Finding Equilibrium on Iran

Mario Loyola
Issue Number 16 – Spring 2009

Last summer, Israeli Prime Minister Ehud Olmert told then-Democratic presidential hopeful Barack Obama that Iran might be able to assemble a nuclear device by the end of 2009.[1] The controversial National Intelligence Estimate on Iran’s nuclear program, released by the U.S. intelligence community in November 2007, puts Iran closer to four years away from a nuclear weapon capability.[2] Either way, Iran looks set to achieve nuclear threshold capability—the point at which it has overcome all material and technical hurdles and can decide to weaponize in a matter of months—in the near future unless the West can bring significantly greater leverage to bear in the diplomacy of the Iran nuclear crisis. 

One factor that has begun to compress the time horizon for Iran’s attainment of threshold capability is Iran’s growing stockpile of low enriched uranium (LEU). According to its own declarations, Iran will have a sufficient quantity of LEU by the end of 2009 for a single warhead, if further enriched to weapons grade, and enough for several by the end of 2010. This stockpile will be mobile, easy to disperse, and difficult to detect. Therefore, as early as 2010, Iran’s nuclear breakout could become virtually unstoppable. 

Many commentators and policymakers—including Vice-President Joseph Biden—have dismissed fears that Iran may use nuclear weapons, arguing that a strategy of deterrence is enough to keep the Iranian threat contained. This may be true in the case of an Iranian missile launch, but Iran could also manufacture a device and deliver it in an unconventional “terrorist” attack, directly or indirectly, intentionally or unintentionally, without leaving “fingerprints.” Some commentators seem to assume that “nuclear forensics technology” would permit us to identify the source of a nuclear explosion.[3] But according to Michael May, former director of the Lawrence Livermore National Laboratory, which has helped pioneer such technology, forensic identification would be much more useful in ruling out a possible origin than in identifying it, and the science cannot provide a 100 percent positive ID.[4] For these and other reasons, Cold War strategies of containment and deterrence will not be as reliable in an age of nuclear terrorism as they were against Soviet ICBMs.

The dimension of the Iranian nuclear threat that deserves perhaps the most immediate consideration, however, is the broader strategic effect of a known or possible nuclear weapons capability. As the North Korea nuclear crisis shows, even the implied threat of such a capability has an enormous “counter-deterrent” effect. In 1994, when the threat of North Korea’s conventional forces convinced the Clinton administration not to bomb the reactor at Yongbyon, we were virtually certain that the DPRK had no nuclear weapons. We would not know for sure that it had produced nuclear warheads until the summer of 2006, when it carried out a controlled explosion of a nuclear device. But in the intervening twelve years, the estimates of how close North Korea was to getting nukes slowly became irrelevant, as the U.S. national security establishment shifted incrementally to accommodate the increasingly inevitable North Korean nuclear breakout. In late 2004, one hawkish Administration official privately admitted that the use of force to destroy North Korea’s nuclear program had effectively disappeared as an option, given even the marginal possibility that North Korea might already have nukes and might retaliate by “incinerating Tokyo.”[5]

The implied threat of nuclear weapons will allow Iran to assume an even more aggressive posture in the region. The Islamic Republic calls for the downfall of many Arab governments, and lays claim to Bahrain and other Persian Gulf territories outright; it has infiltrated into Iraq and (to a lesser extent) Afghanistan, with deadly results; through Hezbollah, Hamas, and its own Revolutionary Guard, it is pursuing a strategy of regional political hegemony and aggressive confrontation; and it is arguably responsible both for the 2006 Lebanon War and the more recent violence in Gaza. Iran clearly sees itself as a great power deserving of a greater strategic position, and is willing to achieve it aggressively and without negotiating in good faith. With a nuclear weapons capability in hand, the regime will feel much more “safe” in pursuing its aggressive strategy for regional hegemony, with effects that could dramatically destabilize an already unstable region. 

Perhaps the most pernicious effect of an Iranian nuclear weapons capability will be to provide strength and survivability to the Islamic Revolution—the greatest force for extremism and instability in the Middle East. A regime that is increasingly unpopular at home, and that might otherwise soon see little choice but to moderate its policies, will seem much more lasting and entrenched once it has nuclear weapons. That would be a grievous blow to moderate forces in the region.

