The Israel Project Conference Call Briefing On Iran Briefer: Mark Dubowitz, Executive Director, Foundation for the Defense of Democracies Date: January 25, 2012 Transcript by Federal News Service Washington, D.C
LAUREN APPELBAUM: Thank you for calling in to the conference call with The Israel Project and with Mark Dubowitz. We ll be starting in approximately one minute. (Break for direction.) MS. APPELBAUM: Hi, sorry about that. We had some technical difficulties. Mark, are you on the line? OPERATOR: This conference is now being recorded. MARK DUBOWITZ: Yeah, I m here. MS. APPELBAUM: Welcome to everyone who has joined us for today s conference call. My name is Lauren Appelbaum, and I m the director of U.S. communications at The Israel Project. On behalf of our entire team, I am very pleased that you could all join us today to hear from Mark Dubowitz, who is the executive director of the Foundation for Defense of Democracies. Now, for those of you who do not know, The Israel Project is a nonprofit, educational organization, that provides factual information about Israel and the Middle East to the press, policymakers and the public. The Israel Project is not related to any government or government agency. We have offices in Washington, D.C. and Jerusalem. Our team of more than 70 experts and former journalists is always ready to help you get the facts you need to cover the Middle East. So please do not hesitate to contact us if we can help you in any way. We will be live tweeting today s call via @israelproject. Please follow along and join the conversation. Now, I d like to introduce you to our speaker today. Mark Dubowitz is the executive director of the Foundation for Defense of Democracies. His policy work focuses on Iran and Syria sanctions and on the use of technology to encourage democratic change. He is the head of FDD s Iran Energy Project, which provides research and analysis on Iran energy sanctions and tracks the role of the Islamic Revolutionary Guard Corps in Iran s energy sector. He directs FDD s Iran Human Rights Project, which provides research on Iranian human rights abuses and on sanctions designed to hold accountable Iranian officials and international companies supporting these abuses. He also co-leads FDD s work on Syria sanctions against the regime of Assad and is a founding member of the Syria Working Group (inaudible) in Africa and speaks multiple languages. He graduated from the international public policy with a master s in international public policy from Johns Hopkins University in Washington, D.C., and also has degrees from the University of Toronto. Now, before we start, I d like to I d like to play a piece from NPR from this morning entitled, Can Sanctions Alone Get Iran to Negotiate?
Hold on one moment. (Begin audio clip.) MR. : America to talk of exporting natural gas. They re also looking to block energy exports from Iran. The U.S. and Europe are intensifying sanctions pressing Iran over its nuclear program. The latest sanctions would raise many barriers to Iranian oil exports. (Audio break) is interconnected, so the challenge is cutting off Iran s oil without harming the rest of the world. NPR s Tom Gjelten reports that some advocates of sanctions have actually devised complex models to show how to do that. TOM GJELTEN: The problem with sanctions is they don t always work as intended. If, for example, the U.S. and Europe don t buy Iran s oil, but other countries pick up the slack, nothing is accomplished. (Audio break) oil is taken off the market, but the price goes up. Iran could earn just as much from its oil even though it s selling less. Mark Dubowitz runs the Iran Energy Project at the Foundation for the Defense of Democracies. His organization supports the Iran sanctions and has an international team of researchers, mathematicians and economists working to show how the sanctions can do exactly what they re meant to do. MARK DUBOWITZ: We ve identified Iran s major oil purchasers, how much they re buying in thousands of barrels a day. We look at how much oil revenue each country is contributing to Iran, and then we run scenarios, you know, based on a certain change in output. MR. GJELTEN: Dubowitz and his team are assuming that over the next six months as the sanctions take effect, the European Union countries will cut their purchase of Iranian oil by 80 percent. Not a hundred percent some will still leak through. They also assume India, Japan and Korea will cut back their oil purchases from Iran. Is that realistic? Those three countries are big consumers of Iranian oil. India s foreign minister says his country will not abide by the U.S. and EU sanctions. But Dubowitz and his team say it s more important to look at what Indian refinery operators do on their own, especially since U.S. sanctions would punish foreign companies that buy Iran s oil. MR. DUBOWITZ: A number of the refineries have significant U.S. interests and assets, and we believe that a number of Indian refineries are going to make a(n) independent decision to comply with U.S. sanctions because they don t want to risk getting sanctioned and cut off from the U.S. market. MR. GJELTEN: So that s India. As for Japan and South Korea, those governments will want to protect their companies from U.S. sanctions.
