September 1, 1996

Old Friends as New Enemies

Security Dilemma: Terrorism and Containment

Sources of American Perception about Iran

Bureaucratic Politics Prevail Over Profits

Domestic Politics Prevail Over Profits

Retribution Trumps Rehabilitation

Interests Under Siege: Intrinsic and Strategic

Intrinsic Interests at Stake

Strategic Interests at Stake

A Tale of Presidential Doctrines

Nixon Doctrine

Carter Doctrine

Reagan Doctrine

Bush Doctrine

Clinton Doctrine

Politics and Idealism Trump Alliance Obligations

The 1970s closed with the fall of the Shah, and Iran shifted in American eyes from ally to adversary. With the rise of Ayatollah Khomeini, Washington went from being Tehran's mentor to being its menace. The Islamic Revolution had ousted the Shah, installed Khomeini, and reversed mutual perceptions between Iran and the United States. At issue was how Washington should treat its old friend, Tehran, which had become a new enemy. Two approaches surfaced: the U.S. as "balancer" between Iran and Iraq; or the U.S. as "container" of both Tehran and Baghdad. These approaches are balance of power and dual containment, respectively.

On the one hand, balancing consists of applying principles like, "The enemy of my enemy is my friend." When Iran and Iraq are adversaries, a balancing approach would play one off against the other. In order to deter Iran, the U.S. would make use of Iraq; in order to restrain Baghdad, Washington would use Tehran. On the other hand, dual containment is a simultaneous effort to counter the threats of both Baghdad and Tehran.

Security Dilemma: Terrorism and Containment

Tehran and Washington perceive that they are on the horn of a security dilemma. What one side sees as action to increase its security, the other views as a decrement to its own security. There are incentives to take the offensive in a race to obtain a margin of safety. Increases in Iranian terrorism follow escalation in American "containment," a policy of isolating Iran through a combination of measures that includes economic sanctions.

After several terrorist incidents, President Clinton called terrorism, "the enemy of our generation," and he signed the Iran and Libya Sanctions Act on August 5, 1996. He also said that the U.S. would fight terrorism alone, if necessary. Two days earlier, Secretary of Defense William Perry had laid the national security groundwork for Presidential signature of the Act. He said that Saudi Arabia was conducting an investigation to find the source of a June 1996 bombing of a U.S. facility in Dhahran that killed 19 American military personnel. He speculated that Riyadh would find an "international connection" in its search for causes of the bombing. Perry also surmised that the connection would likely be Iran, and that the U.S. would be prepared to take forceful action if the evidence were compelling.

In discussing the possible involvement of Iran in the killing of Americans in Saudi Arabia, Perry made a statement on August 2, 1996, to National Public Radio. He stated that the United States would take strong action against any country proved to be involved in the June bombing. He would not say what action would be taken. The Secretary, however, backed away from his initial tough stance against Iran. Reuters reported that on Saturday, August 3, Perry claimed that he welcomed a chance to clarify his Friday comments. Perry disingenuously said that he only had repeated Iran's own threat to support terrorism against the U.S. But if Iran is proven to have committed the bombing, he said that imminent action is not warranted and might not be taken.

Reporters raised the issue of a link between his Friday comments on Iran and reports that it had terrorist training camps. The journalists wanted to know if Washington might launch a military strike against these camps. Rather than answering the question directly, Perry said that was a classic case of adding two and two and getting twenty two. He then repeated his conclusion that the sophistication of the Saudi bombing indicated "an international terrorist connection."

Perry expressed the view that he, in fact, did not know if Saudi Arabia would shortly announce its findings on the June 25 truck bombing. And on August 15, there was a report about the nature of the bombing suspects by the Saudi Minister of Interior, Prince Nayef. He said that the suspects were Sunnis, born in Saudi Arabia, and veterans of the Afghan war. Reuters concluded that Nayef stressed the internal origin of the suspects in order to refute suggestions by Perry that Saudi evidence might point to an Iranian connection.

In a next day reply, Reuters quoted Ayatollah Ali Khamenei, Iran's spiritual leader, of accusing the United States of trying to isolate Iran from the world community. He said, "America and the arrogant world powers, unable to uproot the Islamic Republic [of Iran], have embarked on a calculated policy to separate governments and nations from the Islamic Republic." In other words, Khamenei perceives the threat implicit in the U.S. policy of "dual containment," the Clinton Administration's policy of isolating Iran and Iraq from the international community. The threat behind the containment approach is the flip side of a Cold War-born interest that prompted the U.S. to make contingency plans for the defense of Iran.

Even before Iran entered a rogues gallery of enemies that sponsor international terrorism and/or engage in trafficking in weapons of mass destruction, there were contingency plans for an assault on Iran in order to save it from the Soviet menace. In the Cold War Pentagon, a defense of Iran from Soviet attack was equivalent to an attack on Iran, with or without Iranian consent. Whether Iran was friendly or not was irrelevant to whether it would be saved from Soviet attack.

A Soviet invasion of Iran was one of the major Cold War threat contingencies. Others included the most important one--a Soviet incursion via the Fulda Gap of a divided Germany into the heartland of Western Europe. Even as American forces anticipated these major threats, Pentagon analysts began to plan for new dangers of an indirect nature. Pro-Soviet regimes in Afghanistan, Cuba, and Libya acted as surrogates for Moscow, and thus were fair game for Pentagon planners. The Reagan doctrine gave a rationale for providing military assistance to friendly challengers who sought to shoot their way into closed regimes that carried out Moscow's wishes. Dubbed "freedom fighters," in Afghanistan, these Islamic combatants were the surrogate foot soldiers in the West's conflict with the USSR in Soviet-dominated Afghanistan.

In addition to backing Islamic fighters against Soviet forces in Afghanistan, the Reagan Administration tilted towards Iraq in 1982. Although Iraq had been a traditional enemy of the U.S., Washington opened Baghdad to balance Tehran. In other words, the enemy (Iraq) of my enemy (Iran), is my friend.

In short, Iran and the United States have acted as if they were on the threshold of a security dilemma. What Tehran saw as an action to increase its security, Washington viewed as a decrement to its own security. Each had incentives to take the offensive in a contest to obtain a margin of safety. Increases in Iranian terrorism followed escalation in American containment. With the fall of the Shah and the rise of Khomeini, Washington and Tehran had inverted their perceptions from friends to enemies. The question now arises as to the sources of these changed attitudes.

