bohr i us iran foreign policy

8/13/2019 Bohr i Us Iran Foreign Policy

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U.S.-Iran Foreign Policy:U.S.-Iran Foreign Policy:

Global EnergyGlobal Energy

Independence From Iran isIndependence From Iran isNot the SolutionNot the Solution

By dnan BohriBy dnan Bohri

pril !"# !$$%pril !"# !$$%



Background and *un *actsBackground and *un *acts

+a$ital Tehran+a$ital Tehran

%o$ulation .,./!,0"0%o$ulation .,./!,0"0

1#% 2".)/ billion1#% 2".)/ billion

Language %ersianLanguage %ersian

3*arsi43*arsi4Source htt$55encarta)(sn)co(5encyclo$edia6"7"8..5Iran)ht(l



Iran %re-!!Iran %re-!! Ruled by the Shah,Ruled by the Shah,

9oha((ad Ra:a9oha((ad Ra:a

%ahlavi%ahlavi Allies with ;)S) during theAllies with ;)S) during the

+old 'ar+old 'ar Regi(e fell in the IranianRegi(e fell in the Iranian

revolution of !!revolution of !!

Source htt$55encarta)(sn)co(5encyclo$edia6"7"8..5Iran)ht(l

http://en.wikipedia.org/wiki/Image:Mohammadreza_Shah.jpg



Iranian RevolutionIranian Revolution After the overthrow of theAfter the overthrow of the

Shah, Aytollah RuhollahShah, Aytollah Ruhollah<ho(eini ca(e to $ower<ho(eini ca(e to $ower <nown as the Su$re(e Leader<nown as the Su$re(e Leader

of Iranof Iran

=stablished Isla(ic Re$ublic=stablished Isla(ic Re$ublic

of Iranof Iran

Source htt$55encarta)(sn)co(5encyclo$edia6"7"8..5Iran)ht(l



Iran >ostage +risisIran >ostage +risis

;)S) =(bassy in Tehran;)S) =(bassy in Tehran

sei:ed on 5/5!!sei:ed on 5/5!!

"8 A(erican citi:ens"8 A(erican citi:enstaken hostagetaken hostage

7. hostages held $risoner7. hostages held $risoner

for /// daysfor /// days Su$$orted by <ho(einiSu$$orted by <ho(eini

under the sloganunder the slogan

?A(erica can@t do a?A(erica can@t do a

da(n thingda(n thingSource htt$55encarta)(sn)co(5encyclo$edia6"7"8..5Iran)ht(l



verview of sanctions againstverview of sanctions against

IranIran Began after !! Iran >ostage +risisBegan after !! Iran >ostage +risis Iranian Transactions Regulations - 8 +)*)R)Iranian Transactions Regulations - 8 +)*)R) CC

7".7". I($ort e(bargo on Iranian-origin goods andI($ort e(bargo on Iranian-origin goods and

servicesservices Do direct trade with the ;)S) since !!7,Do direct trade with the ;)S) since !!7,

when the ;)S) govern(ent banned allwhen the ;)S) govern(ent banned allco((ercial and financial transactionsco((ercial and financial transactionsbetween ;)S) co($anies and Iranianbetween ;)S) co($anies and Iranian$ublic and $rivate entities$ublic and $rivate entities

Iran-Libya Sanctions Act of !!"Iran-Libya Sanctions Act of !!"

+urrent Duclear Standoff with Iran+urrent Duclear Standoff with Iran +ould lead to additional sanctions b ;)D)+ould lead to additional sanctions by ;)D)

Source htt$55www)treas)gov5offices5enforce(ent5ofac5$rogra(s5iran5iran)$df Source htt$55www)treas)gov5offices5enforce(ent5ofac5$rogra(s5iran5iran)$df



>ow 9uch =nergy #oes Iran>ow 9uch =nergy #oes Iran

>ave&>ave& %ossesses world@s 0nd largest natural gas%ossesses world@s 0nd largest natural gas

reservesreserves E.F of world@s known oil reserves 3/thE.F of world@s known oil reserves 3/th

largest4largest4 00ndnd largest oil $roducer in %=+largest oil $roducer in %=+

Source htt$55www)eia)doe)gov5e(eu5cabs5Iran5Background)ht(l



Allows the %resident to i($oseAllows the %resident to i($osesanctions if a $erson has (ade ansanctions if a $erson has (ade an

invest(ent of (ore than 20. (illioninvest(ent of (ore than 20. (illion?that?that directly and signi&icantlydirectly and signi&icantly contributes to the enhance(ent ofcontributes to the enhance(ent of

