some advocate diplomatic engagement instead of economic sanctions, but it is a myth that policymakers have to choose between sanctions and diplomacy. In fact, these tools are best employed in a complementary fashion. Targeted sanctions should be seen not only as a means to hold Iran to task for its illicit conduct, and not only as a means of protecting the international financial system from abuse, but as a means to create leverage for diplomacy. As Under Secretary of State Nicholas Burns explained, "we are focused on diplomacy, we want to get to a diplomatic solution through negotiations, but Iran has to accept that path." Sanctions will not solve the Iran problem, but employed wisely they may create sufficient leverage for diplomacy and avoid military conflict.
                                               
And while multilateral sanctions are always preferable, targeted financial measures applied unilaterally by major economic powers and regional bodies are sufficient to successfully target Iran with painful financial sanctions. Consider, for example, that major international financial institutions throughout the world incorporate the U.S. Treasury's various designation lists into their due diligence databases, meaning that designated Iranian banks, entities and individuals find it very difficult to secure loans, lines of credit or otherwise gain access to the international financial system. Just this week an official with Iran's Export Development Bank informed "it is no longer possible to wire money by dollar into Iran and for the payments in Euro there are just three European banks. They could stop cooperating with us at any moment."
                                               
With the multilateral UN sanctions process bogged down, it is now all that much more important that action be taken to lay the groundwork for substantive sanctions following Iran's report to the International Atomic Energy Agency next month on its past nuclear activities. French officials have already stated that if there are no new UN sanctions by the end of the year, the EU should "look at more individual kinds of sanctions." Already the EU has designated several entities above and beyond those listed in the annexes to UN Security Council resolutions 1737 and 1747. With its latest unilateral designations, the United States took similar initiative and led by example, as it did in January 2007 when it designated Bank Sepah unilaterally. The international community followed suit then, designating Sepah multilaterally several weeks later under UN Security Council Resolution 1747.
                                               
Europe should take the lead pressing the international community to do so now as well, designating at least some if not all of the banks, companies, and persons targeted by the US last month in a third UN Security Council resolution before the end of the year.
                                               
The UN channel, however, is not the only one available. Other countries and regional bodies are also considering sanctioning Iran outside the UN system, especially following the October 11 statement issued by the Financial Action Task Force (FATF)-a multilateral, expert body which works by consensus and includes Russia and China-warning that "Iran's lack of a comprehensive anti-money laundering/combating the financing of terrorism regime represents a significant vulnerability within the international financial system." If nothing else, the deceptive and illegal financial practices Iran employs to secretly fund its illicit activities should themselves be reason enough for Germany and other European economic powers to hold Iran accountable.
                                               
Whether employed multilaterally, regionally, or unilaterally, targeted financial measures of the kind the United Stated employed this week are the surest way to avoid military confrontation with Iran and create the necessary leverage for effective diplomacy. The EU should act now to apply its own sanctions targeting Iran and help create leverage for diplomacy. Absent this leverage, policymakers on both sides of the Atlantic will eventually be left with the unenviable choice of bombing Iran or tolerating a nuclear Iran.
                                               
Matthew Levitt directs the Stein Program on Terrorism, Intelligence, and Policy at the Washington Institute for Near East Policy and was deputy assistant secretary of the Treasury for intelligence and analysis until earlier this year.

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Misreading the Iran Report

Why Spying and Policymaking Don't Mix

By Henry A. Kissinger

Washington Post, Thursday, December 13, 2007; Page A35

The extraordinary spectacle of the president's national security adviser obliged to defend the president's Iran policy against a National Intelligence Estimate (NIE) raises two core issues: How are we now to judge the nuclear threat posed by Iran? How are we to judge the intelligence community's relationship with the White House and the rest of the government?

The "Key Judgments" released by the intelligence community last week begin with a dramatic assertion: "We judge with high confidence that in fall 2003, Tehran halted its nuclear weapons program." This sentence was widely interpreted as a challenge to the Bush administration policy of mobilizing international pressure against alleged Iranian nuclear programs. It was, in fact, qualified by a footnote whose complex phraseology obfuscated that the suspension really applied to only one aspect of the Iranian nuclear weapons program (and not even the most significant one): the construction of warheads. That qualification was not restated in the rest of the document, which continued to refer to the "halt of the weapons program" repeatedly and without qualification.   

The reality is that the concern about Iranian nuclear weapons has had three components: the production of fissile material, the development of missiles and the building of warheads. Heretofore, production of fissile material has been treated as by far the greatest danger, and the pace of Iranian production of fissile material has accelerated since 2006. So has the development of missiles of increasing range. What appears to have been suspended is the engineering aimed at the production of warheads.

The NIE holds that Iran may be able to produce enough highly enriched uranium for a nuclear weapon by the end of 2009 and, with increasing confidence, more warheads by the period 2010 to 2015. That is virtually the same timeline as was suggested in the 2005 National Intelligence Estimate. The new estimate does not assess how long it would take to build a warhead, though it treats the availability of fissile material as the principal limiting factor. If there is a significant gap between these two processes, it would be important to be told what it is. Nor are we told how close to developing a warhead Tehran was when it suspended its program or how confident the intelligence community is in its ability to learn when work on warheads has resumed. On the latter point, the new estimate expresses only "moderate" confidence that the suspension has not been lifted already.

