The United Arab Emirates (UAE): Issues for U.S. Policy

Kenneth Katzman
Specialist in Middle Eastern Affairs

The UAE’s relatively open borders and economy have won praise from advocates of expanded freedoms in the Middle East while producing financial excesses, social ills such as human trafficking, as well as opportunity for both illicit and legitimate Iranian businesses to operate there. Moreover, the social and economic freedoms have not translated into significant political opening; the UAE government remains under the control of a small circle of leaders, even as it allows informal citizen participation and traditional consensus-building. Members of the elite (the ruling families of the seven emirates and clans allied with them) also routinely obtain favored treatment in court cases and lucrative business opportunities. However, economic wealth— coupled with some government moves against political activists—have enabled the UAE to avoid wide-scale popular unrest that have erupted elsewhere in the Middle East since early 2011.

Political reform has been limited, both before and since the Arab uprisings began in the region. Lacking popular pressure for elections, the UAE long refrained from following other Gulf states’ institution of electoral processes. It altered that position in December 2006 when it instituted a selection process for half the membership of its consultative body, the Federal National Council (FNC). Possibly to try to ward off the unrest sweeping the region, the government significantly expanded the electorate for the September 24, 2011, FNC election process. However, turnout was only about 25%, suggesting that the clamor for democracy in UAE remains limited or that the citizenry perceived the election as unlikely to produce change. And, the government has not announced a major expansion of the FNC’s powers, which many intellectuals and activists seek.

On foreign policy issues, the UAE—along with fellow Gulf state Qatar—has become increasingly and uncharacteristically assertive in recent years. This assertiveness is probably a product of the UAE’s ample financial resources and its drive to promote regional stability. The UAE has joined the United States and U.S. allies in backing and then implementing most international sanctions against Iran, causing friction with its powerful northern neighbor. It has deployed troops to Afghanistan since 2003. In 2011, it sent police to help the beleaguered government of fellow Gulf Cooperation Council (GCC) state Bahrain, supported operations against Muammar Qadhafi of Libya, joined a successful GCC diplomatic effort to broker a political solution to the unrest in Yemen, backed the Arab League suspension of Syria, and appointed an Ambassador to NATO. It gives large amounts of international humanitarian and development aid, for example for relief efforts in Somalia. The UAE’s growing assertiveness on foreign policy marks its emergence from the 2008-2010 global financial crisis and recession. That downturn hit Dubai emirate particularly hard and called into question its strategy of rapid, investment-fueled development, especially of luxury projects.

For the Obama Administration and many in Congress, there were early concerns about the UAE oversight and management of a complex and technically advanced initiative such as a nuclear power program. This was underscored by dissatisfaction among some Members of Congress with a U.S.-UAE civilian nuclear cooperation agreement. The agreement was signed on May 21, 2009, submitted to Congress that day, and entered into force on December 17, 2009. However, concerns about potential leakage of U.S. and other advanced technologies through the UAE to Iran, in particular, have been largely alleviated by the UAE’s development of strict controls, capable management, and cooperation with international oversight of its nuclear program.


Date of Report: July 17, 2012
Number of Pages: 27
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Iran Sanctions

Kenneth Katzman
Specialist in Middle Eastern Affairs

The current principal objective of international sanctions—to compel Iran to verifiably demonstrate that its nuclear program is for purely peaceful uses—may be on its way to achievement but has not been accomplished to date. The international coalition that is imposing progressively strict economic sanctions on Iran has broadened and deepened, producing significant effects on Iran’s economy. U.S. officials believe that these sanctions—which are now harming Iran’s oil export lifeline—caused Iran to return to the nuclear bargaining table in 2012 with greater apparent intent toward resolution. Many judge that Iran needs an easing of sanctions because the energy sector provides nearly 70% of Iran’s government revenues. Iran’s worsening economic situation is caused by:

