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By Shashank Joshi, Associate Fellow, RUSI
11/01/2012: Four years ago, the Obama administration entered office with the promise to unconditionally engage the Islamic Republic: 'we will extend a hand if you are willing to unclench your fist', the president declared in his inaugural address. Today, an Iranian nuclear scientist, assassinated in his car, became the latest victim of a protracted covert war between Iran and a coalition of adversaries. This month - after years of stalled diplomacy and twelve months of regional upheaval - the administration ushered in the final year of its first term with perhaps the fiercest multilateral pressure ever imposed on Iran. Europe and the United States are turning the screws on Tehran with sanctions of unprecedented bite, directed at the country's central bank and oil exports, crippling its economy ahead of parliamentary elections in March. But Iran and the United States are playing a zero-game, and neither fiercer sanctions nor more negotiations are likely to bring a durable settlement.
The IAEA has never said that Iran is building nuclear weapons; rather, its complaint has been that Iran's obfuscation has made it impossible to prove otherwise. The latest round of the prolonged crisis began last November when the International Atomic Energy Agency (IAEA) released a report on Iran's nuclear programme, warning that it was 'unable to provide credible assurance about the absence of undeclared nuclear material and activities in Iran, and therefore to conclude that all nuclear material in Iran is in peaceful activities'.
In February last year, Iran announced that it would start enriching a portion of its uranium stockpile to 20 per cent. Counterintuitvely, that is most of the way to weapons-grade (at 90 per cent):
'72 percent of the effort to produce weapons-grade uranium is accomplished by the time the product is enriched to 3.5 percent. By the time the uranium is enriched to 20 percent, nine-tenths of the effort to reach weapons grade has been expended.'
Although the material is all monitored by the IAEA, this shortens the - entirely hypothetical - timeline for building a bomb. Then, at the beginning of this year, Iran announced that it had begun this higher-grade enrichment at the fortified Fordo plant - which may be both better suited to such enrichment, and better protected from aerial attack (though even this has been inspected ten times since October 2009).
The United States and its European allies (some of whom, like France, have proven more hawkish than Washington) have reacted forcefully to these developments. After much inconclusive diplomacy, sanctions were imposed in seven separate resolutions between 2006 and 2011. The most aggressive of these came in the summer of 2010, when a complete arms embargo and interdiction regime were put into place. It is likely that Israel, probably in concert with the United States and others, has embarked on a campaign of assassination of Iranian nuclear scientists, physical sabotage of Iranian nuclear and military facilities, and cyberwarfare against Iranian centrifuges, most prominently in the form of the pioneering Stuxnet virus.
But these countries have never resolved the fundamental ambiguity over the status of Iran's programme. In December 2007, the Bush administration declassified part of its National Intelligence Estimate (NIE) on Iran, which represents the consensus view of the country's intelligence community. The controversial document, 'Nuclear Intentions and Capabilities', admitted that 'we judge with high confidence that in fall 2003, Tehran halted its nuclear weapons program; we also assess with moderate-to-high confidence that Tehran at a minimum is keeping open the option to develop nuclear weapons'.
In February 2011, the Director of National Intelligence James Clapper, told Congress that 'we continue to assess Iran is keeping open the option to develop nuclear weapons', adding that 'we do not know, however, if Iran will eventually decide to build nuclear weapons'. Even the November 2011 IAEA report that induced the latest tensions only documented weapons-related work from 2003 or earlier.
Much of this ambiguity is inherent in the nuclear realm. Simply put, 'the peaceful applications of nuclear energy include steps that can greatly shorten the lead time toward acquiring nuclear weapons'. In Iran's case, the research reactor at Tehran (supplied by the United States during the Shah's reign) does require 20 percent enriched uranium to function - but that is exactly the sort that can easily be enriched to weapons-grade. The IAEA can make note of anomalies, such as Iran concealing facilities, or producing in smaller batches than would be viable for energy generation, but this cannot conclusively demonstrate intent. In Iran's case, it is the pattern of non-compliance, prior military associations with the nuclear programme, and dubious rationales for certain types of nuclear activity that has led a large number of states to assess that weaponisation is one objective of enrichment.
