The European Union yesterday reached a preliminary agreement to ban imports of Iranian oil. On Saturday, President Obama signed a bill imposing new sanctions on Iran’s central bank. The intention is to pressure Iran to curtail its nuclear program. But Tehran has responded with threats to close the Strait of Hormuz and attack U.S. naval vessels in the Gulf. The country also launched an anti-American campaign in Afghanistan. Diane and her guests discuss what is behind the recent escalation of threats and sanctions, the political and economic implications and whether military conflict is becoming more of a concern.


  • Michael Rubin Resident scholar, American Enterprise Institute, senior lecturer, Naval Postgraduate School, and author of the forthcoming book, "Dancing with the Devil" (Encounter, 2013.
  • Reza Marashi Research director, National Iranian American Council, former Iran desk officer, U.S. State Department.
  • Ellen Laipson President and CEO,the Stimson Center, and member of the U.S. State Department's Foreign Affairs Policy Board.


  • 10:06:56

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. The U.S. and its allies are threatening Iran's economy with its new sanctions. Iran has responded to the series of military and diplomatic threats. Here in the studio to look at escalating tensions between the U.S., its allies and Iran: Michael Rubin of the American Enterprise Institute, Ellen Laipson of the Stimson Center and Reza Marashi of the National Iranian American Council. Do join us, 800-433-8850. Send us your email to Join us on Facebook or Twitter. Happy New Year to all of you. Thank you for being here.

  • 10:07:59

    MS. ELLEN LAIPSONThank you.

  • 10:07:59

    MR. MICHAEL RUBINThank you.

  • 10:08:00

    MR. REZA MARASHIThank you.

  • 10:08:00

    LAIPSONYou, too.

  • 10:08:00

    REHMReza, let me start with you. How significant is the agreement in principle of the E.U. member states to issue an oil embargo on Iran?

  • 10:08:16

    MARASHII think it's a very important definition. We downplayed it all. This kind of international unity, vis-à-vis the Iranian government, is, if nothing else, something that catches their attention. That being said, I think there are two additional points that should be made regarding this very important issue. The first is that there's going to be about four to six months from now where they study this process of what it would mean taking Iran's oil off the market through an embargo to see if and how it would spike oil prices.

  • 10:08:49

    MARASHIAnd, two, I also think it's important to note that this is a finite resource. So when you take this oil off the market, we, as the international community, open ourselves up to an Iranian response, anything from targeting Iraq's oil resources and trying to take that oil off the market, to military conflict in the Strait of Hormuz. Any sort of thing that can raise the price of the oil 'cause even the threats that have been going back and forth between the United States and Iran, even though it's mostly bluster, have raised oil prices over the last week. It's very tense.

  • 10:09:25

    REHMWould the Saudis step in to relieve that pressure?

  • 10:09:30

    MARASHIIt's a great question. I think that's something that's being actively discussed right now. And the Saudis have a very important and a very interesting choice to make because, on the one hand, I think they would like to step in and increase the pressure on the Iranian government. No love lost between these two governments both presently and historically.

  • 10:09:49

    MARASHIBut at the same time, as the Arab Spring has engulfed the region, the Saudis have been throwing a lot of money at their own domestic stability problems in an effort to -- for lack of better term -- buy off their population. So pumping more oil on the market, if you're the Saudi government, actually lowers the price. And they need high oil prices, at least at the prices that they're at now so that they can, like I said before, kind of buy off their population and try to stem their own domestic, little problem.

  • 10:10:16

    REHMWhat about Greece, Ellen Laipson? It seems to me that Greece imports most of its oil from Iran. Considering the precarious situation of Greece at this very moment economically, wouldn't this just worsen the situation?

  • 10:10:37

    LAIPSONWell, I think the Greeks would be able to find alternative sources since oil is a global market, and countries -- some countries negotiate kind of a bilateral oil trade arrangement. But many countries can go to Rotterdam and see what's available and purchase from other sources. But I think you've raised -- the important point is that all the countries, whether its talking about oil embargo, or, in the U.S. case, sanctions against the Central Bank of Iran, have to at a certain point consider their own economic self-interest.

  • 10:11:08

    LAIPSONWhile they may want to be sending these signals of toughness and, you know, add additional pressure on Iranian decision-makers, they also have to balance that with their own economic interest. And countries -- certainly Greece is one of the top of the lists that's feeling very vulnerable. But even other Western countries would have to calculate, what's the domestic repercussions of taking this additional step against Iran?

  • 10:11:34

    REHMSo, as we heard from Reza, the discussion will go on for several months before any kind of embargo is really put in place?

  • 10:11:46

    LAIPSONYes. But I agree with Reza that the unanimity among the Europeans is quite striking, that I do think Europe has a position that is at least as tough as the United States is right now vis-à-vis Iran.

  • 10:11:58

    REHMMichael Rubin, how is Iran responding to all of these increase tensions?

