Cutting Iran's gas supplies looks like next option

NY Times:

The Obama administration is talking with allies and Congress about the possibility of imposing an extreme economic sanction against Iran if it fails to respond to President Obama’s offer to negotiate on its nuclear program: cutting off the country’s imports of gasoline and other refined oil products.

The option of acting against companies around the world that supply Iran with 40 percent of its gasoline has been broached with European allies and Israel, officials from those countries said. Legislation that would give Mr. Obama that authority already has 71 sponsors in the Senate and similar legislation is expected to sail through the House.

In a visit to Israel last week, Mr. Obama’s national security adviser, James L. Jones, mentioned the prospect to Israeli officials, they said.

The White House refused Sunday to confirm or deny the contents of Mr. Jones’s discussions. But other administration officials said that they believed his goal was to reinforce Mr. Obama’s argument that the Israeli government should stop dropping hints about conducting a military attack against Iran’s nuclear facilities if no progress is made this year, and to give the administration time to impose what Secretary of State Hillary Rodham Clinton calls “crippling sanctions” that might force Iran to negotiate.

The Bush administration considered, and rejected, trying to engineer a cutoff of gasoline to Iran, which produces oil but does not have enough refining capacity to meet its own needs for gasoline.

But enforcing what would amount to a gasoline embargo has long been considered risky and extremely difficult; it would require the participation of Russia and China, among others that profit from trade with Iran. Iran has threatened to respond by cutting off oil exports and closing shipping traffic through the Strait of Hormuz, at a moment that the world economy is highly vulnerable.

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Some analysts have argued that the action could further destabilize a weakened regime; others say it could be exploited by President Mahmoud Ahmadinejad to change the subject from the still-challenged presidential election to Iran’s confrontation with the West.

“Draconian sanctions did not make sense in 2005 and 2006,” said R. Nicholas Burns, who led the Bush administration’s Iran strategy as under secretary of state for policy. “But given the new weakness and vulnerability of the Ahmadinejad government, much tougher sanctions make sense now, with one caveat,” he said in an interview. Congress, he said, must give Mr. Obama complete flexibility to threaten, impose or waive the sanctions, if he has any hope of holding together a coalition of countries.

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I don't see the Russians or Chinese going along. They have been too weak on much weaker sanctions. Israel's threats should not be considered an impediment to these sanctions.

I think one reason the embargo has not been used, besides the lack of support is that the import of gas is helping to destroy the Iranian economy, because it is sold at below cost. In other words, every gallon sold takes money from the Iran treasury that could have gone to weapons development.

The potential response of Iran would be like holding its breath. They could could off oil sales for a short period of time, but there is enough of a supply glut right not that it would hurt Iran much more than the rest of the world. Iran does not have the capacity to sustain the closing of the Straights of Hormuz. Most of their naval assets would be destroyed in the process of trying and they would still be opened.

Because China and Russia will not go along with these sanctions it makes an Israeli attack much more likely. When that happens we should be prepared for the same kind of response the administration fears from a gas embargo.