Bringing Iran in from the cold: is there an opportunity here?

Back in his State of the Union address in 2002, US President George W. Bush classified Iran as a member of an “Axis of Evil”, which was fundamentally antagonistic to the foreign policy and security interests of the United States and seeking to inflict harm on it. Since the Islamic Revolution toppled the pro-American regime of Mohammad Reza Shah in 1979, successive US administrations have characterised Iran as a ‘rogue state’ with a repressive internal regime that makes it all the more likely to carry out subversive activities abroad and violate international law and norms. Much of the anti-Iranian sentiment in Washington was driven by the fact that the Ayatollahs in power in Tehran constantly demonised the US, describing it as the “Great Satan” and proclaiming “Death to America”. The regime made clear that its priority was defying the US and Israel and their friends and allies rather than developing the country for the benefit of its 92 million people, the largest population in the Middle East. The US was blamed for maintaining the repressive regime of the Shah in place and for organising a CIA-led plot that ousted the popular nationalist Prime Minister Mohammad Mosaddegh in 1953.

Over the years the new government launched a number of provocations that demonstrated a willingness to act on this ideological hostility. The US Embassy in Tehran was seized and 56 US diplomats and embassy staff held hostage for over a year. The Carter Administration dispatched an inept military force to try to rescue them. In 1982, jihadist insurgents bombed a US Marine barracks in Beirut, killing 250 US servicemen and women. The Reagan administration pointed immediately to the complicity of Iran and withdrew its forces from Lebanon, leaving the country at the mercy of Hezbollah, Tehran’s key regional proxy. From Washington’s perspective, the Islamic Republic was a core sponsor of international terrorism and its fingerprints found on a number of attacks worldwide, including on the Israeli Embassy in Buenos Aires.

But the Reagan administration bombed Gaddafi’s Libya in 1985 in response to an attack on US soldiers in Berlin, not Tehran, indicating that there were many other sponsors of terrorism throughout the Middle East. This complex reality became even clearer after the 9/11 terrorist attacks against New York and Washington.

Al Qaeda had been operating from Somalia and Afghanistan, not Tehran, and as a Sunni-based organisation it was deeply hostile to Shiite Iran. The Taliban, Al Qaeda’s ally in Afghanistan, had killed Iranian diplomats inside their consulate at Mazar-i-Sharif. Efforts by the CIA to link Iran to the 9/11 attacks did not produce any tangible evidence. Indeed, in the immediate aftermath of the US invasion of Afghanistan in the autumn of 2001 to topple the Taliban regime, the Ayatollahs reached out to US President George W. Bush to propose cooperation against the Taliban and a normalisation of US-Iran relations. This was a major concession from the Iranian regime, which had reacted with great bitterness to Washington’s support for Iraq in its war with Iran (1980 – 1988). Iran lost one million of its population during the fighting and felt deeply victimised by Saddam Hussein’s unprovoked aggression. Yet Tehran’s overture to Washington in 2001 was met with no response from the Bush administration.

Going nuclear

Terrorism aside, the biggest irritant in Iran’s relationship with the West has been its nuclear programme. This was begun in the 1970s by the Shah as a civilian effort and then continued under the Islamic Republic. The Ayatollahs have always denied that they were seeking a nuclear weapon, but their constant obfuscation about nuclear processing activities and failure to cooperate with the International Atomic Energy Agency (IAEA) has not inspired trust. Moreover, Tehran has insisted on keeping its own nuclear fuel cycle and enrichment capability based on a number of reactors spread across the country. This is not technically necessary as nuclear fuel rods can be sourced from the recognised nuclear suppliers abroad and thereafter sent back for reprocessing. But Iran has always feared that dependency on foreign suppliers would leave it vulnerable to blackmail or sanctions. On the other hand, as it proclaimed its sovereign right to enrich fuel, it only reinforced international suspicions that it was pursuing a clandestine nuclear weapons programme. Why would a country with some of the planet’s largest oil and gas reserves need such a large nuclear programme in any case?

Refusing to come clean about past nuclear activities and putting obstacles in the way of IAEA inspections and monitoring were a violation of Iran’s obligations under the Nuclear Non-Proliferation Treaty, but the Iranian case was especially alarming for the US and Europe as Iran had committed publicly to the destruction of Israel.