Bureaucratic Politics Prevail Over Profits

Principal sources of American attitudes regarding Iran are bureaucratic and domestic politics, intrinsic and strategic interests, alliance politics, as well as idealism. To illustrate bureaucratic political roots of American attitudes about Iran, consider an anecdote told by President Ronald Reagan. During a visit to the Department of Interior, he came across a crying bureaucrat from the Bureau of Indian Affairs. "Why are you crying?" asked Reagan. "My Indian died," answered the bureaucrat, "and now what am I to do with my life?" Imagine a Pentagon bureaucrat crying. Why? The threat from Moscow has waned. The USSR died and Russia was reborn. And the former constituent republics emerged as independent states. What does this official do in the absence of the Soviet threat? Enter Iran. Although less than a Cold War threat, Tehran nevertheless is a useful tool in bureaucratic battles over budget allocations.

The question arises whether the Pentagon engages in an overestimation of the Iranian threat for budget purposes. Under the psychological principle that motivated biases cause leaders to see what they want to see, that process would explain why American defense officials would magnify the Iranian threat.

In the bureaucratic politics of American foreign policy towards Iran, the Pentagon needs a pretext to defend its budget. Is it the case that the Pentagon actually created a threat out of the thin air just to serve its bureaucratic needs? With the end of the Cold War, Michael Klare makes the case that the Pentagon indeed invented the Iranian threat, among others. In discussing the nature of American post-Cold War national security strategy, Klare argues that the Pentagon manufactured a rogue state threat. He assumes that the policy of containment against the USSR shifted to containment of rogue states simply to maintain approximate levels of defense spending as during Cold War days.

Without much evidence, Klare presumes that the Pentagon magnifies the rogue state threat for its own bureaucratic purposes. He holds that some Pentagon officials seek "to invent a new raison d'être for the military establishment." Congress and the public no longer support a Soviet-oriented military posture at a time of decreasing Russian capabilities. Therefore, Pentagon officials developed an alternative strategic outlook based on non-Soviet threats to American security. He acknowledges that some rogue states do threaten global peace because of the proliferation of weapons of mass destruction and terrorism. But they were engaged in these activities even before rogue state terminology. As a result, he is on thin ground in suggesting that the Pentagon invented the rogue state threat; he is on even thinner ground in suggesting that rogue regimes only seek weapons of mass destruction and partake in terrorism because the U.S. singles them out.

Klare labels deliberate overestimation of threat, coupled with the desire to disrupt a peaceful status quo, as a rogue state doctrine. An alternative policy he prefers is "rogue state marginalization," a policy which would diminish the perceived importance of rogue states. In so doing, the United States would deny them the ability to serve as role models for "rogue wannabees." In order to induce outlaws to change their ways, Klare favors a policy of holding out increased rewards--economic assistance, trade, and investments.

Because of Washington's practice of "demonizing the alien Other," the U.S. overestimates the rogue state threat. Klare may be correct that the Pentagon overestimates the Iranian threat for budgetary purposes; he goes too far in inferring that it "invents" that threat. In any event, motivated bias is the psychological concept that would explain threat magnification: You see what you want to see. Pentagon officials saw what they wanted to see--a threat that would fit the size of its budget needs.

Domestic Politics Prevail Over Profits

In addition to bureaucratic politics, another source of American perceptions about Iran are domestic politics. Executive-legislative branch conflicts are par for the course in the formulation of American foreign policy. But in the case of Iran, there is remarkably little disagreement between these two branches of government. As a result, the Iran and Libya Sanctions law became law with only minor dissent after the vote. One voice was that of the Chairman of the House of Representatives Subcommittee on International Economic Policy and Trade. He acknowledges that Iran is a rogue state but doubted if economic sanctions against foreign firms that invest in Iran are the best means to change its behavior. Roth claims that sanctions against America's closest allies are a step in the wrong direction. Without allied support and cooperation, sanctions will not be effective and may provoke retaliation.

Ethnic and business interest groups clash in the formulation of policy towards Iran. The pro-Israel community and the American business sector represent the pro-sanctions and anti-sanctions schools of thought.

In the aftermath of the fall of the Shah and rise of Khomeini, the pro-Israel community pushes American administrations to magnify the Iranian threat because Tehran and Jerusalem are enemies. During the height of the Arab-Israel conflict, the main mission of the pro-Israel community was twofold: facilitate the flow of economic and military assistance to Israel; restrain the stream of aid to Arab regimes hostile to Israel. With the decline in intensity of the Arab-Israel conflict, there is less of a need to lobby for foreign aid to Israel. Indeed, one task that Israel-friendly interest groups have initiated is to lobby the U.S. Congress for aid to Arab states and the Palestinian Authority. As former enemies are being transformed into friends, so the pro-Israel community has become an advocate on Capitol Hill of assistance to an emerging "peace bloc."

In the post-Cold War and Arab-Israel conflict era, American foreign economic aid and military assistance budgets are becoming harder to justify to the Congress. With Israel's comparative wealth, it has less of a need for American economic assistance. To the extent that the threat from Arab confrontation states decreases with successes in the peace process, it is difficult to make a case for American military assistance to Israel. Two developments occur as the Arab-Israel peace process reduces the traditional threat facing Israel. First, Jerusalem suggests Iran is its new "threat of the day." Second, taking the lead from Jerusalem, the pro-Israel community in the States pushes Capitol Hill to focus on the Iranian threat to both the U.S. and Israel.

The most influential representative of the pro-Israel community on Capitol Hill is the American Israel Public Affairs Committee. In a paradoxical fashion, AIPAC uses crisis as an opportunity for increasing its clout. During 1981, AIPAC lost a major fight with the Reagan Administration over the transfer to Saudi Arabia of airborne warning and control system (AWACS) aircraft. The loss on AWACS jolted AIPAC to become a superlobby. Its budget went up eight-fold in nine years, its membership multiplied from 9,000 households in 1978 to 55,000 in 1987. And AIPAC's leadership steered $4 million in campaign contributions to candidates friendly to Israel. In other words, AIPAC's loss on AWACS was an opportunity for growth.

