More Than Divestment

On the same day that John W. McCain gives a speech to the powerful pro-Israel lobby AIPAC, where he calls for a worldwide divestment effort to isolate Iran, it is revealed that such a divestment would significantly hurt the balance sheets of members of his own campaign:

In the summer of 2005, John McCain's chief strategist Charlie Black, working for his firm Black, Kelly, Scruggs & Healey, was paid $60,000 to lobby the U.S. government on behalf of the Chinese oil conglomerate CNOOC. At the time, CNOOC was mounting an aggressive bid to buy Unocal, a California-based oil giant, and Black was tasked with churning up congressional support. But the bid ultimately fell through, in part because of objections over the China oil industry's ties to Iran, a country in which it had already invested tens of millions of dollars.

"This transaction poses a clear threat to the energy and national security of the United States," wrote Rep. Joe Barton, a Texas Republican. "U.S. national energy security depends on sufficient energy supplies to support U.S. and global economic growth. But those supplies are threatened by China's aggressive tactics to lock up energy supplies around the world that are largely dedicated for their own use." [...]

as demonstrated by the CNOOC anecdote, if choking off Tehran's economic lifeblood is McCain's goal, he could have personally started down that road years ago -- with his own advisers.

This is the second member of McCain's inner circle with lobbying ties to Iran that has been discovered in just the past few days - campaign manager Rick Davis was the first.

Matthew Yglesias notes that this is part of a larger problem with using divestment to deal with most states.

In a highly globalized economy, it's difficult to try to hermetically seal off Iran economically. You start divesting from firms that do business with Iran, but then you still have firms that do business with firms that do business with Iran. Divest all you like, but Iran still has oil that people want to buy, which gives Iranians money they want to use to buy things with. Which isn't to say that economic pressure is totally ineffective, but how effective it is has a lot to do with how wide the network of pressuring entities is. A really global sanctions and divestment campaign can deliver enormous blows, while unilateral measures are difficult to really enforce in a serious way.

Sudan, who has a far more limited economic picture relative to Iran, is easier to isolate, but in the final analysis, nothing beats good old-fashioned multilateral negotiation. We may never sever the economic ties that bind Iran to the globalized world, but we can gain diplomatic strength with a unified position and a broad set of actors willing to make the concessions necessary to reach agreement. If changing the behavior of Iran is the goal, only an international effort in all possible arenas, not just financial sanctions, will be successful. In fact, as Ilan Goldenberg notes, the last time Iran was faced with international consensus against its nuclear program, they actually ran to the bargaining table.

McCain argues that the Clinton Administration already tried engaging in 1998 and that the entreaties were rebuffed. He’s right. Supreme Leader Ali Khamenei vetoed any talks at that time. But McCain is selectively cherry picking history. The story of the last 15 years between Iran and the U.S. is one of missed opportunities on both sides. The best example is from 2003, where right after the start of the Iraq War senior officials in the Iranian Foreign Ministry sent the “Grand Bargain fax” to the Bush Administration outlining what a deal between the U.S. and Iran might look like. The Bush Administration decided not to respond because of its position of strength at the time and the belief that Iranian reformists couldn’t deliver on their promises. In the late 1980s and early 1990s Iran worked to have Hezbollah release all of the American hostages in Lebanon and in exchange expected greater engagement from the United States. But while the first Bush Administration had signaled that it would in fact engage after the 1992 U.S. Presidential elections, when they lost, the Clinton Administration decided instead opt for a dual containment policy. Elements in the Iranian government who had supported engagement with the U.S. ended up feeling spurned. The story is much more complicated than: “the U.S. has tried talking and Iran has refused.”

But that wouldn't look good on a bumper sticker. Certainly not as good as "Bomb bomb bomb Iran."