Enough carrots and sticks

Most commentators who endeavor to develop a response to Iran’s nuclear ambitions tend towards a piecemeal analysis of “policy options.” But the best diplomatic strategy is one that leverages a combination of such options towards the attainment of a favorable balance of power—a necessary precondition for a mutually favorable settlement. In his 1960 book The Strategy of Conflict, Thomas Schelling noted that situations of pure conflict are very rare. Normally, opposing sides in a conflict will have enough interests in common to make some mutually attractive settlement possible. But with the situation titling rapidly in Iran’s favor, a satisfactory settlement is unlikely in the near term unless sufficient leverage is brought to bear to bring the correlation of forces back to a favorable balance. 

The question of sufficient leverage depends in turn on what our most essential objective should be. The single-minded insistence that Iran stop enriching uranium has several disadvantages for the West, not the least of which is to distract attention from what we really need in the end, which is transparency in Iran’s nuclear activities. 

Alexander George wrote in Forceful Persuasion:

According to the logic of… coercive diplomacy, it is more likely to be successful if the objective selected—and the demand made—by the coercing power reflects only the most important of its interests. Such a choice is more likely to create an asymmetry of interests, and therefore an asymmetry of motivations, in its favor. Conversely, if the coercing power pursues ambitious objectives that do not reflect its vital or very important interests or makes demands that infringe on vital or very important interests of the adversary, the asymmetry of interests and the balance of motivations is likely to operate in favor of the adversary.[6]

Focusing on Iran’s uranium enrichment centers the dispute on an issue that is both psychologically and strategically vital for Iran but only peripheral for the West.

The issue of uranium enrichment is peripheral for the U.S. because the vital threat lies not in the enrichment activity, but in its context: the nature of the regime itself, its energetic use and sponsorship of terrorism, the uncertainty as to the scope and purpose of its nuclear activities, and the lack of any convincing economic rationale for a full nuclear fuel cycle. This is not to minimize the issue of enrichment, but rather to draw attention to the even more grave issues which surround it. Tellingly, even if Iran agrees tomorrow to suspend all enrichment activity at its declared Natanz facility, it would hardly signal the end of the nuclear crisis.

On the other hand, Iranians have come to see a full indigenous nuclear fuel cycle, including uranium enrichment, as a national endeavor. According to some polling, as much as 80 percent of the Iranian public favors the development of civilian nuclear energy.[7] Nuclear technology has come to symbolize national greatness for many Iranians. The regime may be unpopular, but its stance on that issue is not.

Meanwhile, the vital issue for the West is verification of the peaceful nature of Iran’s nuclear program. Here, the regime in Tehran is on far weaker footing. According to a poll conducted in July 2007 by Terror Free Tomorrow, 80 percent of Iranians support full IAEA inspections and a guarantee not to develop nuclear weapons in exchange for normalized relations with the West and western aid. Only 29 percent of those polled expressed a strong desire to acquire nuclear weapons.[8] Indeed, even among conservatives within the regime, there are those who do not think nuclear weapons worth the economic and diplomatic ostracism that they are engendering. And popular majorities in many countries, from the U.S. to France to Japan, support the use of force to keep Iran from attaining nuclear weapons. Politically speaking, transparency and compliance with international law are the regime’s weak points.

If our diplomacy should pit our vital interests against the regime’s weak points, transparency (a word even Iran’s mullahs use approvingly) should be our principal negotiating objective. But transparency is a moving target; the greater the scope of Iran’s nuclear activities, the greater the degree of transparency it would have to provide. And the longer the crisis drags out, the greater the uncertainty as to its possible undeclared activities, so the passage of time without a satisfactory settlement would also increase the level of transparency Iran would ultimately have to provide in order to allay the West’s security concerns. The West should begin to focus on the issue of transparency, because if Iran agrees in coming months to suspend uranium enrichment, it will try to create the impression the crisis is over, and it will succeed unless the West remains unified and focused on what is really at stake.

Applying these principles, a deal satisfactory to the West which leaves the way open for Iran to develop the full nuclear fuel cycle would have to allay all of our fears about the regime itself. Such a deal would have to include (1) a verifiable end to Iran’s support for terrorism; (2) the normalization of relations with its adversaries, including Israel and the U.S., on terms acceptable to all parties; (3) the placement of all nuclear-related activities under the supervision of an independent civilian atomic energy agency;[9] (4) full compliance with the maximum IAEA safeguards; and (5) agreement to such supplementary disclosures and verifications as may be necessary to close out all outstanding questions. Such concessions, however, will almost certainly have to await the demise of the current regime in Tehran.