MR. DUBOWITZ: They do not want to get in a fight with Congress during election season on this issue. They are absolutely paranoid about the prospects of Japanese and South Korean companies ending up on somebody s name-and-shame list. MR. GJELTEN: To be spared that embarrassment, Japan and South Korea are likely to reduce their Iranian oil imports by 15 percent, according to this model, enough to show they re at least making an effort. So from Europe to Asia, those are where the cuts occur. China, on the other hand, is projected to increase its purchase of Iranian oil. In all, by this team s calculation, Iran will see a net loss of about 500,000 barrels each day due to sanctions. And that alone would cost Iran money. But in addition, Iran might be hurt another way. With other countries cutting back on their imports, the countries that do buy more oil, notably China, could insist that Iran sell to them below market price. In this case, Dubowitz and his team predict China will be able to negotiate about a 15 percent discount. MR. DUBOWITZ: We actually assess that if there were no other buyers of Iranian oil, China could actually negotiate a 40 percent discount. Now, of course, there are going to be other buyers of Iranian oil, so the Chinese are not going to have absolute negotiating leverage. Fifteen percent puts it at, actually, a pretty reasonable end of the range. MR. GJELTEN: Between the loss of some exports and the need to accept a lower price, Iran, under this model, could lose $20 billion a year, quite a blow for an already weak economy. (Audio break) these projections by some global energy consultants, in general, they agreed Iranian oil exports are likely to decrease, though perhaps not as much as Mark Dubowitz s Iran Energy Project is predicting. The other consultants also foresaw limited damage to the global economy. Whether the Iranians will be forced to offer steep discounts on their oil, however, is not so clear. Jamie Webster is a Middle East oil analyst at PFC Energy. JAMIE WEBSTER: We don t see a huge discounting occur. Now, that the amount that we ve seen in the past of a dollar or so, couple of dollars, that may rise, but I still don t see it as being, you know, a huge amount that is going to (affect?) their revenues significantly enough to really put them in a bad spot. TOM GJELTEN: Of course, even if Iran is put in a bad spot, whether that would be enough to drive its leaders to the nuclear negotiating table is another question entirely. Tom Gjelten, NPR News, Washington. (End audio clip.)
MS. APPELBAUM: All right. Mark, if you would like to give some introductory remarks, we would greatly appreciate it. MR. DUBOWITZ: Great. Well, thank you very much. And thanks to the Israel Project for the terrific work you re doing, and to folks out there who are working with the Israel Project. Your work is critical at this at this time. Let me just make a few comments, and I really want to open up the floor to questions, because I know many of you are very sophisticated and follow these issues very carefully and I don t need to go over the basics. But let me go over where we are today, and then talk a little bit about the sanctions topic. I think you ve had a pretty good overview of the work we re doing from NPR s Morning Edition. I I m, obviously, like you, very deeply concerned by the threat of Iran and its development of nuclear weapons. But I m very concerned that the Iranians continue to blow by every red line that the international community has laid down. You know, the initial red line was that we would not tolerate domestic enrichment on Iranian soil. Well, they ve blown past that red line. We then laid down a red line that we would not tolerate enrichment to military grade i.e., 20 percent, on a path to a much higher percentage of enrichment that would allow the Iranians to have sufficient quantities of highly enriched uranium that they could then weaponize. Well, the Iranians are clearly blowing past that red line. You know, we then laid down a red line that we would want to keep a military option on the table, and that any evidence that the Iranians were going to be moving their enrichment to secret facilities or hidden facilities that would basically take that military option off the table, that again would be a red line. Well, the Iranians are moving their enrichment facilities, or enrichment capabilities, to the Fordo facility near Qom. This is a hardened facility, underground, controlled by the Iranian Revolutionary Guard Corps. And clearly, again that s another red line that it s possible the Iranians will blow by fairly soon. Then there are red lines and there s a big debate going on between the United States and Israel in particular over the question of breakout capability: Can the Iranians assemble all the components that could give them nuclear weapons capability, but that they won t make the political decision to do so? And I think that tends to be the U.S. position, that the that Khamenei and the regime have not made a political decision yet. I think the Israelis and others and the French, in particular are very worried about the possibility of a sneakout, rather than a breakout; that in fact the Iranians have assembled their components and they do this under the nose of the international community, and we all wake up one day and the Iranians have a bomb. And in fact, if they have a bomb, they will test that bomb. I think that is would be a source of Iranian regime pride, that if they have a bomb, they will test it. And then there s the question of weaponization: Is weaponization the red line? And that seems to be the view of many in the U.S., that weaponization in fact is the red line so a big controversy over where the red lines are; significant dispute taking place within Washington, and between Washington and other capitals.