  • 10:12:06

    RUBINWell, certainly, I agree with Reza that the Iranian discussions of closing the Strait and so forth tend to be a little bit more bluster. And again, here, I think that economics is a key. Iran can't -- wants the price of oil to increase because that's something that -- something they can reap as well. But at the same time, if Iran really were to close the Strait, it would be to cut off their nose to spite their face because not only does Iran need to export oil, it needs to import gasoline as well.

  • 10:12:41

    RUBINAnd, certainly, it seems that sanctions are starting to have an effect last month in Iran. According to the Iranian press, 30 Iranian parliamentarians called for a special close session of the Majlis in order to put polemic aside and really discuss where -- what sanctions we're doing. And on top of which the head of the Islamic Revolutionary Guard Corps' economic wing had said quite openly that sanctions are not without an effect.

  • 10:13:11

    RUBINNow, the interesting thing is, ever since Congress imposed these unilateral sanctions on Iran's Central Bank, the Iranian currency has had a lot of trouble. It's now trading on the black market for around 17,000 rials per dollar, but it seems that the Iranian budget is made, according to the Iranian press, at around 10,000 rials per dollar. And so the Iranians need to pump in extra money as quick as possible.

  • 10:13:41

    RUBINBut I would agree with Reza that perhaps the greatest danger isn't at the Strait of Hormuz or Iran cutting off oil, but on Iran or someone else trying to take off the Iraq -- take the Iraqi oil production offline because then the price of oil skyrockets. But Iran can continue to export.

  • 10:13:58

    REHMOf course, we've seen these tensions arise before, Ellen.

  • 10:14:04

    LAIPSONYes, we have. Over the decades, I mean, the great tragedy, at least from Washington perspective, is that the United States and Iran communicate poorly over these decades, and there have been these spikes of tension in the relationship. We remember the late 1980s during the Iran-Iraq War where the United States tried to not have a policy explicitly on behalf of either party but, in the end, had a number of military confrontations with Iran, including the attack on an offshore oil facility, the shooting down of an Iranian airliner, et cetera.

  • 10:14:39

    LAIPSONAnd somehow we've stepped back from these moments of tension, and it's never become a general war that -- with the goal of going all the way to regime change or trying to undermine the regime. But underlying our -- under all these episodes is a lack of clarity about whether we could co-exist with this country in a more normal kind of relationship with understanding that our political systems and our political goals and objectives are so different.

  • 10:15:10

    REHMInteresting that Iran chooses this moment to try to undercut the U.S. in Afghanistan, Reza.

  • 10:15:20

    MARASHII think rather than them choosing this specific moment, it's been something that's been going on for a couple of years now that's transcended both Bush administration and the Obama administration. Afghanistan represents one of the myriad issues that the United States and Iran are not communicating directly on, even though they do have overlapping interests to a certain degree, not on entirety.

  • 10:15:41

    MARASHIAnd as a result of that, both sides try to up the ante and adversely affect the interest of the other because they're viewing it as a zero-sum game where if the other side is benefiting, we can't possibly be benefiting as well.

  • 10:15:56


  • 10:15:56

    LAIPSONYeah. I think the United States has tried to integrate Iran into its -- you know, the past year of talking to all of Afghanistan's neighbors. Iran has been invited to all these multilateral meetings. It came at a very senior level to both the Istanbul meeting and the Bon meeting. So at some level, Iran wants to be treated equally with the other neighbors of Afghanistan as the Alliance countries think about scaling back and eventually leaving Afghanistan.

  • 10:16:24

    LAIPSONAt the same time, there's a bilateral piece to this, which is the Iranians have expressed very strongly their opposition to a long-term U.S.-Afghan strategic partnership that Iran has signaled, just like it did in Iraq, we do not want a permanent American military presence in this country right on our border. But overall, I think, in the short to medium term, we have to look for opportunities for cooperation between Iran -- with Iran as one of the many neighbors of Afghanistan that should have a stake in a stable Afghanistan.

  • 10:17:00

    REHMDo you believe that Iran's pressure is one of the reasons the U.S. did finally set the deadline in 2011 for U.S. troops getting out of Iraq, Michael?

  • 10:17:18

    RUBINWell, certainly, the America -- the Iranians determined that the Americans were quite casualty averse, and we saw this in the changing public opinion that ordinary Americans had as to what was going on in Iraq. So, certainly, I think it came into play, much more importantly, in -- much of the Iranian rhetoric, they believe it came into play. Now, what concerns me getting back to the Persian Gulf, is that, in 2007, Islamic Revolutionary Guard Corps changed its setup.