The theocratic and absolutist nature of the Iranian regime and its vitriolic hatred of Israel and arming of Israel’s regional adversaries convinced most Israelis that if the Ayatollahs ever got the nuclear bomb, they might well use it against Jerusalem and Tel Aviv or at least to deter Israeli retaliation against Iran-backed groups like Hezbollah and Hamas. Tehran had certainly developed the long-range ballistic missiles to carry a nuclear warhead as far as Israel or its rivals among the Gulf monarchies.

The Israeli Prime Minister, Benjamin Netanyahu, built his entire political career on ringing the alarm bell about the Iranian nuclear threat. He secured a pledge from successive US presidents that they would not allow Iran to acquire a nuclear weapon. How to achieve this, however, was another issue, short of going to war against Iran to bring about regime change. After the Iraq debacle there was little enthusiasm in Washington for another land invasion and military occupation, which would have been necessary to fully dismantle all of Iran’s nuclear facilities. Netanyahu pushed often for a military solution to pre-empt Iran’s ability to cross the nuclear threshold. Israel had done this against Saddam Hussein’s Iraq by destroying its reactor at Osirak in 1981. But Israel did not possess the bunker-busting heavy bombs to do the job comprehensively against Iran’s underground nuclear infrastructure all by itself. It needed US involvement too and this was something that successive US Presidents (before Trump’s second term at least) were unwilling to provide.

So other methods had to be found. One way was to try to slow down or sabotage the Iranian nuclear programme, if it could not be stopped altogether. In 2010 the US and Israel jointly carried out the first known major cyber-attack (codenamed Stuxnet) against Iran’s largest nuclear power plant at Bushehr on the Persian Gulf coast. It made centrifuges spin out of control and is credited with destroying over 1000 of them; although, as is usually the case with offensive cyber operations, both the US and Israel were extremely coy about acknowledging their involvement and provided no details.

Israel’s intelligence agencies, Mossad and Shin Bet, proved adept at carrying out (and at regular intervals) sabotage operations against Iran. They put sticker bombs on the cars of Iranian scientists working on the nuclear programme, sabotaged components that Iran was importing from clandestine networks abroad and even planted bombs inside Iranian nuclear facilities such as Fordow. Commanders of the Iranian Revolutionary Guards Corps (IRGC) were assassinated on visits outside Iran. The Israelis struck the IRGC post inside the Iranian Embassy in Damascus and the first Trump administration took out the notorious IRGC leader, Qasem Soleimani, in a drone attack, also in the Syrian capital.

Yet these covert operations, no matter how ingenious, could only delay but never stop a nuclear programme to which the regime in Tehran was devoting vast resources. Thus, the Obama administration tried the arms control track and in 2015 concluded the Joint Comprehensive Plan of Action (JCPOA) with Tehran. It froze the nuclear programme at a 3% enrichment level, sufficient for civilian, research and medical purposes, but too low down the scale to enable Tehran to manufacture a nuclear weapon. The nuclear deal provided for enhanced IAEA monitoring and for automatic “snap back” sanctions against Iran if it failed to comply with the agreement. In return, the Iranian regime was promised the lifting of many of the long-standing sanctions against it for its non-cooperation on the nuclear file and the unfreezing of its sovereign foreign assets, mainly deposited in the US. The deal also was overseen by the five UNSC permanent members (all nuclear powers) and Germany as part of a 6+1 framework. The EU too was involved as the facilitator of the negotiations. This international framework was a reassurance to Tehran that it was not dealing with Washington alone and that a degree of fairness in implementing the various terms of the JCPOA would be applied.

The JCPOA could have been the first major step in rebuilding trust between Iran and the Western powers and bringing it in from the cold. It would have brought in essential capital for the country’s badly retarded economic development, eased foreign investment particularly in the energy sector, raw materials and agriculture and set up an international monitoring mechanism that would have made the internal workings of the regime more transparent and predictable for the international community. The removal of many sanctions would have opened the country up to foreign trade and communications, helping to break down the acute sense of isolation from which its educated but impoverished population has long suffered. The deal would have also put more pressure on Netanyahu to move forward on Middle East peacemaking as Israeli obstructionism could less easily be blamed on Tehran’s nuclear threat, even if Iran’s recognition of Israel’s right to exist would not have been on the cards for some time. Still a long way to go but a useful first step.

