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DECEMBER 1999, pages 20, 94-95 Special Report
Iran’s Charm Offensive: Economics and Realpolitik Ease President Khatami’s Re-engagement of Iran
In a famous interview1 with CNN’s Christiane Amanpour on Jan. 7, 1998, popularly elected Iranian President Mohammed Khatami served notice that he intended to re-engage Iran with the world economically, politically and philosophically by his call for a “dialogue among civilizations.” What has followed has been a full-scale “charm offensive.”2 Almost every week brings a report of yet another “first since the revolution” visit or inauguration, all accompanied by speeches calling for more trade and better relations with everyone. Building on the more pragmatic foreign policy of his predecessor,3 Khatami has cast Iranian interests around the world from Cuba4 to Norway5 to Senegal6 to South Korea.7 Not even Iranians of other religions have escaped the charm offensive.8 Is it more than charm? At the minimum, talk of exporting revolution has almost vanished, to be replaced by the language of trade, cooperation, regional stability and peace.
Much more than charm is the emerging détente between Saudi Arabia and Iran, and their successful collaboration in limiting petroleum production and raising world oil prices outside of OPEC. The charm offensive, and a significant reduction in Iranian support of groups opposed to the Gulf monarchies,9 led to a series of meetings, most notably involving former Iranian President Ali Akbar Hashemi Rafsanjani, that resulted in several cooperation agreements.10 Iran wants foreign investment to address its significant economic problems, and the oil-producer states of the Gulf seek increased opportunities to trade off their production imbalances of various specialized petroleum products.11 The low oil prices of 1998 provided further motivation for cooperation. During March of 1999, Iran and Saudi Arabia came to an agreement on their own production quotas, an agreement that allowed Iran to calculate its cutbacks from an artificially high level, and committed the Saudis to reduction below their previously held eight million barrel “line in the sand.” The result was the run up of crude prices this spring and summer.12 As Iran and Saudi Arabia together produce about 40 percent of OPEC’s oil, an agreement between them gives them significant leverage in the organization and has led some analysts to predict OPEC’s demise or reorganization in favor of a core group of the largest producers.13 There are problems. The two countries feuded over the new head of OPEC.14 A considerably more serious risk to harmony of the Gulf states is the dispute between the UAE and Iran over control of three small islands in the Strait of Hormuz. Under the shah, Iran seized the islands from two of the future UAE emirates in 1971 as Britain was withdrawing from the Gulf. Unfortunately, the subsequent rise of Iran’s revolutionary Islamic regime did not lead to repudiation of the shah’s actions. Indeed, Iran has periodically expanded its presence and control in the islands.15 The islands are viewed as important, both for strategic control over shipping through the Strait of Hormuz, and for the oil that might lie under their territorial waters.16 But the UAE has no intention of giving up its well-documented claims on the islands, and is pushing for continued support from the other Arab states of the Gulf.17 The Iranian government is unbending, contending that it is the UAE accusations against Iran that constitute the threat to security, as if the UAE were going to attack.18 Naturally, the UAE is not happy with the emerging Gulf alignments, and has accused Saudi Arabia of abandoning it and fellow Arabs to pursue the Iranians and oil money.19 By contrast, the Gulf security issue that has received the most media attention in the U.S., Iran’s alleged massive military buildup, generates little public comment in the Gulf. That is because, in fact, the Iranian military is not undergoing a rapid expansion. Military expenses are a lower fraction of GNP than at almost any time since the shah’s era, and lower in real terms as well. Iran’s army is not being enlarged, and the overall value of Iranian arms imports and agreements for future imports was declining through 1997.20 What is expanding is Iran’s missile capabilities. With assistance from Russia, China and North Korea it is acquiring longer- range missiles and increasing its ability to produce its own missiles domestically.21 Iran also seems to be continuing to