Saturday, November 29, 2008

Iran, Game Theory, and You

For months, pundits from the left and from the right have emphasized the dangers of allowing the nation of Iran to advance its nuclear program. If Iran were to attain nuclear weapons, many argue, it could strike neighboring states like Israel or sell them to terrorist groups such as Hezbollah, which could detonate them on civilian populations. However, I would like to posit that allowing Iran to attain nuclear weapons would not have cataclysmic or even Armageddon-esque consequences—but may in fact be positive for the region.

First, I would like to emphasize that I do not actually believe that Iran becoming a nuclear power—I know I wrote the last sentence—would probably be a positive development. To the contrary, I believe that the opposite is true and, all else being equal, I hope that Iran does not get the bomb. But all else is not equal. From the United States’ perspective, there is, potentially, a tremendous cost in preventing Iran from becoming a nuclear power. This cost is potentially threefold: economic, political, and military—though the three are highly related. The economic cost is clear; the United States has—along with its allies—posed sanctions on Iran for more than a year, prohibiting what is sure to be millions of dollars worth of transactions and trade between Iran and other nations like the United States. In addition, the United States stands to lose a sizable amount of political capital with an anti-Iranian policy. This is due to the fact that Iran is becoming increasingly close with international powers apart from the United States, but vital to U.S. interests, including China and Russia. China, the United States’ second largest trading partner, has an incredibly lucrative oil trade with Iran; the two powers recently signed a $70 billion oil deal. Russia, fresh out of the cold war, is unofficially led by a man—Vladimir Putin—who some say wishes to spoil Russo-U.S. relations by leading us back to it. Russia, though, is also growing increasingly close to Iran, with Putin visiting Tehran in 2007. This visit solidified a developing Russian and Iranian relationship, with Russia suspected of providing direct aid to the Iranian nuclear program. By stifling Iranian nuclear ambitions, the United States stands to lose the ability to negotiate with nations like China and Russia—a loss of political capital—on other key issues. Finally, some, including president-elect Obama, have kept the military option in regards to Iran on the table. This military option would likely have to involve full-scale invasion, as many believe—including David Kay, former U.S. inspector in Iraq—that targeted bombings would simply not work against Iran as they did for Israel against Iraq in 1981. Such an invasion would likely cost far more than the estimated $600 billion and the more than 4,000 U.S. lives that the United States has spent so far in Iraq: Iran is three times its size and has a much stronger military. Therefore, preventing Iran from gaining nuclear weapons by military means—as well as economic or political—is a costly endeavor.

The high cost associated with preventing Iran from developing nuclear weapons is higher than the cost associated with allowing it to develop these weapons. Basically, if Iran attains nuclear weapons, nuclear foreign policy boils down to a game, and can be explained by game theory; this game is the prisoner’s dilemma.

The prisoner’s dilemma is as such: two suspects who are thought to both have committed the same crime together are placed in different cells and cannot communicate. The police investigators do not have enough evidence to convict the suspects on the higher charges that they deserve to be convicted of, so they must elicit a confession from one or both of the prisoners. If one of the prisoners confesses while the other does not, the first prisoner receives no jail time while the second receives 5 years. If they both confess, they both receive three years. If neither confess, they only receive 1 year. The Nash equilibrium for this game—the equilibrium based on what it is rational for both players to do—is that both prisoners confess. However, the situation changes when, and this becomes more theoretical, the game must be played over and over again. Then, eventually, one player will inevitably decide to try not confessing, hoping the other player will soon, in turn, realize it is the best strategy for both players in the long run—they will collude.

This repeated game is the game played on the world’s stage by nuclear powers. In this world game, countries cannot be eliminated in one fell swoop—there are multiple rounds of the game; nuclear attack by one country almost certainly means nuclear retaliation by that same country or by another, leading to nuclear war. This is mutually assured destruction, irrational for all parties involved. So, to prevent this, both parties collude by not launching pre-emptive—or any—nuclear strikes on the other. In fact, this phenomenon has been observed historically, and even presently. Nuclear weapons were likely the major reason why the United States and the Soviet Union did not directly militarily engage each other—doing so would have meant certain annihilation. Mutually assured destruction is likely the primary reasons why Pakistan and India—two nuclear powers—have not had a major war since the development of both countries’ nuclear programs.

For Iran to attain nuclear weapons would add an element of supreme danger to the region that would likely make full scale war between—Iran and Israel, for example—impossible. Neither side would be willing to risk total annihilation by warring with the other. In addition, there is little danger that Iran would risk providing nuclear weapons to non-state terrorist groups like Hezbollah. With modern intelligence, such an action would soon be the open secret of the international community, all but guaranteeing retaliation on Iran. Iran, a rational international actor (yes, Ahmadinejad yaks with a fiery rhetoric, but this blather is just that: rhetoric), would not risk such an action.

It may seem a little farfetched to assume that the leaders of states like Iran would always act rationally—in their best interest—by not risking nuclear war with another nation. But I must invoke the anthropic principle: we’re still here, aren’t we? Look, for Iran to attain nuclear weapons should clearly not be a stated policy goal of the United States. However, the costs associated with preventing, as well as potential benefits of, a nuclear Iran, means that it might just be not that bad. Hey, when it comes to nuclear war, I’m an optimist.

