Everywhere you look in the Middle East today, Iran is threatening U.S. interests and the political order. One Arab ambassador told me recently that the Iranians are reminding Arab leaders that America didn't help Fuad Siniora, the prime minister of Lebanon, or Mikheil Saakashvili, the president of Georgia, when they got into trouble—that in fact Washington left them high and dry. Iran, by contrast, is close by and not going anywhere. If the Iranians are throwing their weight around now, imagine what will happen if they go nuclear.
It's not too late to stop Iran from getting the bomb. Tehran clearly wants nukes for both defensive and offensive purposes. But it's not clear the Supreme Leader, Ayatollah Ali Khamenei, would sacrifice anything to get nuclear weapons. In fact, history shows that his government responds to outside pressure, restricting its actions when it feels threatened and taking advantage when it judges it can.
In 2003, for example, after the U.S. military made short work of the Iraqi Army—something Iran hadn't managed in eight years of war—Tehran quickly reached out to Washington, sending a proposal through the Swiss ambassador in Tehran that sought to allay U.S. concerns about Iran's weapons program and its support for Hizbullah and Hamas. (Sadegh Kharrazi, the main drafter of the proposal, said last year that fear among the Iranian elite led to the overture.) By contrast, when the U.S. government released a National Intelligence Estimate a year ago concluding that Iran had suspended its weaponization program, President Mahmoud Ahmadinejad quickly crowed that confrontation had worked and the Americans had backed down.
Iran has continued to pursue nuclear weapons because the Bush administration hasn't applied enough pressure—or offered Iran enough rewards for reversing course. The U.N. sanctions adopted in the past three years primarily target Iran's nuclear and missile industries, not the broader economy. Hitting the economy more directly would force the mullahs to make a choice. Iran has profound economic vulnerabilities: it imports 43 percent of its gas. Its oil and natural-gas industries—the government's key source of revenue, which it uses to buy off its population—desperately require new investment and technology. Smart sanctions would force Iran's leaders to see the high costs of not changing their behavior.
The way to achieve such pressure is to focus less on the United Nations and more on getting the Europeans, Japanese, Chinese and Saudis to cooperate. The more Washington shows it's willing to engage Iran directly, the more these other parties, will feel comfortable ratcheting up the pressure. Europeans have also complained that if they reduce their business with Iran, the Chinese will pick up the slack. But having the Chinese onboard will allay that fear.
Sharp sticks, of course, must be balanced by appetizing carrots. We need to offer political, economic and security benefits to Tehran, on the condition that Iran change its behavior not just on nukes but on terrorism as well. Sticks will show Iran what it stands to lose by going nuclear; carrots will show its leaders what they would gain by moderating their behavior. Smart statecraft involves wielding them together. It's needed now to avoid two terrible outcomes: living with a nuclear Iran, or acting militarily to try to prevent it.