But under Netanyahu’s pressure, the first Trump administration abrogated the nuclear deal in 2018 despite the fact that the IAEA produced eight reports stating that Iran was in compliance. Trump’s arguments were that a regime that had been untrustworthy in the past could never be trustworthy at all and would eventually violate the agreement. Moreover, he criticised the deal for ‘only’ lasting  15 years, even though that is a fairly standard time for nuclear arms control accords. And in that time, much might have happened in terms of Iran’s political development towards greater moderation that might have permitted a better deal to be negotiated to succeed the JCPOA.

Yet the major objection of US Republicans, echoing Israel, was that the nuclear deal did not cover Iran’s ballistic missile programme, nor its regional behaviour, especially its support for radical anti-Israeli groups in Lebanon, Gaza, Syria, Iraq and Yemen. Giving away too much on sanctions would only allow Tehran to devote even more resources to its nuclear programme, or so it was said. No agreement between adversaries is ever perfect, particularly a first, tentative step in de-escalating Iran’s fraught relations with the West, but the perfect is also the enemy of the good.

Trump tore up a limited but functioning agreement claiming that he would put something better in its place. This, of course, never happened. Instead, Trump re-imposed sanctions on Iran under a policy of “maximum pressure”, but Iran has lived under this kind of economic pressure for so long that it doesn’t make a lot of difference to re-apply it. Although the Europeans, Russia and China remained in the JCPOA, for Tehran the US was the key factor in both the economic and military sense. With Washington out of the agreement, the Iranian regime no longer felt bound by it. It re-started its nuclear processing and within a few years was at 60% grade, close to what was needed for a nuclear bomb.

At that time, and despite the failure of the JCPOA and renewed US sanctions, Iran seemed to be riding high. Its arch enemy, Israel, was being riven by political and legal disputes between its liberal and right-wing ultra-orthodox communities. Thousands came onto the streets of Tel Aviv to protest against Netanyahu’s attempt to bring the judiciary under political control. Across the border in Syria, its long-standing ally, Bashir al Assad, had survived an effort by numerous opposition groups to dislodge him in the wake of the Arab Spring of 2011, although at the cost of massive human rights abuses and the use of chemical weapons against his own people. In Lebanon, Tehran’s proxy Hezbollah had consolidated its stranglehold on the multi-confessional government and had built up a massive arsenal of missiles to threaten Israel. In Gaza, the Iranian-funded and armed Hamas had taken control from the Palestinian authority. In Iraq, the gradual withdrawal of US troops had strengthened the power of the pro-Iranian Popular Mobilisation Forces. And in Yemen, the pro-Iran Houthis were in power and gaining more control over the country. Iranian leaders boasted that they had surrounded Israel with a “Ring of Fire” of well-armed and trained proxy forces able to attack it from three sides.

Meanwhile, the US had done the Ayatollahs a big favour by removing their two principal enemies: Saddam Hussein in Iraq and the Taliban regime with its Al Qaeda affiliate in Afghanistan. The Gulf monarchies, scared of Iran and unsure of American support and reliability, rushed to make peace with Tehran. Saudi Arabia even restored diplomatic relations, mediated by the Chinese. The Gulf States, dependent on their oil and gas exports, were worried about Iran’s capacity to disrupt tanker traffic through the Strait of Hormuz. Despite its international isolation and economic fragility, Iran with its close-knit regional security network seemed to have emerged on top of its more fragmented and anxious neighbours, most of them hedging their bets.

But just as a week is a long time in politics, what a difference two years can make when it comes to geopolitics. A bridge too far can also become a provocation too far.

Iran is the only country to have publicly welcomed the massacre of 1200 Israelis by Hamas fighters on 7 October 2023. Israel responded not just against Hamas but by using this opportunity to destroy (or at least weaken for many years to come) all its adversaries in the region, viewing this all-out strategy as the only way to prevent a repeat of 7 October. After crushing Hamas and Hezbollah and assassinating most of their leaders, Israel turned its attention towards Iran.

