MADRID – At first glance, the entire greater Middle East appears to be sliding into chaos. Civil war continues to rage in Syria, while its neighbors – particularly Jordan and ever-fragile Lebanon – strain under the weight of more than two million refugees . Libya has largely descended into tribal anarchy, and a weak Afghan regime is bracing itself for NATO’s withdrawal in 2014. Egypt’s military-backed government has extended the state of emergency, and Iraq is witnessing a surge in sectarian violence, with more than 5,000 civilians killed and almost 14,000 wounded so far this year .
And yet there is an exception to this pattern where one would perhaps least expect it. For decades, Iran has cast a menacing shadow of confrontation over the Middle East; now the Islamic Republic appears eager to end the showdown with the West over its nuclear program.
This shift – and Iran’s surprising role as an outlier of hope in a region of disorder – invites reflection on America’s global leadership and what the United States can achieve when it uses multilateralism (and transatlanticism in particular) to its full potential. At a time when the US often projects an image of indecision and weakness – reflected in the unfortunate slogan “leading from behind” – Iran exemplifies the potential of an international response with the US leading from the front.
The US has maintained a broad sanctions regime against Iran since the mid-1990’s, and has enforced it vigorously – imposing $1.9 billion in penalties on the bank HSBC last year , for example, and blacklisting entities that help Iran evade financial restrictions. But it was only with growing participation by a wide range of countries that the sanctions really began to bite.
This was clearly reflected in Iranian President Hassan Rouhani’s overwhelming election victory in June. Rouhani campaigned on a pledge to pursue “constructive engagement” with the international community. His early momentum and the apparent support – or at least tolerance – of Supreme Leader Ayatollah Ali Khamenei reflect Iranians’ weariness with international isolation and their bitterness over the economic havoc that ever-tightening sanctions have wrought.
The international sanctions imposed on Iran have grown tighter, of course, as their leaks have been sealed. After overcoming its initial reticence, the European Union significantly strengthened its punitive approach toward Iranian entities connected to nuclear activities (though recent court rulings have cast doubt on some measures). More important, at the EU’s request, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) decided in 2012 to remove 14 Iranian banks from its network (which is the leading conduit of international electronic interbank transactions). The desire to reverse this measure reportedly has been a key factor behind Iran’s diplomatic change of course.
America’s efforts to convince international partners to reduce their reliance on Iranian oil – partly under threat of penalizing their financial institutions – have also been highly effective. Iranian oil exports have plummeted since 2011, from approximately 2.5 million barrels per day to around 1.3 million, owing in part to a total ban on oil exports to the EU and significant reductions by China, Japan, India, and South Africa. This led to a precipitous drop in net oil-export revenue, from $95 billion in 2011 to $69 billion in 2012 – a catastrophic decline for a country in which oil sales comprise 80% of export earnings and 50% of government revenue.
This multilateral response is the result of vision and patient engagement. The US has led through effort and sweat. Rather than sending an army clad in khaki and camouflage, the US has deployed an army of suits armed with talking points to make the case for stronger enforcement.
Moreover, US engagement has gone beyond governments. For many years, the US has been reaching out to multilateral institutions and the private sector. (I recall receiving several detailed briefings on Iran from American delegations during my time as General Counsel of the World Bank Group.) These efforts have continued under the Obama administration, with the US Treasury Department engaging with 145 financial institutions in more than 60 countries since 2010.
The impact on Iran’s economy has been crushing. Iran’s GDP contracted by 1.9% from March 2012 to March 2013, and the International Monetary Fund predicts a further drop of 1.3% this year . The currency has collapsed, with the rial’s unofficial value falling from around 13,000 to the US dollar in September 2011 to roughly 30,000 to the dollar this summer. Not surprisingly, inflation has skyrocketed, with the Central Bank of Iran announcing an official rate of 39% for the 12-month period ending in August.
These are the numbers that support the view that Iran’s new diplomatic posture is more than a façade. But they are important not only because resolving the nuclear issue “can help serve as a foundation for a broader peace,” as Obama told the United Nations General Assembly last month. They also show what can be done.
Since America’s experience in Iraq and Afghanistan, too much talk has been about what the US is incapable of doing. But here is a clear example of what can be achieved with American leadership of a genuinely multilateral effort backed by hard work. Such success, one hopes, will embolden Obama and the US to engage in such efforts more often, so that openings like the one with Iran cease to be the exception.
