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Iran between worlds

Charles Grant
3 February 2004

The rest of the world has become used to viewing Iran as a stable country. The country’s conservatives and liberals seem locked in struggle that is never resolved. The United States continues to shun relations with the Islamic Republic, while the European Union goes on trading with it. And on the streets of Tehran – an ugly, gridlocked city of some 14 million people, strangely void of historical monuments – there are few signs that Iranians expect dramatic changes in the near future.

However, Iran may be less stable than it appears. President Mohammad Khatami and his reformist allies in the majlis (parliament) are a spent force. At the same time, American and European responses to Iran’s attempt to gain nuclear weapons capabilities have thrown Iranian foreign policy into a state of flux.

I have just returned from my first trip to Iran, to attend a seminar on Iran’s foreign policy organised by the Tehran-based, foreign ministry-backed Institute for Political and International Studies (IPIS) in cooperation with the London-based Centre for European Reform (which I work for) and the Landau Network-Centro Volta, an Italian institute.

The seminar provided insight into current Iranian thinking at leadership level, and a week in Tehran provided the opportunity for more informal discussions with a wider circle of Iranians – journalists, academics, professionals. The big question that came up in conversations at all levels is whether, and to what extent, Iran should open up to the United States and the European Union.

At the seminar, the exchange of views was frank. When the Europeans recommended that Iran should recognise Israel in order to promote closer ties with the west, the Iranians – who included the deputy foreign minister, Alireza Moayeri – said that hostility to Israel was a fundamental principle of the Islamic Republic.

The Iranians regarded the concept of “conditional engagement” – which underlines the European Union’s negotiating a trade and cooperation agreement with Iran – as a patronising one that did not treat them with “dignity”. We agreed instead on the idea of “reciprocal engagement”: if Iran does certain things that the EU desires, the EU should respond with things that Iran wants.

Beneath the surface, fear

Iran can seem a fairly free country. Print journalists, though not television or radio, do criticise the regime. Iranians do not need an exit visa to leave the country; foreign businesses can and do trade there. By most measures, the human rights situation is better than it was ten years ago.

But I sensed uneasiness, even fear. The regime is afraid, because it knows that many people hate it, and that its anti-American stance has provoked widespread pro-American sentiment amongst much of the population. Its primary concern is how to maintain power. Indeed, the evident pro-American sentiment of the people – and not only liberal academics – was the biggest surprise that I had in Iran. In the words of one prominent academic at Tehran university: “if there was a referendum on whether Iran should have close relations with the United States, 80% would vote yes.”

The regime’s liberal opponents are also afraid. The various intelligence services spy on them, tap their phones, prevent them from teaching, and send informers to shadow them at conferences when they go abroad.

More active liberals are in prison, though incidents like the killing of the Canadian-Iranian journalist, Zahra Kazemi – who died in July 2003 from severe injuries inflicted when in the custody by security officers – are now relatively rare.

Within the regime, the president and his allies appear to be more or less finished. They have proved incapable of pushing through many of the reforms they promised. Conservatives, using the Council of Guardians to block reformist legislation, wield the real power. The reformists have frequently threatened to resign unless the Guardians pass a reform – only to back down and remain in office.

Most people appear to oppose the regime, but they will not demonstrate or vote in support of the reformists. It is significant that there have been no popular demonstrations in favour of the sit-in by reformist members of the majlis protesting against their exclusion from the legislative elections due on 20 February.

Instead, many opponents of the regime, fed up with politics and the blocking of reform, are adopting a quietist attitude; they want to get on with their lives as best they can. Most of the young Iranians I met, while contemptuous of the mullahs, have lost faith in the parliamentary system and are planning to abstain in the elections.

The real political struggle is between the ideological conservatives on the Council of Guardians, who usually have the support of Supreme Leader Ayatollah Ali Khamenei; and the pragmatic conservatives, such as Hashemi Rafsanjani, who chairs the Expediency Council (which has the job of reconciling disputes among other bodies), and Hassan Rohani, who chairs the Supreme National Security Council.

The ideological conservatives do not want to open up politically or economically, or to modify their US-hating, Israel-hating ideology. The pragmatic conservatives probably want to pursue a Chinese model: liberalise the economy and make peace with the US – but maintain political repression, albeit with the worst excesses softened.

The pragmatists understand that the Iranian economy is a basket-case and that it needs to open up to international investment: per capita GDP is about 30% lower than it was before the 1979 revolution. That is partly because of the population explosion: from 36 million Iranians in 1979 to 67 million by 2003, of whom more than two-thirds are under 30. The regime has proven incapable of converting the country’s oil wealth – 10% of global reserves – into economic development.

