As the U.S. announced new unilateral sanctions against Iran, targeting the Quds Force of the Iranian Revolutionary Guard and a number of other Iranian banks and companies,[1] a columnist for the Financial Times of London warned that the U.S. seems "hell-bent" on "making a strategic miscalculation that could make the war in Iraq look like a sideshow."[2]  --  Iran, for its part, called the move "ridiculous."[3]  --  Russian President Vladimir Putin said the U.S. was "[r]unning around like a mad man with a blade in one's hand," Reuters reported.[4]  --  Western mainstream media organs like the Washington Post echoed the administration's rhetoric asserting that the move was "aimed not at starting a new war in the Middle East . . . but at preventing one,"[5] failing to note what a blogger quoted elsewhere by the Post pointed out:  "[A]ren't sanctions considered an 'Act of War' under such circumstances?  Doesn't 'diplomacy' mean something other than acts of war?   Like, for example, talking?"  --  On its front page, the Post noted that the move sent oil prices to another all-time high ($90.46 a barrel) and quoted experts who believe the saber-rattling by the Bush-Cheney team "add[s] a premium of $3 to $15 a barrel."[6]  --  Leo Drollas, deputy executive director and chief economist of the Center for Global Energy Studies, a London think tank founded by former Saudi oil minister Ahmed Zaki Yamani, compared the present situation to "a crash happening slowly.  You can see the two cars coming toward each other. . . . There's an inevitability about it." ...



Middle East & North Africa

By Daniel Dombey (Washington), Hugh Williamson (Berlin), and Najmeh Bozorgmehr (Tehran)

Financial Times (UK)
October 25, 2007

Washington announced a raft of new unilateral sanctions against Iran on Thursday, targeting the élite international Quds Force unit of the Revolutionary Guards and Tehran’s largest bank.

The new U.S. curbs come at a time when the United Nations has been unable to agree measures of its own.

Condoleezza Rice, U.S. secretary of state, and Hank Paulson, Treasury secretary, called for other countries and international financial institutions to follow the U.S.

“These actions will help to protect the international financial system from the illicit activities of the Iranian government,” Ms. Rice said. “They will provide a powerful deterrent to every international bank and company that thinks of doing business with the Iranian government.”

But some of Washington’s closest allies in Europe expressed misgivings. They fear the move could complicate efforts to reach agreement on new U.N. sanctions, which Washington and the European Union want to see agreed over the next month.

“We understand the concern of the U.S. but we prefer to go to the U.N.,” said a French diplomat. Referring to Thursday’s combination of anti-nuclear proliferation and anti-terrorism measures, he added: “We shouldn’t mix everything. For us, non-proliferation is what comes first as the pressing issue.”

Under Thursday’s steps, the Quds Force, the international arm of the Revolutionary Guards, is designated a supporter of terrorism for allegedly helping “the Taliban and other terrorist organizations.”

The Revolutionary Guard corps itself, the logistics arm of Iran’s defense ministry; Iran’s largest bank, Bank Melli; and the smaller Bank Mellat have been classified as “of proliferation concern” for their alleged involvement in Iran’s nuclear and ballistic missiles programs.

That classification represents a less dramatic step, but bans transactions between the organizations and persons or companies in the U.S. -- as well as freezing any assets they may have under U.S. jurisdiction.

Bank Saderat, an Iranian bank previously hit by U.S. sanctions, was also classified by the Treasury as a financer of terrorism.

The Revolutionary Guards are not entirely a military body -- about 30 per cent of their operations are business-related, generating an estimated $2bn (£975m) in annual revenues.

U.S. officials were unable to say if the designated organizations had assets in the U.S. or direct transactions with U.S. entities. But they say the measures will choke their dollar financing by prohibiting other banks or companies accessing the U.S. financial system on their behalf.

The move comes in the context of increased U.S. frustration over Russian and Chinese reluctance to agree a package of U.N. sanctions against Iran.

“We are six months past the date where we should have seen a third [U.N.] Security Council resolution,” said Nicholas Burns, U.S. undersecretary of state, referring to previous U.N. deadlines.

Russia has warned it will be less willing to contemplate U.N. action if the U.S. or E.U. make unilateral moves.