Where are we with respect to sanctions? Well, I think the Obama administration deserves quite a bit of credit. I think the past three years you have seen a(n) administration put together a broad and increasingly deep international sanctions coalition which is clearly having an impact on the Iranian regime. And I think Congress deserves a lot of credit for introducing many of the big ideas and the good ideas that have have been have found their way into legislation and into the executive implementation strategy, and in holding the administration s feet to the fire on rigorous enforcement and on ensuring that things like the central bank sanction and oil market sanction are done in a serious way. We are now starting to see the impact at least the economic impact of these sanctions. And many of you have seen the reporting on this. The Iranian economy is in a terrible state; the Iranian energy sector is in a terrible state. You ve got evidence of a massive free fall of the Iranian currency. You have hyperinflation in Iran; you have soaring unemployment. And everybody understands that the source of the Iranian regime s power at least financial power is its oil sales. Again, the sanctions have, to date, been designed to go after Iran s production capacity, and these have been investment-related restrictions and restrictions on technology. And the IMF and the U.S. Treasury Department estimate that over the next five years, those production sanctions will lead to a drop of about $14 billion in Iranian oil revenue, which represents about close to 20 percent of the total oil revenue the Iranians get from the export of their crude. And now we re talking about central bank sanctions and oil market sanctions that go after the Iranian ability to sell its oil in the short term, and there s some evidence already, based on oil market behavior, that countries are beginning to cut their purchases of Iranian oil; other countries are in a position now where they re looking to negotiate price discounts on every barrel. So I think you ve seen some impact, and I certainly would be interested in your, you know, question particularly around the question of, well, so what? You know, what are these sanctions designed to do and are they going to achieve the goal? And I think those are the critical questions. I ll say a few words about the sanctions strategy, also a few concluding remarks about my thoughts on, can sanctions work and, if so, how? The sanctions strategy that s been implemented is a strategy based on a mutually reinforcing system of sanctions all designed to significantly increase the hassle factor associated with doing business with Iran. And to also make the case that, if you re doing business with Iran, you re doing business with Iran s Islamic Revolutionary Guard Corps, and that s bad for your reputation. It may have reputational risk, legal risk. You may be sanctioned. And at the end of the day, you are supporting an international outlaw that s building a nuclear weapons program, that is sponsoring terrorism, that has repressing brutally the Iranian people, and that is willing to sponsor attacks against the U.S. the Saudi ambassador in Washington, and has killed American troops in Iraq and Afghanistan. So the U.S. government, I believe then and our allies, have done a very good job of framing these sanctions through the prism of the Iranian Revolutionary Guard Corps, which is a
very important political and strategic communications point. It s very important that we send a message to the Iranian people that we are on their side, and we are against the Revolutionary Guard Corps. And send a message to international business community, again, that if you re buying oil from Iran or you re transacting with Iran in any way, you are transacting with the IRGC. And that is that s a critical point to be making that, as an international businessperson, that should factor into your risk-reward calculus with respect to doing business with Iran. And finally, the point has to be made over and over again, sanctions are not airtight. There s no such thing as a complete embargo. In fact, sometimes the goal is not to embargo Iran. We don t want to take 2.5 million barrels of Iranian oil off the market tomorrow. The result would be significant price spikes, which will only enrich Ali Khamenei, hand him a massive economic windfall, and put the rest of us into a deeper recession. The goal of sanctions, again, is not an embargo; it s to massively increase the hassle factor associated with doing business with Iran, make the white-hatted companies reassess their risk-reward calculus and decide not to do business with Iran, and make the black-hatted companies and put them in a position where they will do business with Iran, but they will ask for significant price discounts on every barrel they purchase, they will ask for price premiums on gasoline they sell to Iran, and banks will ask for significant transaction payments to