The Israeli air force pummelled Iran’s cities and nuclear installations and killed a number of scientists connected to the nuclear programme as well as 25 top IRGC leaders. Having destroyed much of the country’s air defences, the Israelis cleared the way for the US to drop 14 bunker busting bombs on Iran’s core nuclear sites, like Fordow and Isfahan. Although some of Iran’s nuclear fuel may have survived somewhere, the core nuclear programme has been buried under thousands of tonnes of rubble and will take many years to reconstitute. The Israelis demonstrated that they have deeply penetrated the Iranian regime and security and intelligence establishment (notwithstanding the thousands of executions that the regime has carried out over the years of alleged “Israeli spies”). The Israeli air force also had unchallenged control of Iran’s skies. To add insult to injury, the Assad regime in Syria was overthrown by jihadist rebels, denying Tehran its essential transit territory to supply Hezbollah and Hamas with weapons. The gap between the regime’s defiant rhetoric and the military reality of weakness and bluster was laid bare.

What comes next?

Yet military defeat is made worse for the regime by its weakening grip on its own population. Facing sanctions for decades, with a devalued currency, power outages daily and now water rationing due to a devastating drought (that may even require Tehran itself to be evacuated), Iranians are desperate for change and an end to the sclerotic regime of the Supreme Leader, Ayatollah Ali Khamenei, who has been in power since 1989. The regime has brutally repressed street demonstrations and imprisoned and even executed some of the protest leaders. But it has been forced to give way a little. The notorious Morality Police have disappeared from the streets and many women now refuse to wear the hijab in public without being harassed. Ayatollah Ruhollah Khomeini, Iran’s first post-revolution leader, once called the hijab the “flag of the Republic”. Now everyone in Iran is on tenterhooks as they see the end of the 86 year-old Khamenei’s rule fast approaching and a significant turning point for the country on the horizon in which multiple different futures (good and bad) are possible. The country is at its weakest point since the founding of the Islamic Republic in 1979; but how will the ruling elites draw the lessons of the debacle that they have just experienced, and how will they rebuild? Try to resurrect the old, failed model of theocratic authoritarianism or push the country towards reform, limited democratisation and greater openness towards the outside world?

At first sight a bad outcome seems most likely when we consider that a smooth transition from authoritarian rule to democracy is rarely what happens, especially in countries with little or no democratic traditions to fall back on. Democracy is less in vogue these days and even the world’s most powerful democracy, the US, has given up on supporting it or promoting it, as we see from massive cuts to US foreign aid or funding of overseas broadcasting and human rights programmes. There are, alas, many different types of authoritarianism that Iran could lapse into once the rule of religious leaders and rigid dogma at the top of the political establishment have been abandoned.

Many groups in Iran have benefited from the sanctions and isolation; for instance, the IRGC members who control the nuclear programme and whole segments of the Iranian economy. They have siphoned off much of the oil revenues to build up their paramilitary units as a parallel army leading some observers to paraphrase Voltaire’s quip regarding Prussia that it “was less a state with an army than an army with a state”. Looking back at Gorbachev in the last years of the Soviet Union, they will be mindful that reforms can soon spiral out of control and unravel the entire structure of the state. The IRGC leaders probably look to Pakistan for their model: a country where the army has often intervened to make or unmake civilian governments, rule itself for long periods and always has the major share of the economic pie. Pakistan has nuclear weapons, too, which give the country a capability for deterrence (vis-à-vis India) that nuclear programmes short of weaponisation by themselves cannot achieve. The interest here is self-protection and control of resources for financial gain, not belief or ideology and certainly not an interest in the wellbeing of 92 million Iranians.

Other aspirants for leadership around Khamenei in the Assembly of Experts may prefer a different model. For instance, Putin’s Russia: strong, even messianic nationalism based around the Russian Orthodox Church and a visceral distrust of the West predominates, but crony capitalism thrives and the country integrates more into the global financial system and trade, attracting large overseas investment (at least before Putin invaded Ukraine). There is the usual strong leader, and loyal cliques are allowed to grow rich if they stay out of politics. The army is also powerful but kept in line through frequent leadership changes and purges. An intense propaganda campaign keeps the civilian population in line and mainly loyal, but good economic growth also dampens discontent and promotes loyalty to the regime. China has similar features although its economic growth and development are well beyond Iranian possibilities for the time being.

