President Trump has taken new steps to fulfill his campaign promise to either end the Iran nuclear agreement or get a better deal. After much speculation over whether he would extend the deal at all, the President issued an ultimatum to Congress and European allies indicating that if they don't overhaul the deal in the next 120 days, the United States will have no choice but to pull out of it.

To discuss what these developments, alongside growing protests in Iran over the state of the nation's economic affairs, mean for energy markets and international affairs, host Jason Bordoff sits down with two colleagues at Columbia University's School of International and Public Affairs (SIPA), Gary Sick and Richard Nephew. 

Gary is a senior research scholar at Columbia’s Middle East Institute and an adjunct professor at SIPA. He served on the National Security Council under Presidents Ford, Carter, and Reagan and he was the principal White House aide for Iran during the Iranian Revolution and the hostage crisis. Richard, a senior research scholar at CGEP and adjunct professor at SIPA, served as Principal Deputy Coordinator for Sanctions Policy at the Department of State. He was the lead sanctions expert for the U.S. team negotiating with Iran and also Director for Iran on the National Security Staff where he was responsible for managing a period of intense expansion of U.S. sanctions on Iran.

Jason, Gary, and Richard discuss issues including: What happens next in EU countries and U.S. Congress in response to President Trump's ultimatum; Growing protests in Iran and the future of the Iranian regime; Whether or not there are links between economic sanctions against Iran and growing protests in the country; Implications for energy markets should the Iran Deal fall through.

View the full transcript

[00:00:00]

Jason Bordoff:  Hello and welcome to the Columbia Energy Exchange, I’m Jason Bordoff.  Before we begin today’s episode, I want to invite you, our listeners, to do us a big favor about our podcast. We want to hear directly from you about how we are doing, what energy topics you like and more. What guess have been your favorite, what you’d like to see more off, what you’d like to see less off.  And we are always happy to improve.  We value your feedback.  My co-host Bill Loveless and I read every comment.  The survey is quick and should take five or ten minutes. If you subscribed to our podcast by email, you should have received it or you can easily access it online at the Columbia energy exchange, that’s the center on global energy polices website and then click on the podcast page.  Now on to today’s show.

Iran is very much in the news these days.  Protest broke out recently on the streets over economic conditions and more.  And then most recently on Friday, President Trump took new steps to fulfill his campaign promise to either end the Iran deal as we know it or try to get a better deal through Congress.  He want Congress and European Alleys that if they have not come together to overhaul the deal in the next 120 days, the US would have no choice but to pull out of it.  All these developments raise many questions; they have far reaching implications, not only for geo politics, but certainly for energy markets.  And one of the privileges of being part of the institution like Columbia is that on almost any given subject under the son, you will find the world’s leading experts among my colleges on the faculty and Iran is no different.

So I reached out to Professors Gary Sick and Richard Nephew and asked them to sit down with me at the center on global energy policy to talk about what’s happening in Iran.  Many of you know Gary and Richard’s background.  Gary Sick has been one of the country’s leading experts on Iran for decades since he served on the National Security Council staff during the administration of President Carter, during the Iran hostage crises and help negotiate the release of those hostages.

And Richard Nephew is the fellow here at the energy center, a senior research scholar who is instrumental in designing the sanctions against Iran as well as the deal that lifted them during his service in state department and in the Obama White House where he and I worked together also on the National Security Council Staff. 

Gary and Richard, thanks for joining us today on the Columbia Energy Exchange.

[00:02:17]

Gary Sick:  It’s a pleasure to be here.

[00:02:18]

Richard Nephew:  Thank you.

[00:02:19]

Jason Bordoff:  So, let’s start with the news of the day.  I’m going to turn to you, Richard Nephew, first.  Tell our listeners what President Trump did today, he had promised obviously in the campaign to tear up the Iran Nuclear deal and then recently chose not to certify Iranian compliance with the deal.  What had to happen today?  What announcement did he make? And what does it mean?

[00:02:40]

Richard Nephew:  Yeah.  Well, today, depending on how you look at it, he either took a step towards achieving that campaign promise of dismantling the nuclear agreement or he continued to exercise straight beyond what anyone really had anticipated sort of this tenure.  We were required as of this date to extend some of the wavers for sanction, in particularly those affecting oil purchases for another 120 days under the US law and consistent with the JCP right and to also extend some wavers attached to other parts of the sanctions.  And the President announced that we in fact were doing that.

