Some critics nevertheless argue that we can force the hands of these countries by imposing powerful secondary sanctions against those that refuse to follow our lead.
But that would be a disaster. The countries whose cooperation we need — including those in the European Union, China, Japan, India and South Korea, as well as the companies and banks that handle their oil purchases and hold foreign reserves — are among the largest economies in the world. If we were to cut them off from the American dollar and our financial system, we would set off extensive financial hemorrhaging, not just in our partner countries but in the United States as well.
Our strong, open economic relations with these countries constitute a foundation of the global economy. Nearly 40 percent of American exports go to the European Union, China, Japan, India and Korea — trade that cannot continue without banking connections.
The major importers of Iranian oil — China, India, Japan, South Korea, Taiwan and Turkey — together account for nearly a fifth of our goods exports and own 47 percent of foreign-held American treasuries. They will not agree to indefinite economic sacrifices in the name of an illusory better deal. We should think very seriously before threatening to cripple the largest banks and companies in these countries.
Consider the Bank of Japan, a key institutional holder of Iran’s foreign reserves. Cutting off Japan from the American banking system through sanctions would mean that we could not honor our sovereign responsibility to service and repay the more than $1 trillion in American treasuries held by Japan’s central bank. And those would be direct consequences of our sanctions, not to mention the economic aftershocks and the inevitable retaliation.