Energy, economic interests complicate Iran dealings
Kathy Gockel
The Des Moines Register
Last week, the U.S. government announced unilateral sanctions against Iran. The week before, Russian President Vladimir Putin voiced support for Iran's right to pursue a peaceful nuclear program. To say the least, Iran is getting mixed signals.

The United States and Russia—along with many other countries—are worried about Iran's nuclear program. A diplomatic solution, rather than military action, offers the best hope of defusing the situation. But diplomacy requires patience. To see why, it is helpful to look at the negotiations in the U.N. Security Council over further international sanctions on Iran, and to see the complex interplay of interests at work there.

In particular, let's look at the interests of France, the United Kingdom, Russia, and China, the four countries who along with the United States hold veto power. Energy security and its impact on national economies always linger in the background when it comes to Middle East policy. That's certainly the case here, in ways both predictable and surprising.

The UK and France, as Europe's two representatives on the Security Council, are in a difficult position. Europe gets one-third of its energy from Russia, which opposes further sanctions against Iran. There is concern Russia is using its resources to influence policy.

Key European powers also have significant economic interests in Iran, especially Germany. Russia is Germany's largest energy supplier. In addition, its business owners are unhappy about U.S. pressure to restrict investment in Iran. German companies believe that Iran will simply replace them by giving future contracts to the Russians and Chinese. While France enjoys greater energy independence because of its domestic nuclear power, it also has companies with important investment interests in Iran.

These economic interests, plus the negative views many Europeans have of the UK's past support for U.S. policies in Iraq, will lead some states in Europe to pressure France and the UK to shy away from sanctions unless Russia and China play along. However, both countries currently voice support for further sanctions.

Almost every action the United States can take against Iran helps Russian economic interests. U.S. pressure on Europe to limit business with Iran allows Russia to strengthen its already solid ties to Iran. Meanwhile, the ongoing nuclear standoff keeps oil prices high, which pumps more petrodollars into the Russian economy's expansion. And if there is a military strike against Iran, Russia's energy reserves will become even more valuable if oil and gas supplies from the Persian Gulf are impacted.

China also has significant investments in Iran and does not want military action. Yet further sanctions taken by the United States and possibly by Europe will further strengthen China's economic position. It will have less competition for access to Iran's vast energy reserves or for future Iranian business deals.

Given the economic consequences, where will this take the U.N. Security Council and U.S. policy? Russia and China will likely veto any sanctions in the Security Council. Failure to get further sanctions at the United Nations will probably lead the Bush administration to press the EU to impose its own sanctions.

Iran President Mahmoud Ahmadinejad is very aware of these economic and political scenarios that serve as a backdrop to Security Council discussions of Iran's nuclear program. This helps account for his aggressive rhetoric and continued refusal to bow to international pressure. However, Ahmadinejad is also making officials in his own country very nervous. Iranian nuclear negotiator and adviser to Iran's Supreme Leader, Ali Larijani, recently resigned over differences with the president. More than 180 members of parliament then signed a letter praising Larijani.

The United States needs to be careful of hinting at a military strike. This talk drove oil prices higher last week and only helps Ahmadinejad, who relies heavily on oil revenues to make up for his poor economic policies. After all, it is the Iranian economy that the United States most wants to impact with sanctions.

The path of diplomacy and economic sanctions may seem unsatisfying. But it is the only way to reconcile differing interests. When you consider the consequences of other alternatives, diplomacy is the best route—both for the United States and for its allies.

Kathy Gockel is a program officer in Policy Analysis and Dialogue at the Stanley Foundation, based in Muscatine, a nonpartisan foundation advocating mutilateralism and focusing on peace and security issues.

This page is part of Rising Powers: The New Global Reality, a project from the Stanley Foundation.