compensate them for the financial risk they take in transacting with Iranian banks. And I think we ve seen the net effect of this approach lead to significant economic costs on the regime. The final question is, so what? Will significant economic pressure change the riskreward calculus of Ali Khamenei and the regime with respect to the nuclear program? I would say we see no evidence to date that that is the case, which is not to suggest that it won t happen. I think we are only beginning now to finally implement the crippling sanctions that President Obama and Secretary Clinton spoke about a couple years ago. So 2012 will be a critical year where we will see whether these sanctions are going to change the regime s risk-reward calculus or whether these sanctions will reignite the democratic counterrevolution that we saw in June 2009, where we where we missed an enormous opportunity to support the democratic opposition. Will it reignite that opposition? Are the parliamentary elections in March the time for that opposition to show itself again? Or are the Iranians going to respond in ways that are highly provocative, so if we are imposing sanctions on the regime, will they continue to respond in ways that are self-defeating for the regime? Their threats to close the Strait of Hormuz are an indication that for the first time since the Iran-Iraq war, the regime believes that its oil wealth is being threatened, and that the rhetoric over Hormuz is an indication that they are deeply concerned. There are other Iranian countermeasures that we ve seen implemented that have backfired on the Iranians, and ultimately 2012 would be an interesting year as we see tougher sanctions being imposed and Iranian countermeasures being implemented. And we will have a much better idea, I think, even by June or July of this year what the sanctions have or have not produced. And with that, I ll stop and open it up for questions.
MS. APPELBAUM: Thank you very much. We ve had a bunch of questions submitted to us online. If you have questions now you would like to submit, you can either do so on Twitter, to our handle @IsraelProject, or reply to the confirmation email with the phone numbers with your question. The first question is from Enia Krivine of the International Israel Allies Caucus Foundation. She actually has several questions regarding some of your closing comments. One of her questions is, have the oversight committees in the House and Senate been effective in their enforcement of the Comprehensive Iran Sanction Accountability and Divestment Act of 2010? MR. DUBOWITZ: It s a great question, because people talk a lot about the new laws and the new ideas, and I m glad that someone has put their finger on a big question, which is existing law, how are we doing with respect to enforcement of existing law. I think we are beginning to do a decent job. I think that there has been a renewed appreciation for the power of CISADA. I think Congress has done a very good job in holding the administration s feet to the fire on enforcement of CISADA. We have seen sanctions against international energy companies doing business with Iraq, particularly their refined petroleum trade. And I would point out two weeks ago there was a very important sanction, which got some attention, but I think that the full weight of that sanction hasn t been fully appreciated. And that is a sanction against a Chinese state-owned company called Zhuhai Zhenrong, which was the largest provider of refined petroleum to Iran. Why that s important is that really it was the first time that this administration has sanctioned a Chinese company a Chinese energy company under CISADA. And it was done when Secretary of the Treasury Tim Geithner was actually in Beijing speaking with the Chinese government about oil-market sanctions. That sanction has no economic impact on Zhuhai Zhenrong, but it is a very important symbolic sanction. It shows that we are willing to sanction Chinese companies. It also shows the international energy market that this administration is getting more and more serious about vigorous sanctions enforcement. And again, it s a sanction that upset the Chinese, but not enough that there will be significant diplomatic backlash, because it s refined petroleum, it s not critical to Chinese energy security. It s essentially sanctioning a Chinese trader for providing gasoline, and very easy for the Chinese to get out of that market. It is not a strategic market for them. So, overall conclusion: Congress has done a very good job on oversight; administration is starting to do a better job in actually implementing CISADA, but we are a long way from where we need to be for the vigorous enforcement of existing law and of the use of all the tools at the disposal of the president today to force a change. MS. APPELBAUM: You mentioned some opposition movements. How are these sanctions affecting the Green Movement? MR. DUBOWITZ: There was a real debate in Washington 12 to 18 months ago that the sanctions would lead to a rally around the flag; that in a sense, the Iranian people would blame America and the West for the sanctions and the harsh economic conditions and would support