But at the same time as you said, he also announced that this is the last time in which the wavers are going to be extended until and unless a couple of things happen.  First that the congress has to pass new legislation that would attempt to put more restriction on Iran’s nuclear program long after the restrictions and the JCPOA itself, the nuclear deal itself are set to expire.  And he also said that we are going to need additional support in cooperation from European and other Governments to address Iran’s non-nuclear behavior.  And he said that, unless we get cooperation and addressing Iran’s missile program, terrorism, human rights violations, potentially even through new sanctions from Europe and other countries that he will terminate the agreement.

So, from one perspective, there is a little bit of a stay of execution that there is 120 days more where the JCPOA has live sanctions really if this continue to be utilized and utilizable, but in another way we have 120 days to see whether or not the agreement is going to stem depending on some of these other decisions and polices that have to be acted upon by congress, Europe and other places.

[00:04:24]

Jason Bordoff:  Let’s just make sure I understand and our listeners understand.  Sanctions put in place by congress on Iran and several respects including for energy purposes Iranian oil sales.  And then, that legislation is still there, but beginning with President Obama they had exercised waver authority, so the sanctions were waved.  Now the President has to continue to certify Iran is complying with the deal.  President Trump says they are not.  He is not certifying Iranian compliance, but he continues to extend the waver and has now told people, you got to come up with a better deal in Congress, is that right?

[00:04:58]

Richard Nephew:  Yeah, certainly.  And I think it’s worth noting here that the extension of the wavers was explicitly written into the nuclear agreement.  It was made very clear by Iranian negotiating partners, by the Europeans and others, that the only way this would work, is if the US was prepared to continue on the regular required basis extending the sanctions wavers.  And so, now we essentially have 120 days to see whether or not some of these other stuffs, these other negotiations that need to take palace bare any fruit and if they do then we’ve got the possibility, at least according to the statement and the President’s words today, we have an opportunity for the agreement to stand and to stand for at least some additional period of time.  If not he is double down on the commitment that he made back in October that he is prepared to walk away from the agreement.

And throughout his statement, he tried to emphasize the degree to which she is not bluffing. He maybe bluffing, we don’t know actually he know that and some of the language and the statement you can read neither a positive or negative way depending on how you look at it, but I think it’s certainly true that we are in a period of heightened tension, heightened riskier and I think that what Europe, what the Congress, and certainly what Iran does is going to determine what the future lays in stored.

[00:06:11]

Jason Bordoff:  So, the ball is in Congress’ court now? They have 120 days to come up with legislation that would address the requirements the President set forth, is that right?

[00:06:20]

Richard Nephew:  That’s right.  But it’s not even just congress.  I mean, before, back in October, the demand that was made was, congress come up with legislation to help fix this thing.  If you read the statement at Face Value, that’s no longer sufficient.  It’s not just that congress has to pass legislation, it’s also that the European and other governments need to join the US Pressure campaign dealing with terrorism, dealing with missiles, and dealing human rights.  And, unless they do that, again, according to the statement that we have here, the President is indicating the willingness to walk away from the nuclear agreement.

And so, from that perspective, there is a little broadening I think that’s happened in the demand that came out today.  On the other hand though, we don’t know how deep those demands are and we don’t know whether or not face-saving language adopted by Congress, statements of polices, resolutions and findings from congress is going to be sufficient to address some of the those concerns.

[00:07:15]

Jason Bordoff:  So, that seems like a tall order, a lot to ask for in 120 days and I just want to ask you what you expect, this is how we set ourselves up, so we’re kind of headed toward the end of the Iran agreement.  And then the same question for you Gary and then let’s talk a little bit about what this means in the broader context of what’s happening in Iran right now?

[00:07:31]

Richard Nephew:  Yeah.  I’ll say, I mean, I’ve been convinced for quite some time that the agreement was on thin ice when Donald Trump became President.  He campaign so hard against it, the republican and political establishment was largely against it and there were lot of constrains that were raised by certain of US partners, but certainly not all of them with the content of the agreement, the fact that they had to deal with regional issues.

