US and Iran: It’s good to talk

The U.S and Iran are on a collision course. But both countries’ policies are based on misperceptions of each other?s strength

How do you get two adversaries – both stronger than the other thinks, but weaker than they see themselves – to negotiate? That is the problem in the current U.S-Iranian crisis over Tehran’s nuclear programme, recently thrust into the limelight by Washington’s imposition of new sanctions and Iran’s replacement of their long-time nuclear negotiator.

Tehran’s power

Tehran feels powerful. It sees the U.S bogged down in Iraq, and the sand trickling away on George W. Bush’s administration. It has brought the mighty U.S to the negotiating table in Iraq – even if talks were carefully circumscribed – and has had to concede little in return. In the U.S, a Democrat-run Congress has made it clear that it will not support strikes against Iran. In one of the strongest indications yet that the US military is reluctant to consider military action against Tehran, in September Admiral William Fallon, head of US Central Command, expressed concern over tensions between Washington and Iran.

Looking across the Middle East, Tehran has further reason to feel well-placed. Its allies, like Hezbollah, have done well and President President Mahmud Ahmadinejad’s millennial rhetoric is met with widespread approval. Egypt and Saudi Arabia may feel worried by the rise of Iranian power, but have so far been able to do little. Tehran’s diplomacy – of refusing to submit to any conditions before negotiations begin – has split the European Union and allowed the country’s nuclear scientists to continue their work. China, hungry for Iran’s oil supplies, is soon to overtake the EU as the country’s largest trading partner, and Russia’s confrontational attitude towards the U.S plays to Iran’s advantage. While President Putin may think a nuclear-armed Iran is a bad idea, Moscow is keen to protect its $1 billion contract to build the Bushehr nuclear power-plant . Russia is unlikely to accept tougher sanctions in the UN Security Council. In sum, it is understandable if President Almedinejad said, as he is reported to, that the case of Iran’s nuclear programme was “closed”.

Iran’s dangerous miscalculation

But, not for the first time, Tehran could be making a mistake. The vicissitudes of the US nation-building effort in Iraq are unlikely to constrain George W. Bush’s administration. The Army and Marines may be battered by four years of war-fare, but, as Admiral Mike Mullen, the new Chairman of the Joint Chiefs, noted recently: “there is more than enough reserve to respond (militarily) if that, in fact, is what the national leadership wanted to do.”

What about time? Surely, the Iranians might reason, with only a year left in office George W. Bush will hold back from starting something his administration cannot finish. Forget it. This president believes he has been put in the White House for a reason. He believes that Iran represents a clear and present danger. And he will not shirk from doing what he believes is necessary to safeguard America. Just as he governed from the first day following the contested 2000 election, so will he govern until the last day, on 20 January 2009.

What about the Democrats? With their base in uproar over the Iraq War, and the path to the White House looking clear, they seem in no mood for war. Perhaps. But irrefutable evidence that Iran had either killed Americans in Iraq or were within months of making a nuclear bomb could turn things around. If twenty or even fifty Americans, diplomats and soldiers, were killed in Baghdad by a 200mm rocket, which was shown to have Iranians markings on it, woe betide the U.S politician calling for calm and dialogue. According to a 2006 poll by Los Angeles Times/Bloomberg, 57% of Americans already support military action in Iran.

Presidential front-runner Hilary Clinton has echoed the administration’s tough stance and refused to rule out military strikes in democratic debates. The Republican pack-leader, Rudy Giuliani, has given an indication of the foreign policy player he will be by appointing Norman Podhoretz – who has argued for pre-emptive strikes against Iran – as a key aide. To top it off, Iranian reluctance to cede anything in talks with the U.S ambassador to Iraq has probably emboldened the hawks; “look”, they can now credibly say, “talking to Tehran gets us nowhere.”

Increasingly, Tehran’s cocksureness looks foolhardy.

Strikes unlikely – for now

So all clear for US strikes? Not quite. Even if Iran is overplaying its hand, and underestimating U.S weakness, the path to war is not straightforward. If George W. Bush persuades a sceptical Congress, and a war-weary military – which can be done – it is not clear military strikes would achieve their aim.

Even if the U.S can accept the consequences, nothing would be worse than hitting Iran, and missing a number of sites. Besides the effects on the already high oil price, and the immediate Iranian counter-move – which could range from closing the Straits of Hormuz (unlikely), encouraging Hezbollah to fight Israel again (likely) or topple Lebanon’s government (likely), firing rockets directly at Israel (unlikely), overthrowing Hamid Karzai in Afghanistan (likely) and attacking Western cities, Middle Eastern oil facilities (unlikely) and U.S and British targets in Iraq (very unlikely) – the most likely outcome would be a continuation of Tehran’s enrichment programme.