It is therefore doubtful that the evidence supports the dramatic language of the summary and, even less so, the broad conclusions drawn in much of the public commentary. For the past three years, the international debate has concentrated on the Iranian effort to enrich uranium by centrifuges, some 3,000 of which are now in operation. The administration has asserted that this represents a decisive step toward Iranian acquisition of nuclear weapons and has urged a policy of maximum pressure. Every permanent member of the U.N. Security Council has supported the request that Iran suspend its uranium enrichment program; the various countries differ on the urgency with which their recommendations should be pressed and in their willingness to impose penalties.

The NIE then highlights, without altering, the underlying issue: At what point would the nations that have described an Iranian military nuclear program as "unacceptable" agree to act on that conviction? Do they wait until Iran starts producing nuclear warheads? Does our intelligence assume that we will know this threshold? Is there then enough time for meaningful countermeasures? What happens to the growing stock of fissile material that, according to the estimate, will have been accumulated? Do we run the risk of finding ourselves with an adversary that, in the end, agrees to stop further production of fissile material but insists on retaining the existing stockpile as a potential threat?

By stating a conclusion in such categorical terms -- considered excessive even by the International Atomic Energy Agency -- the Key Judgments blur the line between estimates and conjecture. For example, the document says: "We judge with high confidence that the halt . . . was directed primarily in response to increasing international scrutiny and pressure resulting from exposure of Iran's previously undeclared nuclear work." It extrapolates from that judgment that Iran "is less determined to develop nuclear weapons than we have been judging since 2005" and that it "may be more vulnerable to influence on the issue than we judged previously."

It is to be hoped that the full estimate provides more comprehensive evidence for these conclusions. A more plausible alternative explanation would assign greater significance to the regional context and American actions. When Iran halted its weapons program and suspended efforts at enriching uranium in February 2003, America had already occupied Afghanistan and was on the verge of invading Iraq, both of which border Iran. The United States justified its Iraq policy by the need to remove weapons of mass destruction from the region. By the fall of 2003, when Iran voluntarily joined the Additional Protocol for Nuclear Non-Proliferation, Saddam Hussein had just been overthrown. Is it unreasonable to assume that the ayatollahs concluded that restraint had become imperative? By the fall of 2005, the American effort in Iraq showed signs of bogging down; the prospects for extending the enterprise into Iran were diminishing. Iranian leaders could have felt free to return to their policy of building up a military nuclear capability -- perhaps reinforced by the desire to create a deterrent to American regional aspirations. They might also have concluded, because the secret effort had leaked, that it would be too dangerous to undertake another covert program. Hence the emphasis on renewing the enrichment program in the guise of a civilian energy program. In short, if my analysis is correct, we could be witnessing not a halt of the Iranian weapons program -- as the NIE asserts -- but a subtle, ultimately more dangerous, version of it that will phase in the warhead when fissile material production has matured.

The NIE does not so much reject this theory; it does not even examine it. It concludes that "Tehran's decisions are guided by a cost-benefit approach rather than a rush to a weapon." But a cost-benefit analysis does not exclude a rush to weapons on a systematic basis. It depends on the criteria by which costs and benefits are determined. Similarly, in pursuing the cost-benefit rationale, the estimate concludes that a combination of international scrutiny along with security guarantees might "prompt Tehran to extend the current halt to its nuclear weapons program." That is a policy, not an intelligence, judgment.

A coherent strategy toward Iran is not a partisan issue, for it will have to be implemented well after the present administration has left office. I have long argued that America owes it to itself to explore fully the possibility of normalizing relations with Iran. We do not need to tranquilize ourselves to the danger in order to pursue a more peaceful world. What is required is a specific vision linking assurances for Iran's security and respect for its identity with an Iranian foreign policy compatible with the existing order in the Middle East. But it must also generate an analysis of the strategy to be pursued should Iran, in the end, choose ideology over reconciliation.

The intelligence community has a major role in helping to design such a vision. But it must recognize that the more it ventures into policy conjecture, the less authoritative its judgments become. There was some merit in the way President Richard Nixon conducted National Security Council discussions at the beginning of his first term. He invited the CIA director to brief on the capabilities and intentions of the countries under discussion but required him to leave the room during policy deliberations. Because so many decisions require an intelligence input, this procedure proved unworkable.

I have often defended the dedicated members of the intelligence community. This is why I am extremely concerned about the tendency of the intelligence community to turn itself into a kind of check on, instead of a part of, the executive branch. When intelligence personnel expect their work to become the subject of public debate, they are tempted into the roles of surrogate policymakers and advocates. Thus the deputy director for intelligence estimates explained the release of the NIE as follows: Publication was chosen because the estimate conflicted with public statements by top U.S. officials about Iran, and "we felt it was important to release this information to ensure that an accurate presentation is available." That may explain releasing the facts but not the sources and methods that have been flooding the media. The paradoxical result of the trend toward public advocacy is to draw intelligence personnel more deeply than ever into the public maelstrom.