Iran@s ability to develo$ $etroleu(Iran@s ability to develo$ $etroleu(

resources of Iran)resources of Iran) +ontroversial because it allows the+ontroversial because it allows the

%resident to i($ose unilateral%resident to i($ose unilateral

sanctions on foreign co($anies orsanctions on foreign co($anies or

Iran-Libya Sanctions Act ofIran-Libya Sanctions Act of

!!" 3ILSA4!!" 3ILSA4

Source Iran-Libya Sanctions Act, 7. ;)S)+) C . note 3!!"4



??Invest(entG defined as the entry into aInvest(entG defined as the entry into acontract that includes res$onsibility forcontract that includes res$onsibility forthe develo$(ent of $etroleu(the develo$(ent of $etroleu(resources in Iran or Libyaresources in Iran or Libya

Statute silent as to whether theStatute silent as to whether theconstruction of energy transit routesconstruction of energy transit routesfro( Iran (ight be considered anfro( Iran (ight be considered aninvest(entinvest(ent

>owever, +linton Ad(inistration>owever, +linton Ad(inistration$osition was that, under certain$osition was that, under certainconditions, the construction of suchconditions, the construction of suchroutes could be a sanctionableroutes could be a sanctionable

invest(entinvest(ent

ILSA +ontinuedILSA +ontinued

Source <enneth <at:(an, The Iran-Libya Sanctions Act (ILSA), +ongressional Research Service Re$for +ongress, u$dated A$r) 0", 0..")



The *rench oil co($any, The *rench oil co($any,

Total SA, struck a 20 billion deal with Total SA, struck a 20 billion deal with

Iran in Se$te(ber !!, to develo$Iran in Se$te(ber !!, to develo$

natural gas reserves in Iran@s Southnatural gas reserves in Iran@s South%ars field%ars field

This was the largest single foreign This was the largest single foreign

invest(ent in Iran since the ;)S)invest(ent in Iran since the ;)S)=(bassy in Tehran was sacked in=(bassy in Tehran was sacked in

!!!!

+linton Ad() found that deal violated+linton Ad() found that deal violated

ILSA@s *irst TestILSA@s *irst Test

Source <enneth <at:(an, The Iran-Libya Sanctions Act (ILSA), +ongressional Research Service Re$for +ongress, u$dated A$r) 0", 0..")



2/- billion $roHect2/- billion $roHect E0.. k( in length fro( Iran to IndiaE0.. k( in length fro( Iran to India 'ould su$$ly E". (illion cubic (eters of gas'ould su$$ly E". (illion cubic (eters of gas

a day to India and u$ to 8. (illion cubica day to India and u$ to 8. (illion cubic

(eters a day to %akistan)(eters a day to %akistan) fficials of India, %akistan Iran (et infficials of India, %akistan Iran (et in

August 0.." to discuss $ricing of gasAugust 0.." to discuss $ricing of gas Tentatively scheduled to Tentatively scheduled to

begin construction in 0..begin construction in 0..and be co($leted by 0..and be co($leted by 0..

The Iran-%akistan-India Datural The Iran-%akistan-India Datural

1as %i$eline1as %i$eline

Source 1eorge %erkovich and Revati %rasad, APipeline to Peace, D)J) Ti(es, A$r) K, 0..7)



%akistan would benefit fro( Iranian%akistan would benefit fro( Iranian

natural gas ex$orts, and %akistaninatural gas ex$orts, and %akistaniterritory would be used as a transitterritory would be used as a transit

route to ex$ort natural gas to Indiaroute to ex$ort natural gas to India

'ould bring in E2.. (illion $er year'ould bring in E2.. (illion $er yearin trans$ort feesin trans$ort fees

India@s =nergy needs willIndia@s =nergy needs will

sur$ass +hina@s in the next 7.sur$ass +hina@s in the next 7.

yearsyears +oo$eration between %akistan+oo$eration between %akistan

and India would increaseand India would increasestability in South Asiastability in South Asia

The Deed for the %i$eline The Deed for the %i$eline

Source 1eorge %erkovich and Revati %rasad, APipeline to Peace, D)J) Ti(es, A$r) K, 0..7)



