INTERNATIONAL CRISIS GROUP – NEW BRIEFING

Iran:
Where Next on the Nuclear Standoff?

Amman/Brussels, 24 November 2004: With Iran’s nuclear clock ticking, the U.S. must become engaged
in seeking a comprehensive resolution to the crisis that includes addressing
legitimate Iranian security concerns.

The latest briefing from the International Crisis Group,
Iran:
Where Next on the Nuclear Standoff?,* argues for enhanced U.S.-EU
coordination and a serious joint offer with U.S. participation. Washington
remained on the sidelines of the two reprieves for Iran negotiated in 2003 and
again this month by the EU-3 (France, Germany, the UK), acquiescing in the deals
but not believing in them.

“The U.S. has good reasons to be sceptical — Tehran has been
playing the EU and IAEA skilfully while acting as if it has something to hide”,
says Robert Malley, Crisis Group’s Director of Middle East and North Africa
Program. “But the problem with the U.S. posture is it simply hasn’t worked. Four
years of threats without tangible incentives to change behaviour have only
bolstered hard-liners, increasing the regime’s hold on power to its strongest
level in a decade”.

Crisis Group called the 2003 deal a “crisis deferred”, because
it did not address the underlying issues. What little has changed since then is
mainly for the worse: added mistrust, fewer options available and, critically,
less time as the nuclear program goes forward. That deal collapsed, Iran’s
conservatives strengthened their position, and the country has pursued its
nuclear efforts.

Continued U.S. non-engagement would only continue this trend.
If Iran is prepared to trade away military ambitions, only the U.S. can give it
what it wants in terms of security guarantees and the prospect of normal
relations; and if Iran is not prepared to deal, then only the rejection of a
good faith U.S. offer will persuade the world to take tougher action. Waiting
for a new regime is not realistic: Iran’s nuclear clock is ticking at a faster
and far more reliable rate than its regime-change clock.

The second Bush administration will need to confront rapidly
the issue it so far has studiously avoided. This is what should happen: First,
Iran must immediately and unconditionally implement its new agreement with the
EU-3, in particular suspending uranium enrichment activities. Once the IAEA has
verified Iranian implementation, negotiations on longer term arrangements should
begin. For these to have any chance, the U.S. will need to back EU incentives
with its own. If Iran rejects a comprehensive, good faith offer, then a plan of
graduated sanctions will be needed.

“The optimal solution is diplomatic, and it ought to be given a
serious try,” says Karim Sadjadpour, Crisis Group’s Iran Analyst. “Given the
dearth of satisfactory alternatives, failure of this path likely would mean
having to learn to live with a nuclear Iran.”

The International Crisis Group (ICG) is an independent,
non-profit, multinational organisation, with over 100 staff members on five
continents, working through field-based analysis and high-level advocacy to
prevent and resolve deadly conflict.

Iran:
Where Next on the Nuclear Standoff?

OVERVIEW

On 15 November 2004, Iran and the EU-3 (France, Germany and the
UK) signed a new agreement on the nuclear standoff, with Iran accepting more
comprehensive suspension of uranium enrichment, and the Europeans dangling more
detailed economic rewards. This will keep the matter from the Security Council
for now and, like its predecessor agreement in 2003, is a positive step that
could temporarily interrupt nuclear efforts. But at best it is only a prelude to
more critical negotiations over long-term arrangements that must include the
U.S.

One year ago, Crisis Group (ICG) called the deal between Iran
and the Europeans a crisis deferred, because it did not address the underlying
issues.[1] What little has changed since then is mainly for the worse: added
mistrust, fewer options available and, critically, less time as the nuclear
clock ticks. That deal collapsed, Iran’s conservatives strengthened their hold,
and the country has pursued its nuclear program. It is imperative that the U.S.
become engaged in seeking a comprehensive resolution that also meets legitimate
Iranian security interests.

Washington stayed on the sidelines, acquiescing in the deal but
not believing in it, refusing to table incentives while warning Iran was moving
closer to a bomb. It has two assumptions. First, the current regime is
determined to develop a nuclear weapon, so the international community ought not
to be fooled into a policy of engagement. Secondly, this problem can only be
addressed by a new regime in Iran that either abandons the nuclear program or at
least renders it far less threatening — to offer the current regime diplomatic
or economic incentives would only strengthen it and delay the necessary
change.