  • 10:17:50

    RUBINSo instead of looking outward, the army, the Islamic Revolutionary Guard Corps land forces had this big BRAC, this big Base Realignment commission where they put one unit in every province believing that their biggest threat would come from inside. Now, when you look at Ali Fadavi's rhetoric -- he's the head of the Islamic Revolutionary Guard Corps Navy. What he has said is, now, our main power is going to be maritime. And on July 25, the supreme leader went to Bandar-Abbas. I'm afraid that IRGC Navy is going to try to replicate the insurgency, but on water.

  • 10:18:28

    REHMMichael Rubin of the American Enterprise Institute. He's also senior lecturer at the Naval Postgraduate School. Short break. We'll take your calls when we come back. Stay with us.

  • 10:20:05

    REHMAnd welcome back. We're talking about rising tensions between the U.S. and Iran and its allies. Here in the studio, Michael Rubin. He's at the American Enterprise institute. Reza Marashi is at the National Iranian American Council. Ellen Laipson is president and CEO of the Stimson Center, a member of the U.S. State Department's Foreign Affairs Policy Board. We are going to take your calls shortly, 800-433-8850.

  • 10:20:51

    REHMWe talked about the unanimity on the part of the E.U. regarding oil embargos on Iran. But is the same mindset there in regard to imposing sanctions on Iran's central bank, Ellen?

  • 10:21:14

    LAIPSONI don't see the unanimity internationally and even in the United States. I think there's been a debate about whether banning any transactions with the Central Bank of Iran, first of all, affects our allies and trading partners around the world. But whether that constitutes what is called smart sanctions -- are those sanctions that target, you know, elite decision makers but not your average citizen of Iran? -- in the expectation that it's better to insulate the innocent publics from sanctions that are directed at the behavior of states.

  • 10:21:51

    LAIPSONIn my view and, I think, in the view of many experts, you know, sanctions against the central bank would eventually affect the entire society. It would affect access to consumer goods and the sort of quality of life that Iranians who are politically neutral or may have different political views would be affected directly.

  • 10:22:10

    LAIPSONSo in the U.S., I think many people argued against -- that sanctions against the central bank were going too far. It was Congress that included these sanctions, and in negotiations with the White House, they -- the president signed the bill that includes these sanctions with a six-month waiver to determine how it would affect the international economy and the ability to waive for specific countries.

  • 10:22:34

    LAIPSONAnd we are now seeing, at least in the case of Turkey, countries petitioning us, saying, we cannot continue to conduct our normal relationship with Iran unless you give us a waiver on these central bank sanctions. In theory, they don't kick into force for several months, but, already, we're seeing how complicated it's going to be to implement those sanctions.

  • 10:22:55

    REHMReza, do you want to add to that?

  • 10:22:58

    MARASHII completely agree. And the two things that I would add regarding central bank sanctions -- and this is also tangentially related to oil and gas sanctions as well -- is these sanctions are perceived by the Iranian government increasingly as an act of war. And that doesn't necessarily mean that that's what it is, but sometimes perception becomes reality. You know, consider the Iranian perspective on this issue.

  • 10:23:23

    MARASHIWe have a litany of sanctions. We have Stuxnet viruses that are adversely affecting the nuclear program. And we also have secret assassinations of high-ranking military and scientific officials, so, on their end, they see a need to respond. And that's very dangerous because the new Iranian mantra is we respond to pressure with pressure. So what we're seeing now is a cycle of violence that's reinforced by misperceptions and miscalculations quite frankly on both sides.

  • 10:23:55

    MARASHIAnd the reason why it's happening on both sides is because there's no direct communication. And as Adm. Michael Mullen, the former chairman of the Joint Chiefs of Staff, said shortly before he retired, he said, when you don't have direct channels of communication, you do misperceive. You do miscalculate. And that can reinforce a cycle of violence that can spiral out of control into a war that, frankly, neither side particularly wants.

  • 10:24:17

    REHMMichael, are we headed for a war with Iran?

  • 10:24:22

    RUBINI don't think we're headed intentionally for a war with Iran. Certainly what I worry about is, given the Iranian regime's unpopularity among its own population, you have, on one hand, the fact that many Iranians don't particularly care for their government. On other hand, you have the fact that Iranians are quite nationalistic. And so what I worry about is a dynamic in which perhaps the Iranians will try to provoke a crisis in order to rally people around the flag, and that would be a very dangerous dynamic for us to get into.

  • 10:24:57

    RUBINWhat I would say, however, just on the sanctions issue, is that the reason why so many people in Congress, for example, are turning to the central bank sanctions is it really -- they really are the only unilateral sanctions which can also impact and affect the Chinese and the Russian business with Tehran so that we don't get into a situation where the Europeans, the Americans and so forth pull back, only to have that gap filled by Chinese and Russian businesses.

  • 10:25:27

    RUBINAnd, certainly, these are sanctions the Iranians are worried about. The attack on the British Embassy in Tehran happened two days after the British imposed sanctions on the central bank.

  • 10:25:38

    REHMWhat do we know for sure about the state of Iran's nuclear program, Ellen?