The Iranian side of the $roHect will be financed The Iranian side of the $roHect will be financedentirely by Iran and a grou$ of (ulti-nationalentirely by Iran and a grou$ of (ulti-national

investors Iran will be reuired to $ut togetherinvestors Iran will be reuired to $ut together %akistanMs invest(ent in the $roHect will start%akistanMs invest(ent in the $roHect will start

only after the $i$eline reaches %akistanionly after the $i$eline reaches %akistani

territoryterritory

A$$lying a $lain-(eaning inter$retation ofA$$lying a $lain-(eaning inter$retation ofILSA, %akistan@s and India@s involve(entILSA, %akistan@s and India@s involve(ent

could be inter$reted as one that does notcould be inter$reted as one that does not

directly directly contribute ?to the enhance(entcontribute ?to the enhance(ent

of Iran@s ability to develo$ $etroleu(of Iran@s ability to develo$ $etroleu(

'ould the %i$eline be'ould the %i$eline bean ?invest(ent underan ?invest(ent under

ILSA&ILSA&



'omparing (otal)s case *ith'omparing (otal)s case *ith

Pa+istan)sPa+istan)s

20 billion20 billioninvest(entinvest(ent

#irect develo$(ent#irect develo$(entof oil fields withinof oil fields within

IranIran

2-. billion $ro$osed $roHect2-. billion $ro$osed $roHect Datural gas transit routeDatural gas transit route Do direct develo$(ent byDo direct develo$(ent by

%akistan%akistan %akistani ownershi$ of the%akistani ownershi$ of the

$i$eline would begin at its$i$eline would begin at itsborderborder

>owever, deal would $rovide>owever, deal would $rovideincentive and funding for Iranincentive and funding for Iranto develo$ its gas resourcesto develo$ its gas resources



ILSA ex$ired on August 7, 0.."ILSA ex$ired on August 7, 0.." Iran *reedo( and Su$$ort ActIran *reedo( and Su$$ort Act

Bill $assed by +ongress thatBill $assed by +ongress thattightens the sanctions i($osed ontightens the sanctions i($osed on

entities that invest in Iran@s energyentities that invest in Iran@s energy

sectorsector

Includes stricter $rovisionsIncludes stricter $rovisionsregarding the waiving of sanctionsregarding the waiving of sanctions

by the $residentby the $resident

Recent #evelo$(entsRecent #evelo$(ents



Agree(ent in +ongress that ILSAAgree(ent in +ongress that ILSA

shouldn@t be allowed to ex$ireshouldn@t be allowed to ex$ire

;)S) (ust continue to look at econo(ic;)S) (ust continue to look at econo(ic

sanctions as a (ethodsanctions as a (ethodfor kee$ing Iran infor kee$ing Iran incheck and isolatingcheck and isolating

the(the(

+ongress@s Niew+ongress@s Niew

Source >earing of the Senate Banking,>ousing, ;rban Affairs +o((ittee on Oune 00,



The Bush Ad() sees the value The Bush Ad() sees the value

of ILSA, but did not su$$ortof ILSA, but did not su$$ortsignificant changes to thesignificant changes to the

statutestatute

#id not su$$ort the tightening#id not su$$ort the tighteningof the ILSA sanctions asof the ILSA sanctions as

contained in the Iran *reedo(contained in the Iran *reedo(

Su$$ort ActSu$$ort Act

Restrictions would weaken theRestrictions would weaken the%resident@s flexibility to $ursue%resident@s flexibility to $ursue

di$lo(acy with Alliesdi$lo(acy with Allies

Bush Ad(inistration@s NiewBush Ad(inistration@s Niew

Source ,. Nicholas Burns# Under Secretary o& State &or Political &&airs# (estimony Be&ore the Senate 'ommittee on Ban+ing# ousingand Urban &&airs# une !!# !$$/ and 0arch !1# !$$%.



>ave Sanctions Been =ffective>ave Sanctions Been =ffectiveand should they continue to beand should they continue to be

used&used& 0 years of sanctions and isolation0 years of sanctions and isolation

have not dissuaded Iran fro(have not dissuaded Iran fro(

$ursuing its nuclear $rogra( or$ursuing its nuclear $rogra( ordriven the cleric-led govern(entdriven the cleric-led govern(ent

fro( $ower)fro( $ower)

instead have convinced Iran thatinstead have convinced Iran thatonly nuclear technology can $rotectonly nuclear technology can $rotectthe( fro( A(erican hostilitythe( fro( A(erican hostility

Source ,. Nicholas Burns# Under Secretary o& State &or Political &&airs# (estimony Be&ore the Senate 'ommittee on Ban+ing# ousingand Urban &&airs# une !!# !$$/ and 0arch !1# !$$%.