• A decision by the European Union on January 23, 2012, to wind down purchases of Iranian crude oil by July 1, 2012. EU countries buy about 20% of Iran’s oil exports. This embargo is coupled with decisions by several other Iranian oil customers to substantially reduce purchases of Iranian oil in order to comply with a provision of the FY2012 National Defense Authorization Act (P.L. 112-81, signed December 31, 2011). 
• Together, these sanctions have reduced Iranian oil exports to about 1.2 million to 1.8 million barrels per day, down from an average of 2.5 million barrels per day for all of 2011, according to the Energy Information Administration in June 2012. This loss of sales is causing Iran to store oil aboard tankers and to reduce production somewhat. Once the EU embargo is fully implemented, Iran’s oil sales might fall further, and Iran is widely assessed as unable to indefinitely sustain that level of lost oil sales. The Iran oil purchase reductions also symbolize burgeoning international cooperation with U.S. and allied attempts to pressure Iran significantly. 
• The willingness of other oil producers with spare capacity, particularly Saudi Arabia, a strategic rival, to sell additional oil to countries cutting Iranian oil buys. 

The signs of economic pressure on Iran are multiplying. The value of Iran’s rial has dropped by about 50% since September 2011. Iran is virtually cut off from the international banking system and is increasingly forced to trade through barter arrangements rather than hard currency exchange. Many major international firms have left the Iran market, many Iranian firms are reported to be closing and laying off workers, and the effect on the energy sector has been further deterioration of its oil and gas production. Still, Iran has small amounts of natural gas exports; it had none at all before Iran opened its fields to foreign investment in 1996.

Department of Defense and other assessments indicate that sanctions have not stopped Iran from building up its conventional military and missile capabilities. Iran is also judged not complying with U.N. requirements that it halt any weapons shipments outside its borders.

Despite the imposition of what many now consider to be “crippling” sanctions, some in Congress believe that economic pressure on Iran needs to increase further and faster. In the 112th Congress, legislation such as H.R. 1905 has passed the House and the Senate. Both versions, which contain some similar provisions, would enhance both the economic sanctions and human rights-related provisions of previous Iran sanctions laws, although the effects on Iran might not be dramatic. For a broader analysis of policy on Iran, see CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman.


Date of Report: July 16, 2012
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Armed Conflict in Syria: U.S. and International Response

Jeremy M. Sharp
Specialist in Middle Eastern Affairs

Christopher M. Blanchard
Specialist in Middle Eastern Affairs

Syria is now mired in an armed conflict between forces loyal to President Bashar al Asad and rebel fighters opposed to his rule. Since major unrest began in March 2011, various reports suggest that between 17,000 and 18,000 Syrians have been killed. U.S. officials and many analysts believe that President Bashar al Asad, his family members, and his other supporters will ultimately be forced from power, but few offer specific, credible timetables for a resolution to Syria’s ongoing crisis. Some observers warn that the regime’s staying power may be underrated. Intense violence generated demands from some international actors for an immediate mutual ceasefire and from others for military intervention to protect civilians or support opposition forces.

In the face of intense domestic and international pressure calling for political change and for an end to violence against civilians, the Asad government has offered limited reforms while also meeting protests and armed attacks with overwhelming force. Nonviolent protests continue, but their apparent futility has created frustration and anger within the opposition ranks. An increasing number of Syrian civilians have taken up arms in self-defense, although armed rebel attacks alienate some potential supporters. The government accuses the opposition of carrying out bombings and assassinations targeting security infrastructure, security personnel, and civilians in Damascus, Aleppo, Homs, and other areas. Accounts of human rights abuses by both sides persist, with the majority attributed to security forces and military units.

President Obama and his Administration have been calling for Asad’s resignation since August 2011, and have been vocal advocates for United Nations Security Council action to condemn the Syrian government and end the bloodshed. The United States has closed its embassy in Damascus, and Ambassador Robert Ford has left Syria. U.S. officials are actively participating in efforts to improve international policy coordination on Syria. The Administration has given no indication that it intends to pursue any form of military intervention. U.S. officials and some in Congress continue to debate various proposals for ending the violence and accelerating Asad’s departure.

