The inauguration of Mr. Mahmoud Ahmadi-Nejad as Iran's new president marks the consolidation by Iran's hard-line conservatives of the main instruments of government. During Iran's June presidential campaign, Mr. Ahmadi-Nejad, a blacksmith's son, cultivated an image of modesty and piety, while his opponent, former President Rafsanjani, was portrayed as an affluent, cunning political insider who contributed to and profited from systemic corruption. While the new president appealed primarily to the economically disadvantaged, left destitute by the Islamic republic's prevailing corruption, apathy and disillusionment dominated the ranks of Iran's reformists. After eight years as president, the reformist President Khatami made very limited progress largely due to continuous interference and constant obstruction by the clerical establishment, Iran's ultimate decision-makers.

As the mayor of the Iranian capital, Tehran, Mr. Ahmadi-Nejad earned a reputation as a capable administrator but a hard-line conservative and Iranians are expecting a more restrictive environment. The revolution's committed ideologues hope that the like-minded 49 year-old, still imbued by the spirit of the Iranian revolution, will signal a return to the revolution's ideals and restore its original principles. Although he emerged from within Iran's revolutionary ranks, the new president will challenge the status quo, specifically the well-entrenched elements of the conservative establishment that reap significant economic interests from the current system of graft.

His promises of greater transparency and accountability, primarily in the state oil company, during the election campaign resonated with the masses and created high expectations. While the success of Ahmedi-Nejad's presidency remains uncertain, it will be ultimately determined by the Supreme Leader, Ayatollah Khamenei, and his inner circle, the high price of oil and a ruthlessly effective security apparatus.

Although the international community remains ambivalent and cautiously pessimistic about the new president's intentions, it can rest assured that he will speak on behalf, and under direct orders, of the clerical establishment, unlike his predecessor, Mohammed Khatami, a reformist who was appreciated by many officials internationally but not taken seriously since his word did not have clerical support.

For many in the West, Mr. Ahmadi-Nejad's victory complicates negotiations with the EU-3 (France, UK and Germany) over Iran's nuclear program and may put US support for the process in further doubt. Although the issues of human rights and terrorism are central to Iran's relations with the West, the nuclear issue will clearly continue to dominate the agenda.

Over the past year, delaying tactics were employed by both sides due in part to electoral realities, that is, uncertainty as to who would win the US elections in 2004 and the recent elections in Iran. Iran's theocrats hoped for a Kerry victory, likely to have led to direct negotiations (as Kerry clearly advocated during the presidential debates), automatically conferring the recognition from the US sought by Iran over the past 25 years, and potentially securing a more favorable deal for Iran. The Bush administration clearly preferred a Rafsanjani victory in Iran's election as a lesser of two evils. Although a tough negotiator, Rafsanjani was an experienced, pragmatic former president for eight years possessing the seasoned diplomatic skills, and significant credibility with the religious authorities, to reach as an enduring a deal as possible within limited confines. During the campaign, Rafsanjani clearly expressed his intentions to work with the West on a negotiated solution. In the end, neither the Bush administration nor Iran's theocrats realized its desired outcome.

The current situation between Iran and the West may be compared to a slow-moving Cuban missile crisis. Estimates as to when Iran will acquire a nuclear capability range from less than a year to the end of the current decade. Whether Iran is willing to permanently renounce such capacity remains the key issue. The challenges and dangers increase as more time passes. The outcome will not only determine Iran's relations with the West, but the future course of transatlantic relations. A united transatlantic position remains essential to a favorable outcome to the brewing crisis. Iran will be in a very strong negotiating position if it can astutely execute a "divide and rule" policy that exploits US-EU differences and cause a rift to emerge in the transatlantic alliance.

The prospect of a nuclear Iran may also further destabilize the region and trigger a regional nuclear arms race. Although not emphasized publicly, Iran's neighbors remain fearful, principally the Gulf States, which rely on the US for protection, and Saudi Arabia, which views Iran as the greatest threat to its national security, due also to Iran's support for the Shia community in the eastern Arabian peninsula. As Iran's regional arch-nemesis and unofficial regional nuclear power, Israel remains most concerned, particularly since Iran is publicly committed to Israel's destruction and not vice-versa. In addition, many Europeans finally woke up to the fact that they are within, or at least closely within, the striking range of Iranian missiles which may in part explain Europe's more aggressive stance in recent times.