=ffects of Sanctions=ffects of Sanctions

+ontinued+ontinued Since the Total waiver, E 2)7b in foreignSince the Total waiver, E 2)7b in foreigninvest(ents in Iran@s energy sector have beeninvest(ents in Iran@s energy sector have beenagreed u$on)agreed u$on)

Iran@s natural gas sector, non-existent $rior to theIran@s natural gas sector, non-existent $rior to thelate !!.@s, is beco(ing an increasinglylate !!.@s, is beco(ing an increasinglyi($ortant factor in Iran@s energy future as a resulti($ortant factor in Iran@s energy future as a resultof foreign invest(ent)of foreign invest(ent)

=);) threatened for(al counter-action over ILSA=);) threatened for(al counter-action over ILSAin the 'T, and in A$ril !!, the ;)S) and =);)in the 'T, and in A$ril !!, the ;)S) and =);)for(ally agreed to try to avoid a tradefor(ally agreed to try to avoid a tradeconfrontation)confrontation)

Source <enneth <at:(an, The Iran-Libya Sanctions Act (ILSA), +ongressional ResearchService Re$ort for +ongress, u$dated A$r) 0", 0..")

y ran an anc ons arey ran an anc ons are



y ran an anc ons arey ran an anc ons are#etri(ental for A(erican#etri(ental for A(erican

InterestsInterests

Sanctions on IranSanctions on Iran higher global energy $riceshigher global energy $rices higher ;)S) energy $riceshigher ;)S) energy $rices

=nergy $rices are set by the global (arket, so=nergy $rices are set by the global (arket, sodoesn@t (atter whether it@s co(ing fro( Texas ordoesn@t (atter whether it@s co(ing fro( Texas or

Tehran Tehran Increases in oil $rices corres$ond closely toIncreases in oil $rices corres$ond closely to

downturns in the econo(y) The last four recessionsdownturns in the econo(y) The last four recessionsall correlated with restrictions in the oil su$$ly)all correlated with restrictions in the oil su$$ly)

'hen energy $rices s$ike, the (arket slows downP'hen energy $rices s$ike, the (arket slows downPwhen $rices decrease, the (arket s$eeds u$)when $rices decrease, the (arket s$eeds u$)

Lower oil and gas $rices allow us to invest inLower oil and gas $rices allow us to invest inalternative energies and gives us ti(e and breathingalternative energies and gives us ti(e and breathing

roo( to develo$ those technologies)roo( to develo$ those technologies)Source 9ark Qu$an, #ean of 1raduate School of Business Ad(inistration at the ;niversity ofRochester, Dew Jork) Available at htt$55analysisonline)org5energy5:u$an)ht(l



+ontinued)))+ontinued)))

Du(erous 'estern oil co($anies have shied fro(Du(erous 'estern oil co($anies have shied fro(investing in Iran for fear of incurring A(erica@s wrathinvesting in Iran for fear of incurring A(erica@s wrath

I($osing sanctions on co($anies that develo$ Iran@sI($osing sanctions on co($anies that develo$ Iran@s$etroleu( resources would isolate A(erica fro( its$etroleu( resources would isolate A(erica fro( its=uro$ean allies, as well as +hina and India=uro$ean allies, as well as +hina and India

Best way to engage Iran is to bring the( into theBest way to engage Iran is to bring the( into theglobal co((unityglobal co((unity

Lifting econo(ic sanctions, or at the very leastLifting econo(ic sanctions, or at the very leastallowing A(erican allies to invest, should be seen asallowing A(erican allies to invest, should be seen asreal $riority)real $riority)



;)S) (ade historic offer in Oune ." when Sec);)S) (ade historic offer in Oune ." when Sec)Rice first offered to engage in direct discussionsRice first offered to engage in direct discussionswith Iran $rovided Iran co($letely, verifiablywith Iran $rovided Iran co($letely, verifiablysus$ends its enrich(ent activities)sus$ends its enrich(ent activities)

Instead of energy inde$endence, the goalInstead of energy inde$endence, the goal

should be an effort to i($rove relations withshould be an effort to i($rove relations withIran@s regi(e and bring the( into the globalIran@s regi(e and bring the( into the global

co((unity)co((unity)

;)S) unilateral sanctions on Iran under(ine this;)S) unilateral sanctions on Iran under(ine this

goal)goal)

+onclusions+onclusions



The End The End

bohr i us iran foreign policy

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