In yesterday's Marketplace on the public radio station WNYC, Iran figured prominently as a topic. Eyeing a huge untapped consumer market (fueled by oil revenue) European entrepreneurs and businesses are flocking in, investing and living a pleasant (though presumably alcohol-free) expat existence. France (of course) is building an auto plant there.
Meanwhile, a writer from The Economist explains to the American public, US economic sanctions “aren't working.” Iran is moving right ahead with its nuclear arms program. Gee, I wonder why?
Marketplace points out - with no apparent irony - that the European approach to Iran is to offer “incentives” to curb its nuclear ambitions, which is to say “bribes” (sanctions are also incentives). Of course, this approach isn't working either.
For the sake of argument, let's assume that bribes and sanctions cost about the same for the nations that impose them. Sanctions reduce the economic benefits of trade; bribes take money straight out of taxpayer's wallets.
Two questions remain: which approach is more effective, and which reduces the scope of opportunism? (These two may be the same question, since opportunism guts the effects of either measure).
Let's further agree that the goal is to convince Iran to permanently abandon efforts to develop nuclear warheads and the missile systems to deliver them.
As far as I can tell, the bribe scheme would quickly turn into an extortion scheme, since Iran would have every incentive to up its rent - politically and financially - in return for concessions. It is, after all, not as if the removal of bribes is much of a threat unless the regime has become a junkie on foreign aid (which would be a bad side effect, anyway). Also, bribes/extorted funds have several perverse effects on the recipient: they encourage minimal compliance, upping the threat, and end up funding the bad behavior.
Sanctions are also problematic: they may galvanize public opiniom by reinforcing the image of the sanctioning nations as the enemy, and they tend to cause humanitarian problems as the targeted regime diverts even scarcer resources toward the hateful stuff. In order to avoid such problems most sanctions have exceptions that end up being loopholes. Iraq's oil for food program serves as an example. Castro another.
It follows that sanctions only work if they have widespread support. American businesses and individuals who violate the sanctions against Iran or Cuba could go to jail. But that doesn't matter if others can freely fill the void they leave. To make it clear: American snactions against Iran can't possibly work if the EU (at a minimum) doesn't impose them as well. Sanctions against Iraq appear to have worked (in spite of massive corruption related programs) because many took part in them. Against Cuba, less so, because the US is going it alone.
But bribes/extortion is the worst option of all. Any parent will tell you that they are a fool's errand, and if someone as alien to the human race as Kim Jong I'll knows how to take advantage of them, so will Iran.
(As a side note, you have to wonder why the EU doesn't think to offer bribes to Israel in return for evacuating Jews from the West Bank and Gaza).
Sent wirelessly from my Blackberry.
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