Iran and the United States

A key question for members of the political elite in Iran is how to conduct relationships with the United States and the European Union. Some opposition figures expect the west to topple the mullahs; one intellectual told me that he wanted a US invasion. In such circles, there is criticism of the EU policy of conditional engagement (and notably the promised trade and cooperation agreement) on the grounds that engagement prolongs the life of the regime. The US sanctions might work, said one intellectual, if the EU joined in too.

A widely-held view in Tehran is that the pragmatic conservatives are keener to strike a bargain with the US than are the liberal reformists. The pragmatists agreed the deal with the EU in October 2003 that led to Iran putting its nuclear facilities under international supervision; they did so because they want the trading agreement. They have shown the west that, unlike the reformists, they can deliver; now they want to engineer a rapprochement with Washington, and an end to US sanctions.

But is the US ready to make peace with Iran? The short answer is no. The hostage crisis of 1979 is still seen in the US as a national humiliation that has never been resolved satisfactorily. It is one reason why the American right is so keen on regime change in Iran. The fact that Iran has always opposed the Oslo peace process and a two-state solution in Israel/Palestine is another reason why many Americans do not want to deal with Tehran. Iran also supports groups such as Hezbollah and Hamas, which use violence against Israel.

There are two more proximate reasons that hold the US back from dealing with Iran. The first is Iran’s detention of an unspecified number of al-Qaida operatives, whom the Americans want handed over for interrogation while any information they can provide might still have value. The second is Iran’s efforts to assemble the capability to build an atomic bomb.

There is no longer any doubt about Iran’s ambitions: in 2003 the International Atomic Energy Authority (IAEA) discovered that Iran had broken its obligations under the Non-Proliferation Treaty and used clandestine means to buy the technology required to build a bomb. After the deal with the EU, Iran signed the IAEA’s “additional protocol”, which means that it has to accept unannounced inspections of its nuclear facilities. But many in Washington still believe that Iran is merely playing for time, and that it has not abandoned its nuclear ambitions.

Is Iran ready to give the US what it wants, in order to engineer a rapprochement? The government has softened its rhetoric on Israel a little. Foreign minister Kamal Kharrazi now says that if the Palestinians reach a settlement with Israel, Iran will endorse it and that it will “not be more Palestinian than the Palestinians”. However, there are no signs that the al-Qaida prisoners – apparently held by the Revolutionary Guard – will be handed over to the US. As for Iran’s nuclear ambitions, only time will tell whether it is serious about setting them aside; the regime’s track record of not telling the whole truth makes the US right to be cautious.

The US’s current difficulties in Iraq guarantee that its leadership will not, for the foreseeable future, attempt to remove the Iranian regime by force. But any reconciliation with Iran would annoy those Republicans who cheered when it was placed in the “axis of evil”, and President Bush will not want to do that in an election year.

There are, however, informal contacts between the US and Iranian governments. The two countries are cooperating quite well over Afghanistan and Iraq. Once the Iranian legislative and US presidential elections are over, the two sides may try to move towards a partial thaw.

The future of Iran-US relations may depend on the balance of power between realists and ideologues in Washington and Tehran. If it tilts in favour of the neo-conservatives in Washington, who are virulently opposed to any dealings with the mullahs, and the hardliners in Tehran, who hate the US, there will be no deal. But if the realists in both countries – who believe in putting national interest ahead of ideology – win the argument, a deal becomes feasible.

Iran and the European Union

For as long as the regime has no formal ties with the United States, it needs good relations with the European Union. Iran will probably provide the ‘assurances and clarifications’ on the nuclear deal that the EU has demanded (for example, that Iran’s promise to ‘suspend’ the enrichment of uranium really means that the process has stopped). The current EU line is that it will restart negotiations on the trade and cooperation agreement only when these assurances are provided and when the IAEA gives Iran a clean bill of health. On this basis, the negotiations could start in spring 2004.

However, human rights are a constant source of tension in EU-Iran relations. The Iranians generally give Javier Solana, the EU’s high representative for its Common Foreign and Security Policy (CFSP), a very hard time; they almost cancelled his January visit to Tehran – because of his tough criticism of Iran’s human rights record and its nuclear ambitions.

When in Tehran, during the sit-in of liberal parliamentarians, Solana said publicly that while he did not want to interfere in Iran’s internal politics, the electoral process was important, and that if it was flawed it would have an impact on Iran’s relationship with the outside world. And so it would: the EU might find it hard to go ahead with the trade and cooperation agreement if the reformists are not allowed to stand in the elections. The Americans, too, would find it harder to restore ties.

Although Solana insists on mentioning human rights when he meets members of the Iranian regime, this subject has not been the EU’s top priority. The EU believes that it is easier to influence Iran on external matters – namely the nuclear programme, the fight against terrorism, and cooperation on Iraq and Afghanistan.

