Eclipsed for the past 18 months by the Iraq crisis, Iran is rising to the top of the international agenda. Foreign ministries are assigning their best and brightest to the job of devising a coherent strategy. This is just as well, since dealing with Iran is a bit like playing three-dimensional chess. The west is pursuing multiple, potentially conflicting objectives with a country whose politics are in flux and whose leaders oscillate between hostility and pragmatism. The stated aims of preventing a nuclear Iran, promoting democratic reforms and ending Tehran's support for terrorist groups sound reasonable enough. The difficulty is that they sometimes conflict: doing a deal with the conservative establishment on Iran's nuclear programme will be necessary to ensure any agreement is implemented. But this will strengthen the hardliners' grip and weaken the reformist camp further. Conversely, highlighting the need for regime change, and perhaps acting on it, removes any incentive for the regime to comply with various international demands.
All this, of course, sounds very familiar: regime change, weapons of mass destruction, non-compliance, transatlantic rift, Britain's choice. However, analogies with the Iraq crisis can be misleading. Iran, unlike Iraq, has no habit of invading its neighbours. There is therefore no comparable set of UN resolutions, and no record of 12 years of UN-mandated sanctions and inspections. As for the domestic scene, disillusionment and anger at the deadlock between reformers and conservatives are certainly rising. None the less, Iran today has a much more pluralistic political landscape than Iraq ever had under Saddam Hussein. The international political geography is different too. First, the big international players - the US, Europe, Russia and Japan - are closer than they were on Iraq. All suspect Iran is developing nuclear weapons, and that concerted international action is needed to prevent this. Second, to the extent that differences in policy exist between the US and Europe - and they do - this time Britain is on the European side.
For the time being, Iran has probably done enough to avoid being declared in breach of the nuclear non-proliferation treaty (NPT) by the International Atomic Energy Agency (IAEA), the UN's nuclear watchdog. And Washington is reluctant to push the issue to crisis point right now. It has its hands more than full in Iraq and the American public shows little appetite for another major middle eastern crisis. Moreover, there is little chance of getting international agreement on coercive measures. But the Iran problem won't go away. Washington and Tehran remain on a collision course. Iran almost certainly wants nuclear weapons; Bush has said a nuclear Iran is "unacceptable." Iranian discontent with the mullahs and disillusionment with the record of the reformers will intensify. Iran is set to be a big story in 2004.
The Iranian question consists of three parts. First, what is Iran really up to with its nuclear programme? And what policies could dissuade it from going nuclear? Second, how is the domestic political scene evolving? What are the prospects for peaceful regime change, and what role should outsiders like Europe play? And third, will European foreign policy be able to pass the Iranian test? Will Britain stay with the rest of Europe if America starts to apply strong pressure?
Iran's nuclear programme
The evidence unearthed by IAEA inspections points overwhelmingly to a serious nuclear weapons programme. Iran has consistently claimed its nuclear activities are entirely civilian and peaceful in nature. But such assertions have always been dubious. Iran has enormous oil and gas reserves and every year flares off more energy than its nuclear plants will produce. So why is Iran building a heavy-water reactor in Arak and a uranium enrichment facility in Natanz? Iran only admitted their existence after a dissident group, the National Council of Resistance of Iran, revealed them. Why has Iran experimented in secret with uranium metal, which has no use in the type of power reactors it has planned, but which is useful if it wants to build bombs? Iran told the IAEA it had designed and built its own enrichment equipment - until evidence emerged that it had been imported from abroad. Most worryingly, IAEA inspectors have discovered traces of highly enriched, weapons-grade uranium at Natanz, and more recently at the Kalaye Electric Company on the outskirts of Tehran. Iran now says that contaminated material from abroad is responsible. The rest of the world is not so sure.