I take today’s statement as a further indication of overall intent.  And a lot of the demands that are laid out here, I think they’re going to be impossible to satisfied.  I find it very hard to see Europe coming together and adopting and sanctions by consensus, which of course will still be required, that would satisfy some of the requirements that are being made here.  On the other hand, it’s possible that the President is just simply looking for something.  And if he did get something, and something that satisfies some of the conditions that were laid out in the barest way that might also will be sufficient.  And I think this is one where over the course of the next probably 120 days, what we’ll learn more about exactly how far he expects congress, Europe and other places to go.

[00:08:43]

Jason Bordoff:  Gary, your take on the announcement today and do you agree with Richard’s pessimism that were kind of headed toward the end of the Iran agreement?

[00:08:49]

Gary Sick:  I think, I’m a little less pessimistic that Richard is.  I have been before.  In this particular case, you got to remember that 90 days ago, the President made a statement saying in effect, if you the congress don’t in fact do something to take care of this issue and to fix the deal, then it will be terminated.  And he made that very clear and he said we would need the cooperation of the Europeans as well.  And in this statement, this is 90 days later, he says, congress, if you don’t act on this and if you Europe don’t act on it, it will be terminated.  Well, he said that before.  He got absolutely nothing before.  There were ideas being passed around in the congress that said, the ideas about how they might fix the agreement, they went nowhere.  They don’t have 60 votes to pass legislation that would do that.  So I don’t see the congress coming through.  The Europeans didn’t blink on this whole thing.  They basically kept telling the president that the situation that the agreement was working, that it should be maintained, that it would be a disaster if he walked away from it.  So after one threat, and in a way, there is a little bit of Kabuki Theater here going on that you hear all of this sound around, lots of noise, threats and nothing happens. 

Now that doesn’t mean that as Richard says, 120 days, he won’t say, okay, I gave you two chances and now I’m going to just walk away from it.  The reality is, that it cost him a lot, not just in terms of his campaign promises, but in terms of US national interest, the cost would be enormous because we would be seen as unilaterally walking away from an agreement that is working, the Iranians are fully in compliance, you can argue that we are less in compliance than the Iranians are and if you wonder where that’s going to go, it puts us odds with all of our alleys, our very best alleys and some of our not so best alleys in dealing with this whole thing.  So each time he has come up to it, it’s kind of like Charlie Brown in the football, you come up to it and there it is and at the last moment you yank it away.

[00:11:11]

Jason Bordoff:  And we are reading that, many not all many advisors around him, that’s the outcome they want.

[00:11:18]

Gary Sick:  Basically all of the people around him, they have been trying desperately to come up with fix the things that they can do that will keep him from doing this.  Thus far they seem to have succeeded.  You can look at it another way, it may just be a bargaining tactic.  And he is using this as leverage to force people to do something and people know that he is very mercurial, that he can change his mind in a nanosecond.  So he gets up to 120 days and he points to something else and takes off on a different angel of some sort.  It wouldn’t surprise me.  I certainly can’t predict it.  But in effect what we’re going through is, every four months, we have this “crises” in dealing with the issue.  Thus far, three, four times the answer has been the same that we aren’t going to change anything, we are going to actually stay with the agreement.  He might change it and we don’t know that.  But this perpetual show, it’s like a reality TV show that is going on and each one you have to add a little additional interest and some suspense about what’s going to happen.  The suspense is there and it’s real and Richard maybe absolutely correct that we are just headed for that – he kept saying no, over and over again and he is going to have to actually do something at some point.  But I think a little more skeptical about that than Richard is.

[00:12:49]

Jason Bordoff:  And so, Richard, do you think this time is different?

[00:12:53]

Richard Nephew:  I do.  Well, even less than it’s time is different, it’s more off he is getting closer to what he wants.  And I think the fear that I have is, that if you look at a lot of the campaign promises that he made, one of the ironies I think of this President is that he does in fact try and achieve many of his campaign promises even to the ones that a number of people where assuring us during the campaign he didn’t necessarily mean.  And so, look for instance that the current and past with regard to immigration, look at the Paris Agreement, you can see a number of different places where he made commitments about what we were going to do and he’s trying to implement those notwithstanding the fact that it goes against your common sense.  So I think to me my big fear here is that he prioritizes fulfilling the campaign promise and looking tough over something that all of his advisers have been assuring him as a mistake and that there is a better way of trying to address this. 

