Iran sanctions likely to rise as election issue

Iran's dismissal of the latest international offer was not unexpected. On Saturday, Iranian President Mahmoud Ahmadinejad vowed Iran would not budge "one iota" from its nuclear path – though he did say further negotiations were welcome.

That response prompted a high-level conference call Monday with diplomats from the Security Council countries and Germany. Participants agreed Iran's rebuff left the international community no choice but to tighten the economic and financial screws on Tehran, say US diplomats.

"The pressure on Iran to comply with the demands of the international community and its obligations [the international sanctions] will only grow," Mr. Gallegos said Monday.

Oil prices cushioned sanctions' impact

Talks over another round of sanctions will feed an international debate over whether existing financial and economic pressure on Tehran is having much of an impact. The high price of oil is providing Tehran with something of a cushion, most international economists argue, but they say Iran's leadership would clearly prefer not to see any additional constraints on its trade and international financial options.

Any tension-relieving agreement between Iran and international powers would probably lead to a quick drop in the price of oil – something that is not necessarily in the interest of Tehran – or of Russia, for that matter. Iran is the world's fourth-largest producer of oil – and it has also recently stepped up threats to block the Strait of Hormuz in the Persian Gulf if it were attacked. About 40 percent of the oil traded on the world market travels through that strategic strait.

A US election issue

Not only will the anticipated UN debate over fresh sanctions keep Iran in the US presidential campaign, but experts like Wolfsthal with an eye on the international nuclear calendar note that the UN's nuclear watchdog, the International Atomic Energy Agency (IAEA), is set to review a new report on Iran's nuclear progress in September.

Also, a top UN nuclear watchdog official will go to Iran on Thursday, the agency said, amid tension between Tehran and international powers. An IAEA spokesman could not specify the purpose of the visit by Olli Heinonen, IAEA's deputy director overseeing inspections and long-running UN inquiries into Iran's nuclear program. The semiofficial Iranian news agency ISNA said Mr. Heinonen would be in Iran for three days and that his trip was part of the UN watchdog's monitoring program.

"With all of this coming up in the fall, Iran will be injected into the presidential race no matter what the IAEA finds or how the sanctions debate proceeds," says Wolfsthal.

Until now, the "Iran argument" in the campaign had been over "whether to engage with them or not," Wolfsthal says. That has shifted since the Bush administration sent Undersecretary William Burns to participate in talks with Tehran last month in Geneva. But the IAEA findings and UN discussions on additional sanctions will still feed the campaign debate.

"By opening up to sitting down with Tehran, Bush is in a way putting [Republican presidential candidate John] McCain to the right of the administration," says Wolfsthal. "But if nothing comes of all this, McCain can also argue that the heightened diplomacy didn't really play out."

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