Fighting Hard Power With Soft: Sanctions, Iran, and Burma

Burma’s generals, confident that they have reestablished the rule of terror, have just relaxed their  curfews and bans on public assemblies.  It’s exceedingly depressing to write about yet another ongoing atrocity that no one has the courage or vision to really fight, and Burma is another of those atrocities.  If the Administration thinks that modest sanctions like these will end the slaughter, it’s fooling no one:

The president directed the government to freeze any U.S.-controlled assets held by 11 senior Burmese officials, and he widened the net with an executive order expanding sanctions to those who assist such officials or the Burmese government, starting with 12 individuals and entities. He also ordered tighter restrictions on the export of goods such as high-performance computers to Burma.  [WaPo]

You can read summaries of our sanctions against Burma here  and here.   They’re fairly comprehensive already.  We don’t import much of anything from Burma.  Although we can export most items to Burma, financial services are a very important exception.   The main impact of the  new  sanctions will be on junta members’ assets in the United States, and since it’s doubtful that they have  much money here anyway,  the likely impact is questionable. But there is Biparitsanship!    Sure, that  means nothing if you’re at the pointy end of a rifle in Rangoon, but it sounds great  on the think-tank circuit, does it not?

The Bush Administration may have been encouraged by the results of its sanctions against North Korea, and the best evidence we have is that their effect was devastating.  North Korea is probably an exception to the general rule, however; it has few valuable legal  exports and a stunted network of trading partners, which makes it uniquely vulnerable to attack at select chokepoints.  Burma abounds in  timber, gems, oil, and gas, and every one of its neighbors buys those products from its generals.  Sanctions against Burma will be difficult to negotiate and even more difficult to enforce.  They may weaken the generals more than, say, stones or packages of ladies’ undergarments, but sanctions  won’t drive the generals  from power.  Only the people of Burma can do that, and to do it, they will need guns, which nobody is even talking about sending them.  Indeed, a credible threat to arm and train dissidents may be the only  threat  that can  force dictators to negotiate a kinder, gentler tyranny in which dissent can still survive.

Iran’s ongoing inflexibility in its nuclear diplomacy with the United States and Europe, may have inspired  Treasury’s Financial Crimes Enforcement Network  to send this  strong new signal about Iran’s money laundering.  The mention of money laundering  suggests that the Bush  Administration may be thinking about applying PATRIOT 311 sanctions, the single most devastating weapon in our financial arsenal.  You will recall  a PATRIOT 311 designation declares  an entity  to be  one of special concern for money laundering and bans U.S. financial institutions from holding corresponding accounts for any bank that  holds assets for that entity.  In simple terms, it forces every bank on earth to choose between that account holder and the  American financial system, which  effectively means the global financial system.   The effect is to cut the offending entity off from global finance.  It is the measure we used to nearly  destroy Banco Delta Asia, which was once  Kim Jong Il’s principal foreign  bank.   

Treasury previously applied Executive Order 13,382, which allows the freezing  of assets suspected of use to proliferate WMD’s,  to Iran’s Bank Sepah in January.   With diplomacy failing, the administration must be thinking very hard about other options.  It would like to be rid of the mullahs, may be forced to launch air strikes on Iran’s nuclear facilities, and knows that attacks would probably rally the population to the regime, at least for a while.  It also knows that Iran’s economy is a basket case, and that economic warfare is more likely to advance its long-term goals.  My guess is that any military options will be brief and limited, that the main thrust will be economic, and what we’re seeing are probing attacks aimed at finding the regime’s vulnerabilities.  Like Burma, Iran has much to sell to the rest of the world, but its economy is far more developed than those of either North Korea or Burma.  Its population is also far less isolated from outside information and far more likely to express its discontent in the streets. 

Finally, Iran’s petroleum-based monoconomy makes it relatively vulnerable, but  our dependency on it does the same to us.  Without securing an agreement by other oil producers to expand production in advance, it’s questionable that the West would attack the one Iranian commodity to which it is an admitted addict.

See also:

*   Trickle, trickle:    the United  States is preparing to accept a whopping 32 more  North Korean refugees from Thailand.