The Iran Primer

            The effects of the US and EU sanctions established in late 2011 and 2012 are already reducing Iranian energy exports and revenues, crippling foreign direct investment in Iran, and creating serious banking and trade problems. The Iranian Rial has become destabilized, and has steadily fallen to record lows as currency markets have reacted to the prospect of limited foreign trade, declining Iranian reserves, limits on Iran’s oil exports income, growing problems in working with Iran’ financial system, and growing detection efforts and penalties for violating sanctions…

 

            It is not clear whether the regime will react to these pressures by negotiating a meaningful agreement with the P5+1 and actually ending its nuclear program, or whether it will react by pursuing such programs regardless of their cost and/or lashing out at targets in the Gulf, other US targets, or US allies. As Chapters III and IV have discussed, the US must be ready for contingencies that could trigger a significant clash or conflict in the Gulf, where Israeli preventive strikes or US military action escalates to the point where the US might have to strike at Iran’s asymmetric or conventional forces in the Gulf and/or nuclear and missile programs.

 

            While the US should pursue sanctions and diplomatic options, it must also begin to make hard long-term plans regarding the possibility that sanctions and diplomacy fail.

 

            If negotiations fail, this means choosing between containment and preventive strikes. As other sections of this analysis show, both options present serious risks as well as advantages. It would seem that if the US does strike, it should be prepared to strike decisively against the full range of Iranian capabilities, be prepared for restrikes, and be prepared to provide a lasting military overwatch as long as Iran shows any sign of rebuilding its nuclear program. However, the analysis of these choices is sharply limited by the fact so much of the information required is highly classified…

            Sanctions and diplomacy are the best of a bad (or at least highly uncertain) set of options, but it is far from clear that they will stop Iran’s progress toward a nuclear weapons capability. Despite the lack of diplomatic progress, and the appearance that the Iranians are stalling for time, negotiations can still be successful. Negotiations can bring about long-term change in the US- Iranian relationship where military strikes or more sanctions cannot.

 

            The risks become higher as time goes on and as and this aspect of US and Iranian competition turns into a “long game.” So far, Iran has backed away from military confrontation, but it is far less clear what will happen if sanctions result in a prolonged confrontation. Iran has at least as much to lose as any other Gulf state if it halts oil traffic through the Gulf. Iran also cannot hope to win any serious conventional conflict with the US and its Gulf allies, and will therefore attempt to use asymmetric means to confront the US...

 

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