After over a year of unrest and violence, Syria’s crisis is characterized by dilemmas and contradictions. A menu of imperfect choices confronts U.S. policymakers, amid fears of continued violence, a humanitarian crisis, and regional instability. The potential spillover effects of continued fighting raise questions with regard to Turkey, Lebanon, Jordan, Iraq, and Israel. Larger refugee flows, sectarian conflict, or transnational violence by non-state actors are among the contingencies that policy makers are concerned about in relation to these countries. The unrest also is creating new opportunities for Al Qaeda or other violent extremist groups to operate in Syria. The security of Syrian conventional and chemical weapons stockpiles has become a regional security concern, which will grow if a security vacuum emerges. Many observers worry that an escalation in fighting or swift regime change could generate new pressures on minority groups or lead to wider civil or regional conflict.

Members of Congress are weighing these issues as they debate U.S. policy and the Syrian crisis.


Date of Report: July 12, 2012
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Afghanistan: Post-Taliban Governance, Security, and U.S. Policy

Kenneth Katzman
Specialist in Middle Eastern Affairs

The Obama Administration and several of its partner countries are seeking to reduce U.S. military involvement in Afghanistan without jeopardizing existing gains. In a May 1, 2012, visit to Afghanistan, President Obama said the United States and its partners are within reach of the fundamental goal of defeating Al Qaeda, and he signed a Strategic Partnership Agreement that will likely keep some (perhaps 15,000 – 20,000) U.S. troops in Afghanistan after 2014 as advisors and trainers. During 2011-2014, the United States and its partners are gradually transferring overall security responsibility to Afghan security forces. U.S. forces, which peaked at about 99,000 in June 2011, are being reduced to about 68,000 by September 2012, and President Obama said that “reductions will continue at a steady pace” from then until the completion of the transition to Afghan lead at the end of 2014. A key to the transition is to place Afghan forces in the security lead, with U.S. military involvement changing from combat to a training and advising role, by mid-2013. In keeping with the Strategic Partnership Agreement, on July 7, 2012 (one day in advance of a major donors’ conference on Afghanistan in Tokyo) the United States named Afghanistan a “Major Non-NATO Ally,” further assuring Afghanistan of longterm U.S. support.

The Administration view is that, no matter the U.S. and allied drawdown schedule, Afghan stability after the 2014 transition is at risk from weak and corrupt Afghan governance and insurgent safe haven in Pakistan. U.S. officials are pushing for substantial election reform to ensure that the next presidential election, scheduled for 2014, will be fully free and fair. Afghan anti-corruption institutions have been established since 2008 but lack effectiveness.

As the transition proceeds, there is increasing emphasis on negotiating a settlement to the conflict. That process has proceeded sporadically since 2010, and has not, by all accounts, advanced to a discussion of specific proposals to settle the conflict. Afghanistan’s minorities and women’s groups worry about a potential settlement, fearing it might produce compromises with the Taliban that erode human rights and ethnic power-sharing.

To promote long-term growth and prevent a severe economic downturn as international donors scale back their involvement in Afghanistan, U.S. officials also hope to draw on Afghanistan’s vast mineral and agricultural resources. Several major privately funded mining, agricultural, and even energy development programs have begun or are beginning. As part of this economic strategy, U.S. officials also see greater Afghanistan integration into regional trade and investment patterns—referred to as the “New Silk Road (NSR).” Persuading Afghanistan’s neighbors to support Afghanistan’s stability instead of their own particular interests has been a focus of U.S. policy since 2009, but with mixed success.

Even if these economic efforts succeed, Afghanistan will likely remain dependent on foreign aid indefinitely. Through the end of FY2011, the United States has provided over $67 billion in assistance to Afghanistan since the fall of the Taliban, of which about $39 billion has been to equip and train Afghan forces. During FY2001-FY2011, the Afghan intervention has cost about $443 billion, including all costs. For FY2012, about $16 billion in aid (including train and equip) is to be provided, in addition to about $90 billion for U.S. military operations there, and $9.2 billion in aid is requested for FY2013. As announced in the context of the July 8, 2012, Tokyo donors’ conference, U.S. economic aid requests are likely to continue at current levels through FY2017, according to the Administration. See CRS Report RS21922, Afghanistan: Politics, Elections, and Government Performance, by Kenneth Katzman.