On the balance of probabilities, therefore, a U.S military strike is not currently likely. But it is not impossible and any number of factors could make it more likely. In this case, the best way forward would be for the U.S and Iran to begin a process which eventually leads to a settlement, the so-called “Grand Bargain“. The longer both countries stay outside a process, the more likely that the balance of probabilities for war will shift.

Getting to a compromise

How is such a compromise achieved? It is clear Tehran will never compromise if it believes this will be seen as weakness or lead to the end of the Islamic revolution. President Ahmadinejad has recently come under pressure, including from former President Rafsanjani, now the head of the Expediency Council and Assembly of Experts. He will not acquiesce to a climb-down if this makes him vulnerable.

But nor will Iran begin negotiations if it believes holding-off carries no cost whatsoever. Therefore, the cost of Iran’s current strategy must be increased while the benefits of chosing an “alternative path” should be made clearer.

The costs can be increased by tougher sanctions. The EU is well-placed to lead on this, given EU-Iran trade relations; between March 2006 and March 2007, European trade formed 37 percent of the Islamic republic’s total foreign trade. Italy is Tehran’s top European trading partner with two-way trade totalling 5.2 billion euros in 2006. Germany is Europe’s top exporter to Iran, and accounts for 12 percent of all Iranian imports — mainly through industrial equipment, metals and chemical products. France ranks fifth in terms of market share for imported products by Iran. Crude oil represents about 97 percent of French imports from Iran, while refined oil products from France are among the biggest items heading the other way.

The Romanian, Bulgarian and Austrian governments own shares in the Nabucco oil pipeline – expected to run from the Iranian/Turkish border to Austria – which is seen as critical to Europe’s gas supplies from the Caspian region. But its construction represents a considerable investment in Iran, while its completion will make Iran a key energy partner. Finally, Austria is also developing the South Pars Gas Field in the Persian Gulf together with the National Iranian Oil Company.

Further sanctions, starting with a withdrawal of all export credits and guarantees to European firms doing business with Iran – even if it means gifting billions to Iran – is key. As is telling European firms – like Fiat, ENI and Total – that “doing business as usual” has consequences. Access to Euros by Iran’s central bank should be examined and more regime loyalists and banks need to be blacklisted. Iran remains reliant on petroleum imports, despite domestic production and the introduction of rationing. This year alone, Iran is expected to import $4bn worth of petrol. European pressure on Iran’s major petroleum sources could also be effective.

These sanctions need to be followed by an offer of negotiations without conditions, as Iran has demanded. Until now, the U.S and Europe have insisted on a suspension of Iran’s nuclear enrichment programme before negotiations begin. The original reasoning behind conditional negotiations was that these would stop Iran entering negotiations, dragging them out and continuing its enrichment programme. But instead, negotiations have ceased and Tehran has been free to continue its enrichment programme.

Once negotiations begin, the details of a deal can be developed. But it is already clear what this needs to contain. Iran will need assistance with a peaceful nuclear programme, diplomatic recognition by the U.S, closer economic ties with the EU and a regional approach to Middle Eastern security. Ultimately, a non-aggression guarantee between the U.S and Iran is necessary, which includes Washington’s disavowal of regime change. Eighty-four percent of Iranians say that having full-fuel-cycle nuclear program is “very important” to them, while only 4 percent believe that such a program is not important. Iran’s leaders have marched their people up the nuclear hill and will need help to march them down again.

For Iran’s part, not only will Tehran have to give up running an unsupervised nuclear programme; they will have to cut funding for Hezbollah, Iraq’s Shia militias and support to the Taliban. This, again, may be difficult, but with progress in the Israeli-Palestinian negotiations this could happen over time.

Way forward

But how to solve the nuclear programme itself? Perhaps an innovative solution needs to be explored: one idea could be for Iran to continue its nuclear programme, but in a third-country, for example Russia, at a location temporarily designated Iranian soil.

Even though the rhetoric has been increasing lately, both parties have allowed themselves room for manoeuvre. President Ahmadinejad said in May that Iran “possesses, from [start to finish], the nuclear-fuel cycle for peaceful uses.” He could argue, at a propitious moment that Iran has safeguarded its rights, proven its technological prowess and is therefore accept a continuation of its nuclear programme under different conditions. Similarly, U.S Secretary of State Rice has talked about “behaviour change”, not regime-change.

There are other ways forward than into negotiations. But all are based on misperceptions by both the U.S and Iran of each other’s strength. Too many missteps, however, may lead to the kind of confrontation few people want. The key is to getting into a process. After all, it’s good to talk.



The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.


ECFR Alumni · Former Senior Policy Fellow

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