By Philip Stephens

Financial Times (UK)
October 25, 2007

George W. Bush warns that Iran’s nuclear ambitions threaten World War Three. Vice-President Dick Cheney speaks of “serious consequences” unless Tehran falls into line. Joe Lieberman, the independent Democrat, says we are already fighting World War Four against Islamist radicalism. As someone in the Hollywood movie said, it is time for the rest of us to be afraid, very afraid.

Afraid, though, of what? Of Tehran’s nuclear program? Or of the possibility that Mr. Bush, in the darkening twilight of his presidency, is preparing to launch a preventative military strike. The answer is both.

The big story, you might think, should be the menace to regional and global security posed by Iran’s development of the technology that would give it nuclear weapons. This, after all, is not a nice regime. You do not have to be an apologist for Washington to note that Mahmoud Ahmadinejad, the Iranian president, has spoken of wiping Israel from the face of the globe. [NOTE:  Though to assert this you do have to be willing to affirm your belief in something that never happened. --R.T.] Nor to notice Tehran’s unapologetic sponsorship of terrorism. [NOTE:  Here, you have to be willing to pretend to be unaware that the U.S. is backing terrorist acts aimed at Iran. --R.T.] The regime’s human rights record is the wrong side of appalling.

Yet the White House once again seems hell-bent on being outwitted in the court of global opinion; and, maybe, on making a strategic miscalculation that could make the war in Iraq look like a sideshow.

Speculation about a U.S.-backed Israeli or a direct American attack on Iran’s nuclear installations has ebbed and flowed for several years. In the immediate aftermath of the toppling of Saddam Hussein, “Iran next” was the stock refrain of the Washington hawks. The bellicose rhetoric was stilled for a time by Iraq’s descent into chaos. But it has never gone away, even as some of the most ardent advocates of another war in the Middle East have left the administration. Only the other day I heard John Bolton, the former U.S. ambassador to the United Nations, say he was sure that Mr. Bush would do “the right thing.”

The rising tempo of speculation is easily explained. The starting point is the political timetable. If Mr. Bush does intend to act, he has to do so soon. The window of opportunity for an attack, the conventional wisdom has it, will close next summer. Even this president cannot take the nation into another war of choice once the 2008 election campaign is under way.

This ticking political clock coincides with a hardening view in Washington, and in one or two European capitals, that coercive diplomacy has done nothing to shake Iran’s resolve to acquire the means to make the bomb.

The apparent demotion of Ali Larijani as Iran’s chief nuclear negotiator seems to speak to the same conclusion. Mr. Larijani has been as firm as any in Tehran about Iran’s right to pursue nuclear enrichment, but he has also been willing to talk. Mr. Ahmadinejad, we might conclude, means it when he says the nuclear dossier is closed.

Russia’s Vladimir Putin’s objections to further U.N. sanctions has likewise strengthened the hand of those who say that diplomacy has run its course. Earlier this year Iran outflanked the so-called European Union 3 -- Britain, France, and Germany -- by opening direct talks with the International Atomic Energy Agency. Now Mr. Putin is blocking another U.N. resolution.

Nervousness about U.S. intentions, meanwhile, has been heightened by speculation that Mr. Bush could treat Iran’s support for Shia militias in Iraq as a casus belli. A Senate motion, co-sponsored by Mr. Lieberman, calls for the Revolutionary Guards to be designated a terrorist organization. That could provide the president with the political cover to bomb training camps within Iran.

The calculation, if you could call it that, would be that such attacks would destabilize Mr. Ahmadinejad and, in the best case, see him toppled. Logic suggests the reverse: an upsurge of nationalist sentiment would bolster support for the regime. For some people, though, logic does not count.

The thing I find most striking in conversations with Western officials is simply how little is known about Iran: about the power balance within the regime, the dynamics of the nuclear program and, critically, how far that program has progressed.

A little while ago I heard one such official discuss the state of knowledge gleaned by various intelligence agencies. The Israelis thought Tehran was two years from acquiring the bomb; but they had been saying two years for as long as this official could remember. The Russians suggested that Iran was as much as a decade away from mastery of all the necessary technology. As for the U.S. and the big European agencies, three to six years seemed to be a rough consensus. In other words, the spooks, once again, are being forced to make judgments while wearing blindfolds.

