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Et Tu, Karzai? Afghanistan Violates US Iran Sanctions

Posted By Nick Schwellenbach On January 30, 2013 @ 9:13 pm In War & Peace | 13 Comments

IRAN OIL

It would have been really interesting if reporters had known about a wee glitch in the US-Afghanistan relationship—and had asked Afghan president Hamid Karzai [1] or President Obama about it during Karzai’s January visit to Washington. The answers might have compelled an intriguing and candid assessment of the long-term interests at play in both Afghanistan and the Middle East at large.

But in all probability, nobody even noticed the reference, buried as it was in a US watchdog’s report to Congress in October. What it revealed was this: The Afghan government, and possibly its NATO patrons, are breaking US sanctions on Iran.That watchdog, the Special Inspector General for Afghanistan Reconstruction (SIGAR), has just released a follow-up report [2].

Does it matter that a country the US is militarily occupying is doing business with a country the US government is trying to isolate? You bet it does!

US vs. US

In July of last year, President Obama issued an executive order applying sanctions to entities that buy virtually any petroleum products from the Iranians. The order expanded upon previously existing sanctions whose stated goal was to end Tehran’s nuclear program by cutting off Iran’s oil revenue as a funding source.

Unless countries that violate these sanctions receive a waiver, their financial institutions can be barred from accessing the US financial system. And that’s where a bland little mention in that obscure October report [3] from the Special Inspector General for Afghanistan Reconstruction comes in. As it notes, “No Afghan entities have yet been sanctioned, even though Afghanistan currently imports between 33% and 50% of its fuel from Iran.”

Notice that the US has taken no action against its ally. When queried by WhoWhatWhy, a SIGAR spokesman offered the familiar disclaimer that it is “currently looking into this issue.” At the end of January, SIGAR issued a new report, which concluded that there are “concerns that US funds could have been used to pay for imports of fuel potentially in violation of US economic sanctions against Iran.”

To be sure, the Obama administration is in a nearly impossible position—with two major American foreign policy goals in apparent collision. Washington’s attempts to economically isolate and cripple Iran are at odds with another US aim, as part of its counterinsurgency strategy, to bolster Afghanistan’s economy. Despite Afghanistan’s extensive deposits of valuable natural resources, four decades of constant war have kept its (legal) economy underdeveloped. The only “bright” spot: Afghan opium production and exports continue to break records [4], and remain the most reliable source of income for the nation. Not exactly something to cheer about in Congress. So, anything that puts additional pressure on the Afghan bottom line is going to be poorly received at the Pentagon, CIA, State Department, and the like.

A State Department spokeswoman wouldn’t comment beyond general remarks on the sanctions policy—and to confirm that Afghanistan has not been issued a waiver. Yet State’s viewpoint might well be summarized by another passage in the October SIGAR report that says the Department “continues to encourage the Afghan government to reduce fuel imports from Iran, but recognizes Afghanistan’s difficulty in securing sufficient energy supply to meet demand. Afghanistan has few reliable and predictable non-Iranian import options.”

The Politics of Gas Lines

The Embassy of Afghanistan in Washington declined to comment at all on the SIGAR report during Karzai’s recent visit to Washington–and did not respond to a follow-up request after Karzai left.

But we know what the Afghans want. Last spring, Anwar-Ul-Haq Ahady, the Afghan minister of commerce and industries, told reporters in a briefing in Washington that Afghanistan should be given leeway [5] on sanctions meant to choke off exports of Iranian oil and fuel.

If Iranian oil stops flowing, fuel prices in Afghanistan would no doubt rise sharply. This would exacerbate popular discontent and probably increase unemployment. These are the kinds of outcomes the US hopes to foment in Iran—but decidedly not in its client, Afghanistan. If Washington hopes to get American troops out of Afghanistan and keep them out, it may have to look the other way when that country pursues its own interests vis-a-vis Iran.

Thus, one policy objective—stabilizing Afghanistan—runs directly counter to another–destabilizing Iran.

Well, geo-strategists, nobody ever promised you a rose garden.

***

“US officials are sensitive about how much Afghanistan is dependent on Iran economically,” Alireza Nader, a senior international policy analyst at the RAND Corporation, told WhoWhatWhy.

Over the course of history, geographical proximity has ensured a great deal of cross-border traffic, particularly between Iran and Afghanistan’s Shia ethnic minorities. As the US discovered in Iraq when it toppled Saddam Hussein, overthrowing competing regional power players tends to drastically expand Iran’s regional influence. The same thing happened when the Taliban were ousted, with the pro-Iranian Northern Alliance coming to dominate the new government in Kabul.

The Enemy of My Enemy Is My…Enemy?

