I also spent many hours with Israeli Prime Minister Benjamin Netanyahu discussing our dual-track strategy and trying to convince him that sanctions could work. We agreed that a credible threat of military force was important—which is why President Obama and I repeatedly said “All options are on the table”—but we had different views on how much we should telegraph in public. I told him that President Obama was serious when he said we would not allow Iran to acquire a nuclear bomb and that “containment” was not our policy. Containment might have worked with the Soviet Union, but given Iran’s ties to terrorism and the volatility of the region, we didn’t think a nuclear-armed Iran was any more acceptable—or containable—than the Israelis did. So all options really were on the table, including military force.
In addition to our work with the Israelis, the Obama Administration also increased America’s own sea and air presence in the Persian Gulf and deepened our ties to the Gulf monarchies, who viewed Iran with great alarm. I worked with the Gulf Cooperation Council on a dedicated ongoing security dialogue, and we conducted joint military exercises with GCC members. Convincing Turkey to host a major radar installation also helped us build a new missile defense system that would protect our allies in Europe from a possible Iranian attack.
Even as we shored up our defenses, we also went on the offense to increase pressure on Iran in the hopes of changing its leaders’ calculus. Through legislation and executive action, the Obama Administration and Congress worked together to pile on tougher and tougher sanctions, all building on the original Security Council measures put in place in the summer of 2010. Our goal was to put so much financial pressure on Iran’s leaders, including on the military’s growing number of business ventures, that they would have no choice but to come back to the negotiating table with a serious offer. We would go after Iran’s oil industry, banks, and weapons programs. And we would enlist insurance companies, shipping lines, energy traders, financial institutions, and many other actors to cut Iran off from global commerce. Most of all, I would make it my mission to convince the top consumers of Iran’s oil to diversify their supplies and buy less from Tehran. With each one who agreed, Iran’s coffers took another big hit. Iran’s lifeblood was its oil; it was the world’s third largest exporter of crude, which brought in much-needed hard currency. So we did everything we could to make it harder for Iran to do business, particularly around oil.
The Europeans were essential partners in this effort, and when all twenty-seven members of the European Union agreed to impose a full boycott of Iranian oil, it was a huge blow. Bob Einhorn, the expert who helped craft the original October 2009 Tehran Research Reactor swap plan, and Under Secretary of Treasury David Cohen went to work finding the most creative and effective ways to enforce all our new sanctions. Freezing the assets of Iranian banks made it impossible for Iranian tankers to buy insurance on the international market and cut off access to global financial networks. It was a full-court press.
Under a new law signed by President Obama in December 2011, other countries had to demonstrate every six months that they were meaningfully reducing consumption of Iranian oil or face sanctions themselves. To put this into practice, I turned to our newly created Bureau of Energy Resources, headed by Carlos Pascual. Everywhere Iran tried to sell its oil, our team was there, offering up alternative suppliers and explaining the financial risks of conducting a transaction with a global pariah. Iran’s major customers faced difficult choices with significant economic consequences. Thankfully many of them showed far-sighted leadership by embracing the opportunity to diversify their energy portfolios.
We were just as active in places like Angola, Nigeria, South Sudan, and the Persian Gulf, encouraging Iran’s competitors to pump and sell more of their own oil, to keep the market balanced and prevent damaging price spikes. Iraq’s resurgent oil industry, long a U.S. priority, proved invaluable. But the most crucial new supplies came from our own backyard. As American domestic oil and gas production increased dramatically, thanks to new technologies and exploration, our energy imports plummeted. This took pressure off the global market and made it easier to exclude Iran, as other nations could rely on the supply America no longer required.
The biggest consumers of Iranian oil, and the hardest to convince to turn off the spigot, were in Asia. China and India, in particular, depended on Iranian oil to meet their rapidly expanding energy needs. The advanced economies of South Korea and Japan were also highly dependent on imported oil. Japan faced an added burden because of the meltdown of the Fukushima nuclear plant and the resulting moratorium on nuclear power. Nonetheless the Japanese pledged to cut their consumption of Iranian oil significantly, a courageous commitment under the circumstances.
India, by contrast, initially publicly refused Western entreaties to reduce their reliance on Iranian oil. In our private conversations Indian leaders agreed that peace in the Middle East was important and were acutely aware that 6 million Indians lived and worked in the Gulf and could be vulnerable to political or economic instability. At the same time, though, India’s fast-growing economy depended on a steady supply of energy, and they worried that their energy needs were so great that there was no viable way to meet them without Iranian oil. Left unsaid was another reason for their reluctance: India, which had championed the “nonaligned movement” during the Cold War and still prized its “strategic autonomy,” simply hated to be told what to do. The more loudly we urged them to change course, the more likely they were to dig in their heels.
