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U.S., Iran: Why They Will Now Likely Negotiate

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Summary

Diplomatic relations between Tehran and Washington will improve after Iran's new president assumes office Aug. 4, ending months of speculation over whether Iran and Washington will find accommodation in their nuclear standoff. In fact, in recent weeks both sides have expressed interest in resuming bilateral nuclear talks. Those talks never took place simply because Iran never had to participate in them. Its economy was in decent shape despite the sanctions, its regional geopolitical position had been secure and its domestic political environment was in disarray.

But now things are different. Tehran is devoting an unsustainable amount of resources to Syrian President Bashar al Assad in his fight against the Syrian rebellion. And while economic sanctions have not yet forced Iran to the negotiating table, Iranian leaders will likely choose to engage the United States voluntarily to forestall further economic decline. The inauguration of President-elect Hassan Rouhani provides an ideal opportunity for them to do so.

Analysis

Iran severed diplomatic ties with the United States in 1979 and has been opposed to restoring them. For its part, the United States has offered to normalize relations on several occasions, but Iran has rebuffed all such offers. According to Tehran, Washington must first change its attitude toward Iran, a diplomatic way of saying the United States must accept the country as it is.

But several other factors have informed Iran's obstinacy. Since the mid-1990s, Iran has been politically incoherent. Over the past 16 years, Supreme Leader Ayatollah Ali Khamenei has been at odds with Rouhani's two predecessors. He distrusted Mohammad Khatami's reformism, and he went through an outright power struggle with Mahmoud Ahmadinejad. During this time, Iran was thus unable or unwilling to negotiate substantively with the West. In any case, its relative economic vitality meant that Iran never had to engage the United States directly, opting for back-channel negotiations instead.

However, after 9/11, the United States became much more active in the Middle East, an encroachment that Iran saw as both an opportunity and a threat. In a major display of bilateral cooperation, Tehran helped the administration of George W. Bush topple the Taliban regime in Afghanistan.

The two sides began to deal with each other more substantively when the United States decided to oust Saddam Hussein. Washington had aligned itself with Iraqi Shia Islamist groups and Kurds to overthrow the Sunni Baathist regime. Washington's collaborators were closely tied to Tehran, and thus began a paradoxical relationship in which Iran and the United States worked with one another even as they each vied for influence in Iraq.

Their struggle over Iraq began around the same time the controversy over Iran's nuclear program began. While the two sides bargained over the future of Iraq furtively (with the exception of the three-way talks among Baghdad, Washington and Tehran), they negotiated Iran's nuclear program publicly yet indirectly. For the first few years, the diplomatic process was routed through the EU-3, which comprised the United Kingdom, France and Germany. Since 2006, the United States has been part of a broader process under the aegis of the P-5+1 group, which included the five permanent members of the U.N. Security Council and Germany. Under the administration of U.S. President Barack Obama, Washington has sought Iranian input into its multilateral efforts to bring an end to the war in Afghanistan.

Notably, the Bush and Obama administrations offered to normalize relations with Iran, but Tehran rejected them for two reasons. First, Iranian leaders believed that normalizing relations with Washington would make it easier for the United States to subvert the regime. Second, no one in Tehran could agree on how to manage relations with Washington.

A High Price

What they could agree on was that they would not normalize relations with the United States as Libya had in 2003, when it scrapped its weapons of mass destruction program and in essence acquiesced to Western policies toward the region. Tehran's political leaders may differ ideologically, but they all see Iran as a regional and international player, and they do not want to sacrifice their geopolitical ambitions for saving face in the international community. More important, acquiring a nuclear weapons capability is seen as a deterrent against any efforts at regime change and as a means for achieving Iran's geopolitical imperatives.

However, acrimony surrounds Tehran's various power brokers. Disagreements are pronounced between those who consider themselves conservatives and those considered reformists on the issue of how to achieve Iran's imperatives, especially as economic sanctions have degraded the country's economy. Political discord in Iran is aggravated by the structure of the regime, a hybrid political system whereby power is dispersed among clerics, a popularly elected political class and a security establishment dominated by an elite ideological force.

Though the Islamic Revolutionary Guard Corps has gained a tremendous amount of influence over the decades, its role in politics is still indirect, waged primarily through clerics and its veterans who enter politics. At its core, the struggle for power has been between the supreme leader, who presides over a vast clerical establishment, and a popularly elected president, who is the chief executive of the state.