A second crisis AIPAC used as an occasion to change is the success of the peace process with the Palestinians. With the Oslo Accord of 1993, the Israeli government and the Palestine Liberation Organization began exchanging autonomy to Palestinians for peace to Israel. Following on the heels of Oslo was a peace treaty between Israel and Jordan. During the transition from the Arab-Israel conflict to a comprehensive peace settlement, AIPAC assists Jordan in obtaining foreign economic aid and military assistance through the Congress. Much like the crying bureaucrat who lost his Indian, AIPAC sought a new mission. Enter Iran. Although different from the traditional Arab-Israel threat, Tehran nevertheless is a useful tool for AIPAC's survival.

The Iran and Libya Sanctions Act sailed through the Congress in 1996, because of AIPAC's new image as an "Iran-basher." AIPAC used the following argument in lobbying for the Act. The organization claims that Iran needs to be contained until Tehran moderates its behavior and ceases behaving like an international outlaw. American sanctions impose a cost on the rogue behavior of Iran. That regime would be less able to devote resources to the export of international terrorism. The regime would have less capital available for the development of weapons of mass destruction. Quarantined by the world, Iran would lack international legitimacy. The regime then would have to explain to the Iranian people how its policies have resulted in such adverse world reaction.

In addition, AIPAC argued that sanctions on Iran would escalate dissatisfaction with the Iranian regime. Economic problems already have contributed to growing discontent. Sanctions also would diminish the regime's ability to buy off or placate its internal opponents. Export controls would undermine support for the government by the military. A military emaciated of contemporary equipment and technology may diminish support for the Islamic regime. Thus, Iran would have fewer resources for international terrorism, the export of its Islamic revolution, building up its military forces, developing weapons of mass destruction and opposing the Arab-Israel peace process.

Consider the relationship between AIPAC and the oil industry regarding Iran. A noted private oil consultant, Christine Helms, director of country analysis for the Petroleum Finance Company, described the conflict between AIPAC and the industry over Iran. After President Clinton's Executive Order of May 1995, which banned most trade with Iran, she stated that, "U.S. companies--sensing that Clinton was strumming American chords in the countdown to elections--merely hunkered down in their trenches." Oil industry sources admit to Helms that in light of AIPAC's involvement in formulating anti-Iran legislation, business groups are reluctant to join the battle. Nevertheless, "Given AIPAC's involvement in stirring political waters, oil industry sources acknowledge they are reluctant to wade in too deep." Why would businesses be afraid to take on an ethnic lobby? Perhaps the reluctance stems from fear of being accused of anti-Semitism and/or being on the wrong side of counterterrorism. Despite the alleged harm to U.S. businesses, ethnic politics triumph over business economics.

Before the adoption of the Iran and Libya Sanctions Act, Undersecretary of State Peter Tarnoff repeated an argument of American business. He said on March 17, 1995 that the State Department was concerned about the effect of unilateral restrictions on Iran for American firms. Tarnoff felt that such export controls "...could hurt Americans more than the government of Iran." In other words, because the sanctions are unilateral, they are ineffective against the target but are considerably risky for American firms. U.S. businesses believe that unilateral sanctions diminish their market opportunities and place them at a competitive disadvantage.

While AIPAC is a formidable foe of Iran in the war for Washington, there are business associations willing to work against anti-Iran legislation. Mobil Oil exemplifies the prevailing views of American firms towards international economic sanctions. Mobil opposes sanctions because it contends that they fail to achieve their goals. The Petroleum Industry Research Foundation and the Middle East Institute are organizations in Washington that also were on the losing side of the Iran sanctions legislation. In discussing the oil market and economic sanctions, the chairman of the Foundation echoes the Mobil Oil argument concerning the ineffectiveness of punitive, unilateral American legislation regarding Iran.

The business community concerned with American sanctions on Iran held a conference sponsored by Petro-Hunt Corporation during May 1996 in Dallas, Texas. Several former Bush Administration cabinet officials were very critical of the Clinton Administration approach of containing Iran because of the unilateral nature of the policy. In addition to the tepid effort by the American business community, a convergence of domestic and bureaucratic politics reinforce the likelihood that politics prevail over profits. But politics also converge with counterterrorism ideals in the battle over whether to impose sanctions on rogue states and foreign firms dealing with them. Not surprisingly, politicians seek the moral high ground on rogue regimes even if they leave American businesses "high and dry."

Retribution Trumps Rehabilitation

In addition to bureaucratic and domestic politics as sources of decisions to impose sanctions, there are rehabilitative and retributive goals of an embargo policy. Besides politics, idealism adds to the tendency of presidents to choose sanctions. Ideals provide an incentive for rehabilitation: American presidents believe they have a virtual fiduciary responsibility to change the behavior of foreign leaders, i.e., to rehabilitate them. This tradition derives from the idea that occupants of the Oval Office have a right to sit in judgment over and to change the behavior of their counterparts abroad. Presidents from Carter to Clinton believed they were entrusted with the charge of transforming Iran's behavior. At least, however, they did not seek to remake the Iranian regime as was the intention for Cuba. Presidents accepted the Islamic nature of the Republic of Iran, but they opposed the export of its revolution.

Regarding idealism and retribution, American Presidents think they have the moral obligation to punish wrongdoing. In addition to using coercive sanctions against Iran, the U.S. sought retribution--punitive action without regards for changing Tehran's behavior. In terms of domestic politics, retributive sanctions against Iran are gainful and risk-free. As soon as Washington inflicted harm on Tehran, sanctioning as a tool of retribution was effective. Such punishment was immediately gratifying to the Presidents as well as to the pro-Israel community. But regarding international politics, sanctioning jeopardizes alliance unity.

In short, the U.S. embargo not only had an instrumental rehabilitative function, to change Iran's behavior; the embargo also had a symbolic retributive purpose, to signal to Tehran and the pro-Israel community that wrongs are being righted. The only legitimate basis for imposing rehabilitative sanctions on Iran is if it is acting "opportunistically." That is, if Iran were acting from a window of opportunity then rehabilitative sanctions would be appropriate. But if Tehran were motivated by fear, then rehabilitation would be inappropriate. The only legitimate basis for punishing a person acting out of fear would be retribution.

