The Cable

Obama administration to “study” Iran nuke report; bipartisan hawks urge decisive action

The Obama administration reacted cautiously to today's International Atomic Energy Agency report on Iran's nuclear weapons program and declined to say how exactly how they would respond. But across Washington, suggestions for tightening the noose on the Iranian regime were abundant.

"I'm definitely going to tell you we need time to study it," State Department spokeswoman Victoria Nuland told reporters on Tuesday following the release of the IAEA report, which alleges that Iran had until 2003 an intricate and extensive program to design and build a nuclear warhead to fit atop a Shabaab-3 missile. The report also stated that Iran worked on components for such a warhead, prepared for nuclear tests, and maintained aspects of the program well past 2003 -- activities that may still be ongoing today.

"I think you know the process here: that after a report like this comes out, we also have a scheduled meeting of the IAEA Board of Governors coming up on November 18th, so Iran will be an agenda item at that meeting. So we will take the time between now and then to study this," Nuland said.

In a conference call with reporters on Tuesday afternoon, two senior administration officials predicted that the Obama administration would increase sanctions on Iran in light of the report but declined to offer any specifics on what they might be.

That explanation wasn't well received by lawmakers in both parties on Tuesday, who offered plenty of specific ideas on how to ramp up pressure on Tehran and have no intention of waiting for the administration to "study" the IAEA's findings.

The Cable spoke on Tuesday with Sens. John Kerry (D-MA), Mark Kirk (R-IL), John McCain (R-AZ), and Lindsey Graham (R-SC) about the report.

"It's of enormous concern to everybody and a lot of conversations are taking place right now about how to respond," Kerry told The Cable. "It clearly means we have to ratchet up on Iran, probably tougher sanctions and other things."

Kerry declined to endorse one big idea floating around town, namely to take actions that would collapse the Central Bank of Iran (CBI) and ruin the country's currency, bringing the Iranian economy to its knees.

"There are a lot of options, you want to pick them carefully and you want to be thoughtful about what's going to be effective," Kerry said.

Kirk, who co-authored a letter in August with Sen. Chuck Schumer (D-NY) calling for collapsing the CBI, and which was signed by 92 senators, tweeted today that the White House's reaction to the report Tuesday constituted "national security malpractice."

Kirk met with White House Chief of Staff Bill Daley on Monday night to give him the "hard sell" on the idea of collapsing the CBI, he told The Cable. Kirk said that the concept under consideration is to give friendly countries that are dependent on Iranian oil -- such as Japan, South Korea, and Turkey -- a time window to shift their purchases from Iran to Saudi Arabia.

Kirk and Schumer are planning to introduce a bill soon that would be a Senate companion to an amendment by Rep. Howard Berman (D-CA) to require the president to determine within 30 days the CBI's role in Iran's illicit activities. If the president determines that the CBI is complicit, the bill would require the administration to cut off any foreign banks doing business with the CBI from participating in the U.S. financial system.

The main risk in collapsing the CBI is that it could bring down the Iranian oil industry along with it, risking a cascading effect on world energy markets that would exacerbate the global economic crisis.

McCain told The Cable today that it's a risk he is willing to take. "Libya is cranking up their oil exports. There's always risk, but there's a greater risk when you know that they're about to become nuclear weaponized," he said.

"The first thing we should do is talk to the Russians and the Chinese and tell them to get with it and pass the increased sanctions through the U.N.," McCain said, adding that the Obama has leverage against Russian and China if it chooses to use it. "Russia wants in the WTO, China wants a lot of things. There should be consequences for their failure to act."

Graham agreed that the negative impact of collapsing the CBI was a necessary cost of ramping up pressure on Iran.

"We've got make a decision: What's the biggest threat to the world, a nuclear-armed Iran or sanctions that would hurt us and the people of Iran?" Graham told The Cable. "You've got two choices, the policy of containment or the policy of preemption. I'm in the preemption camp. I don't think containment works. The only way to stop this is to prevent this and that means changing behavior."

Graham said existing sanctions don't seem to be working, which means that the sanctions regime has to be fundamentally changed. "If that doesn't work, the other option is military force." But Graham cautioned that if there were to be a military strike on Iran, it would have to include a massive assault on Iran's counterattacking capabilities.

"You'd have to destroy their air force, sink their navy, and deal with their long-range missile threat. So you'd have to go in big," he said. "If you attack Iran you open Pandora's box. If you allow Iran to get a nuclear weapon, you empty Pandora's box. So these are not good choices."

Sen. Joe Lieberman (I-CT) said in a statement that the threat of military force must be credible and he called for Congress to pass a new Iran sanctions bill, one that the administration previously said was unnecessary.