Date of Report: July 12, 2012
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Afghanistan Casualties: Military Forces and Civilians

Susan G. Chesser
Information Research Specialist

This report collects statistics from a variety of sources on casualties sustained during Operation Enduring Freedom (OEF), which began on October 7, 2001, and is ongoing. OEF actions take place primarily in Afghanistan; however, OEF casualties also includes American casualties in Pakistan, Uzbekistan, Guantanamo Bay (Cuba), Djibouti, Eritrea, Ethiopia, Jordan, Kenya, Kyrgyzstan, the Philippines, Seychelles, Sudan, Tajikistan, Turkey, and Yemen.

Casualty data of U.S. military forces are compiled by the U.S. Department of Defense (DOD), as tallied from the agency’s press releases. Also included are statistics on those wounded but not killed. Statistics may be revised as circumstances are investigated and as records are processed through the U.S. military’s casualty system. More frequent updates are available at DOD’s website at http://www.defenselink.mil/news/ under “Casualty Update.”

A detailed casualty summary of U.S. military forces that includes data on deaths by cause, as well as statistics on soldiers wounded in action, is available at the following DOD website: http://siadapp.dmdc.osd.mil/personnel/CASUALTY/castop.htm.

NATO’s International Security Assistance Force (ISAF) does not post casualty statistics of the military forces of partner countries on the ISAF website at http://www.isaf.nato.int/. ISAF press releases state that it is ISAF policy to defer to the relevant national authorities to provide notice of any fatality. For this reason, this report uses fatality data of coalition forces as compiled by CNN.com and posted online at http://www.cnn.com/SPECIALS/2004/oef.casualties/index.html.

Reporting on casualties of Afghans did not begin until 2007, and a variety of entities now report the casualties of civilians and security forces members. The United Nations Assistance Mission to Afghanistan (UNAMA) reports casualty data of Afghan civilians semiannually, and the U.S. Department of Defense occasionally includes civilian casualty figures within its reports on Afghanistan. The Afghanistan Independent Human Rights Commission, http://www.aihrc.org/ 2010_eng/, and the Afghan Rights Monitor, http://www.arm.org.af/, are local watchdog organizations that periodically publish reports regarding civilian casualties. From July 2009 through April 2010, the Special Inspector General for Afghanistan Reconstruction (SIGAR) included statistics of casualties of members of the Afghan National Army and Afghan National Police in its quarterly reports to Congress. SIGAR has ceased this practice, and there is no other published compilation of these statistics. This report now derives casualty figures of Afghan soldiers and police from the press accounts of the Reuters “Factbox: Security Developments in Afghanistan” series, the Pajhwok Afghan News agency, the Afghan Islamic Press news agency, Daily Outlook Afghanistan from Kabul, and the AfPak Channel Daily Brief. These services attribute their reported information to officials of the NATO-led ISAF or local Afghan officials. The Afghan news agencies frequently include statements from representatives of the Taliban; however, any figures such spokesmen provide are not included in this report.

Because the estimates of Afghan casualties contained in this report are based on varying time periods and have been created using different methodologies, readers should exercise caution when using them and should look to them as guideposts rather than as statements of fact.


Date of Report: July 12, 2012
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Foreign Assistance to North Korea

Mark E. Manyin
Specialist in Asian Affairs

Mary Beth Nikitin
Specialist in Nonproliferation

Should the United States resume food, energy, and/or denuclearization assistance to North Korea? This is the major issue facing Congress in considering the provision of aid to Pyongyang. Between 1995 and 2008, the United States provided North Korea with over $1.3 billion in assistance: just over 50% for food aid and about 40% for energy assistance. Since early 2009, the United States has provided virtually no aid to North Korea. On February 29, 2012, after bilateral talks with the United States, North Korea announced a moratorium on long-range missile launches, nuclear tests, and nuclear activities (including uranium enrichment) at its Yongbyon nuclear facilities. It also said it would allow international nuclear inspectors to return to North Korea. The United States announced it would provide North Korea with 240,000 metric tons (MT) of food aid. However, the so-called “Leap Day deal” unraveled after North Korea on April 13, 2012, launched, in defiance of United Nations resolutions, a rocket to place an “earth observation satellite” into orbit. U.S. officials say that during bilateral negotiations they warned their counterparts that any rocket launch using ballistic missile technology would jeopardize the agreement. 