When leaders act out of a window of opportunity, that is a metaphor for assuming that their conduct approaches the standards of "bounded rationality." The window signifies freedom of choice for a comparatively unified actor to pursue expected gains. If actors are not unitary and their behavior is a result of fear, that is a metaphor for assuming that their conduct is less rational. The lack of unity and basement suggest restricted choice and minimization of expected losses. If leaders emphasize loss avoidance over gain, tools like economic sanctions may have counterproductive effects. With this overview of retribution and rehabilitation, consider now an analysis of historical sanctions.

President Carter imposed sanctions on Iran during the hostage crisis of 1979. His goal was to coerce Iran, i.e., to get the government to crackdown on the "students" who held U.S. citizens hostage in the American Embassy located in Tehran. Carter's sanctions intended to be rehabilitative: They sought to change Iran's behavior. But because of the Iranian revolution, there was no "Iran" to coerce: The Shah was on the run, the government was in disarray, and Mullahs were assassinating pro-Western military officers. Because Iran lacked the quality of a unitary actor, American economic sanctions for rehabilitative purposes were irrelevant. Retribution for holding American hostages was the only legitimate basis for economic sanctions.

President Reagan sanctioned Tehran in 1987 during the Iran-Iraq War. He wanted to compel Iran to end its attacks on Gulf-bound Kuwaiti ships that had been re-flagged as American vessels. In contrast to a disorganized Iran during the Carter years, Tehran at the time of Reagan was more or less a unitary actor leaping from a window of opportunity. As a result, Reagan's rehabilitative sanctions were an appropriate means to change Iran's aggressive behavior towards Kuwait. But once Iranian behavior became less offensive, the rehabilitative aim withers, leaving only the retributive goal of righting a wrong. Even after that first Gulf War ended in 1988, the Reagan sanctions remained. When export controls remain in effect after the attacks against Kuwaiti shipping ceased, these sanctions have a retributive purpose. The persistence of sanctions when the threat has diminished suggests that retributive purposes were given greater weight than rehabilitative goals. In effect, retribution trumps rehabilitation.

As a result of state-sponsored terrorism by Iran and it accelerated acquisition of weapons of mass destruction, President Clinton tightened the Reagan sanctions in 1995. Clinton issued an executive order on May 6, 1995 that prevented American oil companies from investing in the Iranian oil and gas sectors. Designed to coerce Iran to cease its sponsorship of terrorism and stop the development of nuclear, biological, and chemical armaments, the Clinton sanctions also had a domestic political bonus for him: They sent a signal to the pro-Israel community that wrongs were being righted. While the Reagan sanctions were retributive, Tehran provided Clinton with a rationale for a return to rehabilitative sanctions.

On August 5, 1996, Clinton signed the Iran and Libya Sanctions bill, which institutionalized his 1995 executive order into legislation. Clinton signed the Act less than a month after the mid-air explosion of TWA Flight 800. Although there was no evidence at the time to link Iran to the downing of the aircraft, the conventional wisdom on Capitol Hill was to assume an Iranian connection. A bias towards inferring Iranian involvement suggests that retribution influenced decision-making. Because the predisposition was to presume the worst of Iran, Members blamed Tehran without waiting for proof. Furthermore, these politicians received domestic political kudos from the pro-Israel community for tightening the sanctions on Iran.

Intrinsic Interests at Stake

Contrary to the assumption that the pro-Israel community "invented" the Iranian threat, there indeed is a perceived danger from Iran. American leaders believe that Iran threatens both intrinsic and strategic interests. These interests are two sides of the same coin under siege. The Iranian menace threatens American civilians and military personnel in the Gulf--intrinsic interests. Iran also is a risk to other inherently valuable targets like Western petroleum products transiting the Gulf and other sea-lanes of communications.

An incident in Saudi Arabia exemplifies the Iranian threat to civilians as well as U.S. military personnel and installations. A fuel truck exploded on June 25, 1996, outside the northern fence of an apartment complex near an air facility at Dhahran, close to the eastern Saudi coast. The explosion killed 19 and injured about 160. The facility housed F-15 and F-16 aircraft belonging to the anti-Iraq Coalition's Joint Task Force, Southwest Asia. This Force includes American, British, French, and Saudi Arabian combatants. Besides U.S. Air Force personnel in the housing area, there were Army technicians who operated a Patriot missile air defense unit.

About 2,000 Americans were stationed at the Dhahran air facility. They helped enforce the U.N. No-Fly-Zones over Iraq. The Coalition created one zone over northern Iraq to prevent Saddam's forces from attacking Kurds. Another is in southern Iraq to protect Shia Muslims against Saddam's Sunni Muslim air force.

Iranian agents working with Saudi dissidents have intrinsic motives for attacking Americans in Saudi Arabia. U.S. civilian and military personnel are innately valuable to Washington. Hence, Tehran's motive could be to destroy that which is of such inherent import. But the same event can be of both intrinsic and strategic value. In this respect, a strategic aim is that which would be gained from publicizing the bombing of a U.S. military facility in Saudi Arabia. Attacking such a facility calls attention to the American presence in the Kingdom and places pressure on the United States to reduce its Post-war "occupation forces."

But the paradox of the Gulf War victory is a requirement for a semi-permanent American combat presence in Saudi Arabia to monitor the No-Fly-Zone in southern Iraq. While triumph in the East-West Cold War reduced the need for an American combat presence to contain the Soviet Union from penetrating the Gulf region, victory in the "Hot War" reinforced the need for deployment in Saudi Arabia.

Strategic Interests at Stake

Irrespective of the termination of the Cold War, the U.S. strategic interest in the Gulf is about the same--preserving the uninterrupted flow of petroleum to the world market at prices that are compatible with the economic growth of the industrialized democracies. The post-Cold War era only changed the source of danger; the strategic interests at stake remained constant. The external threat of the Soviet Union gave way to a regional threat from Iran and Iraq.

While there is a threat to intrinsic interests, there is also an Iranian danger to U.S. strategic interests. They include the credibility of the U.S. threat to use military force; the American resolve to remain engaged in the world; and the U.S. commitment to defend its friends against its foes. To the extent that Tehran stands up to Washington, it challenges U.S. credibility, resolve, and commitments. One means by which Tehran confronts Washington is through state-sponsored terrorism. Not only does Iran target American citizens, it also directs terrorism against the Iranian political opposition at home and abroad. To the extent that the domestic opposition derives from Iranians who were associated with the Shah's regime and thus tarred by the American brush, Tehran's attacks are based on their strategic interests.

