Khamenei Approaches Nuclear Decision Point

Iran negotiations may soon get serious.

Newly elected Iranian president Hassan Rowhani’s declaration that Iran is “seriously determined” to negotiate with world powers at the next round of talks this fall is not surprising. Supreme Leader Ali Khamenei has been brought to a tangible decision point on the nuclear program, and might finally agree to a series of confidence-building measures proposed last April by the United States and its partners.

Talks are most likely to progress with Iran when it believes the costs of obstinacy risks undermining the stability of the government, and steps towards a final agreement do not compromise its core nuclear rights. The world is the closest it has been to that fine balance in nuclear negotiations with Iran.

For the better part of a decade, sanctions were uncoordinated, weak and riddled with loopholes. The result was that from 2002 to 2011, Iran’s average GDP growth was 5.2 percent, hardly a successful case study for sanctions. But today the United States, working with friends and allies around the world, has systematically enhanced coordination, closed loopholes and tightened the existing sanctions regime. New financial sanctions and restrictions in particular have had the most impact. According to the International Monetary Fund, Iran’s economy has contracted two years in a row. While official Iranian numbers can be unreliable, the best estimates are that inflation hovers around 42 percent and unemployment stands at 28 percent. Oil exports have dropped 40 percent in the past year, with Iran’s currency plunging 50 percent during that same time period. A country that has the fourth-largest proven oil reserves and second-largest natural gas reserves in the world is joined only by Zimbabwe on the World Bank’s delinquent list for failure to pay its loans.

While economic pressure increased, the United States slowly tightened the military noose around Iran. U.S. arms sales to Persian Gulf allies skyrocketed during the Bush administration and have continued to rise under President Obama. From 2007 to 2010, the Gulf Cooperation Council (Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman) led the world in foreign military sales from the United States. In 2011, the Obama administration finalized the largest foreign military sale in U.S. history, with $29.4 billion in new F-15s and upgrades to Saudi Arabia. Last year, a $10 billion arms sale to Israel, Saudi Arabia and the United Arab Emirates was announced (not completed). These deals have provided advanced weaponry to ensure Israel maintains its qualitative military edge in the region, and U.S. Gulf allies retain conventional military superiority vis-à-vis Iran.

The Obama administration has also bolstered the Fifth Fleet in the Persian Gulf with additional ships and air power. Joint exercises between the United States and its Gulf allies have increased in tempo as well, the most recent being a forty-one-country maritime exercise facing Iran’s shores. While some members of Congress may still question whether the Obama administration would resort to force, Ayatollah Khamenei may not be so confident.

Moreover, the pressure for Israel to launch a military strike against Iran’s nuclear program grows with each kilogram of enriched uranium Iranian centrifuges churn out. Israel can afford to wait for negotiations to play out once again this fall, but the endgame is fast approaching. In the absence of a deal, the Supreme Leader risks facing an Israeli strike that may drag America into war.

Political tremors in the region have added weight to Iran’s challenges. In the short-term, the Syrian conflict has distracted Iran’s military proxies in the Levant. Hezbollah is less likely to cause trouble now that its troops and equipment are partially tied down in Syria, and Hamas’ political leadership has distanced itself from Tehran since leaving its headquarters in Damascus as an act of solidarity with the opposition. The more enduring challenge to Iran will be the growth of Sunni extremist groups pouring into Syria. Many of these violent sectarian groups view the battle in Syria as a larger war against Iran and its Shiite brethren. Few experts doubt that if President Bashar Assad ultimately were to fall, Iran would suffer a major strategic blow.

The $12 billion in aid provided to Egypt by Saudi Arabia, the U.A.E., and Kuwait is just the latest example of a much more concerning trend to Tehran: Sunni Arab countries are coordinating their diplomatic, financial and military resources in a manner that has not occurred in the past decade. Strong differences remain in the foreign policies of Arab states, but the common threat of Iran has become a catalyst for united action.

Now that the peace process has begun anew, Washington has also muffled the argument that the Palestinian issue must be addressed before there can be any movement on Iran. The initiation of talks between Israel and the Palestinian Authority has provided Arab governments with welcomed political space.