The House and Senate have each unveiled a version of the bill that would tighten existing sanctions, compel the administration to enforce penalties already on the books, and levy a host of new restrictions against members of Iran's regime and companies that aid Iran's energy, banking, and arms sectors. The bills are a follow-up to the Comprehensive Iran Sanctions, Accountability and Divestment Act (CISADA) that Congress passed and President Barack Obama signed in July 2010.

Former Treasury Department official Matthew Levitt, now a senior fellow at the Washington Institute for Near East Policy, told The Cable that there's no consensus yet inside the administration or around the world that collapsing the CBI would be possible without doing severe damage to the world economy.

But Levitt offered several things the administration can do immediately to ramp up pressure on Iran, including pressuring countries to scale back Iranian diplomatic presence in their capitals, restricting the travel of Iranian officials around the world, and setting up a multilateral customs body to enforce sanctions against Iran, modeled after what was done in wake of the Kosovo crisis.

"The administration is not being creative enough with the tools they have," Levitt said. In the coming days, he predicted, "You are going to see scrambling as to what can be done."

The Cable

Fight over aid to Palestinian Authority heating up

A group of House lawmakers is making the case for continuing U.S. support to the Palestinian Authority (PA), despite the Palestinian bid to seek full membership in the United Nations.

"Maintaining U.S. assistance to the Palestinian Authority is in the essential strategic interest of Israel and the United States," wrote 44 lawmakers, all Democrats, in a letter today to House Appropriations State and Foreign Ops subcommittee heads Kay Granger (R-TX) and Nita Lowey (D-NY). The letter was spearheaded by Reps. David Price (D-NC) and Peter Welch (D-VT).

Ever since the Palestinians began their statehood drive this summer, Congress has been attacking the $550 million of annual aid given to the PA by U.S. taxpayers. For fiscal 2011, Congress had already provided the Palestinians with about $150 million in direct budget support -- also known as cash -- but $200 million in security funding and about $200 million in humanitarian funding has been held up.

House Foreign Affairs Committee chairwoman Ileana Ros-Lehtinen (R-FL ) released her hold on the security funding last week, but she and Granger are still holding up the non-security funding. Also, Congress is set to consider whether to allocate a whole new tranche of aid to the PA as part of the upcoming negotiations over the fiscal 2012 State and foreign ops spending bill. That bill could come up in the Senate this week or next, leading to a House-Senate conference behind closed doors to iron out a final compromise bill.

"We understand the developments that have led some to call for a suspension or termination of aid to the PA," the 44 lawmakers wrote. "However, these legitimate concerns must be weighed against the essential role that U.S. assistance to the PA plays in providing security and stability for Palestinians and Israelis as well as critical humanitarian relief to the Palestinian people - and the potential consequences if this assistance is terminated."

Currently, the House version of next year's foreign aid bill would terminate all aid to the PA unless the Palestinian government drops its statehood bid at the United Nations and enters into direct negotiations with Israel. The Senate version is less strict; it would only withdraw the funding if the Palestinians actually succeed in joining the United Nations, which isn't likely due to the U.S. veto power at the Security Council. The Senate bill would also give the president a waiver over cutting aid to the PA.

"The prospect of continued assistance depends on the actions of Palestinian leadership, which can choose to pursue a path of direct negotiations rather than a counterproductive and destabilizing push for statehood through the UN and affiliated agencies," Matthew Dennis, spokesperson for Lowey, told The Cable.

"The chairwoman takes the views of all members into consideration," said Matt Leffingwell, spokesman for Granger.

President Barack Obama's administration has been clear that it wants U.S. aid to the PA to continue, because the assistance impacts Israeli security. Sen. Lindsey Graham (R-SC), the ranking Republican on the Senate Appropriations State and Foreign Ops subcommittee, told The Cable last week that he agrees that aid to the PA is important but will fight to end it anyway because of the politics surrounding the issue.

"I don't think that's in our near-term or long-term interest, but that's what's going to happen, that's where this thing is headed," Graham said.

The Democratic lawmakers who are making the case for the aid, along with some non-governmental organizations such as J Street, want to make sure top appropriators know that there is some support for aid to the Palestinians in Congress.

"The Price-Welch letter puts down a marker that there is a difference of opinion on whether aid to the PA should continue in Congress," Dylan Williams, J Street's director of government affairs, told The Cable today.

Williams said that many of the letter's signers supported House Resolution 268, passed in June, which threatened to cut off aid to the PA if it continued to seek U.N. membership. But seeing as how the Palestinians were able to join UNESCO with overwhelming international support, forcing the United States to stop contributing to that organization, he said those threats no longer makes sense.

"The situation has changed since HRes 268 and the bid to keep the Palestinians away from the United Nations has failed," Williams said.