After the rise of Khomeini and the seizure of American citizens as hostages in Tehran, occupants of the Oval Office perceived Iran as an "evil" nation of international terrorists. This perception constitutes an unmotivated bias that associates Iran with malice, irrespective of its behavior. Thus, presidents perceive Iran's current conduct as malicious, without evaluating that behavior on its own merits. Such misperception is an overestimation of the threat posed by Iran's behavior.

Threat magnification notwithstanding, Iran deserves its status as a repeat offender on the annual Department of State list of nations that sponsor global terrorism. In order to export terror throughout the global village, the regime formed the Supreme Council for Coordination of the Islamic Revolution. Activities of such an Islamic Council may have been discussed during a meeting in Paris during mid-June 1996.

There were reports from Paris that Egyptian President Hosni Mubarak presented a confidential file to French President Jacques Chirac. The file supposedly contained information on a secret conference in Tehran between leaders of terrorist organizations and Iranian intelligence. Reports indicated that the participants discussed plans to carry out systematic attacks directed mainly at American targets. Hezbollah's senior leadership used the conference to establish an organized international terrorist association that would incorporate all of its branches in approximately 15 countries.

Iran's Supreme Council may have been behind several incidents abroad that endangered American strategic interests. With respect to the threat to Iranian opposition forces, several defectors have been assassinated in Turkey, Italy, and Pakistan. The State Department suspects Iran to have conspired in the murder of a secular journalist and the attempted assassination of an Istanbul businessman. And concerning the threat against American allies, Iranian-sponsored Hezbollah combatants in southern Lebanon periodically launch rocket assaults on northern Israel. Iran provides arms, training, and money to the Lebanese Hezbollah. In turn, it tries to slow down the Middle East Peace process. Also, that organization is a leading suspect in the October 1983 bombing of the American Marine barracks in Beirut; the July 1994 bombing of a building housing Jewish organizations in Buenos Aires, Argentina; and the July 1996 mid-air explosion of TWA Flight 800.

Iran, furthermore, encourages Palestinian groups that reject the peace process with Israel, such as Hamas and the Popular Front for the Liberation of Palestine-General Command (PFLP-GC). U.S. intelligence officials report on a June 1996 meeting in Tehran of suspects in airlines bombings. At the meeting, representatives of the PFLP-GC reportedly requested permission to carry out terrorist attacks against U.S. interests. This meeting occurred one month prior to the July 17 mid-air explosion of TWA Flight 800 departing from New York for Paris.

In addition to supporting the PFLP-GC, Tehran provided safe haven to the Kurdistan Workers' Party (PKK) after various attacks against Turkey and Westerners traveling there. The Islamic Republic of Iran also supported Turkish Islamic groups suspected of assaults against secular Turks and Turkish Jews. And the State Department surmises that Tehran is guilty of using terrorism to destabilize friendly regimes in Algeria, Egypt, and Tunisia.

In addition to the worldwide confrontation between Iran and the U.S. over international terrorism, there is a direct confrontation in the area between Bosnia and Baghdad. A strategic aim of both countries is to extend their authority in this geopolitical sphere. This "region" is the only area in the world where American military forces are on the increase. U.S. military operations are conducted in support of Bosnian and Afghani Muslims. Tehran interprets the American military presence on behalf of the Muslims under siege as a direct threat to its own authority. As the presumed leader of an emerging Islamic Empire, Tehran believes that it also has the responsibility to protect Muslims. Rather than acknowledging the American contribution to Muslim security, Tehran berates Washington as the "Great Satan," who acts on behalf of "Little Satan," Israel.

Yet, in two Muslim wars, Washington and Tehran had a tacit alignment. Both sponsored the Islamic mujahadeen in Afghanistan against the Soviet occupation. And both supported the Bosnian Muslim regime against Christian Orthodox Serbia and Bosnian Serbs. In Afghanistan, the CIA provided covert assistance to Islamic rebels fighting against the Soviets. So did Iran. In the former Yugoslavia, the U.S. supported the Bosnian Muslims. So did Iran. Washington gave a green light for Zagreb to receive arms from Tehran en route to Sarajevo. Despite rejecting the American role in Afghanistan and Bosnia, Iranian Revolutionary Guards and their Saudi brethren fought in Muslim wars against the Soviets in Afghanistan and against the Serbs in Bosnia.

Upon returning to Saudi Arabia from the Afghanistan and Bosnian crusades, the Saudi fighters became dissidents. They use the presence of non-Moslems in Saudi Arabia as a means to challenge the Saud family dynasty. The Saudi dissidents opposed both Saudi Arabia's close ties with non-Muslim countries and its failure to observe Islamic tenets. The primary non-Moslems under fire in Saudi Arabia are American military personnel. The dissidents are ardent readers of the London-based Saudi, Mohammed al-Masari. He publishes reports documenting human rights abuses and excesses of the Saudi ruling family.

The regime accused the dissidents of being responsible for a prior bombing of the Saudi National Guard installation in Riyadh on November 13, 1995. That assault was the first political attack against the American military in Saudi Arabia. The Kingdom "convicted" four dissidents and beheaded them. One motive for the June 25, 1996 attack was to avenge this beheading. The dissidents were trained in Afghanistan for the war against the Soviets and had fought alongside Bosnia's Muslim-led army against Bosnian Serbs.

In addition to protecting friends against the threat of Iranian terrorism, American strategic interests include coercing Iran to cease its development of weapons of mass destruction, including nuclear, biological, and chemical armaments. A purpose of such weapons is to enable Iran to deter attacks from states like Iraq. The two neighbors fought a war of the cities from 1980-1988, in which they both employed weapons of mass destruction. Additionally, possession of nuclear, biological, or chemical armaments would allow Tehran to coerce neighbors like Saudi Arabia. The two explicitly negotiate or tacitly bargain over issues like Iranian pilgrims visiting Saudi holy sites, oil production quotas, as well as the presence of U.S. combat personnel in the Kingdom.