There is a similar lacuna of understanding of the political power balance. Take Mr. Larijani’s troubles. Do they signal that Mr. Ahmadinejad has won a struggle with Ayatollah Ali Khamenei, Iran’s supreme leader, over control of the nuclear dossier? Or has a visible backlash against the move -- it now seems Mr. Larijani will keep a place in the Iranian nuclear delegation -- delineated the limits of Mr. Ahmadinejad’s authority?

Diplomacy has not yet been exhausted. Russia’s position is more subtle than it sounds. For all the pleasure he takes in discomfiting the U.S., Mr. Putin has more to fear from a nuclear-armed Iran. In any event, the U.S. decision to leave it to the EU3 to do all the talking with Tehran has ensured that real negotiations have never properly started.

The U.S. has yet to play its highest card: an offer, comparable to that made to, and accepted by, North Korea, of a comprehensive refashioning of the strategic relationship between the U.S. and Iran. Unless and until that bargain is explored, it will never be clear whether Tehran could be persuaded to eschew the nuclear course.

Mr. Bush is not alone in framing a simple choice between Iran’s acquisition of nuclear weapons and war. Nicolas Sarkozy, the French president, has said much the same. It is a false choice. Even putting aside the chaos that would ensue from Tehran’s certain retaliation against any attack, the likely consequence of such thinking is war and a nuclear-armed Iran.

Last month, at a conference hosted by the Konrad Adenauer Foundation’s Washington office, one of those present recalled being taught by Henry Kissinger at Harvard. China had just tested the bomb and a fellow student suggested that the answer was a pre-emptive strike against its nuclear installations. And just how frequently should the U.S. repeat the exercise? Mr. Kissinger asked in response. Mr. Bush might ask himself the same question.

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October 26, 2007

TEHRAN -- Iran condemned on Thursday a U.S. move to brand the country's elite Revolutionary Guard Corps a proliferator of weapons of mass destruction and its Qods force a supporter of terrorism, the state broadcaster IRIB's Web site reported.

"The hostile policies of America against the respectful Iranian nation and our legal organizations are against international regulations and have no value," Foreign Ministry spokesman Mohammad Ali Hosseini was quoted as saying.

"Such policies have always failed."

Washington on Thursday imposed sanctions on more than 20 Iranian companies, major banks and individuals as well as the Defence Ministry in a bid to force Tehran to stop uranium enrichment and curb its "terrorist" activities.

Some within the U.S. administration had wanted to label the entire Guards Corps a foreign terrorist group -- the first time the United States would place the armed forces of any sovereign government on such a list.

Such measures are opposed by allies such as Russia who believe dialogue rather than more punishment or military action to halt Iran's nuclear program, which the West fears is a cover to build nuclear bomb.

Iran denies it, saying its atomic work is to generate electricity.

The Qods force is a special unit of the Revolutionary Guard Corps and considered the most élite unit. There are varying estimates of its strength but it is in charge of Tehran's support for groups such as Hezbollah and Hamas.

"Such measures . . . can not stop development of Iran and its legal organizations," Hosseini added.

"Such ridiculous measures can not rescue Americans from the crisis they themselves have created in Iraq."



By Sue Pleming

October 25, 2007

WASHINGTON -- The Bush administration's decision on Thursday to slap more sanctions on Tehran is aimed at hiking diplomatic pressure over its nuclear program but experts say it will be seen by many as a step closer to war.

Talk of war and anti-Iranian rhetoric has mounted in recent months over Tehran's refusal to give up sensitive nuclear work the West says is aimed at building a bomb, with so-called hawks in the administration pushing for action before President George W. Bush's term ends in January 2009.

U.S. Secretary of State Condoleezza Rice, while repeating that "all options remain on the table," says the focus is on diplomacy but Iran analysts said the new measures will be viewed by Russia and others as a precursor to confrontation.

"While this will probably be interpreted as move towards war, the people behind this probably are trying to avert military confrontation," said Iran analyst Karim Sadjadpour of the Carnegie Endowment for International Peace.

Russia, which has the power to block a third sanctions resolution the United States is pushing in the United Nations Security Council, ridiculed U.S. tactics on Iran.

"Running around like a mad man with a blade in one's hand is not the best way to solve such problems," Russian President Vladimir Putin said when told of the new sanctions.

