Trump Chooses To Hit Iran Economically Rather Than Militarily

Jun 25, 2019
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NOEL KING, HOST:

Iran says the path to diplomacy with the United States is, quote, "permanently closed" after the U.S. imposed new sanctions on Iran yesterday. That came in a tweet from Iran's foreign ministry. And then President Hassan Rouhani went further. He called the sanctions - and I am quoting him here - "mentally retarded." Meanwhile, the U.S. is calling on its allies to help in the Persian Gulf. Yesterday, President Trump said he won't rule out U.S. military action against Iran.

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PRESIDENT DONALD TRUMP: I think a lot of restraint has been shown by us - a lot of restraint. And that doesn't mean we're going to show it in the future.

KING: NPR's Tom Bowman covers the Pentagon.

Hey, Tom.

TOM BOWMAN, BYLINE: Hey, Noel.

KING: So the U.S. is calling for this international coalition to guard Persian Gulf shipping lanes. What would that look like?

BOWMAN: Well, Noel, we don't know at this point what a coalition would look like or its - even its exact mission other than they're calling it maritime security. They expect to put cameras aboard some of these commercial ships to monitor the area. And beyond that, it could take several forms. You could have navy ships actually escort oil tankers and container ships heading through the Strait of Hormuz or just have warships in the area kind of monitoring everything beyond the drones and surveillance planes. But at this point, we really don't have a sense of the exact mission or really who's going to take part in it.

KING: OK. So we don't know two big things. Has the U.S. done anything like this before with regard to Iran in the Gulf?

BOWMAN: You know, four years ago, the U.S. accompanied U.S. and British ships after Iran seized the crew of a tanker ship flagged under the Marshall Islands over, actually, a financial dispute. That lasted just over a week. And beyond that, there was a large operation back in the 1980s during what was called the Tanker Wars. And that lasted well over a year. We don't expect anything that significant. But, clearly, it will be some sort of a security effort and, as the U.S. says, hopefully involve some of the allies.

KING: NPR's Tom Bowman. Thanks, Tom.

BOWMAN: You're welcome.

KING: All right. So for now, President Trump has chosen to hit Iran economically instead of militarily. The president announced these new sanctions that target Iran's supreme leader and other senior Iranian leaders. What exactly will those sanctions do? Here to help answer that is Adam Smith. He served in the Obama administration as the senior adviser to the director of the Treasury Department's Office of Foreign Assets Control.

Thanks for coming in, Mr. Smith.

ADAM SMITH: Good to be here.

KING: So this round of sanctions on Iran targets individuals. Why is that?

SMITH: Well, those are the individuals that the president has decided were - would potentially be most impacted by these measures and perhaps were most involved in either the shootdown of the drone or other, quote, unquote, "bad activities" the president has identified.

KING: Let's listen to Treasury Secretary Steven Mnuchin announcing the new sanctions yesterday in the White House press briefing room.

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STEVEN MNUCHIN: For the people who say these are just symbolic, that's not the case at all. We've literally locked up tens and tens of billions of dollars. These sanctions will come along with additional entities where people are hiding money. So, no, these sanctions are highly effective.

UNIDENTIFIED REPORTER: Mr. Secretary...

KING: It's unclear how the U.S. will get access to the assets of people like Iran's supreme leader. Is that a problem when we're trying to talk about effectiveness?

SMITH: It's a big problem. I mean, these sanctions are very much symbolic, but that doesn't mean that they won't have any impact. But their impact, I would argue, is actually not going to be because of the assets that are stuck in the United States locked up but rather because of the impact, the ripple effect, of non-U.S. persons who, perhaps, now will be afraid to deal with the supreme leader and others who are now listed.

KING: That's really interesting. So other people might say it's kind of a contagion. We don't want to deal with you specifically because the U.S. has got you on its list.

SMITH: That's right. And I could be sanctioned. If I'm a non-U.S. person and decide to deal with the supreme leader or his office, I could become sanctioned next.

KING: I mean, some Iranian officials have been saying there is effectively nothing left to sanction in Iran. From what you can tell, is the U.S. struggling to find things to put sanctions on there?

SMITH: Perhaps. I mean, that depends on the numbers you look at. But I've heard anywhere between 80 or 90% of the Iranian economy is under sanction.

KING: Wow.

SMITH: That means that 20 or 10% is left. Some of those are very much off-limits - humanitarian, food, medicine or whatnot. But there probably still are some targets. But again, the impact of the question - most of the big-name targets - the oil sector, the petrochemical sector, et cetera - have long since been sanctioned. So I do think it's a bit of a challenge right now to finding more economically meaningful measures.

KING: The Trump administration says it wants to get Iran back to the negotiating table. You played a key role in shaping sanctions during the Obama administration, so you know how these sorts of negotiations work. Is this likely to help with that effort? Are these sanctions likely to help get Iran to negotiate?

SMITH: I think not, unfortunately. Under the Obama administration, you had a combination of very, very strong sanctions, yes, and multilateralism, real by-end from an international perspective. And we never went as far as sanctioning the supreme leader or others that are sort of very senior positions that would need to be involved in negotiations. And so the potential of sanctioning Foreign Minister Zarif, which was also announced yesterday, who was a leader of the negotiations, also seems to suggest that the negotiations - the ability for the U.S. to negotiate in the same way they did under Obama is, perhaps, receding.

KING: When you were negotiating with Iran or when you were shaping sanctions under the Obama administration, those sanctions were meant to add pressure and bring Iran closer to negotiating the nuclear deal, which, of course, they did. Now that the U.S. has withdrawn from that deal, is it just going to be harder to have an impact on Iran as we move forward more broadly?

SMITH: I think so. I mean, the nuclear deal was - I think it was not perfect. Nobody thought it did - thought it was. But it did give us a - an ability to sort of engage with Iran on a - sort of a ongoing basis. Without that, and now with just these incredible number of new sanctions, including against the supreme leader, it's not entirely clear sort of what that - what those inroads look like. And if there are no inroads, it's not clear how you'd make that - you sort of push Iran to do what you'd like them to do.

KING: So a lot remains to be seen, huh?

SMITH: Indeed.

KING: Adam Smith was the senior adviser to the director of the Treasury Department's Office of Foreign Assets Control.

Mr. Smith, thanks for coming in.

SMITH: Thank you. Transcript provided by NPR, Copyright NPR.