Tuesday, June 4, 2013

Why sanction the Iranian Auto Industry?

Today the United States announced a few more sanctions on Iran intended to "further tighten U.S. sanctions on Iran and isolate the Iranian government for its continued failure to meet its international obligations."

The targets of the sanctions include the Iranian Rial, the automotive sector, and any "material support to the government of Iran". 

At first I thought it strange that the auto industry would be targeted, but then I remembered an article published by Forbes from last month about how there should be sanctions imposed upon Iran's auto manufacturing industry. 

The author's main argument for sanctions is that Iranian owned car companies enable access to 'dual-use technology for Iran's nuclear designs'. The evidence that he uses for this is that there are gas cylinders produced for hybrid cars by an Iranian owned factory in Germany. These "…included carbon fiber and hardened steel – key components of Iran’s second generation nuclear enrichment centrifuges. It also had sophisticated machinery in its inventory, which can be used both to make cylinders and manufacture centrifuges." 

The problem here is that MCS, the operator of the factory, is not an Iranian car company (though as the Iranians have clearly demonstrated, their clever usage of shell corporations make determining the true owner of any company quite difficult) although the author claims that auto companies are the shadow owners of MCS. The original Washington Post article (referenced in the Forbes piece) does not describe the factory as one which creates auto-parts, but rather "high-pressure gas tanks". In fact, the word "auto" or any of its derivatives is found only once in the article where it states: "One of the dual-use materials at MCS was carbon fiber, which is often used in the aerospace and automotive fields".

So why does the author insist on sanctioning the automobile industry? The Washington Post article states that Iran has been "scouring the world for carbon fiber". High quality carbon fiber is evidently a key part of advanced stage centrifuges and so, there apparently are already sanctions on Iranian purchases of high quality carbon fiber. According to ISIS (Institute for Science and International Security), as a result of this, Iran has begun to produce its own carbon fiber (albeit of low quality).

I may be wrong, but from what I understand of the evidence, the target of the sanctions is not the actual industry itself, but those who run it (IRGC), who are also known to have attempted to proliferate materials important for nuclear activities. Therefore the argument should not be that the industry, the cars or the materials themselves that are a problem, but rather that those who lead the industry are the problem and the reason for such sanctions.

While I think that the argument on Forbes is problematic, it may not even be connected to the new Obama sanctions. The sanctions were created by executive order rather than by Congress, so instead of having to try to force an increasingly pig-headed and obstinate House of Representatives to agree with him if he wants to remove the sanctions in the future, Obama may have created a situation where he himself is able to remove them as a bargaining chip with the Iranians. 

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