U.S. Businesses Should be Allowed To Do Business in Iran

As most followers of geopolitical issues know, on 14 July 2015 the so-called E3/EU+3 (China, France, Germany, the Russian Federation, the United Kingdom and the United States, with the High Representative of the European Union for Foreign Affairs and Security Policy) and the Islamic Republic of Iran signed the Joint Comprehensive Plan of Action ("JCPOA"), which provides for the lifting of a wide range of economic and other sanctions against Iran in return for Iran agreeing to take certain steps to reduce and degrade its nuclear industry.  The actions required by Iran were quickly implement and verified by the International Atomic Energy Agency (an independent agency created by international treaty and which reports to the United Nations General Assembly and Security Council).  As a result, the sanctions relief outlined in the JCPOA were implemented on 16 January 2016 ("Implementation Day").


Although considered by many to be a success from a diplomatic and security perspective (of course, there are voices that disagree with that conclusion), the global business community was also excited to enter into the Iranian market without the threat of sanctions (enforced mostly by the U.S. and the E.U).  Such excitement was justified based on the size of the Iranian market - nearly 90 million people, many of whom are well educated in areas of businesses, engineering, etc., and a wide range of industries that are in dire need of equipment upgrades and investment from the outside world.


However, that initial excitement turned to caution when it became known that, unlike the E.U. and the U.N. sanctions relief, the U.S. sanctions relief agreed to in the JCPOA was very limited.  In fact, a wide range of U.S. sanctions still apply.  Some of those remaining sanctions are the same sanctions that might apply with respect to any country, such as the restriction against doing business with persons on the SDN List (i.e., the Specially Designated Nationals and Blocked Persons list sometimes referred to as the "bad guy" list which precludes business transactions with known or suspected terrorists, money launderers, etc.).  However, there are also a large number of so-called "non-nuclear" related sanctions which limit doing business with Iran because of Iran's support for terrorism, human rights violations, etc.  Prior to Implementation Day, such non-nuclear sanctions were enforced by the U.S. on a global basis.  After Implementation Day, those sanctions are now only enforced against U.S. Persons.


So, although there are several U.S. sanctions that apply globally after Implementation Day, including sanctions that make it hard conduct business in Iran in U.S. Dollars, the most significant U.S. sanctions remaining in place after Implementation Day are those that largely prohibit U.S Persons (i.e., U.S. Citizens and green card holders and U.S businesses) from doing business in Iran or with Iranian businesses or residents.  That's right - the U.S. negotiated for many, many years to get agreement on the JCPOA and the lifting of Iranian sanctions and the U.S. has intentionally prohibited U.S. businesses from seeking opportunities in the huge Iranian market.  Effectively, the U.S. government spent significant time and effort to get to an agreement that gives away the Iranian market to non-U.S. businesses.


At first, many U.S. businesses were shocked that, except for previous exceptions for food and medicine and the new exception for passenger aircraft, they were not going to be able to pursue projects in Iran following Implementation Day.  The arguments for the continue enforcement of the various sanctions (which are part legislative and part from executive orders) are several.    Let's review some of those arguments.


One, that Iran continues to support terrorism and abuses human rights.  It is often repeated that Iran is the largest sponsor of terrorism in the world.  Unfortunately, such arguments are typically made by uninformed people.  The reality is that Iran is no more, and certainly less of, a supporter of terrorism than many other countries in the region.  Iran certainly does not have a tradition of Jihad whereby it sends militants to attack U.S. interests.  Certainly, Iran's activities can't compare to the negative impact of the multi-decade effort by other Middle East powers in to spread extreme religious and cultural thinking by way of funding and controlling schools, mosques, militants and other institutions.  And, Iran's human rights story, while not laudable, is no worse than many other countries, which are often stated to be a U.S. "friend" or "ally". 


Two, that Iran is a totalitarian state with no respect for democracy.  There are very few other Islamic-majority countries in the Middle East that have any aspect of democracy.  But, just on 26 February 2016, Iran had elections for its national and local representatives.  Although those elections are flawed in many respects, they do result in some degree of popular representation, something few other countries in the region can say.  And, in this case, it is generally considered that the "moderates" made significant advances in the election.


Three, Iran is a threat to the U.S. ally of Israel.  This tired argument misses the point that many other countries in the region have actually had wars with Israel, but Iran never has participated in those wars.  And, the U.S. commitment to the defense of Israel is so unqualified that any attack on Israel would be suicide by Iran.  Not going to happen.


There are other arguments, but they also have little foundation in reality or history and can largely be rebutted, including by noting that U.S. companies are allowed to do business in many countries that actually conduct the activities that are attributed to Iran.  Perhaps more important, there are many arguments that would support a U.S. policy of business engagement with Iran.


First, everyone who has any actual knowledge of Iran knows that the Iranian people are big proponents of doing business with Americans.  My personal experience with regular Iranians and every person I've known who has visited Iran comes away with stories of how hospitable the Iranian people are and how much they say they love America and Americans.  To not allow U.S. businesses to operate in Iran risks diminishing the positive attitude that Iranians have of Americans and America.