the regime. We see the total opposite. I mean, it s always difficult to get a real, detailed, granular and accurate read of what s taking place in Iran, but it appears certainly from the reporting that that is not happening; there has not been a rally around the flag. It is unclear whether the sanctions will reignite the Green Movement. I think that, you know, the the Green Movement really is a movement that is responding to a level of frustration and of anger at the regime. It is completely independent of sanctions and really independent of what we do on the sanctions front. You know, this is this is a movement that has built up through the years among highly educated Iranians. And you know, it s clear that the regime has created its own enemies. The regime has done a very good job of opening up higher education to most Iranians, except for Baha is reprehensibly, I might add. But in doing so, it has educated many more Iranians, and the more educated you as an Iranian, the more you re opposed to this regime. So in a sense, the regime has created its own antidote. So it is unclear yet whether we are going to see a resurgence of the Green Movement. As I said, the March parliamentary elections will be interesting as an early indicator. But certainly sanctions have been successful in imposing very, very tough economic pressure on this regime. You ve seen a massive drop in the currency, hyperinflation. Iranians are growing angry. And I would just say that I think sanctions have helped extend the level of frustration beyond the Greens, the sort of north Tehran intellectuals, students, professional class, to what some commentators have called the Blues, which is the Iranian working class, who again are really suffering under this economic situation. So sanctions will play role. But again, sanctions should never be thought of as a silver bullet. They may just be silver shrapnel that could really help wound a regime that s suffering a crisis of domestic legitimacy that has nothing to do with sanctions and everything to do with its inability to deliver on the promises of the revolution. MS. APPELBAUM: Thank you. What is the future of the Central Bank of Iran, given the proposed sanctions by the U.S. and European Union? MR. DUBOWITZ: Future of the Central Bank of Iran is not promising. It is the certainly I would not want to be the head of the Iranian Central Bank right now. I think that it s we should be careful not to overstate the impact of these sanctions. The central bank will continue to operate. It will continue to find willing partners. But it is facing a massive challenge, and the massive challenge is that you ve got a currency in free fall, you ve got hyperinflation, and now you ve got sanctions that are targeting the lifeblood of the regime, its ability to generate short-term hard currency export earnings through the sale of its oil. And if there is a significant drop in those export earnings and that hard currency, the Iranian Central Bank and the Iranian treasury have far less money now to tackle the domestic economic challenges, to support the currency, to deal with hyperinflation. It is very difficult for any government, no matter where you are in the world, to deal with a stagflationary environment,
where you ve got soaring inflation, soaring unemployment, low to no growth. And it is certainly rattling the regime, and I think that is important to rattle this regime, and to also force members of this regime, the Revolutionary Guard Corps, those around Khamenei, those around Ahmadinejad, to intensify the fissures that exist already and to get them to compete over a shrinking asset base. You know, it s always useful to remember that many marriages can survive an increase in wealth; lots of marriages can t survive severe economic pressure on the family budget. That s when that s when those fissures tend to be exacerbated and that s when marriages end. And so I you know, I m not not to put too much stock in that example, but it s very useful that Khamenei, the Rev Guards and Ahmadinejad and others are at each other s throats, and we can intensify that the more economic pressure we put on this regime. MS. APPELBAUM: Alan Stein (sp) of California wants to know if the Europeans start date on their new ban on new oil contracts, set for July will that be too late to stop the assembly of a bomb, of a nuclear bomb? MR. DUBOWITZ: Well, it s a great question. I mean, I would put it this way. The real question is, will sanctions stop an Iranian nuke? And you know, again, I remain skeptical that sanctions are going to change Khamenei s risk-reward calculus with respect to that question. I think the question of the oil embargo s implementation schedule is an important one, but I do