Food Aid. North Korea has suffered from chronic, massive food shortages since the mid-1990s. Food aid—largely from China, South Korea, and the United States—has been essential in filling the gap. In 2011, in response to continued food shortages, Pyongyang reportedly asked the United States, South Korea, and other countries to provide large-scale food aid. The United Nations has issued an appeal for assistance. In 2008 and 2009, the United States shipped about a third of a planned 500,000 MT food aid pledge before disagreements with the North Korean government led to the program’s cessation.

Providing food to North Korea would pose a number of dilemmas for the United States. Pyongyang has resisted reforms that would allow the equitable distribution of food and help pay for food imports. Additionally, the North Korean government restricts the ability of donors to operate in the country. Multiple sources have asserted that some of the food assistance going to North Korea is routinely diverted for resale in private markets or other uses. However, it is likely that food aid has helped feed millions of North Koreans, possibly staving off a repeat of the famine conditions that existed in North Korea in the mid-late 1990s, when 5%-10% of the population died due to particularly severe food shortages.

In deciding how to respond to North Korea’s current request, the Obama Administration and Congress face a number of decisions, including whether to resume food aid; if so, whether to condition food aid on progress in security and/or human rights matters; whether to link assistance to Pyongyang easing its restrictions on monitoring; and whether to pressure China to monitor its own food aid. In June 2012, the Senate voted to prohibit food aid to North Korea, though the measure would allow the President to give aid if he issues a “national interest” waiver. 

Energy Assistance. Between 1995 and 2009, the United States provided around $600 million in energy assistance to North Korea. The aid was given over two time periods—1995-2003 and 2007-2009—in exchange for North Korea freezing its plutonium-based nuclear facilities. In 2008 and 2009, North Korea also took steps to disable these facilities. However, no additional energy assistance has been provided since 2009, when Pyongyang withdrew from the Six-Party Talks— involving North Korea, the United States, China, Japan, and Russia—over North Korea’s nuclear program. The move followed condemnation and sanctions by the U.N. Security Council for North


Date of Report: June 25, 2012
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U.S. Foreign Aid to the Palestinians

Jim Zanotti
Specialist in Middle Eastern Affairs

Since the establishment of limited Palestinian self-rule in the West Bank and Gaza Strip in the mid-1990s, the U.S. government has committed over $4 billion in bilateral assistance to the Palestinians, who are among the world’s largest per capita recipients of international foreign aid. Successive Administrations have requested aid for the Palestinians to support at least three major U.S. policy priorities of interest to Congress:

• Combating, neutralizing, and preventing terrorism against Israel from the Islamist group Hamas and other militant organizations.
• Creating a virtuous cycle of stability and prosperity in the West Bank that inclines Palestinians toward peaceful coexistence with Israel and prepares them for self-governance.
• Meeting humanitarian needs and preventing further destabilization, particularly in the Gaza Strip.

Since June 2007, these U.S. policy priorities have crystallized around the factional and geographical split between the Fatah-led Palestinian Authority (PA) in the West Bank and Hamas in the Gaza Strip. In April 2012, the Obama Administration obligated all remaining FY2011 bilateral assistance for the Palestinians. Obligation had been delayed for several months due to informal congressional holds by some U.S. lawmakers. The holds were largely a response to Palestinian pursuit in late 2011 of United Nations-related initiatives aimed at increasing international recognition of Palestinian statehood outside of negotiations with Israel. A hold remained on a portion of the FY2011 assistance when the Administration obligated it. Additionally, various agreements since May 2011 between Fatah and Hamas leaders regarding a possible consensus PA government have raised concerns among some Members of Congress, even though under most scenarios, such a government would be unlikely to include Hamas ministers unless Hamas performs well in future elections. Nevertheless, conditions might be attached to U.S. budgetary assistance to a PA government whose composition could be subject to Hamas’s approval. Prospects for implementation of the Fatah-Hamas agreements remain unclear.

From FY2008 to the present, annual U.S. bilateral assistance to the West Bank and Gaza Strip has averaged nearly $600 million, including annual averages of approximately $200 million in direct budgetary assistance and $100 million in non-lethal security assistance for the PA in the West Bank. Additionally, the United States is the largest single-state donor to the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). However, whether UNRWA’s role productively addresses the refugee issue in the context of efforts to mitigate or resolve the larger Israeli-Palestinian conflict remains a polarizing question, particularly with respect to UNRWA’s presence in Hamas-controlled Gaza.