But you know I think Gary has got it exactly right, you know, this is a reality TV show.  And there is some incentive in keeping that show going.  And so, from that perspective to have the entire thing and in May, it may not be the best way to point it, especially if you could do closer to sweeps where you got the mid-term elections or any number of other different things that could come up.

[00:14:15]

Jason Bordoff:  Gary, quick reaction and then I want to bring in a few other topics.

[00:14:17]

Gary Sick:  Just one final thing and that is by keeping this suspense going and keeping at uncertain.  He is in fact preventing the agreement from working the way it’s supposed to.  The US signed to an agreement which said that we would actually try to promote more contact, more business and so forth and facilitate that, we’re not doing that, we’re doing just the opposite, we’re trying to create doubt and uncertainty on the part of businesses that might actually go in and do something in Iran.  So, in a way, as a strategy, this sort of constant uncertainty is a strategy.

[00:14:53]

Jason Bordoff:  So, and tell me how that plays into what is happening on the ground in Iran today.  There are some who believe and I think maybe the President who believe this is applying pressure that is helping the people of Iran and undermining a leadership with which the US has issues, others who say in fact it’s the opposite that by not living up to the term – by not letting the Iranian see more benefit from this agreement, you are actually emboldening the hardliners, which is it and then let’s talk about what’s happening today in Iran?

[00:15:24]

Gary Sick:  Basically, you can make the case either way.  My fundamental view on this is that the Iranians frankly aren’t paying much attention to what we say.  You had – think you are a young man, 23 years old, and you get out of bed and mashhad in the morning, and you decide whether you are going to go out on the streets and risk your life and in favor of protesting against the regime. You really don’t stop and say I wonder what President Trump would like me to do in this case or what the broader, what this is going to do, what kind of effects does this going to have on the JCPOA?  They are not asking those questions.  And I think we can talk more about what the situation actually looks like on the ground, but frankly I think we give ourselves too much credit in terms of shaping events there.  Our ability actually to shape events, our history of this has not been particularly stellar.

[00:16:23]  

Jason Bordoff:  And so, help our people understand these protest broke out in streets, reports initially were that they were about the economic discontent, what were they about? What more do we know about them today?

[00:16:34]

Gary Sick:  They were about economic discontent.  You had credit unions that were failing left and right because the government wasn’t regulating them properly, there wasn’t enough money to pay the bills and were losing their entire savings that inflation was going up, things were – their income wasn’t keeping up with what they were doing.  You had a huge drought and a long term ecological disaster in Iran where whole villages were being forced to move because the water that they needed for corps and various other things, was they dried up and there simply was no water at all.  So those were the underlying elements that got these people.  What was really unusual about these demonstrations is, they started out in the countryside.  They started in small cities, all over Iran, they didn’t start as most of things do in Iran in other countries.  Revolutions normally began in the metropolitan, in the capital city where there are lots of people and high levels of political involvement, these didn’t and it worked the other way.  They were actually going in demonstrations in smaller towns and that was feeding back into Tyron which never really caught fire.

[00:17:49] 

Jason Bordoff:  Why is that significant, what does that mean?

[00:17:50] 

Gary Sick:  Well, it means, it actually just from an academic point of view, it’s a revolution than reverse, revolutions for all the talk about agricultural appraising and the like.  They really – if you look at the Russian revolution, the Chinese revolution, the Iranian revolution, they didn’t start that way.  They started in the capitals.  The start with elites who are – who have a – they have a particular set of views and they articulate those and that is, that gradually builds up into a revolution.  This was exactly the reverse. In a way that’s more frightening from the point of the leadership of Iran, because they are actually in a situation where they are confronted with the people who supposedly they’ve helped the most.  These are the people out on the country side who always said that the Shia ignored them and that his regime paid no attention to them. And this group came in promising them everything that they were going to pay all of their attention to the underclass.  They have not and this is the measure of fact that is, they failed in that operation and it indicates that there is a deep seated opposition to the government as it exist right now and the way it’s functioning that if they don’t get their act together, it’s not going to be tomorrow or the next day, but there is enough trouble brewing in Iran that there is going to be held to pay at some point.