develop an infrastructure that would support development of nuclear, chemical and biological weapons, though it has signed all the relevant treaties limiting their use.22 What is Iran’s objective? Adopting the language of all powerful states, Khatami says that “A strong Iran is the best guarantor of peace and security in the region.” He terms its armaments as defensive only and asserts it has “no hostile intent” toward any other Gulf state and no intention of developing intercontinental missiles.23 Khatami also pointedly suggests that it is the presence of foreign (i.e., U.S.) forces in the Gulf that is the real cause of instability.24 It seems hard not to suspect that the U.S. is far less concerned about Iranian missiles reaching the U.S. than reaching Israel. Given that Israel’s development of weapons of mass destruction exceeds Iran’s, and that Israel has been implicated in supplying Iran with weapons technology,25 the concern is unlikely to persuade Gulf states. In June of this year stories surfaced of a defense pact among Iran, Armenia and Greece.26 While the U.S. State Department reported Greek denials of this, no other source publicly denied it.27 In September foreign ministers of the three countries met again, allegedly to discuss tourism and trade, not defense.28 Why would Christian Orthodox Greece, confronted by conflicting territorial claims posed by secularist but Islamic Turkey, find a welcome in Islamic Iran? The opening is provided by Iran’s concern about Turkey’s military treaty with Israel, and the fact that the Greek prime minister has been engaged in his own charm offensive. For their part, the Iranians have a long history of concern about suppression of Muslim culture in Turkey, and have struggled with Turkey over support of the Kurds.29 In July, during the height of the student protests in Tehran, Turkey may actually have bombed Kurdish areas in Iran.30 However, in August, Turkey and Iran signed a security deal establishing a “hot line” between their militaries, and an exchange of information on illegal groups. Perhaps oil and economics again had the upper hand, with Turkey needing to secure its supply of Iranian natural gas.31 Among Iran’s neighbors in the Caucasus and Central Asia are relationships full of possibilities for Iran, but burdened with history. The conflict between Russia and Iran has shaped history in this area for centuries. Since the fall of the Soviet Union, Iran has been seeking to take on the role of a regional power, setting up various cooperation organizations and mediating the Nagorno-Karabakh crisis between Azerbaijan and Armenia.32 Issues in this area that shape Iranian foreign policy include concern to deflect any desire of Iran’s Azeri population to reunite with Azerbaijan, expanding economic opportunities for Iran’s struggling economy, and thwarting Turkish drives for power in the region.33 This context is played out against the issue of oil reserves in the Caucasus and Iran’s desire to be both the conduit for its export and to supply oil industry technology to the region. A series of articles in Iranian media both promote this possibility and discuss the difficulties. Iran, like everyone else, does not have a handle on how to prosper in this region.34 The U.S. government seeks to block Iran by opposing the undoubtedly shorter and cheaper Iranian pipeline routes favored by major Western oil-producing companies in favor of the Baku-Ceyhan pipeline that would require oil from the Caspian basin to pass from Azerbaijan through Georgia to the Turkish Mediterranean port of Ceyhan. 35
In September, the Austrian president became the first sitting European head of state to visit Iran since the 1979 revolution. With him were 130 businesspeople.36 This visit, as much as anything, may signal why the United States will be unable to block Iranian economic development. The twin problems for Iranian relations with Europe—the 1992 assassination of rebellious Iranian Kurdish leaders in the Mykonos restaurant in Berlin, and the fatwa against author Salman Rushdie issued when Ayatollah Khomeini was Iran’s supreme leader—have both been swept aside. Iran’s current government has distanced itself from the death threat to Rushdie and the UK has officially accepted that and restored ties. (Significantly, the UK also “regretted the offense” the book caused Muslims and assured Iran that no EU government “condoned the content” of it).37 Again the motivation is trade: 60 percent of Iran’s oil output goes to Europe, and Iran does $1.8 billion in annual trade with Germany.
