August 9, 2009 / 1:55 PM / 10 years ago

SCENARIOS: What's next if Iran misses U.S. September deadline?

WASHINGTON (Reuters) - U.S. President Barack Obama has set a September deadline for Iran to respond to his offer of talks, but it seems increasingly likely the Islamic Republic, shaken by the worst unrest in decades, will miss it.

The big question is what Obama will do next. Analysts say he has few options, hardly any of them good. Here are some of the possible courses of action he could pursue.

SANCTIONS

Iran’s president, Mahmoud Ahmadinejad, sworn into office for a second term last week, is preoccupied with shoring up his legitimacy, which has been significantly weakened by the post-election turmoil. Responding to Obama’s offer of talks is probably not a top priority for him right now, and Washington needs to factor this into its decision-making, analysts say.

Obama has said he will review his policy of engagement toward Iran and consult allies at a G-20 summit of rich and developing nations in late September. His secretary of state, Hillary Clinton, has talked of imposing “crippling sanctions.”

The U.S. Senate has passed legislation that would ban companies that sell gasoline and other refined oil products to Iran from receiving Energy Department contracts to deliver crude to the U.S. Strategic Petroleum Reserve.

The House of Representatives has approved a bill that would bar the U.S. Export-Import Bank from providing credit, insurance or loan repayment guarantees to foreign oil companies that supply fuel to Iran or help expand its refining capacity.

The bills have not yet been finalized.

Obama, whose foreign policy emphasizes working with allies, is highly unlikely to impose unilateral punitive measures, but getting broad agreement on new sanctions at this point will be difficult, analysts and diplomats say.

In addition to U.S. measures, the United Nations has imposed three rounds of sanctions on Iran so far, but there appears to be little appetite for a fourth round.

China and Russia, two of Iran’s key trading partners, have made clear they will not accept new sanctions at the moment. The 27-nation European Union, meanwhile, is split on the idea of targeting Iran’s energy industry.

“The historical experience of prior U.S. administrations makes clear that international willingness to apply rigorous sanctions is inherently limited,” Suzanne Maloney, a senior fellow at Brookings Institution think-tank, testified before the Senate banking committee in July.

There is also debate about whether sanctions would have the desired effect. One popular idea is to target Iran’s reliance on gasoline imports. Some analysts say it would put domestic pressure on Ahmadinejad by driving up prices at the pump, but others counter the move could backfire by giving him a ready excuse for Iran’s growing economic woes. In any case, Iran’s porous borders would make oil sanctions difficult to enforce.

MILITARY ACTION

The option that Obama is said to favor least, not surprisingly. While he has said that possible military action always remains on the table, even his own generals acknowledge it could have potentially disastrous consequences.

The chairman of the Joint Chiefs of Staff, Admiral Michael Mullen, said on July 7 that a military strike on Iran would be “very destabilizing” for the Middle East and have unpredictable after-effects for U.S. allies and interests in the region.

“It’s not a question of whether we do a strike or not and whether the strike could be effective,” retired Marine General Anthony Zinni said in 2006. “It certainly would be, to some degree. But are you prepared for all that follows?”

Iran watchers say its military would likely retaliate by attacking shipping in the Strait of Hormuz, a narrow waterway that borders Iran’s coastline and through which flows about 40 percent of all seaborne oil traded in the world.

Iran could also seek the help of allies such as Hezbollah in Lebanon and Hamas in Gaza to attack Israel, and encourage Iraqi Shi’ite militia groups dependent on Iran for funding and weapons to attack U.S. troops there.

A U.S. attack would also undermine Obama’s efforts to reach out to the Muslim world and put the prospect for an Israeli-Palestinian peace settlement further out of reach.

There is growing concern, however, that any military strike would come not from the United States but from Israel, which fears any Iranian nuclear bomb could be used against the Jewish state. It has reluctantly backed Obama’s engagement efforts but has strongly hinted that it is running out of patience.

DIPLOMACY

So, if tougher sanctions appear unlikely to be imposed soon and military action is a non-starter, what’s left?

“There is no other option but to pursue negotiations,” said Los Angeles-based Iran expert Reza Aslan.

Administration officials acknowledge that it is in the United States’ national security interests to engage Iran, and Obama has noted that previous efforts to isolate Iran failed.

Iran has not said no to talks with Washington and may try to play for time as it has done so successfully in negotiations with Western powers over its nuclear program, which it says is for the peaceful generation of electricity but which some Western nations fear could be used to build a nuclear bomb.

Analysts say if Obama wants to win support for future sanctions, he first has to convince international partners he is serious about talking to Iran and reversing a decades-old U.S. policy of isolating the Islamic Republic. Withdrawing his olive branch too soon could raise doubts about Washington’s commitment to making a break with the past.

That will be the dilemma facing Obama come September. If he does nothing, he risks looking weak, while Israel could be tempted to take matters into its own hands. All rests on how much more time, if any, he is willing to give Iran.

Additional reporting by Louis Charbonneau in New York; Editing by Doina Chiacu

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