Indeed, since the 1989 death of Ayatollah Ruhollah Khomeini, who founded the Islamic republic, there has been growing friction between the supreme leader and the president. Former President Ayatollah Ali Akbar Hashemi Rafsanjani, who left office in 1997, handled tensions effectively because he, like current Supreme Leader Khamenei, is a conservative and was a top associate of Khomeini.

Problems began when reformist cleric Mohammad Khatami assumed the presidency. He was elected by a wide margin twice, but his worldview clashed with the conservatives, who dominated the clerical and security institutions. It was during his second term that the United States and Iran were forced into dealing with each other in the early 2000s. Fearful that the Khatami government was too conciliatory toward Washington, the conservatives set out to wrest control over the presidency and parliament.

The conservatives believed they were better suited to manage relations with the United States. Accordingly, the Guardian Council, which oversees elections and the legislative process, disqualified thousands of reformist candidates (many of whom were incumbent lawmakers), giving the conservatives an easy victory in the 2004 elections. The following year, Ahmadinejad was elected president.

This conservative resurgence did not create the political harmony the clerics thought it would. On the contrary, it made matters worse. Ahmadinejad's ascension to the presidency divided the conservatives. He proved to be the most ambitious president in the history of the Islamic republic as he began to openly defy the clerical establishment. He even sought to weaken the clerics and enhance his own power.

He adopted a hawkish foreign policy, defying Washington on Iran's nuclear program and occasionally deprecating Israel. Naturally, his actions worsened tensions with the United States, which eventually tightened economic sanctions on Iran. What gains Khamenei made in installing a like-minded conservative president who could connect to the masses came at a high price: economic decline and infighting within the ruling conservative camp.

In his first term, Ahmadinejad avoided clashing with the supreme leader. But that changed in his second term. He defied Khamenei even on foreign policy matters. Caught between opposition from the clerical establishment and worsening economic conditions, Ahmadinejad sought to negotiate with the United States to ease the pain of the sanctions. He even agreed to swap low-enriched uranium for high-enriched uranium in late 2009. The move was overruled by Khamenei, which demonstrated that a conservative presidency does not translate to political harmony. 

In the last two years of the Ahmadinejad administration, Iran was struck by two calamities: the Arab Spring and oil export sanctions. The Arab Spring undermined the position of Iran's core Arab ally, Syria, and by extension its position in the region. The sanctions deprived Iran of money from its main source of revenue.

In 2012, Tehran saw its revenues decline by 40 percent, causing the value of the rial to plummet by more than 70 percent. In July, the United States announced additional sanctions against the rial meant to make the currency unusable outside Iran. Between December 2011 and December 2012, Iranian reserves fell from about $110 billion to slightly under $70 billion. Under these conditions, Tehran cannot hope to maintain political stability for too long, much less pursue an ambitious foreign policy. Thus, Iran needed to strike a compromise that would ease sanctions without scrapping the nuclear program entirely. However, the infighting between Khamenei and Ahmadinejad prevented them from reaching a consensus.

A Major Development

Fortunately for Khamenei and Ahmadinejad's opponents, the president was on his way out when the international situation worsened. Khamenei began preparing for the presidential election. He preferred a moderate with experience in diplomacy and economic management but who would not threaten his authority. His first choice was former Foreign Minister Ali Akbar Velayati, who became the supreme leader's chief international affairs adviser after leaving the Foreign Ministry.

Velayati possessed all the desired qualifications, but as a technocrat who had never run for office, he was unelectable. Rouhani is seen as a leader who could redress Iran's many problems, which necessarily requires negotiating with the United States. He is a pragmatic conservative with decades of experience in key government positions, most notably serving as the national security chief for more than 20 years. The various power brokers trust that he will conduct diplomacy tactically and responsibly. Furthermore, Khamenei feels secure that Rouhani's agenda of domestic reform will not undermine the clerical system.

Under the incoming Rouhani administration, Tehran's political establishment is likely to see an end to the infighting of the past two decades. Coupled with a dire economic situation, political coherence will likely lead to substantive U.S.-Iranian negotiations. Iran's decision to negotiate does not mean that an accommodation is imminent, but it is nonetheless a major development.

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