Because of congressional concerns that, among other things, funds might be diverted to Palestinian terrorist groups, U.S. aid is subject to a host of vetting and oversight requirements and legislative restrictions. U.S. assistance to the Palestinians is given alongside assistance from other international donors, and U.S. policymakers routinely call for greater or more timely assistance from Arab governments in line with pledges those governments make. Even if the immediate objectives of U.S. assistance programs for the Palestinians are met, lack of progress toward a politically legitimate and peaceful two-state solution could undermine the utility of U.S. aid in helping the Palestinians become more cohesive, stable, and self-reliant over the long term.


Date of Report: June 25, 2012
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China’s Economic Conditions

Wayne M. Morrison
Specialist in Asian Trade and Finance

Prior to the initiation of economic reforms and trade liberalization 33 years ago, China maintained policies that kept the economy very poor, stagnant, centrally controlled, vastly inefficient, and relatively isolated from the global economy. Since opening up to foreign trade and investment and implementing free market reforms in 1979, China has been among the world’s fastest-growing economies, with real annual gross domestic product (GDP) averaging nearly 10% through 2011. In recent years, China has emerged as a major global economic and trade power. It is currently the world’s second-largest economy, largest merchandise exporter, second-largest merchandise importer, second-largest destination of foreign direct investment (FDI), largest manufacturer, largest holder of foreign exchange reserves, and largest creditor nation.

The global economic crisis that began in 2008 significantly affected China’s economy. China’s exports, imports, and FDI inflows declined, GDP growth slowed, and millions of Chinese workers reportedly lost their jobs. The Chinese government responded by implementing a $586 billion economic stimulus package, loosening monetary policies to increase bank lending, and providing various incentives to boost domestic consumption. Such policies enabled China to effectively weather the effects of the sharp global fall in demand for Chinese products, while several of the world’s leading economies experienced negative or stagnant economic growth. From 2008 to 2011, China’s real GDP growth averaged 9.6%.

Some economic forecasters project that China will overtake the United States as the world’s largest economy within a few years, although U.S. per capita GDP levels are expected to remain much larger than those of China for many years to come. However, the ability of China to maintain a rapidly growing economy in the long run will depend largely on the ability of the Chinese government to implement comprehensive economic reforms that more quickly hasten China’s transition to a free market economy; rebalance the Chinese economy by making consumer demand, rather than exporting and fixed investment, the main engine of economic growth; and boosting productivity and innovation. China faces numerous other challenges as well that could affect its future economic growth, such as widespread pollution, growing income disparities, an undeveloped social safety net, and extensive involvement of the state in the economy. The Chinese government has acknowledged that its current economic growth model needs to be altered. In October 2006, the Chinese government formally outlined a goal of building a “harmonious socialist society” by taking steps (by 2020) to lessen income inequality, improve the rule of law, enhance environmental protection, reduce corruption, and improve the country’s social safety net (such as expanding health care and pension coverage to rural areas). In addition, the government announced plans to rebalance the economy and boost innovation.

China’s economic rise has significant implications for the United States and hence is of major interest to Congress. On the one hand, China is a large (and potentially huge) export market for the United States. Many U.S. firms use China as the final point of assembly in their global supply chain networks. China’s large holdings of U.S. Treasury securities help the federal government finance its budget deficits and keep U.S. interest rates low. However, some analysts contend that China maintains a number of distortive economic policies (such as an undervalued currency and protectionist industrial policies) that undermine U.S. economic interests. They warn that efforts by the Chinese government to promote innovation could mean that Chinese firms will increasingly pose a “competitive challenge” to many leading U.S. industries. This report surveys the rise of China’s economy, describes major economic challenges facing China, and discusses the challenges, opportunities, and implications of China’s economic rise for the United States.


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Iran: U.S. Concerns and Policy Responses

Kenneth Katzman
Specialist in Middle Eastern Affairs

The issue of Iran and its nuclear program has emerged as a top priority for the Obama Administration. A sense of potential crisis in late 2011 and early 2012 was generated by growing suspicions in the international community that Iran’s nuclear program is not for purely peaceful purposes, and the determination of the government of Israel, in particular, that it might take unilateral military action against Iran’s nuclear facilities if its progress is not soon halted.

