The War Next Door: Implications for Iran’s Domestic and Foreign Policies

1. The War Next Door:Implications for Iran’s Domestic and Foreign Policies Prepared for: Woodrow Wilson Center 4 April 2003

2. Objectives • Briefly discuss status quo in Iran, especially analysing the dynamics of political developments; • List challenges to the regime; • Identify the strategies of each of the political currents in the light of challenges; • Analyze the impact of the Iraq crisis on Iran as well as Iran‘s potential responses; • Discuss future signposts;

3. Current Political Picture • State-society gap due to unfulfilled political promises has led to tensions in society as well as among political players; • Top leadership seems to be in consensus on a „Chinese Model of Reform“ (first economic and cultural reforms and then political reforms); • Recent local council elections have sent a shock wave through existing political entities: Time for strategic re-thinking! (strategies discussed later) • The President‘s attempt to gain the upper hand: Parliamentary bills on limiting the power of the Guardian Council and the other increasing Presidential powers; • Current regional tensions have complicated the political equations in Iran; • Foreign relations influenced by the Iraq crisis, the current Iran-EU negotiations and continued US antagonism;

4. Key Political Processes • There are indications that the key centrist figures have achieved a (Temporary) Truce in the light of internal and external challenges. Signposts include: • Apparent high-level agreement on Khatami‘s new bills (to be tested in the Expediency Council); • Release of Abdullah Nouri and lifting of house arrest on Montazeri; • More active campaign of easing domestic tensions; • HOWEVER, the marginal elements on both ends of the political spectrum are not at ease with this scenario. • Hard-line conservatives are undermining the process by actions such as the arrest of Abdi, the death sentence against Aghajeri, rejecting Khatami’s bills etc.; • Also; ultra-reformists and intellectuals believe that a centrist coalition will work against the interest of democratization – they are also concerned about the threats of a renewed campaign against intellectuals in light of the centrist truce. • Notwithstanding, the centrists have managed a political calm.

5. Key internal and external challenges • Absence of a dominant political discourse for the time being; • New orientation will depend on many factors including the impact of the Iraq crisis on Iran; • Popular discontent at the slow pace of reform reinforced by the voter behavior in large cities in the recent local council elections; • Behavior of marginal rogue elements, both on the internal and external front; • Unemployment and consequent social tensions; • Managing ethnic and provincial demands emerging from gradual decentralization and liberalization; • The Iraq Crisis and continued US antagonism against Iran.

6. Tactics / Tendencies on various Levels

7. Understanding Conservative Constituents Keeping the society uninterested so that voter turnout remain low in the upcoming elections; (They used these tactics to kill the local councils by dissolving the Tehran City Council two months before the elections) Hard-line elements could potentially try to humiliate Khatami before the next presidential elections; Conservatives as a whole will continue to make the economy their own topic…

8. The Political Deadlock • Iran‘s domestic political balance of power is paralyzed due to deadlocks on two different levels: • The regime as a whole is affected through the factional disagreements and the absence of a dominant political discourse; • The conservative camp (theoretically powerful enough to override the others) is paralyzed through conflicting interests between the various constituents; • The paralysis can be ended through: • The re-engagement of the Qom-based senior clergy in politics supporting one of the key factions; • The emergence of a new political agenda carried by a popular politician. • The impact of the Iraq Crisis could be significant in the new balance of power.

9. Iran‘s Concerns in the Iraq Crisis - 1 • On the domestic front: • Instability and its impact on the domestic balance of power; • The MKO factor and its security implications; • Security challenges emerging from US view on Iranian involvement in the conflict; • Impact of an Iraqi disintegration on Iran’s ethnic groups; • Impact of Iraq’s re-emergence as the main center of Holy Shiite institutions; • The Kurdistan Factor; • Impact of the Iraqi oil sector on OIC interest in Iran’s future; • On the international level: • Iran-US relations; • Iran-EU relations; • Oil market scenarios.