[00:19:21]

Jason Bordoff:  And they seem to directly challenge the rule of the [crosstalk][00:19:25]

[00:19:26] 

Gary Sick:  They started with – basically this was a leaderless thing.  It was just a protest broke out.  Some people think and it may be true that this was an attempt by the hardliners to embarrass the Reyhaneh [phonetic][00:19:40] administrations.  So they started these things.  But they quickly ran out of control and I think that’s where we added at the present time.  And after they ran out of control, they began saying down with the regime, down with the supreme leader and so forth.

[00:19:55]

Jason Bordoff:  And help people understand where they are now, you mentioned revolution and reverse and things grow to a revolution, those are powerful words, is that where this is happening and where this is headed?

[00:20:04]

Gary Sick:  No, not at the moment.  Basically it’s quite a down dramatically.  The regime is very good at this actually.  The cut off the internet for easy exchange of information back and forth, they arrested well over 3000 people, 21 people have died in the streets, 2 who were arrested and went to jail have so called committed suicide, most people believed that they were tortured to death or something.  So the regime is very heavy handed, it’s very tough, the revolutionary garden go out into the streets and basically confront people and beat them up.

So, at this point, the regime is still very much in charge and that what I’m saying is, for the first time, there I think unequivocally aware of the fact that the discontent with the regime which is always been true in certain elite circles has really spread to a much wider area.  And that’s got to frighten them.

[00:19:55]

Jason Bordoff:  Richard, what’s your sense of the connection between the pressure of economic sanctions and these economic discontents that is causing people to protest now?

[00:20:04]

Richard Nephew:  Well, I think the baseline problems inside Iran or Iran on making, a lot of these issues go back and as Gary said, both to the revolution and before all that.  What we did with sanctions was trying and generate some real pressure on the Iranian government such that they would see the situations unsustainable, that they wouldn’t be able to manage as they had in the past, these tensions that they arose by saying we were going to give you an opportunity, we were going to give you a greater stake in the economy, we were going to deal with the elites and then with sanctions that made it much harder for them to do that.

Of course, part of the whole idea here was in taking the sanctions away as per the JCPOA, we would force the Iranian system to deal with its own internal contradictions while getting ourselves some pretty significant nuclear concessions.  And I and a number of other people back in 2015 said, left on its own, the Iranian system is going to have a real tussle on its hands, where it’s going to have to explain to its population why entrenched elites are still going better than there and it won’t have the ability to blame sanction as a result.

This is why one of my big concerns with this part that we are on at present, if the protest are about economic frustration, and if they are about how the Iranian people are getting the right deal from their government, it seems to be that this is the exact great moment to stay out of it.  And I’ve written at the center a number of times about the stake craft of doing nothing and about avoiding and getting yourself ensnared in some internal debates.  It seems to me that’s exactly where we are going, if we choose to try and reactivate these sanctions in order to try and put pressure on the system to be more appropriate with expecting the rights into address those kinds of problems.

[00:23:03]

Jason Bordoff:  I think you wrote exactly that and the art of sanctions would use us the chance to plug the new book from the Center On Global Energy Policy book series at Columbia University Press.  I want to ask you about some of the – we are an energy podcast – so I want to ask you about some of the energy implications, but you have – so just help play this out Richard.  So you kind of explained what needs to happen next in European countries, in congress, some of the skepticism you have about whether people will be able to meet the president’s requirement and if he does, what he says he will do and does not extent the waver of the sanctions, then 120 days from now it’s a violation of US sanctions to buy a barrel of Iranian oil, well, what happens then, what does that mean?

[00:23:50]

Richard Nephew:  Yeah, so I mean let’s assume that the sanctions are going to come back in place 120 days, which is possible there are also variance in which they only allow the sanctions that the wavers would expire to come back in place and in that case the only sanctions that would be notionally alive as of May would be sanctions about the purchase of Iranian oil.  So the structure of that law is a little bit different than some of the other ones.  Most US sanctions law have almost immediate application, certainly it would require some kind of executive statement of discretion to not have immediate application.  The worse thing with this one is different, it is built around 180 day periods of analysis and data.  So what could happen is, as of May, if the waver isn’t extended, the President could order the state department, the treasury department and the intelligence community to gather data about who is buying Iranian oil.  And then, to present to them a demand for significant reduction of their purchases of oil within the next 180 day period, that’s what the law would notionally require.