The heightened tensions follow three years in which the Obama Administration has assembled a broad international coalition to pressure Iran through economic sanctions while also offering sustained engagement with Iran if it verifiably assures the international community that its nuclear program is peaceful. None of the pressure has, to date, altered Iran’s pursuit of its nuclear program: Iran attended December 2010 and January 2011 talks with the six powers negotiating with Iran, but no progress was reported at any of these meetings. In early 2012, Iran began uranium enrichment at a deep underground facility near Qom to a level of 20% enrichment. However, since the beginning of 2012, as significant multilateral sanctions have been added on Iran’s oil exports—including an oil purchase embargo by the European Union to go into full effect by July 1, 2012—there are growing indications that the regime feels economic pressure. Iran’s leaders have accepted nuclear talks without preconditions and three rounds have taken place—April 13-14, 2012, in Istanbul; May 23-24, 2012, in Baghdad; and June 18-19, 2012, in Moscow. The three rounds yielded no breakthroughs, but did delve extensively into the two sides’ positions—the crux of which would be an end to Iran’s enrichment to 20% purity in exchange for substantial sanctions relief. Technical talks will be conducted on July 3, 2012, to determine whether there is sufficient common ground for another round of high level talks.

The United States has long seen a threat to U.S. interests posed by Iran’s support for militant groups in the Middle East and in Iraq and Afghanistan. U.S. officials accuse Iran of helping Syria’s leadership try to defeat a growing popular opposition movement and of taking advantage of Shiite majority unrest against the Sunni-led, pro-U.S. government of Bahrain. However, to date, these issues have not generated the same sense of crisis that the nuclear issue has.

The Administration and many outside experts also perceive that the legitimacy and popularity of Iran’s regime is in decline, although not to the point where the regime’s grip on power is threatened. The regime has sought to use the international pressure to rally the public to its side, playing on nationalist sentiment to encourage high turnout in the March 2, 2012, parliamentary elections. The boycott of the poll by reformist groups rendered the election a contest between factions supporting either President Mahmoud Ahmadinejad or Supreme Leader Ali Khamene’i. Khamene’i supporters were elected overwhelmingly, helping him solidify his control over day-today governance. Over the past two years, the United States and international community have also increased public criticism of Iran’s human rights record and its monitoring of the Internet.

Some in the 112th Congress, aside from supporting additional economic sanctions against Iran, assert that the United States should provide additional political support to the democracy movement in Iran, despite the relative quiescence of the opposition since early 2010. The Administration argues that it has supported the opposition through civil society and other programs, and by using recent authorities to sanction Iranian officials who suppress human rights in Iran and help Syria repress human rights. For further information, including pending Iran sanctions legislation, see CRS Report RS20871, Iran Sanctions, and CRS Report R40094, Iran’s Nuclear Program: Tehran’s Compliance with International Obligations, by Paul K. Kerr.


Date of Report: June 26, 2012
Number of Pages: 85
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Iran’s Nuclear Program: Tehran’s Compliance with International Obligations

Paul K. Kerr
Analyst in Nonproliferation

In 2002, the International Atomic Energy Agency (IAEA) began investigating allegations that Iran had conducted clandestine nuclear activities. Ultimately, the agency reported that some of these activities had violated Tehran’s IAEA safeguards agreement. The IAEA has not stated definitively that Iran has pursued nuclear weapons, but has also not yet been able to conclude that the country’s nuclear program is exclusively for peaceful purposes. The IAEA Board of Governors referred the matter to the U.N. Security Council in February 2006. Since then, the council has adopted six resolutions, the most recent of which (Resolution 1929) was adopted in June 2010.

The Security Council has required Iran to cooperate fully with the IAEA’s investigation of its nuclear activities, suspend its uranium enrichment program, suspend its construction of a heavywater reactor and related projects, and ratify the Additional Protocol to its IAEA safeguards agreement. However, a May 2012 report from IAEA Director-General Yukiya Amano to the agency’s Board of Governors indicated that Tehran has continued to defy the council’s demands by continuing work on its uranium enrichment program and heavy-water reactor program. Iran has signed, but not ratified, its Additional Protocol.

