Make a Deal with Iran

With instability in the Middle East now compounded by a resurgent Russia, the time is ripe to push for a major breakthrough in U.S.-Iran relations.

Senator Joseph Biden (D-DE), the presumptive Democratic nominee for vice president, last year listed both Iran and Russia as threats to U.S. interests. Unfortunately, he did not offer a way to prioritize the challenges posed by Tehran and Moscow. Senator John McCain (R-AZ), for his part, has shifted his public statements in recent months, giving greater attention to Russia as a challenge for Washington and the West, and de-emphasizing (at least in his speeches) the threat posed by Iran.

Leaving aside whether their assessments are correct, let's address a different question. How does one's stance on Iran (or Russia) affect other foreign- and domestic-policy promises? Both Senators McCain and Obama have made a series of statements about what they would do as president. Among both their laundry lists: bring down the cost of energy-both to help American consumers but also to deprive "rogues" of petrodollars; help Europe diversify its energy supply so as to reduce dependence on Russia; bring Ukraine and Georgia into NATO; make progress in stabilizing Iraq and Afghanistan-both to permit the withdrawal of U.S. forces and to prevent chaos; and deter Iran from acquiring a nuclear weapon.

To achieve all of these goals-not just the last one-the next president needs a major breakthrough on Iran-one that would end the standoff that has lasted since 1979.

OPEC president Chakib Khelil has repeatedly noted that one of the factors keeping oil prices higher than they ought to be is the perception among traders and speculators that a clash between Iran and the United States-especially a prolonged military confrontation-is likely. Khelil recently observed that oil should be trading at about $70 per barrel, rather than the significantly higher prices we've seen in the last several months.

In addition, Iran's oil production and processing complex is outdated and in need of repair. With Iran fully reintegrated into international financial and capital markets, more of its estimated 136 billion barrels of reserves could be tapped. This would be especially helpful in meeting the growing demand of Asian economies for oil, which has contributed so much to keeping prices high.

And with all of the concern about the concentration and consolidation of Eurasia's energy resources by Russian firms and transport routes, Iran is the only feasible alternative to supplying Europe's thirst for natural gas. Iran has an estimated 974 trillion cubic feet of natural-gas reserves, the second largest in the world. Pipeline projects like NABUCCO, designed to give European consumers feasible alternatives to other routes owned or controlled by Russia's GAZPROM, are only cost-effective if some of Iran's natural-gas bounty is committed.

Iranian energy flowing westward to European markets would balance Russian influence-not remove it altogether-but would guarantee that the Kremlin's ability to wield a potential "energy weapon" would be lessened significantly.

And speaking of the Eurasian space, any fundamental reorientation of the region away from its traditional trade and economic links to Moscow can only occur if the Iranian "doorway" to central Asia and the Caucasus is unlocked and unbarred. Landlocked countries like Kazakhstan and Uzbekistan would benefit from having high-speed land links to Iran's Persian Gulf ports.

The stabilization of both Iraq and Afghanistan would also be served by a rapprochement with Tehran. India has recognized this with its new transport policy of linking central-Asian states via Afghanistan to Iran-projects that could generate the fees and business needed to reinvigorate a collapsing Afghan economy and begin the slow, painful process of weaning the country away from the narcotics business. Iran's ability to mediate among Iraqi factions-demonstrated earlier this year when fighting between the Iraqi government and the Mahdi Army erupted-is essential if the security conditions that are the basis for the U.S. commitment to withdraw combat forces from Iraq by 2011 are to be met.

Finally, the United States would like to see Iran cease and desist its efforts to produce nuclear weapons. The expected Iraq withdrawal and further stabilization in Afghanistan might help to assuage Iranian concerns about "encirclement." Beyond that, would a Libyan-style deal work with Tehran? It would entail something like an abandonment of all WMD programs and ending overt support for terrorism in return for the United States guaranteeing that there would be no forcible, external regime change. (Without Washington making any guarantees to support the regime against an internal challenge.)

Perhaps such an offer might be sweetened, as it was in the Libyan case, by lining up specific economic incentives that would go into effect immediately after verification. In Iran's case, this could be new international loans and a guarantee for the construction of the NABUCCO line, with firm contracts specifying prices and duration for natural gas.

Iran has presidential elections scheduled for 2009. It may be useful to recall that Mahmoud Ahmadinejad was elected in 2005, not on a platform of developing nuclear weapons or destroying Israel, but instead by promising to tackle corruption and deliver economic growth. If, prior to the forthcoming election, the United States and its European allies laid out a very specific and detailed program that included actual projects and the projected benefits to the Iranian people-rather than more generic assurances about goodwill and some small nickel-and-dime measures-not simply Iranian voters but Iranian elites might be more energized to bring about change. It bears recalling that in the 2005 elections, in the initial round, more votes were cast for reform- and engagement-minded candidates than for Ahmadinejad; even within the circumscribed limits of the Iranian political system there is room for a change of course.