Now, back during the Obama Administration, our definition of significant was mostly based on volume, although to some extent we based a little bit on the relative volume of big countries like for instance China.  But we were basically asking for a 20% reduction in purchase by every country that was making any.  And so the demand, if the trump team follows the same pattern could be as of May that they would be looking for every country that is presently buying Iranian oil to reduce their purchases by 20% within 180 days.  So essentially by November of 2018 that they’d have to be down 20% or potentially face sanctions.  But there is a wide range of areas of discretion here where the president could decide to start that period until 180 days from the initial data gathering, there is a number of different ways in which it could basically be played out.

So from an energy market perspective, I think, what we’ll be seeing is, pretty quick decisions having being made by purchase of Iranian oil about how much they want to buy, what their future purchasing behavior is going to look like or of course whether or not they decide that they are willing to risk the US imposing sanctions against them and against their banks.

[00:26:25]

Jason Bordoff:  And is that what, I mean, you mentioned this is the process, the Obama Administration went through, you and I were part of that.  The difference was, there was a coalition of countries that were applying sanctions collectively and delivering that message to purchase of Iranian oil collectively.  I think that would not be the case here, the US would probably be doing this on its own.  What do you think that means for how people would respond to that demand and what would the implications be the US following through with sanctions unilaterally?

[00:26:57]

Richard Nephew:  Yeah.  This is one of my biggest concerns.   I mean, we had a big help up back in 2012, because the EU decided to cancel its purchases altogether, that was 700,000 barrels per day that disappeared off of Iran sale sheet.  And we had a similar forth rate cooperation, not similar numbers coming from our partners and alleys around the world and even countries that were very skeptical of sanctions like Turkey and China were still able to make a significant reduction.

My biggest fear about our review sanction strategy beyond the nuclear restart and all the concerns that come along with that is that, that partnership simply would not be there. There is an agreement about why we would be doing this.  There is an agreement about whether or not it’s necessary.  And so, from that perspective, I think countries will make a decision based upon what their national interests are.  Some may go along with us.  I would imagine that countries like Japan and South Korea for example are concerned enough about the North Korea situation that they wouldn’t want to have any kind of division with the United States at this particular point in time.  I would imagine that China, India, Turkey countries that were harder to persuade in the first place would be far more reluctant to join the reduction campaign.

And then in Europe, I anticipate that we’d have about half in, half out, with some purchasers prepare towards US sanctions because they are convinced that it’s in their economic interest to buy Iranian oil, because their governments tell them that it’s okay and then others would go along with thus.  But either way, that doesn’t had to the kind of sweeping wholesale reduction in Iranian oil sales that in my view would be necessary if there is a small chance and I don’t think there is much, but even a small chance of actually getting the Iranian to agree to make any kind of additional concessions on the nuclear agreement.

[00:28:51]

Jason Bordoff:  So, we obviously have markets tightening, prices have risen to $70 so the impact of pulling another million and half barrels of Iranian oil off the market has happened several years ago would be significant.  It sounds like you think the impact would be far, far more muted than that, you agree with that Gary?

[00:29:08]

Gary Sick:  Yeah, I think, what we would have is chaos truly in the market and I’m not sure how that would play out, but I just noticed that in the last week there have been about a dozen bills circulated on congress talking about different sanctions, about different ways of doing it, about who would be targeted and so forth.  And I think if you got to the end of this first 120 days, didn’t look like that was going to happen again that would have a flurry of these plush you would have the whole international community coming up with it on views and so forth.  And it seems to me it would be completely out of anybody’s control.  But I think Richard is absolutely correct, some people would go along even if there was no legislation or anything else. But I think a lot of people would have second taught about it.  And a lot of that decision will depend on what trump does between now and then and he is not winning very many friends in Europe and elsewhere. So, he is not building up the basis the grand coalition that can actually put anything together.

[00:30:15]

Jason Bordoff:  But, presumably Richard even if that’s right, there is part of the purpose of the deal was to allow investment into the Iranian economy, into the energy sector, companies like Total have made significant investment deals there this one of implications for them, they would technically be violating US sanctions and then I presume we would have a chilling effect on anyone thinking of investing there, is that right?