Reprinting material from this Web site without written consent from Project Syndicate is a violation of international copyright law. To secure permission, please contact us .
And yet there is an exception to this pattern where one would perhaps least expect it. For decades, Iran has cast a menacing shadow of confrontation over the Middle East; now the Islamic Republic appears eager to end the showdown with the West over its nuclear program.
This shift – and Iran’s surprising role as an outlier of hope in a region of disorder – invites reflection on America’s global leadership and what the United States can achieve when it uses multilateralism (and transatlanticism in particular) to its full potential. At a time when the US often projects an image of indecision and weakness – reflected in the unfortunate slogan “leading from behind” – Iran exemplifies the potential of an international response with the US leading from the front.
The US has maintained a broad sanctions regime against Iran since the mid-1990’s, and has enforced it vigorously – imposing $1.9 billion in penalties on the bank HSBC last year , for example, and blacklisting entities that help Iran evade financial restrictions. But it was only with growing participation by a wide range of countries that the sanctions really began to bite.
This was clearly reflected in Iranian President Hassan Rouhani’s overwhelming election victory in June. Rouhani campaigned on a pledge to pursue “constructive engagement” with the international community. His early momentum and the apparent support – or at least tolerance – of Supreme Leader Ayatollah Ali Khamenei reflect Iranians’ weariness with international isolation and their bitterness over the economic havoc that ever-tightening sanctions have wrought.
The international sanctions imposed on Iran have grown tighter, of course, as their leaks have been sealed. After overcoming its initial reticence, the European Union significantly strengthened its punitive approach toward Iranian entities connected to nuclear activities (though recent court rulings have cast doubt on some measures). More important, at the EU’s request, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) decided in 2012 to remove 14 Iranian banks from its network (which is the leading conduit of international electronic interbank transactions). The desire to reverse this measure reportedly has been a key factor behind Iran’s diplomatic change of course.
America’s efforts to convince international partners to reduce their reliance on Iranian oil – partly under threat of penalizing their financial institutions – have also been highly effective. Iranian oil exports have plummeted since 2011, from approximately 2.5 million barrels per day to around 1.3 million, owing in part to a total ban on oil exports to the EU and significant reductions by China, Japan, India, and South Africa. This led to a precipitous drop in net oil-export revenue, from $95 billion in 2011 to $69 billion in 2012 – a catastrophic decline for a country in which oil sales comprise 80% of export earnings and 50% of government revenue.
This multilateral response is the result of vision and patient engagement. The US has led through effort and sweat. Rather than sending an army clad in khaki and camouflage, the US has deployed an army of suits armed with talking points to make the case for stronger enforcement.
Moreover, US engagement has gone beyond governments. For many years, the US has been reaching out to multilateral institutions and the private sector. (I recall receiving several detailed briefings on Iran from American delegations during my time as General Counsel of the World Bank Group.) These efforts have continued under the Obama administration, with the US Treasury Department engaging with 145 financial institutions in more than 60 countries since 2010.
The impact on Iran’s economy has been crushing. Iran’s GDP contracted by 1.9% from March 2012 to March 2013, and the International Monetary Fund predicts a further drop of 1.3% this year . The currency has collapsed, with the rial’s unofficial value falling from around 13,000 to the US dollar in September 2011 to roughly 30,000 to the dollar this summer. Not surprisingly, inflation has skyrocketed, with the Central Bank of Iran announcing an official rate of 39% for the 12-month period ending in August.
These are the numbers that support the view that Iran’s new diplomatic posture is more than a façade. But they are important not only because resolving the nuclear issue “can help serve as a foundation for a broader peace,” as Obama told the United Nations General Assembly last month. They also show what can be done.
Since America’s experience in Iraq and Afghanistan, too much talk has been about what the US is incapable of doing. But here is a clear example of what can be achieved with American leadership of a genuinely multilateral effort backed by hard work. Such success, one hopes, will embolden Obama and the US to engage in such efforts more often, so that openings like the one with Iran cease to be the exception.
Reprinting material from this Web site without written consent from Project Syndicate is a violation of international copyright law. To secure permission, please contact us .
