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The Problems with Sanctions on Iran
As the New York Times recently pointed out, the proposition of serious enforcing sanctions against Iran, particularly in the financial field, are not bright.

The reasons are multiple, but the basic one is that there are too many people and countries that simply want to make money and are happy to help evade sanctions. The second is that there is very little the international community can actually do to penalize sanctions busters. I lived through the global sanctions on Haiti in 1994, and if a desperately poor, isolated country like Haiti, with no real allies, could figure out how to break the sanctions, see the odds of meaningful actions against Iran.

Another reason is that, no matter what Western Europe and the United States -- heck, throw in China and Russia just for fun -- want to do, there are many countries that simply will not comply and in fact will go out of their way to aid Iran.

If one is searching for an answer as to what Iran wants with its expensive and sustained push into Latin America, at least part can be found in the desire to build an alternative structure to avoid sanctions through use of its Bolivarian allies. Venezuela has already agreed to sell Iran 20,000 barrels of gasoline a day, something Iran will desperately need if sanctions were to really kick in.

It is not likely to be a coincidence that Iranian banks operate in Venezuela as Venezuelan banks, or that Ecuador is allowing Iran's central bank in to operate. Nicaragua is hosting Iranian financial structures as well. Imagine Hugo Chávez or Daniel Ortega deciding not help Ahmadinejad out of a sense of international pressure. Can't do it? Neither can they.

But one does not have to look to Latin America to see how the sanctions will be circumvented. Ras al Khaimah, a small and poor emirate in the United Arab Emirates, has opened itself as an offshore haven and is busily registering hundreds of Iranian companies. Its airport is little encumbered by such things as strict cargo inspections or rigorous passenger manifestos, one of the reasons Viktor Bout operated there.

Dubai and Sharjah, also emirates of the UAE, slumbered through the registration and utilization of front companies for Pakistan's nuclear program and the network of A.Q. Khan, as they did with the Bout aviation empire. The list of places where Iran can go (and likely already is going and has long been) is endless.

As the Times noted:

Black market networks have sprouted up all over the globe to circumvent the sanctions. A typical embargo-busting scheme was detailed in a plea agreement filed in federal court here on Sept. 24, the day before Mr. Obama and European allies announced the existence of a previously undisclosed Iranian nuclear enrichment facility near Qum.

In the court filings, a Dutch aviation services company and its owner admitted that they had illegally funneled American aircraft and electronics components to Iran from 2005 to 2007. Under the scheme, Iranian customers secretly placed orders with the company, which served as a front, buying the parts and having them shipped to the Netherlands, Cyprus and the United Arab Emirates. The materials were then quietly repackaged and shipped on to the real buyers in Iran.

The Dutch company was eventually caught. But the ease with which it had operated until then illustrates a key hurdle facing the United States: even if diplomatic challenges can be overcome to persuade countries with significant economic ties to Iran, like China, to approve sanctions, it is virtually impossible to make an embargo airtight.

So one should be extremely careful about making statements about how sanctions will bring Iran to its knees and violators will be prosecuted. The hollowness of that statement will ultimately be shown, and credibility lost. At best they are one tool in a larger tool box.
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