Iran and the IAEA agreed in August 2007 on a work plan to clarify the outstanding questions regarding Tehran’s nuclear program. Most of these questions have essentially been resolved, but then-IAEA Director-General Mohamed ElBaradei told the agency’s board in June 2008 that the agency still has questions regarding “possible military dimensions to Iran’s nuclear programme.” The IAEA has reported for some time that it has not been able to make progress on these matters.

This report provides a brief overview of Iran’s nuclear program and describes the legal basis for the actions taken by the IAEA board and the Security Council.


Date of Report: June 26, 2012
Number of Pages: 20
Order Number: R40094
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Bahrain: Reform, Security, and U.S. Policy

Kenneth Katzman
Specialist in Middle Eastern Affairs

The uprising that began in Bahrain on February 14, 2011, at the outbreak of the uprisings that swept several Middle Eastern leaders from power, began a political crisis that appears to defy resolution. The crisis is far more intense than previous periods of unrest in Bahrain and demonstrates that the grievances of the Shiite majority over the distribution of power and economic opportunities were not satisfied by the efforts instituted during 1999-2010, or by any reform measures announced since the uprising began. The bulk of the Shiite majority in Bahrain says it demands a constitutional monarchy in which an elected parliament produces the government, but the Sunni minority believes the Shiites want nothing less than outright rule.

In March 2011, Bahrain’s government rejected U.S. advice by inviting direct security assistance from other Gulf Cooperation Council countries, declaring a state of emergency, forcefully suppressing demonstrations, and arresting dissident leaders and pro-opposition health care workers. Although the state of emergency ended on June 1, 2011, a “national dialogue” held in July 2011 reached consensus on only a few modest political reforms. Hopes for resolution were raised by a pivotal report by a government-appointed “Independent Commission of Inquiry” (BICI) on the unrest, released November 23, 2011, which was critical of the government’s actions against the unrest as well as the opposition’s responses to government proposals early in the crisis. The government asserts it has implemented many of the BICI recommendations—an assertion largely corroborated on March 20, 2012, by a national commission appointed to oversee implementation—and says it will institute the remainder. However, stalemate on more substantial political reforms—a product of hardened positions on both the government and opposition sides—has stoked continued demonstrations and dashed hopes that a solution is in sight. A proposed closer union with Saudi Arabia, announced May 14, 2012, would strengthen the Saudi ability to limit any Bahrain government compromise with Bahrain’s Shiites. Some fear that the unrest could evolve into violent insurgency.

The Obama Administration has not called for a change of the Al Khalifa regime but it has criticized the regime’s use of force against protesters and urged further political reform and sustained government engagement in dialogue with the opposition. The U.S. position on Bahrain has been criticized by those who believe the United States is downplaying regime abuses because the U.S. security relationship with the Al Khalifa regime is critical to U.S. efforts to secure the Persian Gulf. Bahrain has provided key support for U.S. interests by hosting U.S. naval headquarters for the Gulf for over 60 years and by providing facilities for U.S. war efforts in Iraq and Afghanistan. Beyond the naval facility, the United States signed a formal defense pact with Bahrain in 1991 and has designated Bahrain a “major non-NATO ally,” entitling it to sales of sophisticated U.S. weapons systems. Partly to address criticism from human rights advocates and some Members of Congress, the Administration put on hold a proposed sale of armored vehicles and anti-tank weapons. However, in mid-May 2012 the Administration announced a resumption of sales to Bahrain of arms that it can use to protect itself against Iran and support U.S. operations in the Persian Gulf. Consumed by its own crisis, Bahrain has joined with but deferred to other GCC powers to resolve uprisings in Libya, Syria, and Yemen.

Fueling Shiite unrest is the fact that Bahrain, having largely run out of crude oil reserves, is poorer than most of the other Persian Gulf monarchies. In September 2004, the United States and Bahrain signed a free trade agreement (FTA); legislation implementing it was signed January 11, 2006 (P.L. 109-169). The unrest has further strained Bahrain’s economy. . Bahrain: Reform, Security,


Date of Report: June 29, 2012
Number of Pages: 39
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