Economics may be the most effective U.S. chip in its relationship with Iran. Iran has bad banking practices – minimal oversight and widespread money laundering. Reputable banks do not want to do business with Iran’s banks, because they do not adhere to international banking standards. Currently, more than 80 international banks will not deal with Iran’s banks. If this initiative grows, it could result in the exclusion of Iran from the international financial system. Another possibility is a U.S. Treasury initiative based on Iran’s failure to adhere to international insurance and transportation standards: exclusion from international finance, insurance, and transportation sectors could result in severe domestic political instability.

Iran depends on imported gasoline – 40 percent of its domestic needs. Although it produces far more crude oil than it needs, Iran purchases virtually all of its imported oil from Swiss, Indian, Dutch, French, and British companies. The U.S. could request that these companies cease selling their gasoline to Iran. These companies could sell their gasoline to other purchasers without loss of profit. These companies could respond to U.S. leverage. For example, the Swiss company is building a large terminal in Florida using state tax incentives; an Indian company recently received a $500 million loan from the U.S. Export-Import Bank.

The U.S. can negotiate with these companies to cease sales of gasoline to Iran based on the premise that they will lose more loan guarantees and profits in the U.S. than would be gained by continuing to do business with Iran. The best support for the "economic squeeze" proposal comes from recent statements made by Iranian economists. They believe that foreign investment is critical, but has not been forthcoming. Current "weak" sanctions against Iran are very costly for them. The reduction of gasoline imports would strangle their economy.

Iran has subsidized its domestic gasoline prices. The major decrease in global oil prices confronts Iran with two options: cut domestic subsidies, or tap into its $80 billion in hard currency reserves, much of which is deposited in banks located outside of Iran.

Professor John Norton Moore is a distinguished international law scholar and Director of the Center for National Security Law at the University of Virginia. He has written a compelling argument in support of civil suits against terror states (Iran) that should become part of a U.S. counter-terrorism strategy and policy. The core principle of Professor Moore’s proposal is that international law supports civil judgments against terror states and enforcement of judgments by democratic states. The 1996 Foreign Sovereignty Immunity Act (FSIA) – not FISA – provides the exclusive basis for suits against foreign nations in U.S. courts. FSIA was substantially strengthened by the recent "Lautenberg Amendment" which enlarges the class of parties who have standing to sue to include members of the U.S. Armed Forces and employees or contractors of the U.S. government.

The U.S. has not applied the ordinary rule of law to seek civil monetary damages against states that sponsor terrorism. Large monetary civil judgments against Iran are another peaceful initiative available to the U.S.

Economic pressure, coupled with domestic political protests, is a compelling rationale for Iran to cease nuclear weapons development, cease its terrorism activity, and cease its political influence in Iraq. The predicate to U.S. discussion with Iran is the "economic squeeze" which provides considerable negotiating leverage.

Looking ahead to the next four years, circumstances may require the U.S. to consider the projection of military force. The contemporary military experience in Iraq provides an opportunity to reflect on causation, political considerations, the Rule of Law, and unforeseen consequences.

Iran has recently announced that it has substantially increased its array of centrifuges bringing it closer to the goal of producing enriched uranium, which is the fissile material needed to make a nuclear weapon. If diplomacy and economic sanctions do not prevent Iran from acquiring its nuclear weapons, the U.S. and Western Democracies must decide whether to use military force to prevent this, with or without color of the rule of law.

The U.S. and Western Democracies pride themselves on their adherence to the Rule of Law. However, armed conflict in the context of international law blurs what constitutes adherence or non-adherence to international law for two reasons:

• The nature and causation of armed conflict has changed. The international law standard for war is derived from early 19th century legal precedent. This was a time when troops assembled on a border over an extended period of time for a cross-border invasion.
• The technology of conflict has changed. Weapons of Mass Destruction (WMDs) can be hidden and the threatened state has little or no time to react. Moreover, in the 19th century context, massing of troops was apparent. By contrast, the contemporary existence of and the likelihood of immediate use of WMDs is hidden, unknown, or speculative.

The doctrine of preemption as an international norm arose from the Caroline case (1837)… "necessity of that self-defense is instant, overwhelming and leaving no choice of means, and no moment of deliberation". There are two considerations for the exercise of self-defense: an imminent threat, which is supported by actionable intelligence.

Political partisanship clouds whether the U.S. invasion of Iraq adhered to the international norm of preemption. The intelligence communities of the U.S. and Western Democracies arrayed what they believed to be actionable intelligence that Iraq possessed WMDs and would use these weapons in the immediate future. Subsequent investigation demonstrated that this intelligence was incorrect.

The doctrine of preemption is in the process of adapting to contemporary threats – WMDs and terrorism. A new international doctrine is emerging – preventive war. The key difference is temporal: what constitutes imminence. If a threatened state believes, based on actionable intelligence, that a state or non-state actor is developing or has developed the capability of using WMDs or exercising acts of terrorism, the threatened state can prevent the threat from being exercised against it by using its own countervailing force as a means of self-defense. The legal issue of imminence – how soon can self-defense force be used – is unsettled.

International law changes at a very slow pace. This creates the conditions for the intersection or collision of law and politics. Political leaders, when contemplating the use of force in self-defense, have a difficult choice to make. They can adhere strictly to the Caroline standard of preemption - wait until the very last moment before they are attacked; they can ignore international law (preemption); or they can adapt to the unsettled principle of preventive war in hope that they are adhering to the Rule of Law or that international law norms will adapt to perceived political reality. •

Richard E. Friedman is Publisher of the National Strategy Forum Review and President of the National Strategy Forum.