In May 2012, I visited New Delhi to make the case in person. I argued that maintaining a unified international front was the best way to persuade Iran to return to the negotiating table, achieve a diplomatic solution to the impasse, and avoid a destabilizing military conflict. I outlined the advantages of a diversified energy supply and talked about potential alternatives to Iran available on the market. I also assured the Indians that, if they took positive steps, we would make clear that it was their decision, however they chose to characterize it. All we cared about was the end result, not beating our chest. That seemed to make a difference. When Minister of External Affairs S. M. Krishna and I went out to talk to the media, we were of course asked about the Iran issue. I deferred to Krishna to answer first. “Given our growing demand, it is natural for us to try and diversify our sources of imports of oil and gas to meet the objective of energy security,” he said. “Since you asked a specific question about Iran, it remains an important source of oil for us, although its share in our imports are declining, which is well known. Ultimately, it reflects the decision that refineries make based on commercial, financial and technical considerations.” That was good enough for me. I promised Krishna that I would send Carlos and his team of experts to Delhi to help speed those “totally non-Iran-related” decisions.
In the end our efforts led to every major Iranian customer, even the most reluctant, agreeing to reduce their purchases of Iran’s oil. The result was dramatic. Inflation in Iran soared by more than 40 percent, and the value of the Iranian currency declined dramatically. Oil exports declined from 2.5 million barrels of crude each day in early 2012 to around 1 million, which resulted in a loss of more than $80 billion in revenue.
Iranian oil tankers sat idle, with no markets to visit and no foreign investors or insurance companies willing to back them, and Iranian jets rusted in their hangars, with no replacement parts available. Big multinational companies like Shell, Toyota, and Deutsche Bank began pulling out of Iran. Even Ahmadinejad, who long tried to deny that sanctions would have any effect, began complaining about the “economic assault.”
For years I had been talking about “crippling sanctions,” and now it was coming true. Bibi Netanyahu told me he liked the phrase so much that he had adopted it as his own. I took pride in the coalition we assembled and the effectiveness of our efforts, but no pleasure in the hardship that Iran’s people suffered because of their leaders’ choice to continue defying the international community. We made every effort to ensur
e that the sanctions didn’t deprive Iranians of food, medicines, and other humanitarian goods. And I looked for opportunities to emphasize that our quarrel was with the government of Iran, not its citizens, including in an interview broadcast in Farsi on Voice of America’s Parazit program, Iran’s equivalent of The Daily Show. The people of Iran deserved a better future, but that would not be possible unless their leaders changed course.
Through it all, Iran remained defiant. It continued to be linked to new terrorist plots around the world, in Bulgaria, Georgia, and Thailand. Tehran worked to undermine neighboring governments and incited unrest from Bahrain to Yemen and beyond. It poured money and weapons into Syria to prop up its ally Bashar al-Assad and support his brutal crackdown against the Syrian people. Eventually it sent in Revolutionary Guard trainers and Hezbollah fighters to further bolster Assad. And, of course, it continued to advance its nuclear program in violation of Security Council resolutions and refused to engage in good faith with the P5+1. In public President Obama and I stressed that the window for diplomacy was still open but that it would not remain so forever. In private we maintained some hope that the Omani channel would ultimately yield progress. The more pressure we mounted and the more the Iranian economy crumbled, the more incentive Tehran had to reconsider its posture.
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That’s exactly what started happening toward the end of 2012, just as my time at the State Department began to draw to a close. Iran’s economy, regional position, and international reputation were all in shambles. President Ahmadinejad’s second term was a disaster, and his political standing at home had collapsed, along with his once close relationship with the Supreme Leader and other powerful conservatives and clerics who truly held the levers of power in Iran. Meanwhile the Omanis indicated that the Iranians were finally getting ready to move forward on the long-awaited secret talks. They wanted to send a Deputy Foreign Minister to meet with my Deputy Bill Burns in Muscat. We agreed.
In March 2013, a few weeks after my term as Secretary ended, Bill and Jake returned to Oman to see what this new opening might yield. The answer was still disappointing. The Iranians seemed to be struggling with what to do. Some elements of their government clearly favored serious engagement, but other powerful forces were holding the negotiators back. Once again our team came home with the impression that the time was not yet ripe for a breakthrough.
Then events intervened once more. That spring Iran geared up for new elections to replace Ahmadinejad as President. It was hard to believe it had already been four years since massive protests filled the streets of Tehran after the previous vote. Since then the regime had been ruthless in driving political opposition underground and stamping out dissent. In keeping with this record, the authorities handpicked every candidate in the 2013 race and disqualified anyone not deemed conservative or loyal enough. They even barred Ali Akbar Hashemi Rafsanjani, a leader of the 1979 revolution, former President, and influential cleric, because he was perceived to present a challenge to the regime. The eight candidates who made it through all had close ties to the Supreme Leader and solid regime credentials. In short, the powers that be in Iran were playing it as safe as possible.
Saeed Jalili, the country’s dogmatic nuclear negotiator, was seen as the Ayatollah’s preferred choice and therefore the presumed front-runner. He campaigned on vacuous slogans about “Islamic development” and avoided talking much about the failing economy or questioning Iran’s disastrous foreign policy. Out among the people, there seemed to be little interest or excitement for the election, which was the regime’s goal. But frustration was not hard to find. Western media quoted a forty-year-old garage owner outside Qom, the city with the secret nuclear facility unmasked in 2009, grumbling about the economy: “I love Islam, but how do we fix 100 percent inflation? I’ll vote for anybody with a good plan, but until now I haven’t seen any candidate with clear ideas for the future.”