Like a guilty suspect, Iran changes its story each time inspectors find further incriminating evidence. As a result, there is an emerging consensus that Iran wants nuclear weapons. At a minimum it wishes to become self-sufficient in nuclear matters by controlling the nuclear fuel cycle, making the country independent of uranium supplies from abroad and thus less susceptible to international pressure. The fear in Washington is that Iran is using the cover of the NPT, which allows countries to develop a civilian nuclear programme under international supervision, to get close to the nuclear threshold. Once there, Iran can, perfectly legally, withdraw from the NPT after giving three months' notice - and then develop a nuclear arsenal. The British and French governments estimate that Iran could have a nuclear capability by 2007.
If Iran is indeed seeking nuclear weapons - and in private both reformers and conservatives concede this is something they want - can the US, Europe and others construct a set of policies to get Iran off the nuclear track?
The visit to Tehran on 21st October by the foreign ministers of Britain, France and Germany produced an apparent breakthrough. Europe's big three came with a tough message: Europe would continue talks on a trade and co-operation agreement from which Iran would draw large benefits. But first Iran had to comply with all IAEA demands. Iran got the message and promised three things: a complete account of its nuclear activities, including a list of suppliers; a promise to sign a protocol paving the way for tough "any time, anywhere" inspections; and a suspension of its uranium enrichment and reprocessing activities. The visit was a good day for EU foreign policy. It showed engagement could work. In Tehran, the story is that a fear of "losing Europe" played a key part in Iranian calculations.
Clearly, it is now up to Iran to fulfil all its commitments. Worryingly, Hassan Rohani, the head of Iran's supreme national security council, said the day after the agreement that the enrichment pause "could last for one day or one year, it depends on us... as long as Iran thinks this suspension is beneficial it will continue, and whenever we don't want it, we will end it." Such comments may have been aimed at a sceptical domestic audience, which feels that Iran is unfairly treated. But it does nothing to persuade Americans that Iran is sincere.
Alongside its demand to abandon the nuclear option, the west should also make clear that it takes Iranian security concerns seriously. From Iran's perspective, its region looks distinctly threatening. Iran is a proud and nationalistic country with a deep distrust of the outside world. This is partly paranoia and a consequence of Iran's relative isolation. But it also has a rational core. Throughout the 20th century there was plenty of foreign interference in Iranian politics. There was the Anglo-American organised coup in 1953 against the nationalist government of Mohammed Mossadeq. In the 1980s, Iraq repeatedly used chemical weapons against Iran - with at least tacit agreement from the US. Israel, Iran's arch-enemy, has an extensive nuclear arsenal that is not subject to any international inspections. Then there are Pakistan and India, each with a nuclear deterrent. Most importantly, Iran fears US intentions, especially given the vast numbers of US troops next door in Afghanistan and Iraq. The wry joke in Tehran is that there are just two countries in the world that have only the US as their neighbour: the other one is Canada.
Europe should, together with the US and Russia, take the lead in initiating a regional security dialogue aimed at reducing tensions and increasing transparency on military postures. This effort could be loosely modelled on the Organisation for Security and Co-operation in Europe (OSCE). In the mid-1970s, the west and the Soviet Union agreed on a set of confidence-building measures, transparency on military manoeuvres, economic links and minimum standards on human rights. The Soviets thought they had scored a diplomatic coup by getting western countries to recognise the political status quo. In the end, the west had the better deal: the human rights standards of the OSCE gave it a powerful lever to hold the Soviets to account and support dissident groups. The lesson that many Europeans draw from the "Helsinki process" is that co-operative security can reduce underlying political hostility and lead, eventually, to "regime change." In foreign ministries around Europe, this idea of setting up an OSCE for the middle east is now being quietly discussed.
The US must also start thinking about giving Iran some of the assurances it craves. Ever since the traumatic 1979 hostage crisis, US thinking about Iran has been too emotional and over-influenced by dissident groups with questionable political agendas. It is time for the US to establish normal diplomatic relations. In addition, America will have to think about conditional security guarantees for Iran. With North Korea the US is, reluctantly, offering a deal whereby the North Koreans get a multilateral security guarantee in exchange for denuclearisation. Something similar has to happen with Iran. Moreover, the US has to make clear that it no longer aims for regime change. Of course, the US and others are perfectly entitled to push for greater democratisation in Iran. But they must stress that change has to come from within. Garish regime change rhetoric is removing the incentive for Iran to comply with the west's demands.