Democratic presidential contenders John Edwards and Dennis Kucinich, both critics of the Iraq war, accused the administration of plotting a war against Iran.

"Today, George Bush and (Vice President) Dick Cheney again rattled the sabers in their march toward military action against Iran," said Edwards, the former senator from North Carolina.

Ohio Rep. Kucinich was more blunt: "This latest stunt is nothing more than an attempt to deceive Americans into yet another war -- this time with Iran."

Trita Parsi, head of the National Iranian American Council and commentator on Middle East Affairs, said Rice was "playing defense" and losing the battle against the Iran hawks.

"This decision only pushes Iran and the U.S. further into a paradigm of enmity that makes it harder for future administrations to resolve Washington's problems with Iran," said Parsi.

"Every time she (Rice) seeks to appease the hawks through measures like these, she undermines the prospects for diplomacy," he added.


In her announcement on Thursday, Rice tried to squash talk of war by saying Washington was still open to direct talks with Tehran, but with the longtime caveat that it suspend uranium enrichment beforehand.

Nonproliferation expert Joseph Cirincione advised Rice to drop preconditions and conduct direct negotiations with Iran, just as Washington did with North Korea before it had promised to give up its nuclear weapons program.

He said Iranian President Mahmoud Ahmadinejad could not afford to suspend his country's nuclear program because of strong domestic pressure.

"You have to find a compromise position here that allows the Iranian government to save face and slowly back down from this program," said Cirincione of the Center for American Progress, a Washington think-tank.

Sadjadpour said the United States should actively pursue more talks with Iran over Iraq, where both have common interests.

The United States has accused Iran of fomenting violence in Iraq and of using its Qods force to train and provide material support to militants who are attacking U.S. forces there.

The U.S. ambassador to Iraq, Ryan Crocker, has held several rounds of talks with his Iranian counterpart in Baghdad but Rice said recently these meetings showed no sign of progress.

"It's still a viable, open channel," said State Department spokesman Sean McCormack, although he added there were no plans at the moment for further talks.



By Michael Abramowitz and Robin Wright

Washington Post
October 26, 2007
Page A17

In approving far-reaching, new unilateral sanctions against Iran, President Bush signaled yesterday that he intends to pursue a strategy of gradually escalating financial, diplomatic and political pressure on Tehran, aimed not at starting a new war in the Middle East, his advisers said, but at preventing one.

Bush believes Tehran will not seriously discuss limiting its nuclear ambitions or pulling back from its involvement in Iraq unless it experiences significantly more pressure than the United States and the international community have been able to exert so far, according to administration officials and others familiar with the president's thinking.

With yesterday's actions, which included the long-awaited designations of Iran's Revolutionary Guard Corps as a proliferator of weapons of mass destruction and of the élite Quds Force as a supporter of terrorism, Bush made clear that he is willing to seek such leverage even without the support of his European allies.

"The president does not want to be stuck -- and doesn't want his successor to be stuck -- between two bad choices: living with an Iranian nuclear weapon or using military force to prevent Iran from building nuclear weapons," said Peter D. Feaver, who recently left a staff position on the National Security Council. "He is looking for a viable third way, negotiations backed up by carrots and sticks, that could resolve the Iranian nuclear file on his watch or, failing that, offer a reasonable prospect of doing so on his successor's watch."

Even so, the administration's actions yesterday immediately rekindled fears among Democrats and other countries that the administration is on a path toward war. Bush's charged rhetoric in recent months, including a warning that Iran could trigger a "nuclear holocaust," and his close consultations with hard-liners -- such as former Commentary editor Norman Podhoretz -- have led many outside the White House to conclude that the president will order airstrikes to eliminate any Iranian nuclear capability.

"The choice of words has given rise to concerns about just how serious the president is about stopping Iran from crossing the nuclear threshold on his watch," said Suzanne Maloney, an expert on Iran.

Sen. Robert C. Byrd (D-W.Va.) said in a statement yesterday that Bush's action "not only echoes the chest-pounding rhetoric which preceded the invasion of Iraq in 2002, but also raises the specter of an intensified effort to make the case for an invasion of Iran."