Discussion about relations between the United States and Iran have been conspicuously absent from this analysis. The continuing attempt by the administration of President Bill Clinton to portray Iran as an isolated, inwardly focused nation is wearing very thin when contrasted with Iran’s actual foreign policy. Ironically, if the United States and Iran are searching for common interests, there are two common concerns. Despite the occasional exchange of prisoners—some of them pathetic, broken, middle-aged men who have spent their entire adult lives as prisoners of war—and sympathetic words about the plight of the ordinary Iraqi, Iran has not warmed up relations with Saddam Hussain, and supports the U.N. sanctions against Iraq.38 Neither has Iran achieved anything approaching détente with the Taliban movement of Afghanistan on its eastern border.39 Therefore, if the United States seeks allies for containment of these forces, it might be vulnerable to some of the charm emanating from Tehran.
BBC Online: British Broadcasting Corporation Online Network. Site: news.bbc.co.uk Ettela’at:Ettela’at International Newspaper, Daily English page. Site: www.ettelaat.com ID: Iran Daily. English-language paper affiliated with official government news agency, supportive of President Khatami. Site: www.iran-daily.com IPS: Iran Press Service. Paris-based press service organization with contacts to exile reformist groups. Site: www.iran-press-service.com SA: London Information Office, Royal Embassy of Saudi Arabia. Site: www.saudinf.com. SF: Stratfor.Com. News analysis source. Site: www.strafor.com. Washington Report on Middle East Affairs
1 Jan. 7, 1998. Transcript at: http://cnn.com/WORLD/9801/07/iran/interview.html 2 For a comprehensive review of the first year of Khatami’s foreign policy see Jahangir Amuzegar, “Khatami’s Iran, One Year Later,” Middle East Policy, v.6:2, October 1998, p. 76-94. 3 Stephen Fairbanks, “A New Era for Iran?” Middle East Policy, v. 5:3, October 1997. 4 BBC Online, July 10, 1999; Ettela’at, July 12, 1999. 5 BBC Online, Aug. 2, 1999. 6 Ettela’at, June 29, 1999. 7 Ettela’at, Sept. 30, 1999. 8 ID, Sept. 29, 1999, p. 1. 9 Kenneth R. Timmerman, “Is a Saudi-Iranian Détente Underway?” The Wall Street Journal, May 20, 1999. 10 SA, Feb. 23, March 4 and May 27, 1998. Also: Mahmood Monshipouri, “Iran’s Search for the New Pragmatism,” Middle East Policy, v.6:2, October 1998, p. 95-112 at p. 102. 11Gulf Business Magazine, June 1999. Site: www.gulfbusiness.com 12 BBC Online, March 12 and March 18, 1999. Nawaf E. Obaid, “Saudi Oil Politics,” PolicyWatch No. 379, The Washington Institute for Near East Policy, April 6, 1999. 13 SF, May 4, 1999. Nawaf E. Obaid, “Saudi-Iranian Cooperation: A Sign of Changing Relations Among Large Oil Exporters,” PolicyWatch No. 388, The Washington Institute for Near East Policy, May 5, 1999. 14 BBC Online, Sept, 20, 1999. IPS, Sept. 23, 1999. 15 “Abu Musa: Island Dispute Between Iran and the UAE,” Case Study No. 369, TED Projects, American University. Available at:http://www.american.edu/projects/mandala/TED/ABUMUSA.HTM. Saeed M. Badeeb, “Iran’s Dispute With the UAE Over Three Gulf Islands,” WRMEA, March 1993, p. 21. 16 Michael Collins Dunn, “Iran Continues to Test Gulf Waters,” WRMEA, April/May 1993, p. 54. 