Yet the more uranium that Iran enriches to 20 per cent, the easier it would be - in theory - to expel inspectors, enrich it to weapons-grade at more secure facilities, and fashion a bomb. However, getting a warhead to the right size and fitting it to a missile would be technically demanding. US General Eugene Habiger, a former Commander-in-Chief of the US Strategic Command, noted in 2004 that 'the miniaturization of a nuclear warhead is probably the most significant challenge that any proliferant would have to face'.
How does the threat of military attack change Iran's thinking? It would take Iran some time to transition from the status quo to building up a useful stock of bomb-grade uranium. Unless there are secret stocks of uranium and secret facilities, initiating any such transition (a so-called 'breakout') would be impossible without either the knowledge of inspectors, or the highly public and provocative expulsion of inspectors. The United States and/or Israel would then have (probably ample) time to prepare and conduct a military strike on nuclear facilities, although Iran might use the cover of a regional conflict (say, a surprise attack by Hezbollah against Israel) to hinder the military response. These countries may consider a strike even if Iran enriches uranium to weapons-grade with the knowledge of inspectors.
The risks of any such strike - a wider war, Iranian retaliation through Hezbollah and Hamas, the temporary closure of the Strait of Hormuz, the sabotage of Iraqi oil facilities, the political disintegration of Iraq, the initiation of terrorist strikes in Western countries, the bombardment of Israel, and so on - are well known. But equally important are the practical limits of a strike, which could only delay the programme (by 'no more than two years', according to Leon Panetta) rather than terminate it. As Joshua Pollack notes:
'You can bomb an enrichment facility, but you can't bomb an enrichment program. (Or not one as well-developed as Iran's.) It's not like a reactor, with billions of dollars' worth of hard-to-replace capital piled up in one spot over the course of several years. Instead, it's thousands of interchangeable pieces that can be brought together and operated more or less anywhere ... Iran's capacity for precision engineering would have to be bombed somehow. That's not a problem with a solution.'
If an attack left the present regime in place, there would be every incentive for the Iranian leadership to resume the nuclear programme with added vigour and determination. This does not mean, however, that the Iranian leadership can discount the costs of an attack. Tehran cannot guarantee that an attack would not also result in a wider war, which might in turn induce a popular uprising or foreign-led regime change. It has to balance these risks against the hope that external attack would rally popular and elite support for the regime.
Possessing the option of acquiring the bomb, rather than actually doing so, has been called 'nuclear hedging', 'nuclear latency', or the 'Japan option'. This is likely a more desirable path for Iran. The precedents for overt nuclearisation - in other words, the benefits from going nuclear - are mixed: Pyongyang has undoubtedly acquired a robust deterrent, but also labours under a severe sanctions regime. India, which tested its weapons in 1998 after a long period of nuclear latency, was eventually given special exemptions from sanctions; Iran would not receive such treatment. Unless the regime's very survival was in serious doubt, it is difficult to see what Iran would gain from actually building or testing a bomb. It would gain prestige, and some deterrent value, from simply possessing the technical means - 'the art rather than the article', as Churchill put it in 1951.
President Obama, facing election-season Republican accusations of 'appeasement', and fearful of unilateral Israeli military action that could drag in the United States, has initiated the most severe pressure against Iran hitherto attempted. It is questionable as to whether this will work.
As Robin Mills has argued, 'oil sanctions are a bad idea if they work, and a bad idea if they fail'. The sanctions regime is already proving extremely leaky, with some importers of Iranian oil getting exemptions, and China able to extract discounts from Iran. Greece, with a deeply vulnerable economy, imports a quarter of its oil from Iran. Italy imports 13 percent and Spain just under 10 percent. South Korea and Japan each depended on Iran for 10 per cent of their crude imports. Saudi supplies will be stretched between European and Eastern markets, and a price rise is inevitable.