Surely, policy-makers knew what they were gaining—and losing—when they chose to invade Afghanistan. They must have known that the Taliban and the Iranian government traditionally despised each other on theological grounds. Indeed, in 2001, the Taliban government seized the Northern Afghan city of Mazar-i-Sharif and executed a number of Iranian diplomats, almost instigating a war. The Northern Alliance—a loose gang of non-Pashtun ethnic warlords who controlled the north of Afghanistan during the 1990’s reign of the Taliban—received substantial assistance from Iran.

Whatever one thinks of the merits of the invasion, the West’s intervention in Afghanistan toppled a government that was decidedly anti-Iranian, and the war inadvertently gave Tehran a stronger regional hand by installing a much more sympathetic regime in Kabul. Much like the blunder in Iraq, the results of removing checks on Iranian power are now becoming apparent. With few other cost-effective and logistically feasible options, it should come as no surprise that Afghans are heavily reliant on Iranian petroleum.

A further complication—which opens the US to charges of hypocrisy as it seeks to strong-arm other nations into isolating Iran—is the ultimate source of the funds Afghans are using for their purchases from Iran. The US has been supercharging Afghanistan’s economy with large infusions of reconstruction cash and contracts related to the US military’s presence. There’s a high probability that American bucks are footing the bill, at least indirectly, for Iranian fuel. And since the military and its contractors run on oil, it’s possible that some of the Iranian oil bought by US dollars is going to fuel US military operations or that of its proxy security forces in Afghanistan. Surely the irony of that situation is not lost on everyone, though the Pentagon did not respond to WhoWhatWhy’s requests for comment.

The Iranians themselves are aware of this possibility. At the end of 2010, Iran halted fuel shipments into Afghanistan; the reason, according [6] to Faridullah Sherzai, head of the Afghan Commerce Ministry’s fuel department: “The national security team of the Iranian government has decided that Coalition and NATO forces are using this fuel for their own use.” The US government denied the charge, and after the Afghan government protested, Iran resumed fuel exports to its neighbor. That’s piling irony on irony—the US indirectly having to prove to Iran that no, it was not using “illegal” Iranian oil to fund its inherently anti-Iran operations.

The Geography of Gas Supply

A quick glance at the natural supply routes in the region suggests why it’s likely that US funds have been used to purchase Iranian fuel. Petroleum products for US occupation forces enter Afghanistan along three main routes: from the south through Pakistan; from Central Asian countries in the north through Uzbekistan; and from Iran [7] in the west.

In November 2011, the southern route was shut down after US attack helicopters, fighter jets and a gunship killed as many as 24 Pakistani soldiers and wounded others along the unsettled border between Pakistan and Afghanistan. NATO oil shipments through Pakistan are often targets of sabotage raids—the rate of which increased substantially after ties between Washington and Islamabad soured following the 2011 killings.

The closure of the southern route forced the US military to increasingly rely on more expensive fuel and other supplies trucked in from the north or purchased on the local Afghan market – likely brought in from Iran. These purchases prompted local anger because the American intrusion into the domestic market was blamed for driving up fuel prices and making life more expensive and difficult for most Afghanis.

A month after the 2011 airstrike, Iran and Afghanistan inked an agreement, whereby Iran would supply [8] one million tons of gasoil, gasoline and jet fuel to its neighbor. This deal solidified and expanded the economic relations between the countries just as the US government ratcheted up its global-sanctions effort to starve Iran of petrochemical-derived revenue. Today, according to some estimates [5], trade between Iran and Afghanistan tops $1 billion, the bulk of it in oil and fuel from Iran.

Since the northern route into Afghanistan via Uzbekistan could supply only 85 percent of the US military’s fuel needs, NATO made a separate, $1 billion deal [9] with 20 Afghan companies – many owned by relatives of Afghan government officials – to provide the remainder.

In July 2012, after Secretary of State Hillary Clinton apologized for the 2011 airstrike, the Pakistanis reopened the southern supply route. The day before this step was formalized [10], Obama signed [11] a presidential order expanding the existing sanctions to include virtually any petrochemical product from Iran, not just crude oil.

The US military in Afghanistan pays not only for its own fuel but also for that of the Afghan National Army (ANA) and other proxy security forces – another possible avenue for US dollars to end up buying Iranian fuel. From fiscal years 2007 through 2012, the Afghan National Army spent [12] $1.1 billion on petroleum, oil and lubricants with funds provided by the US and its NATO allies. It is estimated that the ANA will spend $466 million for those same products in 2013 and $555 million in 2014 – and this does not include the cost of jet fuel and kerosene.

US and NATO military forces between 2007 and late 2012 “did not require vendors to provide information on the sources of fuel or certify that their fuel purchases complied with US sanctions prohibiting transactions with Iran,” according to the new SIGAR report. In late 2012, vendors were required to certify the fuel they provided did not come from Iran. As of November, the report notes, “it still may be a possibility that fuel purchases could include Iranian fuel, given the multiple sources involved in the fuel acquisition process for operations in Afghanistan.” Ultimately, the Defense Department is unable to determine whether any of the $1.1 billion spent on the Afghan National Army was used to violate US sanctions.