Yet another faction may look to Türkiye, which, under the rule of Recep Tayyip Erdoğan has experienced strong economic growth and maintains still some elements of representative democracy, particularly with opposition mayors controlling cities. Islam is also important in civic and cultural life but not at the Iranian level of dogma and leaves room for alternative faiths and secularism. Erdogan is a powerful strongman but he cannot control the show entirely as elections are competitive and civil society is well developed. Türkiye has a sophisticated industrial and technological base with leading companies and banks that compete worldwide. This model may appeal to Iranian reformers who have occupied the presidency in the past or who retain influence. Figures such as the former president, Hassan Rouhani, or Hassan Khomeini, the grandson of the founder of the Islamic Republic.

Another option is also on the table. The return of a rabble-rouser and populist such as the former mayor of Tehran and President of Iran in 2005, Mahmoud Ahmadinejad, cannot be ruled out. Ahmadinejad proclaimed that he would “put the oil money on people’s dinner tables” rather than allow it to flow to corrupt elites. But this promise went the way of most populist chimaeras.

Opportunities for a renewed relationship with Tehran

Yet do any of these scenarios present an opportunity for the US and its European partners to bring Iran in from the cold – at least in terms of a less hostile regime, more open to the outside world and more willing and able to do mutually beneficial deals in trade and security? We may have to wait until the shape of the new post-Khamenei regime emerges and this may take some time. There is no obvious or designated successor and there could be a prolonged power struggle among the various factions. The next leader may be only an interim one, similar to what happened in the Soviet Union after the death of long-standing leaders such as Stalin and Brezhnev. But Iran’s desperate plight means that it has to carve out a breathing space for itself. There can be no business as usual and so the West should be on the lookout for opportunities to engage with Tehran and help the cause of the reformers by showing that dialogue brings concrete benefits.

One such opportunity may arise in the nuclear domain. Just recently the Iranian Foreign Minister, Abbas Araghchi, told The Economist in an interview that Iran would be interested in “a fair and balanced deal” regarding its nuclear activities, something akin to the former JCPOA. This message was apparently also conveyed to the White House by the Saudi Crown Prince, Mohammed bin Salman, during his visit to Washington. Typical for an Iranian minister, the offer was accompanied by a good deal of bluster about Iran not being a pushover and having rebuilt its stock of ballistic missiles. Yet Araghchi confirmed that Iran had not restarted processing.

The US also has an interest in a new nuclear deal with the JCPOA serving as the basis. Iran is believed to still have 400kg of enriched uranium, which it would be useful to locate and bring under international control. Iran may have some secret processing sites that Western intelligence agencies have not yet discovered and may be able to produce a limited number of nuclear weapons in a short timeframe. A deal would also enable the IAEA to resume its inspections and ascertain on the ground just how much damage the US and Israeli strikes inflicted on Iran’s nuclear programme. The US national security establishment has divided sharply on this question. Since the 12-day war last June, the Iranians have halted their cooperation with the IAEA. A nuclear deal, which would cancel the snapback sanctions that the Europeans recently imposed on Tehran for its non-compliance with the JCPOA would make sense for both sides and help to undermine the stance of the extremists in Iran who will want to push for an operational nuclear capability as a deterrent at all costs, similar to the model of North Korea.

The second opportunity is in the economic domain. Inflation is out of control. The rial has slumped in value. The price of rice has doubled in a year. Cooking oil is up 40% and onions up 70%. Between 2018 and 2022 income per capita fell by a fifth. A third of Iranians now live below the official poverty line, which the government defines as an income less than $400 a month. Teachers earning $250 a month are more poorly paid than before the Islamic Revolution. As the regime looks at what happened with people power uprisings in Syria or across North Africa during the Arab Spring of 2011, during which once-impregnable authoritarian regimes were swept from power, it has to feel nervous. As the example of the self-immolating fruit seller, Mohamed Bouazizi, demonstrated back in 2010 at the onset of the Arab Spring, it takes only the smallest spark to ignite a political conflagration.