If the EU achieved success on the external dimension, I asked Javier Solana in Tehran, would it then try harder to influence Iran’s internal behaviour? He said that in those circumstances the EU would pay much greater attention to human rights issues. European pressure has already secured limited ‘victories’: Iran has agreed to halt public amputations and execution by stoning, and some dissidents have had their death penalties commuted to life imprisonment. However, Solana is not free to say a great deal on this subject: it is the member-states who define the terms on which the EU deals with Iran.

Iran and nuclear weapons

Only those at the heart of the Iranian regime know the extent of the Islamic Republic’s nuclear ambitions. All factions of the regime probably want at least the capability to build a nuclear bomb. Some hardliners undoubtedly want the weapons themselves, as a defence against a potential US invasion; but many others in positions of power would probably be prepared to trade the nuclear programme in exchange for sufficiently high dividends. If this is right, the European policy of using stick and carrots to influence Iran is the right one. The policy of the US hawks – that Iran is determined to become a nuclear weapons state, whatever the EU or the US offers, so it would be wrong to offer carrots to an evil regime – is less likely to achieve the objective of a non-nuclear Iran.

If the EU and the US try hard enough, they may be able to persuade Iran to abandon its nuclear plans. This will require real concessions – diplomatic recognition and an end to sanctions from the US, negotiation of the trade and cooperation agreement from Europe, the transfer of technologies and encouragement of Iran’s ambition to join the World Trade Organisation from both.

They might go further, and help the Iranians develop the idea of a common regional security framework – proposed by, amongst others, my colleague Steven Everts – involving the states around the Persian Gulf. A Gulf Security Organisation (GSO) would encourage confidence-building measures and transparency on military matters, while establishing procedures for resolving disputes. Iran is more likely to abandon its nuclear ambitions if it feels that its security concerns are being addressed through an institutional framework.

Iranian foreign ministry officials told me they like this idea, as does Javier Solana. Senior officials in the UK and French governments, and in the US state department, also speak in favour of it. However, the dependence of the Gulf states (including, for now, Iraq) on the US in security matters means that a GSO becomes feasible only when the US and Iran have made peace.

Iran and Russia

The west needs to be unified in its dealings with Iran, in order to maximise its chances of success. It should also try to involve Russia, which is a major trading partner in Iran, and is building the nuclear reactor at Bushehr in south-west Iran. I have discussed Russia’s ties with Iran with officials in Moscow, who are reluctant to admit any worry about Iran’s nuclear ambitions; they regard the Iranians as a friendly people who, even if they had the bomb, would not use it against Russia. When pressed, these officials say they would prefer Iran not to have a bomb, but they also express total confidence in the IAEA’s ability to sort out the problem.

Most Iranians know that the US and the EU have more of the technology their economy, especially the oil industry, needs. Iran’s leaders tend to regard Russians as unreliable and as susceptible to US pressure (for example they are slowing work on the Bushehr reactor) though some hardliners see Russia as a bulwark against US hegemony.

A number of people close to the government also think that a Franco-German-led EU could help create a multipolar world. I told them they should not count on it: the Iraq war of 2003 was a very specific event, and the west’s divisions over the war stemmed partly from President Bush’s inept diplomacy. Iran should not assume that the transatlantic rift will continue for ever.

The future of the regime

Should Europe try to expand trade with Iran, even if it prolongs the life of the regime? I believe that it should: more trade generates more contact with the outside world, more wealth, more dynamism in the economy – and thus more social change. This process would undermine the bonyads, the Islamic foundations which control much of the economy and fund the bodies dominated by ideological conservatives.

Yet the EU is right to apply a policy of “conditional” (or, in our agreed term, “reciprocal”) engagement: only when the EU suspended talks on the trade and cooperation agreement did Iran agree to sign the IAEA additional protocol.

How long will the Iranian regime – formally democratic but in practice, largely theocratic – endure? At present, the pragmatic conservatives seem to be gaining ground over both reformists and hardliners. Many analysts in Tehran argue that these pragmatists have a better chance of modernising the economy than the reformists, on the grounds that they are tougher and better able to deliver. If the Hashemi Rafsanjani / Hassan Rohani grouping can make peace with the US, and open up the economy, the system could evolve without a convulsion.

At the same time, the Iranians – despite years of disillusion – still care about politics and democracy. The mullahs will find it very hard to modernise the economy while smothering political life.

If the pragmatic conservatives fail to modernise the economy, the combination of slow economic growth, the population explosion, and frustration with the corrupt and repressive nature of the regime could prove explosive. Although the current generation of reformers has lost credibility, in time another group may arise. Iranians have shown in recent decades that when they are angry they are prepared to demonstrate. Another revolution cannot be ruled out.

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