  • 10:25:47

    LAIPSONWell, we know that there -- they have a research reactor. They are expanding the --their capability to produce enriched uranium up to the 20 percent level. We know that there are some military facilities that they've been very reluctant to allow international inspectors access to. And there are some ambiguity and uncertainty as to how far they have gone in the past or may be currently working to do warhead design and thing that would go all the way to full weaponization.

  • 10:26:20

    LAIPSONI think the last IAEA report that came up just a few months ago is being interpreted somewhat selectively by people on both sides of the debate, either to say it's not conclusive that there's a weapon's program, or to say that they IAEA is raising again these doubts about whether Iran's true intentions. What we do know is that Iran believes it is totally entitled as a signatory of the Non-Proliferation Treaty to peaceful use of nuclear technology and in reaching up to the 20 percent level would not be a violation of that.

  • 10:26:57

    LAIPSONThere's experts' question whether many of their activities would suggest that they're at least experimenting to go beyond just civilian use. So there's -- you know, there are still uncertainties, and part of it is the Iranian's reluctance to be as transparent. They believe that they have been as forthcoming as the law requires them to be.

  • 10:27:19

    LAIPSONBut other experts, you know, there is a lack of trust here. And the Iranians are also very sensitive to this question of double standard, universality. They don't want the IAEA or any part of the international government system to be able to develop special rules for Iran that would not apply to any other country that's a member in good standing of the NPT.

  • 10:27:40

    REHMAnd what do you make of Iran's apparent willingness to negotiate with the U.S. and other members of the U.N. Security Council on this issue, Reza?

  • 10:27:55

    MARASHIWell, I think Iran's negotiating stands has been non-cooperative, particularly recently. But I don't think a non-cooperativeness on the part of the Iranian government necessarily means that there is a lack of willingness to negotiate. I think every country, whether it's the U.S., Iran or anyone else has a set of interests. And willingness to negotiate is usually predicated on whether or not you're interests are being addressed in said negotiations.

  • 10:28:22

    MARASHISo what does that mean? Let's unpack it. Think, first and foremost, and most importantly, what it means is there are very few overlapping interests with regards to Iran's nuclear program between Iran and the United States. That doesn't mean that they shouldn't negotiate over it. It just means that it's the toughest not to crack.

  • 10:28:38

    MARASHISo maybe starting with some issues such as Iraq, Afghanistan, regional security, where I wouldn't say that their interests are perfectly aligned, but there is a little bit more room for negotiation and maneuverability might help fill that trust gap that we were talking about a little bit earlier and create enough goodwill to make progress on the nuclear front.

  • 10:28:56

    REHMAt the same time, Israel is certainly very, very concerned about what Iran may be constructing. And there has been talk that Israel might wish to attack Iran's nuclear structure. However, the statement has been made again and again that Israel would need the help of the U.S. to complete that operation. How likely is it that Israel might go for and attack on Iran, Michael?

  • 10:29:40

    RUBINWell, I'm a historian, so I'm paid to predict the past. And I only get that right about 50 percent of the time. When it comes to Israel, I think what we need to recognize is that many Israelis have a very different threat perception than United States does. United States looks at the Iranian nuclear challenge in terms of strategic tenability. The Israelis -- or at least some Israelis -- will look at this in terms of an existential threat, and so, hence, a lot of the suspicion with regard to diplomacy, this issue about whether the Iranians are just letting the clock run down on the nuclear clock.

  • 10:30:15

    RUBINThere's actually a second clock that's running down, which most people don't think about -- but the Iranians certainly do -- and that's the demographic clock. What many people forget is that the Iranian birthrate now is only half of what it was in the 1980s. The growth rate in Iran is less than that of the United States, which means when you look at the Revolutionary Guard weekly newspaper Sobh-e Azadegan, they won't often talk about demography, that if they can only hold on for a couple odd years more, they will be over the demographic bulge.

  • 10:30:45

    RUBINAnd when you think back to the 2009 uprising, most of the people coming out in the streets were in their 20s. They represented the demographic comp. And so it's an opposite demographic profile than what you have in many of the Arab countries undergoing the Arab Spring. So the Israelis, and perhaps the Iranians, also believe that if the Iranians are allowed more time, rather than the genie of reform being out of the bottle, it's actually possible to put it back in. And that's something that gives Iranians and Israelis both shudders.

  • 10:31:16


  • 10:31:17

    MARASHII think that, you know, demographics are important. But when we look back to the 2009 protest in Iran, you know, it was a very diverse socioeconomic swath of Iranian society that went out to the streets to protest what was a stolen election and human rights abuses that have ensued to the present day. That being said, when we're talking about the issue of Israel, it's important to consider what the Iranian government perceives as well, correctly or incorrectly.

