Is It Time To Rethink U.S. Sanctions Against Iran?

Iran's presidential election on May 23 won't be an exercise in Western-style democracy. Iran has no political parties. Candidates are vetted for their Islamic piety and revolutionary fervor by a 12-member Council of Guardians.

Yet the election of a successor to President Hashemi Rafsanjani's eight-year rule could be a watershed for the strategically located, oil- and gas-rich nation of 65 million people. For the first time since the Islamic Revolution in 1979, voters have a choice between candidates espousing radically different programs. The vote could lead to a significant shift in Iran's tense relations with the rest of the world. "It really will make a difference who is elected," says Gary Sick, an Iran specialist and former National Security Council staff member.

Only a few weeks ago, Ali Akbar Nateq Nouri, the conservative speaker of Iran's parliament, looked a shoo-in. Now polls show him neck and neck with Seyyid Mohammed Khatami, a former culture minister. Although Khatami is a mullah who trained in the holy city of Qom, he is waging a vigorous campaign for human rights and press freedom as well as improved relations with the West.

TANTALIZING. A Khatami win could provide a tantalizing opening for Washington to begin modifying its dual-containment policy to isolate and weaken Iran and Iraq. Not that a sudden about-face is likely. The U.S. is pushing for tougher trade sanctions against Iraq's Saddam Hussein. And, adds a senior Administration official, "there's no wavering" in policy regarding Iran.

Indeed, Western-Iranian relations may still worsen before they improve. In April, a German court implicated senior Iranian officials in ordering the killing of dissidents in a Berlin restaurant in 1992. And the investigation into the bombing of U.S. Air Force barracks in Al-Khobar, Saudi Arabia, in June, 1995, could still turn up Iranian involvement.

But unilateral sanctions imposed on Iran by President Bill Clinton in 1996 are coming under increasing fire. In a long article in the May issue of Foreign Affairs, for instance, former presidential advisers Zbigniew Brzezinski, Brent Scowcroft, and Richard W. Murphy argue for a more balanced Iran policy and resumption of U.S.-Iranian commercial relations.

U.S. corporations from AT&T to Texaco agree. On Apr. 16, 500 companies set up USA-Engage to lobby against overuse of unilateral trade sanctions by the U.S. "[There's] evidence that the U.S. can't do much to influence Iranian behavior by acting alone," says Dan O'Flaherty, deputy director of the National Foreign Trade Council, who chairs USA-Engage.

Sanctions often penalize U.S. interests more than Iran's. American energy companies, for instance, are excluded from lucrative Iranian oil and gas deals, leaving rivals such as France's Total free to scoop up the business. Development of the oil-rich but landlocked Caspian Sea region, where U.S. companies such as Chevron Corp. and Amoco Corp. have huge stakes, is stalled because Washington opposes piping the oil through Iran, the shortest and most economical route.

The political costs are high, too. Last year's Iran-Libya Sanctions Act imposing penalties on foreign companies investing in Iran's oil sector is straining ties with Western European allies. And Russia now has a hammerlock on oil and gas pipelines out of the Caspian.

Hopes of moderate mullahs coming to power in Iran proved illusory in the past and may do so again. But now, Washington's policy of all stick and no carrots is not only undercutting potential reformers in Iran but could also erode U.S. influence in the Middle East.