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Obama and the EU Could Stop Iran's Nuclear Quest With Crippling Financial Sanctions

On Monday, November 14, only days after the United Nations' nuclear authority detailed Iran’s unlawful nuclear activities, a meeting of European foreign ministers came up short of sticks with which to change Tehran’s behavior.

The disunity among the European Union’s top diplomats -- who are already losing sleep over the continent’s economic meltdown -- sent precisely the wrong message to Iran’s rulers. German foreign minister Guido Westerwelle promptly stated that “We won’t be part of a discussion about a military intervention ... such a discussion is counter-productive.”

Strikes on Iran’s military facilities would lead to an “uncontrollable spiral,” stressed French foreign minister Alain Juppe, following Berlin’s lead in rejecting the policy that would do most to degrade Iran’s nuclear program.

British foreign secretary William Hague and Dutch foreign minister Uri Rosenthal rightly left their options open. When questioned about military intervention, Rosenthal said, “I don’t exclude anything. Now is not the moment to say anything else.”

Iran’s leaders surely aren’t so shy about acts of war; only last month, the White House implicated them in a foiled bomb plot to murder Saudi Arabia’s ambassador to the United States along with scores of Americans at a Washington restaurant.

While military action has entered the Iran debate -- notably among Republican presidential hopefuls -- the U.S. and its allies could still impose crippling economic sanctions that might stall Iran’s nuclear program and contribute to the demise of its anti-democratic regime. 

If the EU were to reduce its €25 billion in annual trade with Iran, and its massive consumption of Iranian crude oil, it could deliver a one-two punch to Iran’s nuclear program and its terrorist proxies abroad, including Hezbollah in Lebanon and Hamas in the Gaza Strip.

For starters, the EU could replicate President George W. Bush’s decision to designate Iran’s Islamic Revolutionary Guard Corps as a terrorist group. The IRGC controls Iran’s nuclear weapons program, coordinates terrorist attacks from Argentina to Afghanistan, and violently represses pro-democracy activists inside the Islamic Republic’s borders.

The IRGC also largely controls and profits from Iran’s oil trade. By reducing Iranian oil imports to the EU, and filling the gaps with anti-Iranian energy providers like Saudi Arabia and Kuwait, Europe could deny Iran billions of dollars a year in hard currency.

Europe’s capitals could also ban critical financial transactions with Iran’s economic lifeline, the Central Bank of Iran. Germany, Tehran’s number one trade partner in the EU -- with bilateral trade of roughly €4 billion each year -- has traditionally resisted sanctions, but they could create major headaches for Iran’s clerical elites.

The EU and the U.S. have already sanctioned CBI’s main subsidiaries, Banks Melli and Saderat, for their involvement in Iran’s nuclear and ballistic missile programs.

Sadly, President Obama’s main point man on Iran sanctions, U.S. under secretary of the Treasury for terrorism and financial intelligence David S. Cohen, encountered vehement opposition when he sought to encourage European capitals to crack down on CBI during a whirlwind tour of Rome, London, Berlin and Paris in late October and early November.

Europe’s leaders have spent almost 10 years engaging Iranian diplomats in a futile effort to persuade the former allegedly “moderate” president Mohammad Khatami and now the current leader Mahmoud Ahmadinejad to abandon their quest for nuclear weapons. These dialogues merely bought Iran time and attention.

Europe should instead support a package of serious economic disincentives, and leave a military option on the table, to turn back Iran’s nuclear clock.

The United States and Israel have wisely chosen this course, but neither country wants war. In order to prevent it, President Obama will need to twist his European partners’ arms and persuade them to take crippling financial action against Iran.

Benjamin Weinthal is a Berlin-based fellow at the Foundation for Defense of Democracies.

Benjamin Weinthal is a Berlin-based fellow at the Foundation for Defense of Democracies. Follow him on Twitter@BenWeinthal.