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.
 

IAEA

When discussing evidence of Iran's nuclear intentions, there is a tendency to draw comparisons to the erroneous evidence surrounding Iraq's WMD program, particularly when statements emanate from the US. However, the IAEA (International Atomic Energy Agency) has been at the forefront in providing some of the most reliable evidence. Although it has not declared officially that Iran is pursuing a nuclear arms program, it has clearly highlighted Iranian violations of its international obligations, failure to report these violations and provide adequate explanations. The recent re-election of Mohammed El-Baradei as head of the IAEA is likely to guarantee a continuing policy of cautious vigilance.

THE US AND EUROPE

The Bush administration's first term provided no clear policy on Iran. It remained broadly divided between the neo-conservatives pushing for regime change and realists advocating a more pragmatic approach. Although the second Bush administration marks a tilt in favor of the realists, the neo-conservatives must not be discounted from the debate.

With respect to the EU-3, the British are more than likely to remain resolute, while many Americans have been surprised by French support for a tough stance. As Iran's largest trading partner, Germany's Chancellor Schroeder has expressed a commitment to remain firmly coordinated and united with the US. However, a victory by Angela Merkel in Germany's September elections is likely to solidify this unity and satisfy any skeptics within the Bush administration vis-à-vis Germany.
 

THE MILITARY OPTION

Although the military option appears unlikely at present, it cannot be excluded, principally if all diplomatic means are exhausted and prove fruitless. It's highly unlikely that the international community would approve such action, therefore the US would likely proceed alone, or together with the support of a coalition of select allies, and much smaller than Iraq's coalition of the willing.

Contrary to misleading reports, there would be no ground of invasion of Iran. It is simply unsustainable considering that the US military is heavily engaged in Iraq and other commitments around the world. In addition, Iran's ability to complicate matters and create mischief for US forces in neighboring Iraq and Afghanistan remains a harsh reality.

Although some prefer the removal of Iran's theocrats by force, ordinary Iranians would react to any intervention due to strong nationalist feelings and an obligation to defend their homeland against foreigners, and not out of any liking of the clerical elites.

If an attack occurs, it would be in the form of a surgical air-strike with the purpose of destroying Iran's nuclear capabilities, while avoiding as much collateral damage as possible. Alternatively, sabotage by commando units is possible, although less likely due to the logistical challenges involved.

As noted by Vice President Cheney in early 2005, Israel's role remains unpredictable and could possibly strike unilaterally with or without US support. Although Israel successfully destroyed the Iraqi nuclear plant in Osirak in 1981, the logistical challenges for Israel in the current situation are highly formidable, ranging from Iran's air-defense systems to the ability of Israeli aircraft in reaching such long-distances. A possible missile counter-strike against Israel by Iran cannot be ruled out.

Furthermore, an Israeli military strike against Iran could prove regionally destabilizing by intensifying Iran's support for terrorist movements. Its backing of Hezbullah operations in southern Lebanon against Israel would complicate Lebanon's road to recovery and normalization and Iranian support for Palestinian militant groups in the occupied territories and Israel proper would further jeopardize the extremely fragile Israeli-Palestinian peace process, which for many is already on life-support.

A recurrent argument for a strike is the claim that Israel's action against Osirak, an Iraqi nuclear power plant, delayed Iraq's ability to create a bomb by 10 to 15 years. By the time of the 1991 Gulf War and the eventual presence of UN inspectors in Iraq throughout the 1990's, Saddam Hussein's ability to produce nuclear arms was neutralized. Although a strike against Iran would not stop its nuclear desires, it could significantly delay it in the hope that the clerical regime's demographic time-bomb (with over two-thirds of Iran's population under 30) would eventually remove it from power. However, to a certain extent this argument is based upon the premise that Iran's nuclear program is driven primarily by the clerics. On the other hand, a future secular Iranian regime could prove more amenable in cooperating with the international community and reaching a satisfactory outcome. However, this remains far from predictable.

Ultimately, the main obstacle to any military option remains acquiring reliable intelligence that identifies the locations of alleged illicit nuclear materials. If located in populated areas, the collateral damage could be significant. If stored deep underground, "bunker-buster bombs" could prove effective but not completely dependable.
 

CONCLUSION

The challenge remains finding a way that provides for the Iranians to use nuclear technology for power generation, that is, civilian purposes, while ensuring it cannot use that technology for military purposes, specifically enriching uranium to create a nuclear device.

Iran will not renounce its nuclear option unless there is a deal to normalize relations with the US, which would include the lifting, or at least easing, of sanctions and resolving all outstanding disputes. Ultimately, if the US is not at the negotiating, or at least provides its firm but tacit approval for a settlement, no deal can be reached.

Perhaps "creative" diplomatic language may guarantee a satisfactory outcome allowing all sides to claim victory. For Iran, this would entail a claim that it made the sovereign choice to cooperate with the international community, while in principle retaining sovereignty over its nuclear option, that is, "Iran cooperates today, but it does not mean that it cannot withdraw tomorrow." The US and Europe could claim that Iran has renounced its nuclear option and locked itself into an international arrangement that allows for complete, transparent, continuous, consistent and verifiable inspections.

Such "creative" language may deliberately exclude terms such as "permanent" and particularly "irreversible dismantlement" from any final document, leaving it for future negotiations should the need arise. Although such an accord would reduce the risks of a confrontation, it does not necessarily exclude the possibility of one occurring. For any agreement to endure the test of time, the concept of good faith is fundamental. At present, such good faith appears to be in very short supply.
 

August 2, 2005

Marco Vicenzino is the Director of the Global Strategy Project in Washington, DC.

Updated 8/8/05