  • 10:31:44

    MARASHIThey perceive not religion, not ideology, but regional pre-eminence and regional hegemony as the primary driving force, and they see an Israeli government, right or wrong, that wants to maintain regional pre-eminence through military domination. And as a result of that, the Iranian government perceives an Israeli government that will take the steps necessary to prevent another regional actor from achieving technological advancements that would make them on par when it comes to the regional balance of power.

  • 10:32:17


  • 10:32:18

    LAIPSONTwo points I'd make about the debates in Israel, which have been really very open and lively and interesting. One is some Israelis have gone back and tried to assess what did they accomplish when they bombed Iraq's pre-weapons facilities when Iraq had not yet crossed the threshold, like Iran today, in 1981. And in hindsight, the view is that it probably, yes, it set back by a few years.

  • 10:32:45

    LAIPSONWe can disagree over exactly how many years it set back their program. But it probably strengthened the resolve of the Iraqi government to go all the way, so that if the program, prior to being bombed, had been, well, let's just roll along and see, we can make a decision later on how far to go. After the attack, at least according to some Israeli experts, it strengthened Saddam Hussein's resolve that he, in fact, needed nuclear weapons.

  • 10:33:10

    LAIPSONSo there is that strand of argument now that attacking the Iranian facilities could be counterproductive. The second is this debate over existential. We are seeing Israeli -- very senior Israeli security officials saying, please let's not call it existential. And in the debate over the existence of Israel, you know, that after the Holocaust, the creation of the state was supposed to mean that there would never again be an existential threat to the Jewish people, that they would always have this homeland.

  • 10:33:40

    LAIPSONSo using -- degrading the term existential is very sensitive in Israel because it's almost a questioning or repudiation of the viability of the state. So it's very interesting to listen to the debate in Israel over this question, of whether they're overreacting.

  • 10:33:58

    REHMEllen Laipson. She is president and CEO of the Stimson Center. And you're listening to "The Diane Rehm Show." Michael Rubin, you wanted to talk about the 2012 parliamentary election.

  • 10:34:16

    RUBINWell, I just wanted to make a point that as much as we tend to look at the situation through the lens of Iranian-American relations or Iranian-Israeli relations or the trilateral relationship, within Iran itself, since we were talking about the 2009 uprising after their botched presidential elections, it's interesting to note that especially in the last two days, the Iranian press, and especially the Islamic Revolutionary Guard Corps, has been obsessed with avoiding a repeat as Iranians again go to the polls this year for their parliamentary election.

  • 10:34:50

    RUBINThey've been taking a lot of pre-emptive measures. For example, when several members of the Rafsanjani family came back two days ago from the United Arab Emirates, they had their passports confiscated. Certainly, this also raises the question, again, about whether Iran would try to do something that might be a distraction to rally people around the nationalist flag if they don't have enough self-confidence to believe that the Iranian people aren't going to rise up again.

  • 10:35:16

    REHMAnd, Michael, what is the situation with the U.S. military at this moment?

  • 10:35:24

    RUBINWell, certainly, the U.S. military is committed to keeping the 34-mile-wide Strait of Hormuz international waters open. But while much of the press has been focused on the USS John C. Stennis, this aircraft carrier which has been traversing the Strait of Hormuz, close behind are actually two additional aircraft carriers, the USS Carl Vinson, which was last in the news with the disposal of bin Laden's body, as well as the USS Abraham Lincoln.

  • 10:35:53

    RUBINNow, on average, in the 5th Fleet area of operation, the Persian Gulf and the Sea of Oman, we usually have around, on overage, 1.75 aircraft carriers. To have three there seems to be a little bit of an unannounced naval surge.

  • 10:36:07

    REHMHow do you interpret that?

  • 10:36:09

    RUBINWell, there's a couple of ways to interpret this. Very quickly, perhaps the United States was trying to demonstrate its commitment to the region after the pullout from Iraq. But the fact that this crisis then erupted with regard to Iran plays into the fact. One thing you know when you get on an aircraft carrier is, no matter where they tell you your port calls will be or what your mission will be, it's always changing.

  • 10:36:32


  • 10:36:34

    MARASHII think it's an important point -- one point about the Majlis elections and then, very quickly, one point about the Strait of Hormuz. Rather than calling it an election, I think we should call it a selection. Quite frankly, when you have one side of the Iranian political spectrum, or at least what it used to be -- either in jail, exiled from the country or continually harassed by this Iranian government in its current iteration -- it's hardly an election.

  • 10:36:59

    MARASHISo, really, what we're seeing is a game of elite competition right now, and trying to predict Iranian politics is a very humbling experience. And then on the Strait of Hormuz, I think what we're really talking about here is a broader conversation about the regional security architecture in the Middle East. And Iran refuses to enter the regional security architecture as it exists now.

  • 10:37:23

    MARASHIThey will not become -- this current iteration of an Iranian government will not become a compliant U.S. ally a la Saudi Arabia, Mubarak's Egypt or Jordan.

