Editor's Note: Though the Bush administration finds itself preoccupied with trying to fend off congressional pressure to withdraw U.S. troops from Iraq, the drumbeat for countering Iran is likely to grow louder again soon -- especially with the faceoff between Iran and the United Kingdom over the capture of British naval personnel.

In this guest essay, the Independent Institute's Ivan Eland warns that escalating sanctions against Iran may prove counterproductive:

The conventional wisdom for dealing with Iran is demanding repeatedly that the Iranians end their uranium enrichment program, and slapping on new sanctions.

Although the December 2006 United Nations Security Council sanctions that banned countries from exporting nuclear and missile materials and technology to Iran probably were prudent, widening the sanctions outside the nuclear and missile areas is a mistake.

Broadening the sanctions changes their main purpose from being instrumental to being merely punitive. Although any kind of sanction is prone to evasion, an instrumental embargo which attempts to deny Iran the materials and technology needed to make a nuclear weapon and to deliver long distances via a missile could at least slow Iranian acquisition of such ingredients, or raise the price to do so.

A comprehensive ban on weapons sales, cutting off loans to the Iranian government, and freezing the assets of important Iranian individuals and institutions have little to do with keeping Iran from getting nuclear and missile materials and technology. Thus, widening the measures beyond this narrow purpose turns sanctions into punitive symbolism.

Such punishment seems misplaced when no conclusive proof yet exists that Iran has an illegal nuclear weapons program. Under the Nuclear Non-Proliferation Treaty, Iran has a right to enrich uranium for peaceful purposes. Although there are reasons to suspect that Iran has an illegal nuclear weapons program, it has not been proven.

Unfortunately, permanent members of the U.N. Security Council—their own sizeable nuclear arsenals being their major qualification for membership in the body—seem in the eyes of many nations to be hypocritical for seeking to deny Iran a nuclear capability.

The United States’ credibility was further reduced when it cut a deal to provide nuclear fuel and technology to India, a state with nuclear weapons which has refused to sign the Nuclear Non-Proliferation Treaty. Also, the United States provides billions in assistance to its allies Israel and Pakistan, both nuclear weapons states which have also spurned the treaty.

For these reasons, U.S. leadership in the U.N. Security Council to punish the Iranians for ostensibly legal activities creates a “rally-around-the-flag” effect in Iran. Although not as pronounced as it would be if the United States were to conduct air strikes against Iran, sanctions do allow the Iranian regime to create an external enemy in order to win more support from Iran’s restive, youthful population, which is disaffected with the Iranian government’s austere Islamic rule.

Moreover, any broader measures intended to commercially isolate Iran from the world would be a move toward shutting off the very ideas that could eventually topple the despotic regime. Ideas subversive to the regime’s hold on power accompany Western products and technologies into Iran.

Even many opponents of U.S. military action against Iran approve of broader sanctions as an apparent substitute for war. History shows, however, that sanctions can instead lead to war. Once the punitive road is selected, when sanctions fail—as they often do—to have the desired effect on the target country, pressure for military action can intensify.

Two examples spring immediately to mind. When stringent financial sanctions against the Panamanian regime of Manuel Noriega embarrassingly failed to depose him, President George H.W. Bush then felt overwhelming pressure to oust him militarily—which he did, through an invasion of Panama in 1989.

That same president went to war with Saddam Hussein in 1991, when the most comprehensive and grinding sanctions in world history failed to compel Saddam to withdraw Iraqi troops from Kuwait. Thus, starting down the road of broader punitive sanctions may lead ultimately to war with Iran.

Instead, Iran should be given positive incentives to forgo its nuclear weapons program. If the Iranians forswear their uranium enrichment efforts, the United States should offer to reintegrate Iran into the world, economically and politically, and sign a pact pledging not to attack that nation.

Given that Iran lives in the vicinity of a nuclear Israel, and has other potentially hostile neighbors, even this offer may not make the Iranians willing to give up their nuclear program.

As the United States accepted and deterred a nuclear China in the 1960s, when radical Mao Zedong was at its helm, it may ultimately have to accept and deter, with the world’s most potent nuclear arsenal, a nuclear Iran.

History shows that when countries get nuclear weapons they usually moderate their behavior—for example, China, India, and Pakistan have become more responsible internationally after going nuclear. Like the governments in these other countries, the first aim of the Iranian regime is to survive and stay in power. Threatening a superpower with thousands of warheads would put that important goal at risk.

In sum, a strategy of negotiation with positive incentives, and deterrence if that fails, is superior to broad, punitive sanctions that only make the autocratic Iranian regime stronger.

Ivan Eland is Director of the Center on Peace & Liberty at The Independent Institute and Assistant Editor of The Independent Review. Dr. Eland has been Director of Defense Policy Studies at the Cato Institute, Principal Defense Analyst at the Congressional Budget Office, Evaluator-in-Charge (national security and intelligence) for the U.S. General Accounting Office, and Investigator for the House Foreign Affairs Committee.

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