Tehran seeks to import sophisticated weapons systems and expand its own internal capabilities. Iran has the ability to obtain a nuclear device from a former Soviet republic, such as Muslim Khazakstan, that still possesses its nuclear weapons, but to acquire such a device on its own could take some five years. Whether with outside assistance or not, there are Central Intelligence Agency reports to indicate that Iran may have a nuclear weapon by the year 2,000.

Iran has a larger stockpile of chemical weapons than nuclear or biological armaments. Chemical weapons, however, are not as lethal as either the nuclear or biological hazard. Tehran began acquiring chemical arms in its war with Baghdad. The Islamic Republic stockpiled poisonous explosives with mustard gas as well as blood and nerve agents. But Tehran has initiated limited production of biological weapons. It is creating an infrastructure to sustain biological arms at places ostensibly engaged in pharmaceutical research.

Regarding missile systems to deliver weapons of mass destruction, Beijing and Pyongyang are selling ballistic missiles to Tehran. While the Islamic Republic has the ability to produce its own ballistic missiles, it prefers to import them from sources like China and North Korea. Iran's inventory is about 450 Scud B and Scud C missiles. Not satisfied to rely on these limited- range systems, Tehran is obtaining longer-range, solid-fuel missiles. Iran is expected to take delivery on North Korea's Rodong ballistic missile during 1996. It has a range of about 800 miles, which indicates that Tehran has most of the Middle East in its missile envelope. This range coupled with the capacity to deliver weapons of mass destruction enables Tehran to emerge as a world-class strategic threat to the United States.

In short, in order to counter the coercive potential of Iranian armaments, Washington has a strategic interest in preventing Tehran from acquiring weapons of mass destruction. Presidents have acted upon this strategic interest, whether directed at Iran, Iraq, or other rogue regimes. In the history of American-Iranian relations, several presidents have formulated what might be called "doctrines" regarding the Gulf in general and Iran in particular. A discussion of these doctrines should assist in the process of understanding the use of economic sanctions as a tool of choice by American presidents in their relations with the Islamic Republic of Iran.

Although presidents do not label their policies as doctrines, it is possible to outline the defining characteristics of their policies and label them as such. Here is a brief overview of these policies towards the Gulf, with special emphasis on Iran. Presidential doctrines vary according to the extent to which American regional allies acted as proxies, the degree of U.S. resolve, and the overall balance of military power in the area. As Cold War Presidents, Nixon and Carter focused on the external threat from the Soviet Union; during the transition to the post-Cold War era, Presidents Reagan, Bush, and Clinton have emphasized the internal threat from the region.

Nixon Doctrine--Containment of the USSR with the Twin Pillars. In view of the 1971 British military withdrawal from the area East of Suez, the Nixon aim was to reinforce American strategic nuclear deterrence of the Soviet Union. The method was to strengthen U.S. regional proxies--Iran and Saudi Arabia. A twin pillars policy provided justification for supplying arms to Tehran and Riyadh so that each could act as props to hold up Western interests in the Gulf. In 1969, President Nixon acknowledged the declining ability of the U.S. to take unilateral action in defense of its regional allies. Consequently, he put them on notice that they would have to shoulder more of the burden for their own defense. Military assistance was the tool of choice in order to facilitate allied defense initiatives. Faced with the burden of fighting the Vietnam War, President Nixon formulated a policy that would encourage allied participation in their own defense and minimize the American role.

Carter Doctrine--Containment of the USSR via American Resolve and Rapid Deployment Force. President Carter issued a statement of intent to intervene in the event of a Soviet military move in the Gulf. With the withdrawal of British and the Soviet invasion of Afghanistan in 1979, the USSR had an imbalance of power in its favor in the Gulf region. Moscow could stage combat aircraft from airfields in Afghanistan; in the contingency of a Backfire bomber attack on U.S. naval forces in the Arabian sea, Soviet use of Afghanistan would extend the range of fighter protection of the Backfire. Consequently, President Carter said that he would act to prevent a takeover of that region by any hostile outside power. The President's aim was to show resolve in order to deter a Soviet move into Iran from the Caucuses or Afghanistan. In effect, President Carter held that he would not allow the Soviets to do Iran what they had done to Afghanistan.

Reagan Doctrine--Balance of Power between Iran and Iraq to Preserve Stability of Saudi Arabia. With the fall of the Shah of Iran in 1978 and the subsequent rise of Ayatollah Khomeni, President Reagan's doctrine stated that he would not allow the Iranian revolution to spread to Saudi Arabia. He did not want Riyadh to move away from the American orbit because of a change of regime. President Reagan would not allow Saudi Arabia to go down the same path as Iran, e.g., for a revolution to overthrow a friendly regime and for the successors to oust the United States.

One way to protect Saudi Arabia from Iran or Iraq was for the U.S. to act as a balancer between the two. The United States provided tacit support to either so that neither could dominate the Gulf. Once Iran became hostile to the United States and Iraq invaded Iran in 1980, however, Washington acted as the "holder of the balance" in the Gulf. It initially tilted towards Iraq. But when Reagan sent U.S. arms to Iran in exchange for American hostages held in Lebanon by terrorists allies of Tehran, Washington tipped towards Tehran.

Bush Doctrine--Balance of Power between Iran and Iraq to Preserve Security of Saudi Arabia. In the post-Cold War era, the Bush Administration continued the Reagan policy of acting as holder of the balance between the two enemies. Bush first leaned towards Iraq by selling it dual-use equipment, removing Iraq from the terrorist list, providing import subsidies, and encouraging Iraq to play a major role in the Arab-Israel peace process. With the Iraqi invasion of Kuwait, Bush then tilted against Iraq. He "drew a line in the sand" with the deployment of American ground combat forces to the Arabian Peninsula. Bush in effect stated that he would not allow the Iraqis to do to Saudi Arabia what they had done to Kuwait. Following the defeat of Iraq, American ground troops remained in order to deter Iraq and monitor the terms of the cease-fire with Baghdad. Although the purpose was deterrence of Iraq, American combat forces created a predominance of military power that could be used to contain either Baghdad or Tehran.

Clinton Doctrine--From Balancing Power to Dual Containment. The U.S. would refrain from the Reagan-Bush balance of power approach: tacitly supporting either Iran or Iraq in an attempt to thwart expansion by the other. The basic purpose of dual containment is to counter the threats of both Baghdad and Tehran. The Administration sought to fashion an approach specific to each country as separate threats.