  • 10:37:33

    REHMReza Marashi. He is research director of the National Iranian American Council. Short break. Your calls when we come back.

  • 10:40:04

    REHMAnd welcome back as we talk about Iran, the rising tensions over fears of the construction of a nuclear weapon. Let's go first to Ed in Rockford, Ill. Good morning to you.

  • 10:40:25

    EDHowdy. I'm glad to be on the show. My comment was what would stimulate these people, the Iranians or anybody else, to try to develop weapons in that area? But the real problem is the threat of Israel. Israel has gone in and destroyed infrastructure and people in Lebanon because two soldiers were kidnapped. They bombed Iraq as was previously discussed. They have invaded the Palestinians and occupied that whole country and destroyed their olive tree farms and so forth. The people in the Mideast are afraid of that threat.

  • 10:41:08

    REHMAll right. Michael Rubin.

  • 10:41:11

    RUBINI think it's just important to recognize the chronology of the Iranian weapons program. It actually started in its more modern incarnate form during the Iran-Iraq War, and so it predates a lot of both the American activity in the region and some of the issues which you were discussing.

  • 10:41:28

    REHMAnd to Great Falls, Va., good morning, Morgan.

  • 10:41:34

    MORGANGood morning. I had a couple of points, and one of those -- I'm an American-Iranian -- that the effect of the sanctions on the national -- on the Central Bank will be much more immediate on the general public and is not going to be as -- have any kind of time lag, and the effect is absolutely immediate. And my other point is that this regime is in much disarray within Iran, and the vast majority of the Iranian people are opposed to this regime. And with the economy in shambles, the -- really, the only way that this regime can sustain itself is to have some level of conflict.

  • 10:42:27

    MORGANNow, I don't mean war because they can't really afford that, nor do they have the capability. But they can -- they must have some impression, at least, of a pending war in order to rally the people around. And the other is I think that whether the Iranian government where they're most democratic or it is as it is now, the desire to have a nuclear weapon would be the same. And it would not be an aggressive tool for the Iranians but rather from a defensive point and also membership of that exclusive club.

  • 10:43:07

    REHMAll right, sir. Thanks for your call. Ellen Laipson.

  • 10:43:11

    LAIPSONWell, I do agree that we're already hearing reports that the impact of even the prospect of sanctions against the Central Bank are having effects on people's daily lives. The importance of the regime places on hoarding dollars now and keeping currency in the country. They're going to limit how much Iranians can take when they travel abroad, et cetera. So I think our caller is very correct on that point. In terms of the regime needing conflict, you know, I think that this relationship between economic stress and political behavior is just not -- we don't have a reliable scientific rule of how it's going to work.

  • 10:43:48

    LAIPSONIt can work in contradictory ways. Sometimes it rallies people to a sense of national solidarity. Sometimes it turns them against their regime. But as we know in non-democratic countries, you know, how that expresses itself doesn't always have a linear endpoint that resolves the problem. You can sometimes have regime crackdown. You can have a suspension of democratic rules, et cetera.

  • 10:44:13

    LAIPSONSo, yes, Iran is in turmoil in terms of its domestic politics, but I don't know whether we can say for sure that this level of economic pressure will make a difference. And on the very last point on the nuclear, I do believe that Iranian -- at least many Iranian officials are clear that they want to remain a member in good standing of the Non-Proliferation Treaty as a non-weapon state.

  • 10:44:37

    LAIPSONSo I think it's possible that Iran has a strategy to be like Japan, which is to achieve the highest level of nuclear technological capability but not to fully weaponize. But, again, we're in an environment of absence of trust where, that alone, even if Iran were to very clearly explain its position for much of the international community, that would not be a reassuring situation.

  • 10:45:04


  • 10:45:05

    MARASHII don't think there's any question that sanctions hurt the Iranian government. I think the more important question is do sanctions change the Iranian government's strategic calculus? And to date, we see little to no evidence of that being the case. I think more important than sanctions is the Iranian governments own chronic mismanagement of the economy, and this has been going on for the better part of three decades with ebbs and flows.

  • 10:45:25

    MARASHIBut this particular administration, the Ahmadinejad administration, has been the worst of the worst when it comes to nepotism, corruption, embezzlement. You name it. And the last point that I would make more broadly about sanctions, it pertains to the U.S. around conflict broadly conceived. You know, when it comes to the tools of statecraft, you have war and you have diplomacy.

  • 10:45:48

    MARASHIAnd anything else is -- whether it's sanctions or containment, you name it, it's really just a stalling tactic that kicks the can down the road to delay the inevitable choice between these two options, and war always ends in some kind of negotiation. So the longer you put off the negotiations, really, you're just trying to build leverage in order to maximize your negotiating stance. And I think that's really what we're seeing right now when it comes to the U.S.-Iran conflict.