Iran's quest for nuclear power status dates back to the Shah's reign and is rooted in deterrence and prestige. Contrary to common wisdom, it remains primarily a nationalist, and not religious, issue that draws significant support from across the political spectrum, although clerics recognize clear advantages in their pursuit to preserve and spread the revolution. According to the Iranian view, nuclear capacity will provide a deterrent to US aggression since it is surrounded and feels the noose gradually tightening. The US maintains troops to Iran's east in Afghanistan, to its west in Iraq and exerts substantial influence to its north in the central Asian republics and the US Navy continues to dominate the shipping lanes to its south in the Persian Gulf and the Indian Ocean. However, the removal of Saddam Hussein in Iraq and the Taliban in Afghanistan, both enemies of Iran, have clearly served Iran's interests.

Furthermore, the issue of Israel's nuclear arsenal, for years an open secret, is used by Iran to advance its argument of a double standard and justify its need for a nuclear capability. Ardent Iranian nationalism, rather than fervent religiosity, predominantly fuels the desire for increased regional influence, greater international legitimacy and recognition, prinicipally from the US. These remain principal driving forces in the Iranian psyche. From Iran's perspective, there will be no deal on the nuclear issue in principle unless the US is involved in negotiations, preferably directly; the US is prepared to make significant concessions, including the lifting, or at least the substantial easing, of the 25-year embargo; and the US renounces all references to regime change in Iran.

In the months ahead, the new president is likely to engage in a game of brinksmanship in an attempt to extract and accumulate significant political capital, particularly in terms of domestic and international credibility, if the situation deteriorates and draws closer to crisis mode.

In addition, the uncertainty and threat of conflict may further increase the price of oil, further benefiting Iran's economy, distract ordinary Iranians from the hardships of daily life, and silence the political opposition, particularly within the reformist ranks. The new president may eventually use a crisis as a pretext for cracking down on all opposition as collaborators and enemy agents of the Great Satan, that is, the United States.

On the other hand, the new president may prove a tough negotiator but ultimately amenable to a deal that guarantees a satisfactory face-saving mechanism that allows both sides to claim victory and not lose face with constituents and the international community. Although no possibilities can be excluded, there is simply no evidence to support such optimism at present. For now, it remains wishful-thinking.
 

ASIAN DIMENSION

With the geopolitical center of gravity shifting to Asia in the 21st century, the "Asian dimension" of the brewing crisis must not be underestimated as evidenced by significant Chinese and Indian investments in Iran's oil sector and the real prospect of a pipeline connecting Iran, Pakistan and India. Despite the formal consolidation of the US-India strategic partnership with Indian Prime Minister Singh's recent state visit to Washington, India is unlikely to compromise on its energy resources which it views as essential to its national security and prospects for rapid growth.

Whether catering to Myanmar, Zimbabwe, Venezuela, Cuba or Uzbekistan, China will continue to define its diplomacy and geopolitical strategy, particularly beyond its immediate periphery, in opposition to the US. Iran is no exception. If the crisis were to reach the floor of the Security Council, one can expect a Chinese veto. However, unified pressure by the international community, could at least guarantee an abstention.

Iran, including the other energy-rich states of the Persian Gulf, is shrewdly exploiting the geo-strategic, and principally Asian, competition for energy resources. Although energy-hungry Asia is increasingly important to Iran's interests, and may one day become Iran's primary energy export markets, Europe remains Iran's principal trading partner for the foreseeable future.
 

RUSSIA

Russia remains a leading supplier of Iran's nuclear development, which provides a source of desperately-needed hard currency. However, the Russian leadership felt deceived that Iran was not forthright in its intentions with respect to nuclear development. Russia can be expected to take a fairly calculated and pragmatic stance in the current debacle, weighing all options, and acting purely in accordance with its national interest.

Important factors include a desire to keep a healthy economic relationship and political dialogue with the US and Europe and fear of a nuclear-armed Muslim state to its south within striking distance, particularly at a time when Russia is experiencing serious difficulties with its own restive Muslim minorities in its southern regions, primarily Chechnya, which continues to present a real and constant potential threat of spillover to surrounding areas. In light of this background, if the crisis reaches the UN Security Council, one can at least expect a Russian abstention. If near unanimous international pressure results due to persuasive evidence implicating or blatantly exposing Iranian violations, a Russian vote against Iran should not be surprising. Ultimately, sanctions could only be effective if they are multilateral and strictly enforced, in order to avoid the difficulties of the UN's Iraq sanctions in the ‘90's.