Second, allowing U.S. businesses to be present in Iran and engage with more Americans can only increase the positive view of the U.S. inside Iran.  In fact, the hardliners in Iran are quite happy that the U.S. is preventing most U.S. companies from doing business in Iran because they are very concerned that the image of the U.S. is a threat to the hardliners' control of various aspects of Iranian life, many businesses in Iran and the overall propaganda effort that the U.S. and Americans are the Great Satan.


Third, without any U.S. engagement in Iran, the U.S. government will have almost no access to first-hand knowledge of what is happening in Iran.


Fourth, the European and Chinese companies will excel in Iran without U.S. competition, leading to the strengthening of the non-U.S. companies and the loss of jobs and income in the U.S.


In summary, the arguments against allowing U.S. companies to do business in Iran are weak, at best, and certainly are illogical given how the U.S. doesn't have such restrictions for doing business in other countries whose actions are much worse by comparison.  And, there are many strong policy arguments to allow U.S. companies to do business in Iran.  Congress does not seem to have the sense or the will to make the right decision on this.  U.S. business interests need to join efforts to pressure Congress and the president to change the law and eliminate most of the remaining sanctions so that U.S. business competitiveness and U.S. jobs are a priority.

The Apple-DOJ Case Is Not What It Appears To Be - On Either Side

Does anyone really believe that the NSA, FBI or other government agency could not hack an iPhone?  Apparently Apple can do it, otherwise they would be saying so.  Surely, the NSA or FBI has equal or better capability.  Most likely, the FBI/DOJ are simply using this case to get the legal authority to force cooperation by tech companies generally.  And, Apple certainly "doth protest too much" when they pretend they are standing up for a moral principal instead of its business model, which is what they are really trying to defend.  Apple is not a legal think tank or foundation, it is a business.  Otherwise, Apple would also not be taking advantage of the legal but morally doubtful tax and intellectual property laws that benefit their business.   In any event, the approach is surely going to backfire because, regardless of whether it is the best policy, most every day Americans are going to side with the argument that security overrides data privacy (especially in a terrorism-related case, which is why the FBI chose this case to be so public) and Congress is probably going to pass legislation that limits or prohibits "warrant proof" software and devices.  Then, Apple and others in the Silicon Valley bubble will wish they had not started this fight at all.

How to Fix Iraq and Defeat ISIS

There seems to be great doubt about what to do about “ISIS” or the “Islamic State”.  Few think that the United States has a coherent or winning short-term or long-term approach.  Many fear a creeping increase of U.S. involvement that will eventually involve more and more U.S. and other allied soldiers on the ground in Iraq and Syria.  We see this fear being realized with the recent news of U.S. Special Forces now being deployed to Syria.  Others fear that Russia or Iran will gain increasing influence through their growing actions against ISIS as compared to the overall limited action by the United States.  The U.S. policy has been to “degrade” and then “destroy” ISIS is doing neither.  Here is what needs to be done:

First, we need to take into account that Iraq, like many other nation states in the region, was artificially created from the line-drawing of outside powers.  In this, case the British were in charge of restructuring the Middle East after World War I.  And, what is known as Iraq today was never a political or social unit that should have been lumped together into a state. Rather, it was created out of Ottoman provinces that had previously reflected the distinctions between the Shias and Sunnis in the region (if not fully the Kurds).  The post-WWI created boundaries of Iraq met the then goals of the British, but had nothing to do with any sort of natural relationships among the peoples of what is now called Iraq.  That is not a new analysis and certainly professional historians have more to say about this than I can.  But, it is fair to say that this brief of Iraqi history is generally accepted as correct by knowledgeable observers.

Second, we need to acknowledge that, practically, Iraq is broken into three distinct regions.  The current reality is that the Kurds are, for all intents and purposes, running their own country in northeast and much of the north of Iraq.  And, the Shias clearly dominate the south and southeast and the Sunnis are dominant in the west, including the Anbar province and other areas in the northwest of the country.  For convenience, we can call these areas Kurdistan, Shiastan and Sunnistan. 

Third, we need to recognize the reality of the impossibility of these three areas ever being put back together.  The Sunnis, under Saddam Hussein were in control of the country and the levers of power.  As is common in the region, there was little room for other ethnicities or any sort of “loyal opposition”.  As such, the Shias, despite being a majority, were significantly discriminated against and oppressed.  Quite naturally for this area of the world, once the Shias became dominate after elections following the fall of Saddam Hussein, the Shias then turned on the Sunnis.  The previous Shia Prime Minister al Maliki could have been a leader against such secular division, but instead he significantly worsened it.  The current Shia Prime Minister Al Abadi is less secular in his approach, but it is too late.  The damage is done.  The Kurds are never coming back into the fold (most likely they never were) but the Sunnis have concluded that there will never be justice and fair treatment under a Shia-dominated Iraqi government (and given the demographics of Iraq, the Shias will always dominate).  For this reason, the Sunnis are hesitant to fight with the Shia-dominated Iraqi military against the Islamic Nazis because even a successful fight would result in greater Shia dominance and control in Sunnistan.  So, although the Sunnis generally don’t favor ISIS, many Sunnis conclude that if they can’t govern themselves they may be better off under the ISIS than under the Shia-dominated Iraqi government.