There is some reason — based on track records — for such
scepticism. Tehran plays the EU and International Atomic Energy Agency (IAEA)
skilfully while acting as if it has something to hide. De facto violation of its
commitment to suspend enrichment activity, production of significant amounts of
uranium hexafluoride, and continued work on a heavy water reactor — among other
suspicious activities — hardly inspires confidence. Leadership in Tehran that
pursued different policies on issues such as support for violent groups or
opposition to Arab-Israeli peace certainly would alleviate concerns and, given
high popular dissatisfaction, eventual political change cannot entirely be ruled
out. Finally, EU and other international players such as Russia or China often
appear to give political and economic interests precedence over
non-proliferation concerns. Still, the U.S. posture is self-defeating, for the
following reasons:

• With regard to the nuclear program,
  if Iran is prepared to trade away military ambitions, only the U.S. can give
  it the political, economic or security compensation that it wants; and if Iran
  is not prepared to deal, then only rejection of a good faith U.S. offer will
  persuade the world. Nor should one assume Tehran’s position is static,
  impervious to influence: dangling normalised relations with Washington could
  shape views within the regime and heighten costs of a military program for
  those who would benefit from expanded trade. Under either scenario, the U.S.
  must add its incentives to Europe’s to achieve its objectives.
• With regard to regime-change, there
  is no assurance it will occur anytime soon. Events this year — rout of the
  reformists in parliamentary elections; sharp rise in oil prices; U.S.
  difficulties in Iraq — have bolstered hard-liners and raised regime
  confidence to the highest level in a decade. As reformists argue, Washington
  should exploit fault-lines within the regime, pitting those who favour
  economic liberalisation and trade against those who benefit from a closed
  economy. Instead, it is generating nationalistic unity leading to the
  combination it should most try to avoid — a regime hostile to U.S. interests
  and moving toward the bomb. In short, the nuclear clock is ticking at a faster
  and more reliable rate than the regime-change clock.

Nor has the U.S. offered a realistic alternative to EU-3
policy. Counter-proliferation efforts have mixed prospects at best. Iran’s
program appears sufficiently advanced as to be immune to sanctions. A
pre-emptive U.S. or Israeli strike would carry great risk for uncertain gain.

The U.S. has threatened Iran for four years but offered no
tangible incentives to change behaviour. It overestimated the ability of Iran’s
youth to foment political change, while underestimating the hardliners’ capacity
for political revival. It vocally pressed for regime change, thus boosting
Iran’s ambitions for a nuclear deterrent. The second Bush administration will
need to confront rapidly the issue it so far has studiously avoided. This is
what needs to happen:

• Iran must immediately and
  unconditionally implement its new agreement with the EU-3, in particular
  suspending uranium enrichment activities.
• Once the IAEA has verified Iranian
  implementation, negotiations on longer-term arrangements should begin. For
  these to have any chance, the U.S. will need to back EU incentives with its
  own. Iran has legitimate economic, political and security concerns. Assuming
  it would forsake a military program, it will only do so if these will be met.
  Enhanced integration in the world economy (e.g., through the WTO) would
  exacerbate latent divisions within the regime, strengthen pragmatic voices,
  and heighten the opportunity costs of a military program. Ideally, Iran would
  permanently forego the right to an indigenous fuel cycle, but if it is in
  compliance with the Nuclear Non-proliferation Treaty (NPT) and Additional
  Protocol requirements, the West may have to settle for less. Joint
  Iranian/international management of its nuclear facilities — not required
  under the NPT — should be considered an acceptable compromise.
• If Iran rejects a comprehensive good
  faith offer, a plan of graduated sanctions will be needed. In order to
  persuade the U.S. to go down the diplomatic path, the EU and others — China,
  Russia and Japan — should commit upfront to such sanctions — preferably
  backed by a Security Council resolution — in the event negotiations fail.

Footnote:

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