10. Iran‘s Concerns in the Iraq Crisis - 2 • On the regional front: • Future constellation of the region; • Power projection in the region; • Power projection in Iraq, especially the role of Shiites; • The impact of the conflict on the Iraqi Shiites; • Increased regional tensions, should Iraq be disintegrated; • Impact of Iraq developments on Saudi position and stability; • Issue of regional hegemony and competition between Iran and Iraq (Post-conflict Iraq, if in one piece, would have a potential for hegemony); • Iranian analysts and strategists across the political spectrum believe that this war is about US domination of the entire region, which is understood as “undermining Iranian interests”. • Consequently, all see the necessity of a proactive foreign policy response to the new situation.

11. Source of Contradiction in Iran‘s Foreign Relations • Iranian foreign relations suffer from lack of consensus when there are opposing views among the public opinion determinants (Public opinion in the Islamic world, world perceptions of Iran, and domestic public opinion). • Key determinants for Iran: • Public opinion in the Islamic world (mainly of concern to the “Cultural Conservatives”); • Internationalperceptions of Iran (mainly of concern to the “Economic Right” and the “Reformists”); • Domestic public opinion (mainly of concern to “Reformists”);

12. Iran‘s Response to the Regional Crisis -1 • The domestic discourses have been put on a security footing; • Calls for unity are more evolving around „regime reconciliation“ rather than „national reconciliation“ • Khamenei seems to take more direct charge of issues, dedicating time to marginal issues that could be significant (eg. His long trip to Sistan-Baluchestan). • Iran‘s response in foreign relations has mainly focused on 3 levels; i.e.: • Consolidating Iran‘s regional position and relations, interacting with the majority of regional players, including Turkey, UAE, Saudi Arabia etc.; • Deepening the relations with the European Union as a leverage against potential future US domination in the region; • Seeking a new strategic relationship with India as a leverage in regional relations;

13. Iran‘s Response to the Regional Crisis - 2 • Iran-EU negotiations on a Trade and Cooperation Agreement (including a dialogue on political as well as human rights issues) are very significant for Iran; • At the same time, despite all rhetoric, it seems that Iran has kept the door open for a limited crisis-related dialogue with the US, especially through the UN and through Iraqi entities; • Potential for rogue elements to create crises by acting irresponsibly – Iranian rogue elements could try to use proxies to advance their interest; • The current outlook for the war (i.e. the eventual removal of Saddam, but with more difficulties than expected) is an acceptable outcome for Iran, provided that Iraq does not disintegrate and the Shia of Iraq have access to power in post-Saddam regime; • The outcome of the Iraq crisis is very significant for Iran and can both be a threat or an opportunity for Iran-US relations.

14. What Iran will watch closely in the US behavior: • US respect for the Shiites of Iraq, especially the position of SCIRI in the future developments; • US treatment of the MKO as a terrorist organization - ; • Involvement of Iran in managing the post-Saddam issues, especially the prevention of Iraq’s disintegration, prevention of civil war and tribal confrontations, as well as the disarming of the Iraqi people. • American discourse towards Iran’s regional role in the new regional constellation. • Potential facilitator in the new relationship (not necessarily a fully normalized relationship) will be the UK. • The political capital needed for a better relationship with the US could only be developed if a new dominant discourse emerges in Iranian politics.

15. Key Milestones • Regime behavior on the following issues will be indicative of the balance of power: • Decision on two bills introduced by the President – especially the final decision by the Expediency Council; • Continued negotiations with the European Union with the objective of signing an Trade and Cooperation Agreement; • Iran’s opening towards a dialogue with the US in the light of a potential victory for the US in the Iraq crisis; • Emergence of the new political discourse around the concept of “national interest” potentially including an open agenda of normalizing ties with the US – this discourse will emerge within the context of the 2004 elections; • Diversity of political groupings represented in the 2004 Majles elections; • The consolidation of the emergence of the “economic lobby” in the format of “Executives of Construction” gaining more power and potentially introducing the next President.

16. Finally: Why Iran needs nuclear energy?