  • 10:46:15


  • 10:46:16

    RUBINWell, I tend to agree with Morgan. However, there's two analytical questions which I just want to throw out there, should Iran actually develop a nuclear weapons capability or nuclear weapons. One is: Who would have the custody command and control over that arsenal, and what do they think inside their heads? How would that impact the situation? The second would be how would that unit holding these theoretical weapons impact the succession when the supreme leader dies?

  • 10:46:45

    RUBINWould they subordinate themselves to someone with whom they disagreed, or could we see a cycle of radicalization? I would like to just disagree with Reza for a moment, however. I think there's been two examples inside Iran where diplomatic and economic isolation have fundamentally changed Iran's position. One was with regard to Iran pledging no compromise before the release of the hostages, and yet -- and they did compromise without all their demands met.

  • 10:47:15

    RUBINAnd the second one was with Ayatollah Khomeini deciding to agree to a ceasefire on the Iran-Iraq War after swearing for years that he wouldn't agree to that ceasefire. He got on the radio and said, it's like drinking a chalice of poison, but I have to go ahead and do this. And the question is, in that case, whether greater economic and diplomatic isolation could actually impact Iran's behavior.

  • 10:47:40

    REHMThere are a number of listeners who are wondering about the domestic implications of all of this. Steve on Plum Isle writes: "I don't mean to push the poll candidacy, but the Republican candidates, with the exception of Mr. Paul, are ready to start another military action in the Middle East if there's a perceived threat to Israel." He goes on to say, "I think Mr. Obama shares this sentiment as well. Is the American public ready for another war in the Middle East? I thought we wanted out of these wars? What is a voter to do?" Ellen.

  • 10:48:31

    LAIPSONMy understanding is that polling data suggests that the United States -- the American public is not all interested in a war with Iran, does not feel that there's an imminent threat from Iran to U.S. immediate interest and would like the next president to be focused more on restoring our economic stability. So I do think that, you know, candidate Paul took a stand that was quite unusual within the spectrum of Republican views. And I think he's, in some quarters, being chastised for it and in others being praised for his independence and his ability to call it in a very straightforward way.

  • 10:49:11


  • 10:49:13

    RUBINWell, what's of most concern to me is that what causes war in the Middle East isn't oil, and it's not water. It's fundamentally the overconfidence of one side or the other, which is why I agree that we need to have much greater communication that doesn't necessarily mean sitting down at the table with diplomats, but just to define what our redlines are, so that every side recognizes that if they cross paths a certain point, for example, closing the Strait of Hormuz, that could set us down a slippery slope to a conflict no one wants.

  • 10:49:47

    RUBINUltimately, I don't think that either the Bush administration or the Obama administration has done a very good job of defining what these redlines are.

  • 10:49:56

    REHMAnd, Reza.

  • 10:49:57

    MARASHII would say two things. What's most interesting about the Republican Party and American domestic politics right now when it comes to Iran is that when you look at the polling of Republican voters, even they are opposed to a war with Iran. The numbers are quite striking. So that's one. And, two, when it comes to communication between the United States and Iran and setting redlines, I do think it's important to understand what redlines are on both sides.

  • 10:50:20

    MARASHIAnd I actually think that there's a pretty good understanding both in Tehran and in Washington of what the various redlines are, but it's silly season in Washington right now. There's an election coming up. There's also an election coming up in Tehran. And sometimes the rhetoric takes on a life on its own.

  • 10:50:34

    MARASHIThis is very troubling when it comes to the U.S.-Iran conflict because during this silly season, rather than the governments controlling the conflict dynamic, the conflict dynamic can begin to control the governments. And that's when things can get really scary, particularly when you're not communicating.

  • 10:50:48

    REHMWhat kind of role do you think China is playing, can play here in its relationship with Iran and the United States, Reza?

  • 10:51:02

    MARASHII think China benefits from the status quo. I think it's rather obvious that China benefits from the status quo because right now, you have the Islamic Republic of Iran, which is one of the foremost oil and gas producers in the world, and United States is not involved in that market so the Chinese can maximize the market. At the same -- so they benefit from U.S.-Iran enmity. And at the same time, in addition to benefiting from U.S.-Iran enmity, I think the Chinese government also uses this issue as a way to kind of poke the United States in the eye and maximize its leverage.

  • 10:51:32


  • 10:51:32

    LAIPSONI don't see the Chinese is playing a very dynamic geopolitical role right now. I think their relationship with Iran is pretty heavily in energy security relationship. And they have not asserted themselves very forcefully to try to be a security actor in this region yet. But I do think that if the enmity between Iran and the West continues, that Iran will orient itself to the rising Asian powers more.

  • 10:51:59

    LAIPSONAnd that interdependence between Iran and China on economic matters will, you know, make China take a pretty predictable position at the U.N. I think it's harder and harder for the United States to persuade China to be, you know, as stalwart on more sanctions against Iran. And I see this as a pattern that's likely to continue.