Iran dismissed the sanctions as meaningless. "The hostile policies of America against the respectful Iranian nation and our legal organizations are against international regulations and have no value," Foreign Ministry spokesman Mohammad Ali Hosseini said yesterday. "Such policies have always failed."

Both publicly and privately, White House and other administration officials have expressed frustration over the talk of war, emphasizing that Bush remains convinced that his strategy of nonmilitary pressure can work. They described yesterday's actions as essential to that approach.

"This decision today supports the diplomacy and in no way, shape or form does it anticipate the use of force," said Undersecretary of State R. Nicholas Burns, a key administration player on Iran. "Now, the president has never taken that option off the table and quite rightly so, but we are clearly on a diplomatic track, and this initiative reinforces that track."

The new sanctions, announced jointly by Secretary of State Condoleezza Rice and Treasury Secretary Henry M. Paulson Jr., mark the first time that the United States has tried to punish another country's military. It is the broadest set of punitive measures imposed on Tehran since the 1979 takeover of the U.S. Embassy there, and includes a call for other countries and companies to stop doing business with three Iranian banks.

The bank measures could emerge as the most significant step taken yesterday because the financial institutions targeted -- Bank Melli, Bank Mellat and Bank Saderat -- are among Iran's largest. The first two have helped finance Iran's proliferation program, and Saderat is being cited for helping finance terrorism, according to U.S. officials.

The United States had originally hoped to get at least some of the measures against Iran's military -- particularly the Quds Force -- and Iran's financial institutions into a tough U.N. resolution to heighten global pressure on Tehran. Two earlier resolutions, passed in December and March, were tepid in sanctioning individuals and a bank linked to the proliferation of nuclear technology.

The administration has become frustrated with European allies and veto-wielding U.N. members. Russia and China have balked at approving a new resolution until two reports, by International Atomic Energy Agency head Mohamed ElBaradei and the European Union's Javier Solana, are submitted next month. Washington sought a new resolution in June.

The European Union met on Oct. 15 and agreed to impose sanctions outside the U.N. context. But even allies who have led the diplomacy -- Britain, France and Germany -- have been reluctant to join the United States in using broad measures.

While the White House has long been obsessed with Iran's potential to develop nuclear capability, the president has become increasingly angry with Tehran because of the training, rockets and explosives it provides to Shiite extremists who are targeting U.S. troops and facilities in Iraq.

Whether Bush will break from diplomacy and employ force is the great unknown, given his propensity to mix combative rhetoric with assertions that he is looking for a peaceful solution. Many of those who support continued diplomacy take heart from what they believe to be the skepticism of key advisers, including Rice and Defense Secretary Robert M. Gates, about the usefulness of force.

Some Iran experts voice worry that the president is paying heed to figures such as Podhoretz, who has made little secret of his desire for a military strike. "There's no doubt that the president has very strong views on Iran, that these views are obviously formed by the most hard-line position that sees Iran as an extremely Messianic state that is bent on destruction of the world," said Vali R. Nasr, a professor at Tufts University. "He is eager to deal with that threat to the world before he leaves office, and he sees that as part of his legacy."


By Steven Mufson

** Price Hits Record Close; U.S. Tightens Sanctions **

Washington Post
October 26, 2007
Page A01

A U.S. military strike against Iran would have dire consequences in petroleum markets, say a variety of oil industry experts, many of whom think the prospect of pandemonium in those markets makes U.S. military action unlikely despite escalating economic sanctions imposed by the Bush administration.

The small amount of excess oil production capacity worldwide would provide an insufficient cushion if armed conflict disrupted supplies, oil experts say, and petroleum prices would skyrocket. Moreover, a wounded or angry Iran could easily retaliate against oil facilities from southern Iraq to the Strait of Hormuz.

Oil prices closed at a record $90.46 a barrel in New York yesterday as the Bush administration tightened U.S. financial sanctions on Iran over its alleged support for terrorism and issued new warnings about Tehran's nuclear program. Tension between Turkey and Kurds in northern Iraq, and fresh doubts about OPEC output levels also helped drive the price of oil up $3.36 a barrel, or 3.8 percent.

Although the Bush administration is not openly threatening a military strike against Iran, the president recently spoke of needing to avoid "World War III," and Vice President Cheney said that the United States would "not stand by" while Iran continued its nuclear program. "We will not allow Iran to have a nuclear weapon," he said.