Then, in the final days before the June election, something remarkable happened. In the middle of the regime’s carefully orchestrated election, these frustrations burst into public view, and the contradictions and failures of the regime’s policies were suddenly being questioned before the entire country. In an explosive nationally televised debate, Jalili’s opponents went after him aggressively for his mismanagement of the country’s nuclear policy and the terrible toll it had taken on the economy. “Being conservative does not mean being inflexible and stubborn,” said Ali-Akbar Velayati, a former Foreign Minister with a reputation as a hard-liner. “We can’t expect everything and give nothing,” Mohsen Rezaei, a former senior commander in the Islamic Revolutionary Guard, piled on, questioning the mantra of resistance against the world. “Do you mean that we have to resist and keep people hungry?” he asked. Jalili tried to defend his stonewalling at the most recent P5+1 talks—“They wanted to exchange a jewel for candy,” he protested—and invoked the Supreme Leader in his defense. But that didn’t stop the attacks. Hassan Rouhani, a former chief nuclear negotiator himself and the closest person to a moderate in the race because of his talk of “constructive interaction with the world,” slammed Jalili for allowing Iran to be sanctioned at the UN Security Council. “All of our problems stem from this,” he said. “It’s good to have centrifuges running, providing people’s lives and sustenance are also spinning.” Iranians watching at home must have been in a state of shock. They had rarely been allowed to witness a debate like this before.
On Election Day, in June 2013, Iranians turned out in surprisingly large numbers and elected Rouhani in a landslide. This time there would be no attempt to reverse the results or steal the election. Crowds gathered in the streets chanting, “Long live reform.” Rouhani took office in August and immediately began making conciliatory statements toward the international community and even tweeted good wishes on Rosh Hashanah, the Jewish New Year.
I was now a private citizen, but I watched all this with great interest and a healthy dose of skepticism. The Supreme Leader still held all the real power, especially when it came to the nuclear program and foreign policy. He had allowed Rouhani’s election and was so far tolerating all this talk of a new direction, even quietly defending the new President against attacks from unsettled hard-liners, all of which perhaps meant that he understood how unsustainable the regime’s policies had become. But there was no reason yet to believe that he had fundamentally decided to change course on any of the core issues at the heart of Iran’s belligerence toward its region and much of the world.
But behind the scenes, after the election of Rouhani, the Omani channel was heating up. The Sultan was the first foreign leader to visit Rouhani in Tehran. President Obama sent another letter and this time got a positive response. In Muscat, Bill and Jake, who was by this time Vice President Biden’s National Security Advisor, resumed meeting with Iranian officials, who were finally empowered to negotiate from the highest levels. Maintaining strict secrecy was more important than ever, to preserve Rouhani’s fragile credibility back home. Relatively quickly the outlines of a preliminary deal began to take shape. Iran would halt advances in its nuclear program and allow new inspections for six months in exchange for modest sanctions relief. That would open a window for intense negotiations to address the international community’s concerns and resolve all outstanding issues. Under Secretary of State for Political Affairs Wendy Sherman, an experienced negotiator and the first woman to hold that position, joined the discussions in Oman and helped hammer out the details.
The teams also discussed the possibility of a historic face-to-face meeting between Presidents Obama and Rouhani in New York at the UN General Assembly in late September. At the very last minute, however, the Iranians failed to deliver on the meeting, an indication that divisions and misgivings continued inside the regime. But the two leaders did speak on the phone—as Rouhani’s limousine was driving him to the airport for his flight home. It was the first such conversation since 1979. My successor, Secretary Kerry, met with the new Irani
an Foreign Minister, Javad Zarif, and the administration began briefing key allies about the progress achieved in the secret talks. Israeli Prime Minister Netanyahu warned in a speech to the UN that Rouhani was a “wolf in sheep’s clothing.”
In October, the secret Oman channel began to merge with the official P5+1 process in Geneva that Wendy Sherman had been leading for the United States. Bill and Jake participated, but they took elaborate measures to stay out of sight of the press, including staying at a separate hotel and going in and out of service entrances.
In November, Secretary Kerry flew to Geneva twice in the hopes of pushing the negotiations over the finish line. There were still big concerns to work out: Would Iran stop all enrichment of uranium, or could it be allowed to continue enriching to a level far below what was needed for a bomb? For Rouhani, maintaining even a low level of enrichment provided him important political cover. But the Israelis and others thought that such a concession would set a dangerous precedent. Then there was the question of how much sanctions relief to provide. Again some were against giving any ground unless Iran took irreversible and verifiable steps to dismantle its nuclear program. Bibi scoffed that the P5+1 was preparing to offer Iran the “deal of the century” on a silver platter.
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