17 BBC Online, Sept. 11, 1999. “Khalifa Urges Iran to See Reason,” Gulf News, Sept. 19, 1999. Available at www.gulf-news.com.ae 18 ID, Sept. 23, p.2, and Sept. 25, 1999, p. 1. “Iran Rejects Arab League Stance on Islands,” Reuters, Sept. 14, 1999, Available on www.arabia.net. 19 SF, July 7, 1999; SA, March 4, 1999. 20 Anthony H. Cordesman, “Trends in Iran: A Graphic and Statistical Overview,” Center for Strategic and International Studies, Washington, DC, June 20, 1999. 21 BBC Online, Sept. 19, 1999. Center for Nonproliferation Studies, “Iran: Weapons of Mass Destruction Capabilities and Programs,” Monterey Institute of International Studies, May 1998, and “Russian Nuclear and Missile Exports to Iran,” Monterey Institute of International Studies, December 1998. 22 Michael Eisenstadt, “Iran Under Khatami: Weapons of Mass Destruction, Terrorism, and the Arab-Israeli Conflict,” Statement before the United States Senate Foreign Relations Committee, May 14, 1998. Available at: www.senate.gov/~foreign/eisen.htm. Also Anthony H. Cordesman, “Weapons of Mass Destruction in the Middle East,” Center for Strategic and International Studies, Washington, DC, Sept. 20, 1999. 23 ID, Sept. 12, p. 2, Sept. 29, p.2 and Oct. 3, 1999, p. 2. CNN online, Sept. 28, 1999. Hadi Nejad-Hoseinian, “Iran’s Regional Policies: Positive Approaches to Great Opportunities,” Speech, Middle East Insight, Washington, DC, June 17, 1998. Available at: www.un.int/iran/statements/other/other008.html. 24 ID, Sept. 23, 1999, p. 1. 25 Victor Ostrovsky, “What Israel’s Top-Secret Manbar Trial Reveals About Extensive, Ongoing Israeli Arms Dealing With Iran,” WRMEA, September 1998, p. 55. Jack Colhoun, “Israeli Spy Cover-up Crumbles,” IF Magazine, September/October 1999, p.10. 26 BBC Online, June 28, 1999. SF, July 1, 1999. Ettela’at, June 30, July 1, 1999. 27 SF, July 3, 1999. 28 SF, Sept. 9, 1999; Athens News Agency, Daily News Bulletin of Sept. 9, 1999. 29 Amuzegar, op.cit., p. 82; Monshipouri, op.cit., p. 101. Nabil Kaylani, “Israeli-Turkish Alliance May Prove to Be New Destabilizing Factor in Middle East,” WRMEA, Jan/Feb 1999, p. 47. 30 SF, July 20, 1999; BBC Online, July 19 and July 23, 1999. Also: Alan Makovsky, “Turkish-Iranian Tension: A New Regional Flashpoint?” PolicyWatch No. 404, Aug. 9, 1999, The Washington Institute for Near East Policy. 31 BBC Online, Aug. 10 and Aug. 13, 1999. Ettela’at, Aug. 16, 1999. Zalmay Khalizad, Ian O. Lesser, “Sources of Conflict in the 21st Century,” RAND Institute, 1998, p. 211. 32 Abdollah Ramezanzadeh, “Iran’s Role as Mediator in the Nagorno-Karabakh Crisis,” Chapter VII of Contested Borders in the Caucasus . Available at: poli.vub.ac/be/publi/ContBorders 33 Svante E. Cornell, “Iran and the Caucasus,” Middle East Policy Journal, Vol 5:4, January 1998. 34 For example: ID, Sept. 13, p. 3, Sept. 27, p. 4. 35 James Dorsey, “Oil Companies Rejecting U.S.-Turkish Plans to Bypass Iran for Pipeline to Transport Caspian Oil,” WRMEA, Jan/Feb 1999, p. 49. 36 ID, Sept. 19, p. 1 and Sept. 21, 1999, p. 1. Nina Kamran, “Austria’s Klestil First Western Leader to Visit Islamic Republic,” IPS, Sept. 18, 1999. 37 “End to Rushdie Affair,” Independent Iran Observer, Sept. 24, 1998. Monshipouri, op. cit., p. 104. BBC Online, July 18, 1999. 38 CNN Online, Aug. 17, 1999. 39 CNN Online, Feb. 3 and Aug. 31, 1999. Ettela’at, July 5, 1999. Dr. John P. Nordin is a free-lance writer living in the Denver area. |
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