Sunday, May 18, 2008
President Bush is absolutely right to criticize sharply direct negotiations with Iranian President Ahmadinejad. Barack Obama’s embrace of the idea of direct negotiations is both naïve and dangerous and should be a big issue in the campaign.
The reason not to negotiate with Ahmadinejad is not simply to stand on ceremony or some kind of policy of non-recognition. It is based on the fundamental need to topple his regime by increasing the sense the Iranian people have — that he has isolated Iran from the rest of the world, to its severe and ongoing detriment.
The Iranian regime is almost entirely dependent on oil and gas revenues to pay for the vast program of social subsidies with which the government buys domestic support. Gasoline costs 35 cents a gallon in Teheran. Bread and all other staples are subsidized from public funds. But 85 percent of all government revenues come from oil and gas exports. There lies the regime’s vulnerability.
Iran is sitting atop the second largest oil reserves in the world. Only Saudi Arabia has more. But it can’t get at them. It lacks the foreign investment and technology necessary to increase, or even to sustain, its petroleum output. Under the Shah, Iran pumped upwards of six million barrels of oil a day. Now, Iran generates fewer than four million daily barrels. With domestic consumption of energy increasing at 10 percent a year — due in part to the massive subsidies which hold the price down — Iran is expected to see its oil exports cut in half by 2011 and entirely eliminated by 2014. If Iran cannot export oil, it cannot pay for social peace and the regime could be in dire trouble.
Without subsidies, the Iranian people, half of whom are under 30 and only 40 percent of whom are ethnically Farsi, will become restive and resentful. Already, many complain that Ahmadinejad’s policies have led to global isolation of Iran and stymied economic growth and social upward mobility. While opinion surveys in Iran indicate that the people support the nuclear aspirations of the regime, they are not willing to pay a price of international isolation.
If a President Obama were to meet with President Ahmadinejad, it would send a signal to the Iranian people that they are not isolated but that the rest of the world has come to respect them and to have to deal with them. The leading argument for toppling the current regime will have been fatally undermined.
But if the West sustains a policy of economic sanctions, curbs on foreign investment, and diplomatic isolation, the Iranian regime’s days are numbered.
Official United Nations sanctions are having some effect on Iran but the real power lies in cutting off investment by foreign companies, particularly in the banking and energy sectors. American companies are already prohibited from doing business there, although General Electric may be seeking ways around this prohibition through foreign subsidiaries.
Frank Gaffney, formerly of Reagan’s Pentagon, has pioneered the use of private economic disinvestment in companies that do business with Iran, Syria, North Korea, or Sudan. On his Web site, he has identified almost 500 companies that do business with these terror sponsoring nations. They include such international powerhouses as Sieman’s, Shell, Repsol, BNP Paribus, and Hyundai. He has crafted a terror free mutual fund which can earn good returns while avoiding investment in any of these companies.
Missouri Treasurer Sarah Steelman — now running for governor — pioneered disinvesting pension funds in these companies. Now California, Florida, and Louisiana have followed suit.
We need to let these policies work and global isolation of Iran is the way to do it. Negotiating with Ahmadinejad would simply boost his domestic stature and enhance his political stability, the exact opposite of what we should — and must — be doing.
See other recent columns by Dick Morris.
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