Can GOP sanctions on Europe tank the economy?

Some Republicans want to punish European states that buy oil from Iran, one of the world’s biggest exporters [EPA]

Remember, “It’s the economy, stupid” – the slogan that helped Clinton win in 1992? So how come Democrats in congress – over the objections of the Obama administration – are helping Republicans press sanctions against Europeans who buy oil from Iran – sanctions that would increase unemployment in the US during the 2012 campaign?

The National Defence Authorisation Act now contains an amendment by Republican Senator Mark Kirk – supported by many Democrats as well – that would sanction European banks and companies that do business with Iran’s Central Bank in order to stop them from buying Iranian oil.

This is a big deal, because Iran is the world’s fifth-largest oil exporter, and blocking Iranian oil exports to Europe would raise the price of oil in Europe and in the United States. Kirk’s amendment would hurt the US economy at a time when economic contraction in Europe could push the US back into recession. Does fear of the sanctions’ economic blowback in Europe make sense? Many Europeans seem to think so. On Tuesday, Reuters reported:

The European Union is becoming skeptical about slapping sanctions on imports of Iranian oil, diplomats and traders say, as awareness grows that the embargo could damage its own economy without doing much to undercut to Iran’s oil revenues. […]

“Maybe the aim of sanctions is to help Italy, Spain and Greece to collapse and make the EU a smaller club,” one trader joked. The remark reflects the growing unease that EU sanctions would hit hardest some of the continent’s weakest economies, because Iranian oil provides the highest share of their needs, not to mention the rest of the bloc.

“The likely increase in oil prices that would result from a ban would be felt by all (European) oil refiners, not just those that are big customers for Iranian oil,” ratings agency Fitch said last week. An oil industry source in Greece, which mostly relies on Iranian oil, said: “Greece can’t be put with its back to the wall.” The threat to Iran’s oil exports and fears about a possible military strike on its nuclear facilities have helped keep oil prices above $100 a barrel…

Raising the price of oil will directly hurt the US economy – and indirectly damage the US economy by causing US exports to Europe to fall. Furthermore, adding to Europe’s economic problems now would undermine attempts to contain the eurozone debt crisis, as the trader’s joke about sanctions helping Italy, Spain and Greece to collapse suggests. And if efforts to contain Europe’s financial crisis fail, we’re going to feel that pain in the US, just as Europe felt the 2008 US financial crisis.

A neocon-manufactured crisis

What’s the Republican response to all this? When a US Treasury Department spokesman said, “it is critically important that the steps we take do not destabilise the US and global economy”, a senior GOP Senate aide responded by saying, “Treasury should go back and model the cost to the US economy and the world economy of an Israeli strike on Iran”.

So, according to this Republican argument, we only have two choices: sanctions on Europe that will hurt the US economy, or an Israeli military strike on Iran that will hurt the US economy even more. But that’s a false choice, because a lot of people in Israel, including the former head of the Mossad, think the idea of an Israeli attack on Iran is insane. And the US can keep Israel from attacking Iran if it wants, just as the US did during the Bush Administration.

Of course, many Republicans claim that Iran’s nuclear programme constitutes a national emergency for the United States, so we should be willing to accept higher unemployment in the US in order to block Iran’s oil exports to Europe. But the “emergency” claim is extremely dubious, for the following reasons: as Pulitzer Prize-winning journalist Seymour Hersh recently noted in the New Yorker, there is still no definitive evidence that Iran has a nuclear weapons programme.

Secondly, as former AIPAC staffer MJ Rosenberg recently noted, leading neoconservatives at the American Enterprise Institute (a key cheerleader for war with Iran, as it was a key cheerleader for war with Iraq) are now publicly conceding that the issue for neoconservatives isn’t really whether Iran has a nuclear weapon – it’s about trying to maintain a balance of power in the region in favour of Israeli military ambitions.

It’s certainly understandable that some Israeli generals would want to maintain their freedom, as they see it, to invade Lebanon anytime they want, but does supporting this ambition constitute a national emergency for people in the US?

As Defence Secretary Leon Panetta recently affirmed, a Western military strike on Iran would at best set back its nuclear programme by two years. Since a military strike can’t stop Iran’s nuclear programme – and since such a strike would be extremely costly to the US – it’s an extremely stupid thing to do, if the goal is to stop Iran’s nuclear programme.

The only way that military force can stop Iran’s nuclear programme is if it is used to overthrow the Iranian government and install a Western client government. But few dare call for this openly, since – thanks to the Iraq and Afghanistan experience – the public is now quite aware of what this programme would cost in blood and treasure, and is also aware that despite that cost, installing a client government could fail anyway.

So there is no emergency requiring sanctions that hurt the US economy. There’s just another manufactured crisis, designed to force Americans to submit again to the neoconservative agenda. But the question remains: Why would Democrats support this? Do they want to lose the election?

Robert Naiman is Policy Director at Just Foreign Policy.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.