A balance of power assumption is that the "holder" should keep its options open regarding whether to have political relations with states in a region. Depending upon the balance in the area at any point in time, the balancer may intervene to prevent either state from dominating third parties. Iran's traditional aspirations to become a regional hegemon have in the past been kept in check by a rough balance of power with Iraq. Baghdad could count on the support of its Arab neighbors in any conflict involving Arabs and Persians. U.S. policy under Reagan and Bush was in the British balance of power tradition of preventing the emergence of any hegemonic power in the Gulf capable of controlling production and pricing policies of the oil producing states.

Contrary to the Reagan-Bush balance of power policy is an approach that rules out political relations on ideological grounds. The Clinton doctrine of dual containment rejects the balancing assumptions in favor of an ideological approach to Iran and Iraq. This ideological rigidity contrasts sharply with the flexibility of the balancing approach. But the principal flaw of dual containment is the assumption that it is possible to contain both Iran and Iraq at the same time, without making use of the hostility of the other state.

Isolation of Tehran assumes a comparatively powerful and united Iraq on the Islamic Republic's extensive western frontier; if not, Iraq becomes a tempting location from which Tehran can seek to escape containment. Likewise, isolation of Iraq assumes Iranian complicity. In this respect, multilateral economic sanctions on Baghdad would not be very effective if Tehran refused to enforce the embargo. Indeed, during the summer of 1996, these two states had a de facto economic alignment that allowed some Iraqi oil to be shipped across Iranian borders in contradiction with United Nations restrictions against such shipments.

Additionally, dual containment encourages Iran and Iraq into a de facto political alignment against the United States; but a rogue state alliance is precisely not the goal of American policy. The Clinton Administration's aim is to separate and isolate Iran and Iraq not only from the rest of the world but from each other. Paradoxically, the Clinton policy pushes Tehran and Baghdad together. Fortunately for the Administration, local forces work to separate these two states.

With respect to local populations, Iran and Iraq compete for allegiance of the Kurds along their borders. But the Kurds in Northern Iraq divide into two competing groups. The Patriotic Union of Kurdistan and the Kurdistan Democratic Party periodically appeal for assistance from Iran and Iraq, respectively. As a result of Iranian intervention on the side of the Patriotic Union in Erbil, Iraqi ground combat troops attacked that city on the weekend beginning August 30, 1996. In launching this attack, however, Iraqi forces violated the Western-protected safe haven above the 36th parallel and gave rise to the prospect of military intervention by Coalition aircraft.

In light of dual containment, it would be ironic for the U.S. to intervene on behalf of Iranian-supported Kurds in Iraq. This approach does not permit Washington to align temporarily with Tehran in order to thwart Baghdad. Consequently, the Iran-Iraq conflict via Kurdish surrogates leaves the Clinton Administration with two options: acceptance of Iraqi violations or military intervention on the side of Iran. Because of the policy of dual containment, the Administration is on the horns of a dilemma. On the one hand, acceptance would reward Baghdad and encourage further attacks against Iraqi Kurds. On the other hand, intervention would aid Tehran, contrary to dual containment's requirement to isolate Iran. The dilemma occurs because of rigid policy of dual containment; there would be no such dilemma under a flexible balance of power approach.

Dual containment also places a disproportionate political problem on Saudi Arabia. By housing the American forces that implement the military aspects of the containment policy for both states, Riyadh assumes the burden of retaliation from both neighbors. The number of troops required to enforce the No-Fly-Zone in southern Iraq is fewer than the number needed to monitor it and to deter Tehran. And if there were an Iranian connection to the June 1996 bombing of an American military installation in Saudi Arabia, that could be payback for Riyadh's collusion with Washington.

Dual containment is a flawed policy. It is indicative of the failure of the Clinton Administration to come to grips with regional and local factors that sustain conflicts in the Gulf, absent the external threat from the Soviet Union. As Cold War Presidents, Nixon and Carter successfully dealt with the external threat posed by the USSR. And during the transition to the post-Cold War era, Presidents Reagan and Bush managed the internal threat from the region. A return to the flexibility inherent in the balance of power policy of the Reagan and Bush years would allow Washington to take advantage of changing circumstances in the Gulf. Dual containment does not permit external actors to take advantage of future political instability in the region. A balance of power approach would permit the U.S. to make flexible adjustments in policy by temporarily siding with either Iran or Iraq.

While the U.S. sought to build consensus within the international community and regional allies to contain both rogue states, it succeeded only in the case of Iraq. Containment of post-Gulf War Iraq is an international strategy based upon U.N. resolutions. Containment applied to Iran, however, is problematic because the allies are reluctant to isolate Tehran.

In short, another assumption of the Clinton doctrine of dual containment is that it would be enforced by the allies. Failure to persuade the allies to boycott Iran has led to a situation where they accept the American approach or are in public dispute with the Unites States. By punishing foreign firms that invest in Iran above a threshold determined in Washington, the United States seeks to compel its allies to accept dual containment.

Politics and Idealism Trump Alliance Obligations

There is a convergence of bureaucratic and domestic politics with idealism and perceived interests. As a result, alliance politics have little influence on American policy regarding terrorism and weapons of mass destruction. In this respect, Pentagon threat perceptions, the pro-Israel community, counter-terrorist ideals, and principles against proliferation prevail.

Even though the allies oppose designating countries as "rogues," their opposition was comparatively mild when Secretary of State George Shultz placed Iran on the list of states that sponsor international terrorism on January 13, 1984. He thereby subjected Tehran to a set of anti-terrorism laws, including the Anti-terrorism and Effective Death Penalty Act of 1996. In a prohibition of assistance to terrorist states, this Act imposes penalties upon U.S. persons who engage in a financial transaction with a country knowing, or having reason to know, that it has been designated under the Export Administration Act as a country supporting international terrorism.

Because U.S. persons are the subject of the 1996 anti-terrorism law, the allies have little problem with its prohibitions. What is at issue for the allies in the Iran and Libya Sanctions Act is that Washington applies its laws to "any person," e.g. to either humans or foreign firms that trade and invest with Iran and Libya. In response to the Act, the European Union voiced its strong opposition: There is no doubt that the Iran/Libya legislation is a case of extraterritorial application. American sanctions can be imposed even if the relevant parties are located outside of the U.S. and the transactions involve no American financial instruments or technology. The European Commission, "...fails to see why the United States needs to hit out at its friends while targeting its adversaries."