  • 10:52:23


  • 10:52:24

    RUBINI would just add that you really can't talk about China and Iran without also talking about China and Saudi Arabia. Certainly, I agree with Ellen that energy security is reason number one, two and three behind Chinese actions in the region, be what they are. But, increasingly, it's important to realize that China has also developed refineries that can accept Saudi oil with its slightly higher sulfur content, and this makes Saudi Arabia much more of a player.

  • 10:52:52

    RUBINOne thing the Obama administration has been trying, is to leverage Saudi Arabia and in order to communicate with China and try to get China onboard with U.S.-Iran policy.

  • 10:53:03

    REHMAnd you're listening to "The Diane Rehm Show." Now, to Hollywood, Fla., good morning, George.

  • 10:53:11

    GEORGEGood morning, Diane, and guests.

  • 10:53:15

    REHMMorning, sir. Go right ahead.

  • 10:53:18

    GEORGEOK. I keep hearing about the Strait of Hormuz and 34 miles across. And I'm thinking, metaphorically, but, realistically, my idea is that, to reduce economic -- and you hear about economic pressure, too -- to reduce economic pressure or, conversely, to relieve economic pressure and, probably, military pressure, why don't they build a canal, like the Erie Canal or -- across the tip of U.A.E. and Oman? It looks to be about 100 miles on my Atlas here. In that way they can relieve the pressure and the political pressure, military pressure of -- in that area.

  • 10:53:59


  • 10:54:00

    RUBINWell, I think that is actually much greater discussion if you want to alleviate the strategic importance of the Strait of Hormuz on trying to reconfigure the Trans-Saudi Pipeline in order to allow it to handle crude oil and take it out to Yanbu on the Red Sea. At present, about one-third of tanker-borne oil traffic transits the Strait of Hormuz, and certainly this would add a great deal of energy security if you had an alternative.

  • 10:54:25

    REHMAll right. And, finally, to Lansing, Mich. Good morning, Peter.

  • 10:54:31

    PETERGood morning. Any war with Iran would be a horrible situation. The last three countries that we fought have a population less than the total population of Iran. Iran is a very radical state, willing to fight interminably, as they proved when they fought Iraq. And the Strait of Hormuz is a horrible place to have a battle. There is even a possibility that Iran could have purchased a nuclear weapon from the likes of North Korea or someone. So Ron Paul is -- you know, I don't generally support him, but his position is reasonable, rational and in line with the wishes of the American public.

  • 10:55:12


  • 10:55:13

    MARASHII think the caller makes a very good point when it comes to Iran being ready for a fight. That being said, I think we should also point out that the Iranian government is a group of cunning ideologues, but they're not suicidal. They don't want this fight. You know, we're the United States of America. We're the superpower. They don't want this fight. What they do want, though, is to try to use the leverage that they have in the region to achieve their strategic interest.

  • 10:55:36

    MARASHIAnd the last thing I'll say about the Iranian government and the possibility of U.S.-Iran war is that it doesn't have to be this way. When the Obama administration came into office and used terms like mutual interests and mutual respect, you know, they faced -- I liken it to a bill being introduced into Congress. When the Obama administration introduced its Obama-Iran policy, you know, just like a bill in Congress, they've got marked up by the Israelis, the Saudis, the Brits, the French.

  • 10:56:02

    MARASHIAnd on the back end, when it was all said and done, it ended up as something very different than what it started as. So, you know, a willingness to take risks for peace requires the adults in the room to take a stand for peace. And I'm hoping that the adults in the room, both in Tehran and Washington, do exactly that.

  • 10:56:18


  • 10:56:19

    LAIPSONI think it's useful to take that sobering a pause and realize that Iran is three times the size, geographically and population wise, of Iraq. So imagine the troubles we got into in Iraq and what it would be like to have some kind of sustained conflict...

  • 10:56:33

    REHMYou're talking about a population of, what, 75 million?

  • 10:56:36

    LAIPSONEighty million.

  • 10:56:37

    REHMEighty million.

  • 10:56:38

    LAIPSONMm hmm. And I think we should not be completely disheartened. You know, there is -- every prospect that we're going to go back to the negotiating table with Iran over the nuclear arrangements with no prospects or a dramatic breakthrough, probably, but still, any channel of talking and of communicating directly, I think, is very critical.

  • 10:56:57

    REHMVery briefly, Michael.

  • 10:56:59

    RUBINWhat I would answer is just, very briefly, on Nov. 4, 2009, the 30th anniversary of the Embassy seizure in Iran, Ayatollah Ali Khomeini, the supreme leader, basically laid down a bunch of pre-conditions with the conclusion saying we're not going to be negotiating seriously with United States. We can blame our own allies, but I think the Iranians need to look at themselves.

  • 10:57:22

    REHMMichael Rubin, Reza Marashi, Ellen Laipson, thank you all so much. Thanks for listening, everyone. I'm Diane Rehm.

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