think that we are already seeing the impact of this voluntary oil embargo, whether or not the implementation schedule is too is too slow. And you know, July 1 st seems to be the important date on new contracts. You re already seeing oil market reaction to this, and if you look at the detailed modeling that we ve done on this and I m happy to talk to anybody offline on this; we have very specific work that we ve done on this you know, even if there are if the Europeans don t fully embargo Iranian oil, so they embargoed 80 percent, 20 percent is leaks because of cheating or because of the implementation schedule that embargo alone will knock off, based on certain assumptions, $15 (billion) to $20 billion of revenue. And then if you add in the Japanese, the South Koreans, the Indians reducing their imports by about 15 percent that s one-five, 15 percent and even with the Chinese, the Turks, the South Africans, the Pakistanis, Taiwanese buying more Iranian oil and with the modest discounts that the Chinese are able to extract, again, you re going to see a significant impact on Iranian oil revenue. So I think the Europeans, just by announcing an embargo, have already set off a cascade of oil market reaction and of sanctions reaction that is already starting to have the desired effect. But we ll have to monitor this carefully. These are early days. And you know, there ll be a there ll be a fair amount of cheating and a fair amount of circumvention, all of which, again, imposes a cost on this regime. Black-hatted countries willing to help Iran circumvent sanctions will always extract a discount for that willingness. They will always want some you know, what economists call rent, in order to do that. And that just, again, means less money for
the Iranians. It means increased hassle factor, increased transaction cost and an increased blow to their treasury. But these are early days, and I think the next few months, as I ve said earlier, are going to be consequential. MS. APPELBAUM: Flikel Schneider (ph) of New Haven, Connecticut, wants to know if any of Iran s neighboring countries are involved in any of the sanctions, or if you believe that they may get involved at some point. MR. DUBOWITZ: Yeah, it s a good question. Well, specifically relating to oil markets, I mean, the real question is going to be, to what extent the Gulf states, the non-iranian OPEC producers of oil release additional barrels of oil into the market, or what you know, what oil market analysts call spare capacity. It s a very important question because the assumption is that the Saudis in particular are the most important swing producer here the assumption is that the Saudis will increase their production of oil by a certain amount and that this amount will help replace the amount of Iranian oil that s taken off the market. Now, that s a critical number. And you know, a lot of hearts have been broken in Washington and elsewhere around Saudi promises to increase their production. So really, our analysis has always assumed, all else being equal, that the Saudis won t provide any additional supply, but that this is a that we can still do this without additional supply, which is our analysis has been around the question of, can you shrink the number of buyers of Iranian oil so that the same amount of oil is still in the market, but those buyers are in a stronger negotiating position to extract discounts? And we believe that you can get some discounts that result in a significant drop in Iranian oil revenue. But there is no doubt the Saudis are the most important player in this question. If the Saudis can put an additional 500,000 barrels into the markets and they ve made promises to do that and more that will have an even more significant blow to Iranian oil revenue. So I d be watching the Saudis and, to a lesser extent, the Emiratis and the Kuwaitis on the question of oil. I d be watching the Turks. The Turks will certainly try and find a way to be in compliance with these CBI sanctions. And some Turkish refineries have already expressed a willingness to cut the purchases of Iranian oil. But I would suspect that Turkey ultimately will be a country that will be very helpful to Iran in circumventing these sanctions. But again, you know, the Turks really are a minor player when it comes to Iranian oil market purchases. They will just be problematic with respect to circumvention and perhaps providing Turkish banks as an alternative route for settling oil trade. So I d be watching the Turks. I d be watching the Saudis and, you know, hoping that the Saudis can at least live up to their commitments. MS. APPELBAUM: All right. Last question is from Roberta Rampton, who is a correspondent with Reuters. She asks: What do you expect to be the key measures in the next round of U.S. sanctions? How closely will the Senate bill correspond to what the House passed in two bills in December? And what do you expect on the timing of these new sanctions?