The next best framework would be one akin to what Iran is implicitly being offered now: a lifting of sanctions and assistance in constructing a proliferation-safe nuclear infrastructure in which enrichment of nuclear fuel and reprocessing of spent fuel would be done abroad by members of the Nuclear Suppliers Group. In exchange, Iran would have to (1) suspend and dismantle its extraneous fuel-cycle facilities, including uranium mining, conversion, enrichment, and reprocessing; and (2) provide for sufficient disclosures and inspections to permit the IAEA’s verification of the peaceful nature of its program for both declared and possible undeclared facilities. Alas, the current regime in Tehran has rejected essentially this “offer” insistently and repeatedly, and at great material cost to itself.

The bare minimum the West could settle for, then, would be a temporary agreement that increases transparency and extends the time horizon for Iran’s attainment of threshold capability. The U.S. should consider offering Iran a diminution of sanctions in exchange for a long-term freeze in further expansion of Iran’s nuclear capability and sufficient transparency through disclosures and inspections to be able to verify the freeze, with respect both to declared facilities and to possible undeclared activities—even if it means accepting continued uranium enrichment. 

But even such a minimalist framework is likely to be rejected by the Iranian leadership absent significantly increased pressure. To be successful, dialogue will therefore need to be grounded in a strategy of sufficient leverage to convince Iran that a negotiated settlement is more attractive than the alternative.

The logical starting point for such a strategy is containment. The late Peter Rodman, who served as Assistant Secretary of Defense for International Security Affairs in the Bush administration, proposed a containment strategy that includes: (1) stabilizing the situation in Iraq; (2) building up the military forces of Iran’s neighbors; and (3) a declaratory policy of extending the U.S. nuclear and conventional force security umbrella to those neighbors.[10] Such a policy reflects George Kennan’s Cold War definition of containment as a strategy that might constrain the expansion of a revolutionary power until the internal contradictions in its system begin to weaken it.

But given the short time left before Iran’s attainment of threshold capability, it seems clear that coercive levers beyond containment will be needed. The measures most likely to win international and domestic political support are economic. Existing sanctions by the United Nations, the European Union, and individual countries from the U.S. to Japan have already significantly crimped Iran’s economy. They have increased Iran’s cost-of-capital some 30 percent, and are cutting off Iran’s sources of foreign investment. Given the regime’s internal economic mismanagement, which has produced an inflationary spiral and shortages of basic goods, including gasoline, additional sanctions could create excruciating pressures on the Iranian regime.

Alas, there may not be much more that we can expect by way of economic sanctions from the UN Security Council. Future economic pressure may come not from the UN but from the European Union and Iran’s other bilateral trading partners. Sanctions could also make use of financial measures that leverage second- and third-order market effects to make it increasingly difficult for Iran to conduct business with the outside world. Finally, such measures could target the key inputs into Iran’s economy, most vulnerable of which is likely to be the gasoline imports, on which Iran depends for some 40 percent of its total refined petroleum consumption.

The current strategy banks on political and economic tools in the hopes that the penalty of isolation will be sufficient to dissuade Iran from its nuclear advance, without reaching the need to choose between military conflict and a nuclear-armed Iran. But, as Rodman noted, “to ‘exhaust’ these tools means to use them, not to exhaust ourselves in debating them for two years, doling them out in small increments, and then wondering why the Iranians have not been intimidated.”[11]

Deterrence and dynamic equilibrium

Reflecting the increasing international apprehension over Iran’s aggressive nuclear advance, President Obama has declared that the development of nuclear weapons by the current regime in Iran is an unacceptable “game-changer,” and has intimated that the use of military force would be appropriate to prevent it. But what circumstance might trigger consideration of what military action? The failure to answer this question has resulted in a diplomatic strategy that is incomplete and perhaps fatally weak. 

Alexander George has identified four basic variants of coercive diplomacy: “the classic ultimatum, the tacit ultimatum, the ‘gradual turning of the screw,’ and the ‘try-and-see’ approach.”[12] The strongest of these strategies, the classic ultimatum, combines (1) a demand upon the opponent with (2) a time limit (or sense of urgency) for compliance and (3) a threat of punishment for non-compliance. The weakest, the “try-and-see” approach, presents a demand with neither a time-limit for compliance nor a threat of punishment for non-compliance. Though the U.S. posture often towards Iran often sounds like a classic ultimatum, it is in reality little more than a failing “try-and-see” approach. The same ambiguity that makes “all options remain on the table” valuable for a purely passive deterrent makes for much weaker diplomacy when actively seeking a negotiated settlement.