On the other hand, Iran will invariably face declining revenue and foreign exchange at a time when its currency is falling and its economy fragile. That will limit its ability to buy off dissent, and could exacerbate popular grievances against the government - youth unemployment may already be as high as 50 per cent, and two years of major reforms to subsidies have already caused tension.
But the danger is that Iran's leadership is backed into a corner, deeply wounded but not fatally so, and strikes out so as to demonstrate its risk-acceptance and deter further pressure. Japan, deprived of oil after a US embargo in 1941, struck out at Pearl Harbour. Contrary to popular belief, Iran's leadership is largely rational - but it may still judge that a provocative act is the safest option.
This scenario is all the more likely if Iran perceives a closing window of opportunity. Its key Arab ally, the Assad regime in Syria, may be months away from destruction, which could leave Tehran cut off from Hezbollah; rival Saudi Arabia just signed a $60 billion arms deal with Washington; and oil sanctions will become more effective over time as buyers look for more reliable supplies. Iran's leadership has withstood fiscal deprivation on a greater scale. Suzanne Maloney points out that 'during the height of its war with Iraq, Iran's annual oil revenues fell under $6 billion - less than ten percent of its 2010 take'. The regime has not always been successful in blaming foreign plots for domestic deprivation, but they have refused to change policies so as to alleviate sanctions.
There are additional dangers if sanctions do provoke a hoped-for repeat of the 2009 anti-government protests. A senior US intelligence official has acknowledged that the 2012 sanctions are explicitly intended to bring down the regime by generating 'enough hate and discontent at the street level' (his comments were later amended, but it is unclear as to whether this was for reasons of accuracy or diplomacy). Yet the prominence of the Libya precedence means that the leadership would have every reason to double down on the production of a nuclear weapon as a deterrent to foreign intervention and, so, guarantor of regime survival.
As Ray Takeyh and Suzanne Maloney note, the American view of sanctions exacerbate Iranian vulnerabilities and render nuclearisation more, not less, likely: 'as long as Iranian leaders perceive themselves to be under siege from a domestic insurrection orchestrated by their longstanding enemies, they may be reluctant, and less able, to negotiate in a serious and sustained fashion with the international community, particularly on the nuclear programme - an issue that they have identified as critical to the security of the regime and the state'. This implies that sanctions should either be calibrated so as to cause pain without threatening the regime, or rendered so overwhelmingly punitive so as to achieve regime change without enabling a long period of nuclear gestation; the present course achieves neither.
It's tempting to conclude by arguing that the answer lies in negotiations. Perhaps, but it's hard to see how exactly these will advance. If one begins with the not unreasonable (but hardly foolproof) assumption that Iran seeks nuclear latency, an assumption rendered more plausible by the regional flux and Western pressure, then it must eventually get to - but not past - the breakout threshold. That threshold is the point at which Iran could, within a reasonable timeframe, enrich its uranium to weapons-grade and build a usable bomb.
Crucially, Iran cannot agree to the West's main demand - that it suspend enrichment altogether - without also abandoning latency. What about a compromise? Mark Fitzpatrick has argued that 'the precedent of sending Iranian enriched uranium out of the country [to be returned as fuel plates for the Tehran Research Reactor] and thereby reducing its stockpile still holds promise'. It's worth a try, of course. But this sort of deal - first sought in 2009, and revived by Brazil and Turkey in 2010 - would either stop Iran getting to the breakout threshold (if it sent abroad all its uranium) or just slow it down (if it kept enough uranium at home). Moreover, even pragmatists like Ali Larijani, speaker of Iran's parliament and former nuclear negotiator, and Green Movement leader Mir Hossein Mousavi, opposed the first attempts at a swap.