So, the only realistic approach to resolving the secular division in Iraq and creating a situation in which the Sunnis will fight against ISIS is to formally divide the country into what is already the fact on the ground.  That is, have the people on the ground and the world agree to the division of Iraq into three truly independent countries - Kurdistan, Shiastan and Sunnistan – each formally recognized by all major and regional powers and the United Nations.  Details of this may be difficult, especially with respect to certain cities and regions where the ethnic majorities have been diluted based on political considerations of whoever was in charge of Iraq from time to time.  And, there may well be some aspects of a new partition with some of the negative consequences that happened in 1947 when India and Pakistan came into being.  However, those negative consequences and difficulties could hardly be worse than what has been happened on the ground in Iraq over the last several years. There is also the question of the oil.  But, the simple answer has to be that Kurdistan, Shiastan and Sunnistan each will own and control the natural resources in their respective territories.  Sunnistan would have less oil that Kurdistan and Shiastan, but the Sunnis see virtually no benefit of the oil in Iraq as it is.  A secure and functional Sunnistan would be more valuable to the Sunnis that any share of the oil that might come about from some three-way agreement about how to share the oil (which probably could never be reached or complied with anyway).

The formalization of this reality would have the general benefit of significantly reducing the secularism that has been destroying people’s lives in Iraq.  But, it would also provide the best framework for a realistic strategy for defeating ISIS.  The reasoning for such a conclusion is based on the history of the Awakening Movement that was largely responsible for defeating Al Qaeda in Sunnistan in 2005.  At that point, the Sunni tribes in Sunnistan realized that living under Al Qaeda rule was not acceptable and so instead of fighting U.S. forces the tribes agreed to fight with U.S. forces to defeat Al Qaeda.  Unfortunately, instead of being recognized by the Shia-dominated government as part of the overall solution in Iraq, the courageous and successful efforts of the Sunni tribes during the Awakening Movement worked against the Sunnis because the Shia-dominated government then was able to further oppress the Sunnis in Sunnistan after Al Qaeda had been defeated and was no longer a threat to the Shia-dominated Iraqi military.  As such, the Sunnis this time around have little incentive to fight and defeat ISIS because their experience has shown that such an effort will not ultimately benefit them.  One might argue that it would be different now under Prime Minister Al Abadi, but the Sunnis are not going to believe that in the short term and ISIS will continue its murderous ways.

The formal division of Iraq would have the Kurds controlling the current region already known as Kurdistan. Sunnistan would include the entire Anbar province and some points north. That would need to be negotiated some with the Kurds.  But, with both Kurdistan and Sunnistan formally being recognized as nation states, the Kurds and the Sunnis would have a strong incentive to come to an agreement.  That leaves Shiastan, which would cover all other areas of Iraq, including Baghdad.  Kurdistan already has its own capital and doesn’t need Baghdad.  Sunnistan would need to declare its own capital, but that is likely to be Ramadi, which is already the provincial capital and has the benefits of being close to Baghdad, the Shiastan capital.  The recognition of the three countries would need to be conditioned on fully negotiated treaties on trade, security and other matters.  Sure, Iran, Turkey and others have some reasons to not support this approach, but they have more reasons to agree to it.  In any event, the members of the United Nations Security Council do not need Iran’s and Turkey’s consent to such recognition.

In addition to resolving the secular issues that are essentially incurable under the current ethnic, political and geographical concept that is called Iraq, this then leads to a credible strategy for defeating the ISIS.  That is, if the Sunnis in Sunnistan see that fighting ISIS means that the Sunnis actually are fighting for themselves and not for a Shia government, the sentiments that led to the Awakening Movement and the successful defeat of Al Qaeda in Iraq can be repeated.  The international community would also need to provide all military and economic support to defeat ISIS and to re-build Sunnistan into a functional society with a responsive and functional government.  An important part of the international community’s support from Sunnistan would need to come from the Gulf Cooperation Council states, especially Saudi Arabia and the United Arab Emirates.  Those states have the financial strength and the military muscle to significantly support both the fight and the rebuilding of Sunnistan.  They also have the desire to defeat ISIS and to see a stable Sunni-dominated country carved out of Iraq.

Finally, if the Sunnis and the international community could defeat ISIS in what is now known as Iraq, then the remaining threat from ISIS would be focused only in Syria, a much smaller territory.  At that point, the ISIS becomes a much smaller issue geographically, its resources diminished, the recruitment of foreign fighters likely significantly reduced as the movement is falling apart and Sunnis in the region see an international commitment to the fair treatment of Sunnis in the region of Sunnistan.  It would also offer an opportunity for Iran and the Sunni-dominated Arab states to work together, which could then lead to more trust and confidence to work on other regional issues. 

What is now needed is for the United States, the United Nations and the Gulf Cooperation Council to make such a proposal and present it in the United Nations and to the parties in Iraq so that negotiations and planning can start in order to end the secular divisions in Iraq and at the same time have a plausible strategy for defeating ISIS.