'Crippling sanctions' on the oil sector wouldn't work. But the US Treasury Department can deal Tehran a significant financial blow using existing laws.
Although the Obama administration has not spelled out the nature of these crippling sanctions, politicians in Washington have floated two bad options: halting Iran's import of gasoline, and embargoing its oil exports.
The US should drop these potential sanctions and instead enforce a bold new campaign to devastate Iran's financial sector – using existing US laws.
To set up an effective gasoline embargo, the US would have to go to the UN Security Council for approval – a lengthy process and by no means certain. Perhaps even more important, a gasoline embargo would help, not hurt, the regime in Tehran.
Here's why: The government of Iran imports a sizable part of its domestic gasoline needs. It sells those imports along with domestically refined gasoline at a heavily subsidized price. This subsidy encourages waste, but it also dramatically reduces government revenues.
The regime hasn't been able to eliminate this subsidy and increase the price of gasoline for fear of a domestic backlash. If the US imposed a successful gasoline embargo, Iran would then be able to decrease domestic consumption, eliminate smuggling, and increase government revenues. Jackpot.
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