While it remains possible that a generous offer by the West could drive a wedge between Iranian hawks and doves (there was much less domestic opposition to the swap attempt in 2010), it's equally likely that, in the run-up to parliamentary elections, the regime would see compromise as politically reckless.
The central problem is that this is a zero-sum diplomatic game and each side's move are inherently dual-use and therefore subject to the most malign interpretations. Enrichment is seen as synonymous with weaponisation, and sanctions are seen as tantamount to regime change. All the while, Tehran has negotiated in obviously bad faith, but the US has also shown little willingness to take risks or offer up carrots commensurate with the sticks. Even so, the most sweeping American concessions we could envisage - such as non-aggression guarantees - just wouldn't be taken seriously by the present leadership. Pushing for a political transformation within Iran is both counterproductive and, in the present standoff, dangerous. The Obama Administration, facing presidential elections in less than a year and an especially belligerent Republican field of candidates, would be unlikely to judge itself politically able to ease the pressure on Iran even if it felt inclined to do so. That is where we stand: diplomacy that hasn't worked, sanctions whose effects are unpredictable, and each side lashing themselves ever tighter to the mast.
Shashank Joshi is an Associate Fellow at RUSI and a doctoral student of International Relations at Harvard University.
The views expressed here are the author's own and do not neccessarily represent those of RUSI
 Mark Fitzpatrick, Containing the Iranian Nuclear Crisis: The Useful Precedent of a Fuel Swap, Perceptions, Summer 2011, Vol. 16, No. 2, p34
 Neil MacFarquhar, "U.N. Security Council Passes New Sanctions Against Iran", 9 June 2012, The New York Times
 Wolfgang K. H. Panofsky, Capability versus intent: The latent threat of nuclear proliferation, Bulletin of the Atomic Scientists, 14 June 2007, http://bit.ly/wr7h2N. Panofsky notes that high-enriched uranium (HEU) 'is still a component of research reactors at about 100 sites worldwide'.
 The IAEA has, however, noted circumstantial evidence of research only applicable to weapons-design - though much of this evidence is in contention, and its interpretation is clouded by memory of the intelligence failures over Iraq's purported nuclear programme.
 Michael A. Levi, Working Paper: Limiting Iranian Nuclear Activities: Option sand Consequences, Council on Foreign Relations, February 2011, p8
 Derek Brower, The Hormuz red herring, Petroleum Economist, 5 January 2012, http://bit.ly/zjuxZt; see also Derek Brower, "For the oil market, you can no longer talk about Iran without talking about Iraq", 6 January 2012, http://bit.ly/wfhEZr
 Ariel E. Levite, "Never Say Never Again: Nuclear Reversal Revisited," International Security 27, no. 3 (2003 2002): 59-88.
 Scott D. Sagan, "The Causes of Nuclear Weapons Proliferation," Annual Review of Political Science 14, no. 1 (June 15, 2011): 225-244.
 Llewelyn Hughes, "Why Japan Will Not Go Nuclear (Yet): International and Domestic Constraints on the Nuclearization of Japan," International Security 31, no. 4 (April 1, 2007): 67-96.
 Margaret Gowing, Independence and Deterrence: Britain and Atomic Energy, 1945-1952, Vol. 1: Policy Making (New York: St. Martin's, 1974), p406
 A useful study of the link between major power sanctions and war is available in Timothy M. Peterson and A. Cooper Drury, "Sanctioning Violence," Journal of Conflict Resolution 55, no. 4 (2011): 580 -605.
 On the importance of 'windows of opportunity', see Stephen Van Evera, Causes of War: Power and the Roots of Conflict (Ithaca: Cornell University Press, 1999), chapter 4.
 Ray Takeyh and Suzanne Maloney, The self-limiting success of Iran sanctions, International Affairs, Vol. 87, No.2 (2011): 1297-1312
 Mark Fitpatrick, Containing the Iranian Nuclear Crisis, p27