Sources:
http://www.cnn.com/2007/POLITICS/10/25/iran.sanctions/index.html

http://www.chinadaily.com.cn/english/doc/2004-10/31/content_387140.htm

http://www.nytimes.com/2008/10/10/world/10nuke.html

http://www.cbsnews.com/stories/2008/10/01/world/main4493241.shtml

http://www.nationalpriorities.org/costofwar_home

http://www.nationalpriorities.org/costofwar_home

4 comments:

Pman said...

I’m not sure I agree that, “The high cost associated with preventing Iran from developing nuclear weapons is higher than the cost associated with allowing it to develop these weapons.”

Your key argument as I understand it is that allowing Iran to develop nuclear weapons does not carry as high a cost as full-scale invasion. You reached this conclusion based on Game Theory and MAD. However, there is a faulty assumption here – that Iran will behave like other world powers have in the past. In fact, I think there is considerable evidence that Iran is not a rational actor, as required by Game Theory. Maybe the things Ahmadinejad says are just bluster, but I think he really does want to destroy Israel and “The Great Satan” (i.e. America). The impact of religious fundamentalism is that he may not really be concerned with the practical danger of retaliatory nuclear strikes; his destructive agenda is more important than the lives of his people. Therefore, he could act irrationally and expect to end up in the kingdom of heaven.

Even beyond this possible irrationality, there is another danger of an Iranian nuke that we should consider. That is, they would not have to rely on a traditional missile- or bomber-delivered strike, but could employ a terrorist agent. At the risk of sounding like a writer for 24, such a nightmare scenario could go something like this: an Iranian nuclear device ends up in the hands of a terrorist group, is smuggled into the country through one of the millions of unscreened shipping containers, and gets detonated in Times Square.

By using an indirect actor, Iran insulates itself from the game and does not have to worry about retaliation. I think this is a likely scenario if Iran gets the bomb. I hope we don’t have to go to war to prevent it, but I’m definitely leaving that option on the table.

Baracrates said...

Good post Playdoh, and while Pman brings up an interesting (though horrifying) scenario, I think reality provides two complex reasons for Iran acting as an rational actor. First, the US has good intelligence, and I imagine that a lot of our intelligence resources are focused on Iranian actions. That is not to say we couldn't prevent such an occurrence, although the nature of smuggling an atomic bomb, because it is so easily detectable, makes me think that such a plot is far more unlikely that most terrorist activity. However, even if it did succeed, and this is my second reason, who do you think the US would immediately look to revenge for? Just a handful of potential countries, with Iran at the top of the list. It wouldn't matter if it had been an Iranian military operation, or a terrorist one. Our gut reaction would be to annihilate Iran, and I think the leadership in Tehran knows that. That is also a powerful deterrent.

I think the real danger, for us, in Iran developing nuclear weapons, is, with each increasingly less sophisticated government acquiring such power, there is more likely to be a slip: the knowledge, or even goods, gets into private hands. As terrorism has shown, in this situation game theory would not apply. That's the scariest scenario.

On a side note, I've noticed Playdoh's remarkable penchant for giving us interesting, real-world posts that supplement my economics class as we go along (and I know Playdoh isn't in this class). Anyone else read this and think "Dr. Strangelove?"

Anonymous said...

Baracrates, actually, you are wrong about deterrence. Read Robert Aumann’s and Thomas Schelling’s Contributions to Game Theory: Analyses of Conflict and Cooperation, in it they write, “that investments in deterrence can become dangerous in case of false warnings as well as when misjudging the adversary’s interests and intentions” (6).

The subtle irony is that the state "actors" in Iran are actually quite rational within the framework of their own viewpoint. To them, rational is instigating a nuclear war against its enemies. It would certainly not be a misjudgment of “interests and intentions” if the USA took them at their word.

Therefore, it is in the best interest of the United States of America and the rest of the world for that matter to prevent Iran from becoming a nuclear power.

Castle said...

One observation that could weaken Playdoh's case is that once Iran gains nuclear weapons, it could pass on this knowledge to terrorists.

Let's ignore the fact that some terrorists are willing to risk death to achieve their goals. Even so, the terrorists are immune to mutually assured destruction. If the terrorists bomb the US, the US cannot bomb the terrorists back: the US does not know where the terrorists are.

No terrorist "country" exists on a map that would deter them from using nuclear weapons against countries they hate. The US cannot bomb random mountains in various countries of the Middle East. The position of terrorist enemies is unclear, so the US would not be able to respond to a nuclear first strike by terrorists.

That said, we have to see whether Iran has reason to facilitate terrorists' obtaining of nuclear weapons. First, Iran stands to make money. Iran does not have to deliver all the necessary nuclear information. It can hand over certain information that makes it easier for terrorists to get nuclear weapons, information for which terrorists will still pay plenty.

Second, considering that the Iranian government has already supplied Iraqi insurgents with IEDs in the past, the US cannot give Iran the benefit of the doubt of not associating with groups that are not considered terrorists by Iran but are considered terrorists by other countries, like the US.

For these reasons, Iran should not be allowed to acquire nuclear weapons that it may transfer to terrorist groups that are immune to game theory considerations.