[00:30:42]

Richard Nephew:   Yeah, it’s absolutely right and I think this is again part of the problem of where we are now is, this chilling effect could potentially cause the Iranians to withdraw from the nuclear agreement on their own.  And so, we’re now in a much more unsettle sort of situation, but let’s say, for instance, that we go forward the next several months there is a chilling effect, there is no new business but the business that’s there stands.  Well, then a lot of companies like, for instance, Total are going to have to make some pretty important decisions.  Do they abandon a billion dollar investment inside Iran?  Do they invest their investment in side the United States?  Do they de-risk by separating up their investments such that Iran still gets the benefits but we don’t have the ability to apply the kinds of sanctions that would potentially pressure Total to back away.

So, from that perspective, by presenting these choices to countries that are unwilling to go along and follow our lead and cooperate with us on a strategy, we are making a very big bet here that we are going to have the kind of far reaching and intense cooperation that we had in the past.  And if not we really do run the risk of our bet being called and then what happens, will this president be prepared to tell Total, we are going to sanction you, meaning all those investments that they have throughout the country are now at risk.  Well, that’s not simply money to Total, but jobs to Americans.  And I think that this is one of the big risk of an overuse of sanction strategy and over confidence in that strategy is that it leads you down the path where it’s not just you or it’s putting others into advice and making to make tough decisions, but potentially they’ve been in their position and do the same thing right back at you.

[00:32:20]

Jason Bordoff:  We only have a few minutes left, but Gary Sick, let me ask you, you explained a little bit about what’s happening and what more we know today than a week ago about the protest in Iran, how do we know that?  How good is our understanding of what’s actually happened there and where is that information coming from?

[00:32:38]

Gary Sick:  For the most part it’s coming on social media.  The Iranians are tech savvy and they have managed to continue to get social media out even though the Iranian government has clamped down on a number of favorite sources, they have managed to work around that, they use VPNs to hook up to things outside and a lot of people are arguing and I certainly would share their view that one of the great things that United States could do is simply provide satellite capability for social media in Iran to let people be able to do that regard as to whether the government wants them too or not, it would be a huge thing. It will be costly, but it would be a very big deal.

So, we – it’s not that we have people on the ground everywhere and neither does the CIA or the US government I think they were taken by surprise by this as well.  And they might have some people in Tyrone, they are really very unlucky to have people in little villages out in the boondocks, so basically in social media that’s where we are getting information, it’s rough, there have actually been several, rather significant polls done that are quite respectable.  They’ve been not only just telephone, but face-to-face in Iran that have been talking about the what were these things came from and why.

So I think we are going to know more about it as time goes on that you shouldn’t necessarily trust all the numbers that you are seeing in the news paper, but I think they are generally right, they may not be precise, but I think we are getting descent information out.  And it’s one of the interesting things about the Iran is that, it’s a much more open society than most people believe.  And people will actually talk, they go out in the streets and for a century more, they have been protesting.  This is an example.

[00:34:27]

Jason Bordoff:  Does our intelligence community have much better information than an expert like you have from social media?

[00:32:32]

Gary Sick:  No.

[00:34:33]

Jason Bordoff:  No.

[00:32:33]

Gary Sick:  I think they have basically with a few exceptions the same information that I have for the most part.

[00:34:40]

Jason Bordoff:  Richard, you agree with that?

[00:34:40]

Richard Nephew:   Yeah, absolutely I do. I pretty much agree with that.  And I think that this is again one of my big concerns is that we tend to be a little over confident in what our knowledge is and what will happen if we do one thing to another.  I think one of the ironies of everything is actually that a lot of opponents of the JCPOA were consistent is saying, you know, don’t try and influence things from far, because you don’t really understand what all those going on, on the ground.  It seems to me that is the exact same sort of trap that were followed into now with this kind of strategy.

[00:35:10]

Jason Bordoff:  Well, it is hard to understand and keep track of everything happening, especially given how quickly things are changing both on the ground in Iran and with policy here in the United States.  As I said, at the outset that’s why it’s such a joy to get to work on faculty like this and have the chance when things are happening to spend time with people like Gary and Richard learn from you about them and share all that with our listeners here on Columbia Energy Exchange.

So I want to thank you for joining us today.  Thanks for our listeners for tuning in.  Again, please do take a moment to give us feedback on the survey and we have up on the podcast section of our website that addressed energypolicy.columbia.edu.  We’ll back next week.  Until then, I’m Jason Bordoff.  Thanks for listening.