Because of the convergence of politics, idealism, and perceived interests the United States hurts its friends while targeting its enemies. In addition to this convergence, there are legal precedents for American sanctions against foreign persons. These precedents include the Arms Export Control Act of 1967, the Iran-Iraq Non-Proliferation Act of 1982, and the Foreign Relations Authorization Act of 1994. There are also the Anti-Economic Discrimination Act of 1994 and the National Defense Authorization Act for 1993. They penalize foreign persons who support the Arab boycott of Israel. These two Acts restrict the Departments of State and Defense from doing business with foreign persons who comply with the Arab boycott of Israel.

Despite the U.S. assertion of legal precedents for its claim of extraterritoriality, the EU passed its own regulations that make it difficult for its Member States to comply with the American secondary boycott of Iran and Libya. In addition, the EU mounted a challenge to the United States through the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). The EU went to the WTO with its opposition to U.S. claims of extraterritoriality. The EU Council of Foreign Ministers called for a WTO dispute settlement panel that would deal with the issue of extraterritoriality. But because the GATT permits a signatory state to adopt measures that protect its national security, it allows economic sanctions by Member States. Despite Iran's attempt to divide America from its allies and the U.S. extension of its laws against Iran to them, the battle is still mainly between Washington and Tehran.

Currency Exchange: Capital for Terror and Arms Control

Both Washington and Tehran use weapons of choice in confrontations with one another. Export controls on investments are tools of the capital-rich to take advantage of the susceptibility of the capital-poor; the export of international terrorism is a weapon of the weak to exploit the vulnerability of the strong. Because the United States is a primary source of global capital, it employs economic sanctions to constrain international investment in Iran. Tehran is a regional power with a capacity for exporting its revolution worldwide; it engages in state-sponsored terrorism against the United States. Exporting terrorism is an Iranian tool of choice befitting its aspirations to become a fountainhead for the Islamic Revolution.

While exporting terrorism is a way by which Iran can spread the ideology of its revolution, importing equipment for the development of weapons of mass destruction is a means for Iran to catapult its way into Great Power status. The acquisition of nuclear, biological, and chemical armaments is a method to achieve an equality of deterrent and coercive potential with the United States, at least in the Gulf region. Just as revolutionary ideologues are reluctant to give up the option of resorting to state-sponsored terrorism, so the more secular-oriented officials may be hesitant to give up what Iranians may perceive as a great equalizer, weapons of mass destruction.

The currency for Washington is capital for investment; the currency for Tehran is terrorism for export and weapons proliferation. At issue is whether there can be a currency exchange--a grand bargain between the two confrontation states: Is there a potential for an accord that would trade a piece of capital for a piece of peace? Doubtful. As long as each state derives both national security and domestic political benefits from confronting the other, there is little prospect for such a bargain. And so long as Washington and Tehran are motivated primarily by idealism and ideology, there is scant potential that these new enemies can resume their old friendship. And within Iran, revolutionary ideologues may have reached an accommodation with their secular competitors: The religious faithful can export the revolution; the secular military can have its weapons systems.

The Iran and Libya Sanctions Act also contains seeds for an exchange. For a cessation of Iranian terrorism, conventional military build-up, and acquisition of weapons of mass destruction, there is an implicit promise of a removal of American sanctions. In the currency exchange proposed here, there would be an explicit pledge of sanctions removal. More importantly, there would be a promise of capital investment. For its part, Iran would have to cease the practice of terrorism, reduce its conventional armaments, and dismantle its rudimentary nuclear, biological, and chemical components.

On the one hand, the allies would be somewhat optimistic regarding the prospects for a currency exchange between Tehran and Washington. Iran projects a moderate image of itself to the allies in order to enhance the prospects of business relations with them. The State Department views this quest for respectability as an explanation for why Tehran reduced its attacks in Europe during 1995: "Tehran wants to ensure Western capital and markets." The Europeans claim that their "critical dialogue" with Iran yields dividends. They take a critical posture towards Iran's misbehavior, while they maintain normal commercial and political relations. The allies would argue that if Iran decreases its terrorist assaults in order to gain access to European and Japanese capital and markets, perhaps Tehran would be willing to do the same with respect to Washington.

On the other hand, the U.S. would be pessimistic concerning the possibility of a bargain. For Washington, there is no question that Iran is disingenuous regarding its "moderate" posture and should not be trusted. American officials believe that Tehran is making a tactical, short-term reduction in its practice of terror in order to gain capital and market access. Iran still retains its long-term use of terror as a strategic weapon, while making a tactical accommodation for the moment. Washington assumes that Tehran's moderate posture is a ploy to gain short term advantage with the European Union, Japan, and Canada in their disputes with the United States over the extraterritorial application of American laws against Iran.

Because of Iran's subterfuge, critics may view the idea of a currency exchange as appeasement. But unlike the appeasement policy of arms-for-hostages, capital-for-terrorism/proliferation is more demanding on Tehran. The arms/hostages arrangement gave Iran an incentive to seize hostages in order to gain additional armaments. A capital-for-terrorism/proliferation arrangement would place the ball in Tehran's court: Only in the context of a reduction in terrorism and arms acquisition would there be a corresponding cutback in economic sanctions. The pain would remain before there would be any gain.

In the arms-for-hostages swap, there was no new pain for Iran but a high prospect for a weapons gain. In the capital-for-terrorism/proliferation bargain, the gain would only come after the terror ceases and the pain ends. In short, an incremental reduction in terrorism and proliferation would be a necessary condition for a gradual decrease in sanctions; success of this tit-for-tat process would mean an end to the Iranian terrorism threat and weapons build-up. Only then could investment capital flow freely to Iran from capital-rich Europe, Japan, and North America. While such an achievement could allow new enemies to rekindle their old friendship, such progress is unlikely.

Meanwhile, the inflexible policy of dual containment should revert back to the flexible balance of power approach. The U.S. as balancer between Iran and Iraq is more likely to restrain either state than the United States as a container of both Tehran and Baghdad.