MR. DUBOWITZ: Yeah, that s a great question. The Senate bill is likely to come out of Banking in the next week or so. I would expect the Senate bill to closely hew to what came out of the House, particularly the Iran Threat Reduction Act. I think there will be some new ideas in there, and I think there ll be some important tweaks to what came out of the House. But ultimately, I think you re going to get you know, you ll get a comprehensive bill. I think the timing of it, again, is probably comprehensive bill passed and signed April or May. I think the bills will be important. There ll be some new big ideas in there, and I think the one to really watch is the what s already in the House bill and was in the original Senate bill introduced by Menendez, Kirk and others, and that is the connection between the oil markets and the IRGC. You know, if you look at the U.S. government s strategy over the past number of years and you see this reflected in the at the U.N., with the Europeans they ve done a very effective job of framing sanctions through the prism of the IRGC, as I mentioned earlier. This these new provisions in the bills will give authority to sanction international companies who do business with the IRGC in Iran s broader commercial sector. CISADA focused on that concept with respect to the financial sector. They ve broadened it to include the overall Iranian economy. And what they re really talking about is the Iranian energy sector. And the basic mechanism would be to call on the U.S. Treasury Department to designate IRGC companies that are active in Iran s oil supply chain and then to sanction international companies that buy oil from IRGC entities. I think this is very important for a number of political, strategic and operational reasons. First of all is to remind everybody, and most importantly the Iranian people, that we re not interested in sanctioning the Iranian people; we re interested in sanctioning companies that do business with the IRGC. Number two is to remind people that an oil transaction with Iran is not an oil transaction with a state-owned entity like the National Iranian Oil Company, but indeed, again, if you re buying oil from Iran, if you re buying oil from the National Iranian Oil Company, you re buying it from the IRGC. I think that s a very important point to make politically. I think it s a very important point to make operationally because I think white-hatted companies will have even more reason to reduce their purchases of Iranian oil so that they don t end up with a front-page story in the Financial Times or The Wall Street Journal that they re buying oil from the Revolutionary Guards. So I think operationally, that ll be very useful, and I think again, I think the more that we can force the IRGC to consolidate its power within the Iranian energy industry, counterintuitively, the better. And the reason for that is that what the IRGC has done is that it s removed many of the technocrats who were the most effective managers of Iran s energy sector and replaced those people with IRGC loyalists, many of whom have no experience running a complex energy sector. The more that the IRGC takes over the energy sector, the greater the reason international companies will have to shy away from Iran s energy sector, and the more we can count on managerial incompetence to actually supplement what we re trying to do on the sanctions front, which is to reduce Iran s ability to produce oil, so it has less oil to sell and therefore less oil revenue that it can generate.
MS. APPELBAUM: Well, thank you very much. As closing remarks, if someone were to say, from this call, what is the most important takeaway, you know, in a few in a few sentences, if you could just sum up what the what you feel is the most important part. MR. DUBOWITZ: Look, I think I think the most important part is to understand that, you know, sanctions are not a silver bullet, that no sanction is a silver bullet in and of itself, that sanctions need to be part of a comprehensive strategy that includes economic pressure, serious material and political support for the Iranian opposition, covert action, sabotage everything has to be put on the table because this is the number one national security threat that the United States faces, that our allies face that sanctions, again, are not going to solve this problem, but that the sanctions that are being implemented are much tougher than many people imagined, and they are starting to have an impact on the Iranian economy and on the Iranian energy sector. They need to be implemented aggressively. We need to exhaust all peaceful alternatives. MS. APPELBAUM: Thank you very much for taking the time to join us, and thank you to all of our guests who have participated in today s call. As always, if there is anything that The Israel Project can do to help you get the facts and sources you need to cover Israel, please do not hesitate to contact us. Please visit us at www.theisraelproject.org, where we will be posting both the mp3 and a transcript of today s conference call, and please follow us on Twitter, @israelproject. Thank you very much. MR. DUBOWITZ: Thank you. (END)