Finally, the US and Europe should place the possibility of Iranian entry into the World Trade Organisation (WTO) on the table. This would not just increase trade and investment; because of the WTO's transparency requirement on subsidies, it would also undermine the role of the bonyads - the foundations run by clerics that have a stranglehold on the economy. Ordinary Iranians complain as much about the restrictions on their personal freedom and dress codes as they do about the rampant corruption and rent-seeking by the conservative establishment.
Put together, a package like this would be an offer impossible to refuse. But it would be conditional on Iran giving up the quest for nuclear weapons and accepting stringent international verification of that decision.
Reformers vs conservatives in Iran
The international and domestic dimensions of the Iranian question are intimately linked. The Nobel committee's decision to give the 2003 peace prize to Shirin Ebadi was a shrewd one, and instantly turned this soft-spoken human rights lawyer into a celebrity. It signalled to the conservative establishment that its record on human rights, gender equality and due process of law is inadequate. But it also sent a message to Washington: change has to come from within Iran, a position that Ebadi has always espoused.
The split reaction in Iran to the news of Ebadi's Nobel prize was symptomatic of the country's political divisions and the weakness of the reformist camp. Ordinary people and pro-democracy activists gave her a hero's welcome when she returned to Tehran from a short trip to Paris. More than 10,000 people, a large number by Iranian standards, gathered at the airport, including several reformist members of the majlis (parliament). Reform-minded papers and online journals were ecstatic. But hardline newspapers ran hostile editorials. And in Qom, a group of conservative clerics put out a statement portraying the award - quite accurately - as an attempt by outsiders to weaken the Islamic nature of the regime: "The Nobel institute has been after political gain... and has given the prize to a person who has challenged the fundamentals of religion." Most depressing was the flip-flop that President Khatami performed. Initially his reaction was enthusiastic. But a few hours later - presumably after conservative forces had intervened - Khatami back-pedalled, saying the award was "not very important."
The story of Iranian politics in the last few years has been a slugging match between the majlis, where reformers are dominant, and the conservative-controlled guardian council. The conservatives have many levers of power, including the security apparatus, judiciary and the protection of Ayatollah Ali Khamenei, the successor to Ayatollah Khomeini. Their most effective weapon is the guardian council, which is unelected and has the authority to delay and veto any proposals agreed by parliament that it deems inconsistent with Islamic law.
In many respects Iran has a dual state structure: for every elected body there is a more powerful, unelected one. Since 2000 the guardian council has blocked a huge number of laws proposed by the majlis, including measures relating to press freedom, the minimum age for marriage, divorce laws and the UN convention eliminating discrimination against women. Perhaps most damning of all was the guardian council's decision to block a law that would have restricted its ability to veto candidates standing for various elections.
Despite these setbacks for the reformist movement, Khatami so far has not carried out his threat to resign unless the guardian council respects the legislation passed by parliament. One reason may be that parliamentary elections are scheduled for February. Another may be the fear of electoral defeat. Khatami won a huge victory when he first stood for president in 1997, and again in 2001, but the failure of moderate reformism to deliver seems to be turning people away from politics. As a consequence of turnout falling to a mere 11 per cent in the capital, conservatives managed to regain control over Tehran city council earlier this year. Young people wonder why they should bother to vote if nothing ever changes.
An incredible 65 per cent of Iranians are under the age of 30, while 50 per cent are under 20. These are the "children of the revolution": after 1979, Iranians were encouraged to have many children in order to create "a great Islamic society." Many among these children have become hardened cynics. Some are turning to drugs and other forms of escape. Others are drawn to wistful dreaming about the outside world intervening and ending the mullahs' rule. Israel aside, Iran is the country in the middle east where, below the thin veneer of radical anti-US slogans, the US is most popular. Talking to young Iranians you get no sense of the anti-US resentment that pervades so much of Arab discourse.
