The uses and limits of Iran sanctions

Editor's note: David Frum is a contributing editor at Newsweek and The Daily Beast and a CNN contributor. He is the author of seven books, including a new novel, "Patriots."

(CNN) -- Iran's oil output has tumbled to the lowest level in 23 years, the International Energy Agency reported Friday. This is the work of the tightening sanctions around Iran. The effects upon the Iranian economy have been dramatic.

Over the past year, Iran's oil output has dropped by about 1 million barrels a day; Iran's oil revenues have declined by 60% over those same 12 months. This is the cause of the collapse of the Iranian currency. The rial traded at 12,000 to the dollar at the beginning of 2010. Today the rial trades at about 35,000 to the dollar, when it trades at all. Expect things to continue to deteriorate for Iran. This summer, Iran lost its European customers.

The Kirk-Menendez sanctions isolate Iran from the international payments system. Once the world's No. 3 oil exporter, Iran is dropping to the bottom of the top 10.

David Frum

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Iran's next two exports after oil are carpets and pistachio nuts. Iran imports food, machinery and even gasoline, as it cannot refine enough to fuel its own cars. The Iranian economy shrunk in 2011, and inflation now runs at somewhere between 20% and 25%, depending on who is counting. The recent currency collapse -- the rial has lost 30% of its value since the summer -- implies further price surges.

The question now for American policymakers is: What is the United States trying to achieve?

The U.S. has three goals vis-a-vis Iran: minimalist, maximalist and in-between.

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The minimalist goal is to compel Iran to surrender its nuclear ambitions and submit fully to international monitoring.

The in-between goal is more generally to moderate Iran's obnoxious behavior, including state sponsorship of terrorist outrages such as the recent attempt to murder the Saudi ambassador to Washington.

The maximalist goal is to apply enough economic pressure to incite domestic revolution and the fall of the regime.

The maximalist goal should strongly appeal to those who'd like to see a better and more just world. The Iranian regime ranks among the most vicious and dangerous governments today. It abuses its own people, executes homosexuals, oppresses women, bankrolls Hezbollah and supports terrorism. Iran has never respected anybody else's sovereignty -- the regime's first international act was to seize the U.S. embassy and hold 52 Americans hostage -- so it's not well-placed to demand respect for its own sovereignty.

And yet there's a great danger in the maximalist strategy. The Iranian regime has proved itself tough and survivable. It faced down a big wave of strikes in 2003. It suppressed protests against the probably faked election results of 2009. And even now, it is beating back cost-of-living protesters. Sanctions alone seem unlikely to topple the regime, meaning that the maximalist goal will probably require a much more ambitious set of instruments than sanctions alone. A strategy of regime change is a strategy that pulls the U.S. toward open conflict with Iran, and who wants that?

An intermediate strategy of improving Iran's behavior seems more achievable. After all, it's worked before. In the late 1980s and early 1990s, Iran went on a terrorist rampage. It attacked civilians all over the world, from Berlin to Buenos Aires. In 1996, an Iranian-backed terror group blew up the Khobar Towers complex near Dhahran, Saudi Arabia, killing 19 U.S. service personnel and wounding almost 300 people of many nationalities. The Clinton administration threatened Iran with military retaliation, a threat that seemed to jolt the Iranians. Over the next half-dozen years, Iran lowered its pace of terrorist activities.

The problem with setting "behavior improvement" as the quid pro quo for the ending of sanctions is that it's very hard to define what level of improvement we seek. Iran is a chronic bad actor. Its bad actions are embedded in the very DNA of the regime. Unfortunately, Iran can almost continue to be a bad actor longer than the U.S. can sustain today's tight global sanctions regime against Iran.

The experience with Iraq in the 1990s should be a warning example: The sanctions imposed in 1991 got looser and looser and looser over the decade they remained in place. Demanding a quid pro quo we can't define, and can't probably obtain, in exchange for relaxing sanctions invites an outcome in which by asking for more, we actually obtain less.

The appeal of the minimalist approach is that it demands from the Iranian regime a concession to which it can say yes. The regime can surrender its nuclear program and still survive.

Indeed, there may be elements of the regime that would be happy to drop an expensive and less than brilliantly successful program in exchange for economic improvements that might raise the regime's popularity at home: "less nukes, more chicken." By eliminating the nuclear risk, we for our part downgrade Iran from major global threat to midlevel regional nuisance. We won't like such an Iran, but we can live with it.

It's now a little more than a decade since President George W. Bush delivered his famous "axis of evil" speech. In that speech, Bush did not promise to render the countries mentioned any less evil. He promised to prevent them from acquiring arms with which to trouble the peace of the world. He was right.

The United States has many means for punishing state sponsorship of terrorism and protesting violations of human rights. The fierce sanctions now in place, however, were imposed to halt the accelerating Iranian nuclear program. If that program ends, so should the tough new sanctions.

Our goal is not regime change, or even regime reform -- those goals are for the Iranian people to accomplish themselves, in their own way, on their own time.

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The opinions expressed in this commentary are solely those of David Frum.