Much discussion has been devoted to the “military option,” but most of it has been artificially slanted. Commentators almost always start by asking what military strikes would be needed to destroy Iran’s nuclear program. Having framed the question in that way, they naturally conclude that such strikes would involve hundreds of sorties conducted over a period of weeks; that they would not have a high probability of fully destroying the relevant facilities; and that Iran would simply reconstitute its program and proceed in secrecy, its thirst for nuclear weapons and its domestic political support significantly strengthened. This answer is, of course, “cooked” by the flawed initial question, which is founded on the false premise that military options are only useful if diplomacy fails. 

The purpose of military power is not in the first instance to destroy Iran’s nuclear capability, but rather to convince the Iranians to abandon it. As former Clinton administration official Ashton Carter recently noted, limited military force can be integral to a diplomatic strategy.[13] In a paradigm of coercive diplomacy, where the possibility of war may hang in the balance, the spectrum of possible effects one might seek through the use of force runs the gamut of military capabilities, from small-scale non-violent tactical demonstrations to applications of strategically decisive force.

Of these, ironically enough, the most impractical is the only one that commentators ever seem to consider: a campaign of air strikes sufficiently powerful to destroy Iran’s nuclear infrastructure (mostly) but not sufficiently powerful to affect its capacity to retaliate or its willingness to reconstitute the program. Besides the fact that this would hurt Iran grievously without weakening it, such a campaign—as an initial use of force—might be seen to lack a compelling political justification, given Iran’s strategy of proceeding always in small, incremental steps. If so, it could unify Iranians behind the regime, and fracture public opinion in the West. 

The elements of a smart diplomatic strategy (including military options) will seek to match Iran’s clever strategy of small steps with small steps of our own. At the “small” end of the “coercive diplomacy” spectrum there are the naval demonstrations and covert operations that are happening already. Between these activities and the “big” end of the spectrum, many military options could serve to enhance the crucial negotiating leverage in our diplomatic strategy.

In a strategy of coercive diplomacy, the outcome of a limited military confrontation often turns on which side feels (and communicates to the other side) that it can better afford the risks of escalation. Given the wide disparity in conventional capabilities between the U.S. and Iran, it is hard to imagine that Iran could find escalation attractive in any situation. But if Iran is more committed to its objective than the U.S. and its partners are to theirs, that alone could nullify the latent “escalation dominance” implied in our comparative military advantage.

By the same token, if military force is applied in a limited and incremental way at the outset, it could increase the chances that hesitation will win out in Tehran and cooler heads will prevail. From Tehran’s point of view, the risks of escalation will be greater the more it still has to lose after any use of force by its adversaries. Conversely, the more force its adversaries use at the outset, the less it will have to lose, the more humiliated it will feel, and the more it will be tempted to retaliate with the assets still at its disposal.

For this reason, the more significant applications of force would need to account for the increased chance of Iranian retaliation, and critical elements of the regime’s capacity to retaliate would then become parts of the target lists. If Iran is willing to absorb the risks of escalation, it could retaliate through missile attacks against U.S. forces and allies in the region, and by launching a campaign of terrorist attacks against Western targets by regime elements and proxies such as Hezbollah and Hamas.

Iran could also interrupt oil exports from the Persian Gulf, especially through the Strait of Hormuz. But, according to Ashton Carter, the U.S. navy is confident that it can quickly reestablish freedom of navigation. And there is an oil weapon on our side, too. The West could shut off Iran’s gasoline imports of gasoline, on which it depends for 40 percent of its consumption. And it could also shut off Iran’s oil exports, on which the regime depends for 85 percent of its revenue; according to Carter, such a move “would immediately bring the country to its knees.”[14]

Added to the dangers of retaliation and escalation is the danger of ruining the hard-fought unity among Western capitals and partner countries that is so vital in confronting both the Iranian menace and the larger movement of Islamist extremism. The diplomatic, economic, and even cultural isolation of Iran is now reaching visibly painful levels, with more to come. Any military action, however small, could jeopardize the international unity forged on these fronts over the past several years, whether it is undertaken unilaterally by the U.S. or even with a small coalition.[15]

It is vital that U.S. diplomacy continue to strengthen the resolve of the powers now arrayed against Iran in the nuclear crisis. Just as vital is ensuring that differences on long-range policy issues not be deferred in the interests of current unity (as so disastrously happened with the passage of UN Security Council Resolution 1441 in November 2002) but addressed and resolved now, while there is still time for deliberation. As allies and partners, our governments should try to plan for the worst-case scenario that looms largest in the near-term: namely that Iran finally forces us to choose between military action and a nuclear-armed Iran.