Given that the regime's manner of running the country is so out of line with people's aspirations, radical change in Iran is inevitable. But most European and regional analysts think that change will only come slowly and through spillover effects from economic liberalisation. The idea that Iran is "ripe" for another revolution seems popular only in neoconservative think tanks.
Still, Europe should position itself more clearly on the pro-democracy side. This will be difficult because of the need to do deals with the current regime on nuclear and other issues. But there is a real risk of Europe being on the "wrong side of history." An analogy with eastern Europe may be fitting. One reason why eastern European elites are so pro-American is because they think that during the cold war, western Europe, particularly the centre left, was too focused on stability, too soft on human rights, and too willing to ignore the plight of dissidents.
Europe needs to calibrate its approach. It is right to resist taunting Tehran with regime change rhetoric. It is up to Iranians to shape their political future. But Europe should make greater efforts to speak in favour of, and give financial support to, those inside Iran who make the case for reform.
The geopolitics of Iran
During the summer, amid the flurry of exchanges between the White House and Downing Street over Iraq, George W Bush rang Tony Blair. The purpose of Bush's call was to express his displeasure at the plans by Britain, France and Germany to send a letter to Iran offering Tehran a deal: you come clean on your nuclear programme and we will deliver access to technology, trade and investment. Bush asked Blair to dissociate himself from this initiative, but Blair refused. He agreed that Iran's growing nuclear ambitions were a serious cause for concern. But he also said that isolation and threats would not work; that tough but conditional engagement was the way to go.
In recent months, Europe has toughened its stance - overtly linking its negotiations on a trade and co-operation agreement to changes in Iranian behaviour, not just in the nuclear field but also with respect to Iran's support for terrorist groups, its rejectionist approach to the Israeli-Palestinian conflict and its dismal human rights record. This more sceptical EU stance stemmed from changes in its own assessments of what Iran was up to, not only from US pressure. Europeans are aware that because of their diplomatic and trade links, they have some leverage with Iran, as do the Russians and Japanese. Provided those with leverage use it in a concerted manner, there is a good chance of them influencing Iranian behaviour. The US has fewer policy options. Because of its long-standing strategy of diplomatic isolation and economic sanctions, there is little the US can offer to Iran, and fewer benefits it can threaten to withdraw.
The one big option is military action. Radek Sikorski of the American Enterprise Institute has said, only partially tongue in cheek, that for neoconservatives, "Baghdad is for wimps, real men go to Tehran." Some Americans speculate that "surgical strikes" could take out all Iranian nuclear installations in one go.
But European strategists believe surgical strikes are unlikely to succeed because of the long list of targets. This would not be a repeat of Osirak, the operation in June 1981 in which Israel attacked Iraq's only nuclear installation. Moreover, unlike Iraq, Iran has a capacity to retaliate militarily - directly with missiles and conventional arms, indirectly through Hizbullah. It could make life very difficult for America in both Iraq and Afghanistan, where the west is vulnerable. Most important of all, surgical strikes would not eliminate the technological knowhow and desire for a deterrent for regime survival. The hope in Europe, and the quiet expectation, is that the US will recognise these factors and stick with concerted international pressure.
The probability of America (plus Israel?) choosing coercive military action is not very high. But it would be Europe's moment of truth: split again or stay united. The historical record is that when the US applies heavy pressure, Europe fragments with France and Britain spinning in different directions.
With luck, Europe's best and brightest will come up with an effective strategy for dealing with the Iranian question. A forceful yet more creative European stance would go a long way towards forestalling a collision between Washington and Tehran. After Iraq, Tony Blair will be keen to avoid having to choose between Europe and America again. That is why he must mix his usual deftness with a greater willingness to point out the flaws in America's current stance - and do so before the issue reaches crisis point.