This would not be the first time that US logistics required some form of dependence upon official US enemies. In 2010, a Congressional report highlighted [13] the use of bribes for local “protection” along dangerous NATO supply routes, and noted that money is often funneled directly to the very Afghan insurgents who would be attacking those convoys.

Do As We Say, Not as We Do

As Afghans have ramped up their purchases of Iranian fuel, the US has strained to prevent other countries from similar trading activities with Iran.

But how can Washington credibly twist the arms of other nations in the region, such as India, to cut off the flow of fuel from Iran, while it winks at the regular shipments to Afghanistan? The threat of being excluded from the US financial system is a big stick, but Washington isn’t asking nations to quit Iranian petroleum cold turkey. In December 2012, Secretary of State Clinton announced [14] that 20 countries had received [15] waivers from US sanctions because they had made progress in reducing crude oil shipments from Iran.

Notably absent: Afghanistan.

Some in Congress were furious at the issuance of any waivers. In a rare bashing of the energy sector by a Republican, Representative Ileana Ros-Lehtinen of Florida chairwoman of the House Foreign Affairs Committee and well-known Iran hawk, stated in a release [16], “Instead of tightening our sanctions dramatically, the Administration continues to let transgressions slide and enable the profits of [Iran’s] energy sector to fuel their nuclear ambitions.”

Ros-Lehtinen made no mention of Afghanistan’s waiver-less violation of the sanctions, and her spokeswoman did not respond to a request for comment.

It’s probably futile to expect a country that gets half its fuel from Iran—and shares a long border with that country—to shut down a mutually rewarding trade. But what if it’s true that the US military runs, at least in part, on Iranian fuel? It’s unlikely the US petroleum sanctions regime against Iran, which began in the mid-1990s under President Clinton, was designed with such a scenario in mind. Still the optics of this scenario could prove embarrassing to the US and complicate Washington’s efforts to further isolate Iran.

Of course, such contradictions, particularly in foreign and intelligence work, will hardly surprise informed news consumers. As just one example: in the 1980’s the Reagan administration deliberately violated US weapons sanctions against Iran so it could covertly fund its terrorist war against the government of Nicaragua.

Given the impending withdrawal of most US forces from Afghanistan in 2014, Washington no doubt wants to avoid doing anything to undermine the stability of its client government in Kabul. But as American foreign policy pivots to East Asia and the American public loses interest in Afghanistan, our collaborators in Kabul must be asking themselves, “How long until we’re trivial enough to throw under the bus?”

In cooperating with their Iranian neighbors and risking the ire of Washington, the Karzai coterie may be simply hedging their bets. After all, Washington may have the greatest military force in the history of the world, but unlike the US Army, Iran will always be right next door.

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URL to article: http://whowhatwhy.com/2013/01/30/e-tu-karzai-afghanistan-violates-us-iran-sanctions/

URLs in this post:

[1] Hamid Karzai: http://blogs.wsj.com/washwire/2013/01/11/transcript-obama-karzai-press-conference/

[2] a follow-up report: http://www.sigar.mil/pdf/alerts/2013-01-30-alert-sp-13-2.pdf

[3] report: http://www.sigar.mil/pdf/quarterlyreports/2012-10-30qr.pdf

[4] continue to break records: http://www.pbs.org/wgbh/pages/frontline/afghanistan-pakistan/opium-brides/afghanistans-opium-production-on-the-rise/

[5] leeway: http://www.bloomberg.com/news/2012-04-03/afghanistan-needs-leeway-on-iran-sanctions-minister-says.html

[6] according: http://www.nytimes.com/2011/01/10/world/asia/10afghan.html?pagewanted=all&_r=0

[7] Iran: http://www.huffingtonpost.com/huff-wires/20090202/as-afghan-nato/

[8] supply: http://tribune.com.pk/story/312665/iran-inks-oil-products-deal-with-afghanistan/

[9] deal: http://iwpr.net/report-news/nato-purchases-leave-afghans-short-fuel

[10] formalized: http://www.washingtonpost.com/world/asia_pacific/us-pakistan-sign-deal-to-allow-supply-routes-through-2015/2012/07/31/gJQA4xeSMX_story.html

[11] signed: http://www.fas.org/sgp/crs/mideast/RS20871.pdf

[12] spent: http://www.sigar.mil/pdf/audits/2012-09-10audit-12-14508.pdf

[13] highlighted: http://abcnews.go.com/WN/Afghanistan/united-states-military-funding-taliban-afghanistan/story?id=10980527

[14] announced: http://www.state.gov/secretary/rm/2012/12/201683.htm?goMobile=0

[15] received: http://www.state.gov/r/pa/prs/ps/2012/03/186122.htm

[16] release: http://webcache.googleusercontent.com/search?q=cache:puoa57wQJsQJ:foreignaffairs.house.gov/news/story/%3F2640+&cd=1&hl=en&ct=clnk&gl=us&client=safari

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