On Iran, West looks for a Plan B

Iran may yet end up on the docket of the United Nations Security Council for restarting its nuclear-fuel program. But even if the international community can agree to punish it with economic sanctions, will those actions succeed in stopping Tehran's pursuit of nuclear technology - and possibly a bomb?

Many doubt the current diplomatic efforts will have the desired effect, prompting some officials and analysts to lay out a range of Plan B's for coping with the crisis.

For some experts, the time is ripe to prepare the world economy for living without Iranian oil - by developing pipelines in the oil-rich Gulf region to circumvent Iran- dominated transport routes. With global markets already hinting at the impact that action against Iran could have, some say that countries should take steps now to ease the burden of future moves.

For others, the best course may be to accept that Iran is likely to develop a nuclear weapon eventually - and to prepare the region and the world for "the day after."

"I'm not saying I think a nuclear Iran should happen, but I think it's going to happen, so we have to prepare for that and deal with it," says Leon Hadar, a foreign-policy expert at the Cato Institute in Washington.

Recalling similar doomsday scenarios that greeted China's announcement that it had developed nuclear weapons, and global consternation eight years ago when Pakistan joined the nuclear club, Mr. Hadar says an argument can be made that even "rogue" regimes evolve once they possess the bomb.

"You can argue that [China's] behavior since it acquired nuclear weapons became more responsible," he says. The nuclear standoff between India and Pakistan has played a role in those two longtime enemies avoiding war over Kashmir, Hadar says. He adds that a similar understanding of "mutually assured destruction" might one day have to be developed between Israel and a nuclear Iran.

Of course, the flurry of diplomatic activity set off by Iran's unsealing of equipment at a nuclear enrichment plant last week is still aimed at stopping Iran from developing a bomb - a prospect that President Bush and other leaders say is unacceptable. China and Russia joined the United States and the European Union this week in insisting that Iran suspend its nuclear program. Going further, the Europeans moved for Iran's case to be taken up by a meeting early next month of the International Atomic Energy Agency's board of governors.

The IAEA could refer Iran to the Security Council, which could then impose sanctions against Iran - steps that would further isolate it. But neither China nor Russia is yet on board the sanctions train, with both countries saying other diplomatic efforts must still be given a chance to work.

Another option would be for the IAEA to suspend nuclear cooperation with Iran. Such a move might draw the support of countries like India and Egypt, which have so far frowned on referral to the Security Council. But experts doubt how effective a suspension of IAEA cooperation would be - leading some to suggest that the Nuclear Suppliers Group, a smaller collection of countries with nuclear know-how, should act to restrict transfers to Iran.

One reason for the reluctance of Russia and China to act is both countries' high economic stakes in Iran - primarily the importance of Iran's gas and oil exports. China, for example, imports 17 percent of its oil from Iran.

That is why some experts say the world must deal now with its dependence on Iranian oil. Iran is the world's fourth-largest oil producer.

One idea is to reduce global dependency on oil exports through the Strait of Hormuz - the narrow passage from the Persian Gulf to the Gulf of Oman through which all Iranian oil exports pass.

"Until and unless the US-Allied stakes in the strait's threatened closure can be reduced, Iran will literally think and act as if it has us over a barrel," says Henry Sokolski, executive director of the Nonproliferation Policy Education Center in Washington.

At a cost of about $2 billion, existing pipelines could be refurbished and new pipelines built to take oil from the Saudi Peninsula to non-Gulf ports, Mr. Sokolski says. Today a three-month closure of the strait and a loss of Iranian oil exports would cost the US alone a 4 to 5 percent drop in gross domestic product and cause a 2 percent rise in unemployment. But developing a pipeline alternative for exporting Iraqi and other oil without the strait would reduce the impact to less than 1 percent of GDP, Sokolski says.

And it would be Iran, rather than the global economy, that would suffer from a loss of strait shipping, he adds, with oil making up 80 percent of Iran's exports and oil proceeds paying nearly half of the national budget.

"It's also an indication of what the world is really prepared to do to handle Iran," Sokolski says. "If you're not prepared to do this, you're not going to do very much."

For now, the world is showing it is ready to focus diplomatic efforts on Iran. The sense of urgency about dealing with Iran's nuclear ambitions stems largely from concerns about the governing regime in Tehran. Iranian President Mahmoud Ahmadinejad hasn't helped by advocating Israel's destruction.

But Hadar of Cato wagers that "even the most open-minded Iranian leader" would fall under nationalist pressures to develop a nuclear capability. With that in mind, some experts advocate dialogue with Iran rather than increasing its isolation.

Karl-Theodor zu Guttenberg, a member of the German Bundestag's Foreign Affairs Committee who has met with both the Americans and the Iranians, says the international community should be working toward "smart sanctions" against Iran, even as it tries through diplomacy to persuade Iran to end its nuclear program.

But Mr. Guttenberg, who accompanied German Chancellor Angela Merkel to Washington last week, adds that "only the US has anything to offer that is of real interest to the Iranians."

That view suggests another solution to the crisis, one that would require dramatic Nixon-to-China-type discussions between Washington and Tehran.

Recently John Bolton, the US ambassador to the UN, has called on Iran to follow the example of Libya, which in December 2003 gave up its clandestine nuclear weapons programs in a bid to rejoin the global community of nations. But for many experts, such an outcome with Iran would require almost as big a shift in Washington as in Tehran.