Public opinion would also loom large in any consideration of military options. Will Western public opinion back limited military options beyond the ones currently in use? Assuming Iran retaliates in a way that further escalates the conflict, will Western public opinion support an increased military response? Finally, if any such conflict should escalate, will public support for military exertion wither with early reverses, military and civilian casualties, or the spectacle of captured soldiers paraded on Al Jazeera?

Against these risks should be weighed the risks of the current Iranian regime attaining the nuclear threshold. A nuclear weapons capability could immeasurably empower the mullahs and encourage their worst ambitions. It could turn the Middle East upside down, and create such fear in Israel as to call into question the viability of the state itself. We could face the harrowing prospect of a nonproliferation regime in full collapse, and the eventual risk of losing urban centers to nuclear terrorism without necessarily being able to identify those responsible. 

With a threat of this magnitude, with such vital U.S. interests at stake, and while we still enjoy a position of such comparatively overwhelming military power, it would not be unreasonable for Western leaders to conclude that we can afford the risks of escalation better than Iran. Western leaders have called a nuclear-armed Iran—with the current regime in power—unacceptable. If they are willing to use even the most limited military measures, they must be prepared to accept a calculated risk of escalation. And if they do accept that risk, then it is vital to marshal public support for a firm stance and communicate that commitment of purpose to Iran.

There is at the root of the current standoff a search for a favorable balance of power. By incrementally increasing the pressure on Iran, the West is hoping that it will discover Iran’s “breaking point” before Iran reaches a nuclear weapons capability. For its part, Tehran is hoping that it will discover the West’s “breaking point” before it is forced to abandon its uranium enrichment activity. The countervailing pressures from the West and from Tehran are not yet at equilibrium; the balance continues to tilt in Tehran’s direction, which is why Tehran continues to behave as if time is on its side.

As Iran brings us nearer to a final choice between military conflict and a nuclear-armed Iran, Western leaders may deem it prudent to strengthen our diplomacy with a more convincing threat of military action. While the manifold risks of escalation point to more limited and incremental measures than most commentators have in mind when they discuss “the military option,” it is crucial not to dismiss the value of military levers in the diplomacy of this crisis. Military options may remain on the table when diplomacy fails, but they are most valuable when they help diplomacy succeed.

Mario Loyola is a former national security policy advisor in the U.S. Senate and a former Pentagon speechwriter.


[2] Iran: Nuclear Intentions and Capabilities, National Intelligence Council, Office of the Director of National Intelligence, November 2007,

[3] See, for example, Richard Haas, “Living with a Nuclear Iran,” in James N. Miller, Christine Parthemore and Kurt M. Campbell, eds., Iran: Assessing U.S. Strategic Options (Washington, DC: Center for a New American Security, June 2008),

[4] Mathew Stannard, “New Tools for a New World Order,” San Francisco Chronicle, October 26, 2006, A19.

[5] Author’s interview, Washington, DC, Fall 2004.

[6] Alexander George, Forceful Persuasion (Washington, DC: U.S. Institute of Peace. 1991), 13.

[7] Mahan Abedin, “Iranian Public Opinion and the Nuclear Standoff,” Mideast Monitor 1, no. 2 (2006),

[8] “Poll: Iranians Want Democracy, Nuclear Inspections,” CNN, July 16, 2007,

[9] Some have proposed an international consortium to help operate Iran’s nuclear infrastructure.

[10] Peter Rodman, “Countering Iran’s Revolutionary Challenge: A Strategy for the Next Phase,” in Opportunity ’08 (Washington, DC: Brookings Institution. 2007),

[11] Ibid.

[12] Alexander George, The Limits of Coercive Diplomacy (Boulder, CO: Westview Press, 1994), 18.

[13] Ashton Carter, “Military Elements in a Strategy to Deal with Iran’s Nuclear Program,” in James N. Miller, Christine Parthemore and Kurt M. Campbell, eds., Iran: Assessing U.S. Strategic Options (Washington, DC: Center for a New American Security, June 2008),

[14] Ibid.

[15] The prospect of unilateral action by Israel presents a special case.