The executive branch and the intelligence community have gone through a rough period. The White House has been accused of politicizing intelligence; the intelligence community has been charged with promoting institutional policy biases. The Key Judgments document accelerates that controversy, dismaying friends and confusing adversaries.

Intelligence personnel need to return to their traditional anonymity. Policymakers and Congress should once again assume responsibility for their judgments without involving intelligence in their public justifications. To define the proper balance between the user and producer of intelligence is a task that cannot be accomplished at the end of an administration. It is, however, one of the most urgent challenges a newly elected president will face.

© 2007 Tribune Media Services Inc.

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The myth of a grand bargain with Tehran

By Gideon Rachman

Financial Times, Published: December 10 2007 19:14 | Last updated: December 11 2007 14:55

A week ago, the Americans were mad bombers. Now they are naive dupes. The Bush administration’s flip-flop over Iran’s nuclear programme has caused a somersault in the way America’s allies talk about US foreign policy in the Gulf.

The release of the latest US National Intelligence Assessment on Iran, with its jaw-dropping first sentence – “We judge with high confidence that in fall 2003, Tehran halted its nuclear weapons programme” – has come as a huge shock. It is now widely assumed that the Bush administration will not bomb Iranian nuclear facilities. It is also clear that it will become much harder to push through further UN sanctions against Iran. The Iranians, it seems, are off the hook.

This turn of events has inverted the usual stereotypes. The British and French – often typecast as appeasers of Iran – are furious with the Americans. They are convinced that the Iranians are still working on the bomb, even if they are not actively trying to “weaponise” their nuclear programme. Officials at the International Atomic Energy Agency – routinely accused by the Americans of being softies – now say that the US intelligence assessment is “generous”. The Gulf Arabs – who often complain about US belligerence – now worry aloud that America is planning to cut a deal with Iran. And the Iranian government is deeply grateful to America’s Central Intelligence Agency.

So what is going on? Fortuitously, I spent the weekend at a conference on security in the Gulf, organised by the International Institute for Strategic Studies. Soldiers, diplomats, spooks and academics had flown into Bahrain from all over the world.

But the wisdom of the security crowd failed to come up with a single convincing explanation for recent events. Several theories were doing the rounds. Among the Americans and Europeans, the most popular explanation was that the US intelligence people were trying to do two things. First, to prove their independence; second, to stop a drive to war with Iran. A rival theory was that the spies had been naïve. They had failed to realise how their work would be spun by the media.

Neither of these ideas seemed popular among the Arab delegates. They find it difficult to believe that President George W. Bush could be deliberately undermined by part of his own government. They have a strong preference for conspiracy theories over cock-ups.

So their preferred explanation is that the US is intentionally being nice to Iran – perhaps as a reward for improved Iranian behaviour in Iraq. Alternatively, the Americans may already be talking to the Iranians and this is the first outward manifestation of their rapprochement.

Being of a western cast of mind, I incline to a mixture of theories one and two. This looks like a declaration of independence by America’s intelligence services, whose full ramifications for US policy may not have been completely understood.

So where does that leave us? Unless Iran does something really stupid, Mr Bush will not be able to bomb. Much tougher sanctions are also out. So that leaves talking.

That could be a very good thing. For years, those who have opposed the drive to war have urged America to strike a “grand bargain” with Iran. This would involve Iran forswearing nuclear weapons in a convincing and verifiable way and generally promising to behave better in the region. In return Iran would get full diplomatic recognition from the US, the lifting of sanctions (such as they are) and all manner of economic and technological benefits.

But there are two obvious snags. First, America’s intelligence re-assessment will probably be a boon to hardliners in Tehran. President Mahmoud Ahmadi-Nejad will be able to say that Iran has stood firm and faced down the world. In such a climate, why should the Iranians make concessions?

Second, there may be no “grand bargain” to be had. Most of the evidence suggests that the determination to get a nuclear bomb is a national project in Iran – uniting different political factions. The Iranians are not necessarily in a hurry. They might be deterred for a while. But the nuclear programme has become a symbol of national machismo – and is also widely regarded as a strategic necessity, given that Iran is surrounded by hostile powers.

Iran also has ambitions in the region. It is the biggest country in the Gulf area – or, as the Iranians insist on calling it, the Persian Gulf area – and it wants its “natural role” to be recognised. If Iran is to be the regional hegemon, then the US military presence must be greatly diminished. The US army is in Iraq, the navy is in Bahrain, the air force is in Qatar. There is no way that the Americans are going to cede the dominant security role in the Gulf – a region that sits on top of 60 per cent of the world’s known oil reserves and 40 per cent of its natural gas.

That is the basic reason why a grand bargain will be so hard to achieve. The US and the Iranians are strategic rivals in the Gulf region. They are not going to become friends. The best that can be hoped for is an uneasy modus vivendi.

As for the Iranian nuclear programme: the message that the American public risks being left with is that it would be impossible to live with an Iranian bomb – but fortunately Iran is no longer pursuing nuclear weapons. The reality is the complete opposite. Iran probably will get nuclear weapons. And the west will probably have to learn to live with it.