Oil traders said that even if the chances of military conflict with Iran were small, the huge run-up in oil prices that would result encourages some speculators and investment funds to bid up the price of oil, adding a premium of $3 to $15 a barrel.

"It will be chaos. . . . I can't really see it," said Abdulsamad al-Awadi, an oil trading consultant and former executive at Kuwait Petroleum. "Having been in the marketplace for almost 30 years, I can't see a scenario for it, or precautionary measures" that oil companies could take. "There are no precautionary measures."

"If war breaks out, anticipate that all hell will break loose in the oil markets," said Robin West, chairman of PFC Energy, a District oil consulting firm.

"If it's a clinical strike like the one that Israel carried out on the Syrian installations and no one admitted to doing it, you'd have a fierce reaction from Iran, but it would probably die down," said Leo Drollas, deputy executive director and chief economist of the Center for Global Energy Studies, a London think tank founded by former Saudi oil minister Ahmed Zaki Yamani. "If it were a botched job with lots of targets and civilians dying and Iranians retaliating . . . it could escalate and the price of oil could shoot up to God knows where."

Ominous warnings about oil prices have preceded other conflicts in the oil-rich Persian Gulf, and spikes in crude prices proved fleeting in the past.

But during earlier conflicts in the region -- the Iran-Iraq war in the 1980s, the Gulf War in 1991, and even the 2003 U.S.-led invasion of Iraq -- the world's oil-exporting countries had enough capacity to make up for the disruption in oil exports. Not so this time. Demand has grown, and output has fallen in many oil-producing countries.

Saudi Arabia, which accounts for about 8.7 million barrels a day, produces almost all of the world's excess oil and is capable of boosting output by about 2.5 million barrels a day, Drollas said. Iran produces 2.5 million barrels a day.

Moreover, while some members of the Organization of the Petroleum Exporting Countries fear that high prices would hurt oil demand and undercut long-term revenue, others see no need to boost output. In a meeting with reporters in Caracas yesterday, Venezuelan energy minister Rafael Ramirez said that the market is "well supplied." Earlier, Venezuelan President Hugo Chávez said he expected oil prices to climb higher.

"Can the world do without Iranian oil exports at the present time? The answer is: just," said a senior planning executive at a major European oil company who spoke on condition of anonymity because the company has a policy not to publicly discuss oil prices. "There is enough spare capacity to offset Iranian exports, but it would be very tight. If every spigot were open everywhere, including Saudi Arabia, that should just about cover it. But it's not comfortable."

"That's just arithmetic," he added, "but is it all as simple as that? The question is: What would the Iranians do in retaliation?"

He and others noted that Iran would not need to attack well-guarded facilities in places like Saudi Arabia or harass tankers in the U.S.-patrolled Strait of Hormuz, at the head of the Persian Gulf. It could simply collaborate with Shiite forces in southern Iraq to cut off Iraq's roughly 1.7 million barrels a day of production, further weakening its neighbor while driving up prices for its own exports.

"Certainly when you lose 2.5 million barrels a day of Iranian production, which is the most likely case scenario, that will literally just make the market go berserk," al-Awadi said. Asked whether the companies he worked with had contingency plans, he said, "The oil industry does not have contingency plans. We are not military people."

The senior executive from the European oil company said that his firm did not have contingency plans, either. "You come to a point where you say it's indefinable," he said. "You sit around and ask, 'What would we as a company do differently?' The answer is nothing. You deal with it at the time."

Most industrialized nations do have contingency plans; they have strategic petroleum reserves that could be tapped during an emergency. The U.S. Strategic Petroleum Reserve, which was tapped during Operation Desert Storm in 1991 and after Hurricane Katrina in 2005, has nearly 700 million barrels, enough to cover about 68 days of U.S. oil imports from all sources.

Yesterday, Secretary of State Condoleezza Rice said that Bush is "committed to a diplomatic course on Iran," but she added that U.S. patience is "not limitless, and allies need to know that."

"These crises have a habit of bursting on the scene and leading to unforeseen places," Drollas said. "Everyone wants it not to happen, but it's like a crash happening slowly. You can see the two cars coming toward each other. . . . There's an inevitability about it."