The regime has every interest in seeking a relaxation of tensions with the West to bring in much-needed humanitarian aid, and to help address stress issues like water management in the wake of the widespread drought and pollution due to tarry-oil smog. The Iranian President, Masoud Pezeshkian, has announced that rice production will be restricted to just five provinces next year, not the usual 17. The regime could be persuaded in these circumstances to allow Western NGOs to operate more freely (without arresting their representatives and dual nationals on charges of spying) and welcome more technical advice and assistance from bodies such as the World Bank, the EU and regional development banks. Yet first and foremost it needs to reduce its high tariff walls which dampen foreign trade and fuel corruption and lucrative smuggling rackets by the IRGC and others.

The energy sector also badly needs foreign investment and new technologies. Iran has the world’s third largest natural gas reserves, but its city dwellers suffer blackouts several times a day. Oil production at 3.5 million barrels a day has never returned to its daily output under the Shah at 6 million barrels. The regime’s 20-year plan for economic growth, adopted in 2005, has not met any of its targets. Iran badly needs to import green technologies to develop its renewables and produce more clean energy to reduce pollution and avert spiralling health costs. Here it needs Western capital and knowhow. In return, the US and other G7 partners can insist on guarantees such as a proper judicial framework, anti-corruption measures, transparent and independent boards and protected private ownership models allowing for investment or profit repatriation.

Finally, civil society and the independent media are still surviving in Iran although under constant pressure and harassment. Over 1000 executions have been carried out this year alone. Torture in the country’s infamous prisons, such as Evin in Tehran, are widespread and many prisoners mysteriously die in police custody. Since the regime realised the extent of Israel’s penetration of its security establishment, paranoia has developed and over 20,000 suspected of treason have been arrested and questioned.

Yet this doesn’t stop civil society from making its voice heard. Students organise rallies and denounce the malfeasance of the IRGC. Farmers demand more support to deal with water scarcity and desertification. Truckers, bakers and nurses agitate against cuts in subsidies. People vote with their feet. The turnout in Tehran in Iran’s last presidential elections in 2024 was just 11%. It is not easy for the West to help civil society in Iran as the hardliners immediately employ the old chant of “foreign agents in the pay of the CIA” in order to discredit the opposition. But there are ways to break down the isolation that the regime and its cronies thrive upon. More visits and exchanges can be arranged. More public broadcasting into Iran, more support for the free media especially to resist financial pressures from the government.

The US, as mentioned, no longer seems to be interested in these democracy promotion and civil society initiatives. It is up to the EU and the other G7 members to fill the vacuum. As the regime needs to ease up on repression to stop discontent sliding into revolt, it is relaxing religious laws and allowing more cultural space, for instance organising exhibitions of pre-Islamic Iranian culture in Tehran to emphasise the country’s national as opposed to religious roots. So, as this space opens up, Western governments must quietly but progressively use it to support civil society and allow more ideas and debates to circulate.

Many in the Iranian regime are waiting for the opportunity to rebuild their power base and take Iran back to “the normal state of affairs”. Already the parliament last month impeached the moderate finance minister, Abdolnaser Hemmati.  But their success is not predetermined and the West has every interest in making life as difficult for them as possible.

One way to do this is to diminish Iran’s capacity for regional interference. The EU is discussing a plan to help train and equip Lebanon’s internal security forces so that they can disarm Hezbollah. It should focus too on what it can contribute to the formation of a Palestinian police force in Gaza to provide security and gradually disarm and reduce Hamas’ presence.

The new Syrian leader, in a week that marks the first anniversary of the ouster of the hated Assad, deserves support. The government of Ahmed Al-Sharaa is far from perfect and its moves against its Alawite and Druze minorities are deeply troubling. It will take many years to stabilise Syria and a generation to rebuild it. But what the Syrians have today with all the difficulties and uncertainties is massively better than what they had under Assad.  Al -Sharaa has shown a willingness to shake off his radical past, engage with Europe and has even visited the White House. The US is lifting its Caesar sanctions against Damascus and Europe should help the Syrian transition as much as it can. The alternative of a relapse into civil war and more Iranian influence is in nobody’s interest.

Israel needs to be constructively engaged in this effort, too, if Europe and the US can convince Netanyahu and the next Israeli government that they would achieve a lot for Israel’s security if they worried more about the security and stability of their neighbours and not only about Israel itself.

The views expressed in this #CriticalThinking article reflect those of the author(s) and not of Friends of Europe.