Bush Pulls Financial, Diplomatic Levers To Check Iran

By: Wall Street Journal

The nation’s leader, nearing an election that polls say his party could lose, decides he must act while he still can to eliminate a national-security threat.

Fearing his successor won’t have the necessary guts, he sends jets to bomb nuclear facilities in a hostile Mideast country, reiterates his belief that he has the right to launch pre-emptive strikes and accepts the international opprobrium he knows his action will bring.

A prediction of what President Bush will do against Iran some time in the next year?

No. It’s a description of what Menachem Begin, Israel’s late prime minister, did in June 1981 by ordering a strike against Iraq’s Osirak nuclear reactor.

The question hanging over a Democratic presidential debate last week, and over the United Nations this week, is whether Begin was prelude to Bush. Democrats certainly seem to think Mr. Bush is laying the groundwork for an attack on Iran’s nuclear program, just as he once methodically laid the groundwork for the invasion of Iraq.

“We’ve seen this movie,” John Edwards said at the debate. “We know how it turns out.”

Well, not exactly. A series of conversations with top Bush administration officials in the past few weeks suggests the strategy now being employed is different, and more subtle, than the one that preceded the war in Iraq. That hardly means an attack isn’t possible, but it suggests today’s approach has different purposes and goals.

At the moment, there is no discernible appetite for a military strike among either top civilian or military leaders at the Pentagon. On the other hand, there is greater support elsewhere, including among Vice President Dick Cheney’s advisers at the White House, for considering the military option.

At the State Department, Secretary of State Condoleezza Rice likes keeping the military option on the table because that gives some urgency to American diplomatic efforts to shut down Iran’s nuclear program.

But the most important action isn’t in this simmering internal debate. The action to watch is financial and diplomatic, and it has four goals:

• Exert a new and different kind of financial pressure on Iran. In many ways, the most important steps right now are being taken by Treasury Secretary Henry “Hank” Paulson. He’s leading an effort to cut off Iran from the international financial system by blacklisting its national banks, and by persuading banks in the developed world to stop doing business with Iran.

This isn’t the traditional effort to enact economic sanctions, which cut off trade and travel. The goal now is to cut off the oxygen of international finance.

So, bankers are the target audience. The first step was to get American banks to stop handling money for Iran’s business network. The next step, now under way, is for Mr. Paulson to go directly to foreign banks to urge them to do the same. His argument: The “reputational risk” banks run by doing business with Iran isn’t worth the short-term benefit.

The U.S. is lobbying European governments as well, but because European laws aren’t particularly accommodating to such action, better to go straight to the source. The task is tough, though, given the rivers of cash high oil prices are generating for Iran.

• Get the U.N. to help, as much for symbolic reasons as real ones. That process begins this week, when the U.N.’s International Atomic Energy Agency offers a new report on Iran’s nuclear-enrichment program. The report is expected to prompt a Security Council debate on imposing another round of more-traditional economic sanctions.

Security Council sanctions tend to be of the Swiss cheese variety — full of holes — but the message behind a sanctions vote would be as important as the details. When one European ambassador to Tehran visited Washington recently, he told U.S. officials that a 15-0 vote against Iran at the Security Council has more effect on the regime than any other single action, because it shows Iran’s problems range well beyond the U.S. alone.

• Use the financial pressure to create a rift between Iran’s merchant class and its political leadership. The goal of American policy right now is as much internal as external. On the one hand, Iran’s economy is far bigger and more robust than is, for example, North Korea’s, and hence tougher to cut off. On the other hand, Iran, unlike North Korea, has a real merchant class that, if sufficiently agitated, can create internal problems.

• Push the Arab-Israeli peace process as a way to knit together a Sunni Arab coalition against Iran. The odds are long against achieving an Israeli-Palestinian peace deal, of course. But by pushing for one now, Ms. Rice is trying to build confidence in American leadership among the Arab states it wants to stand united against Iran.

The most immediate challenge is to launch a peace process at least credible enough to pull in Syria, and thereby weaken or break its alliance with Iran. So when the U.S. convenes a Middle East peace summit in the next few weeks in Maryland, here’s what to watch: Do the Syrians choose to attend, or are they at least made to feel uncomfortably isolated in the Arab world if they don’t?

Write to Gerald F. Seib at jerry.seib@wsj.com

* Content From the Wall Street Journal supplied by Elva Ramirez:

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