Engaging Iran? Transatlantic Perspectives on the Nuclear Issue

Ladies and Gentlemen,

How to handle Iran may be one of the most difficult problems in global politics today - and nobody seems to have an easy answer or solution. I hope that there will be an opportunity for a new and more coherent Iran strategy with the new US administration. Fact is: The UN sanctions put on the table up to now have not been weighty enough to persuade Tehran to change its mind about enrichment.

On the other side I think it's a big success to keep the Big 5 of the Security Council plus Germany together. And the negotiations the European Union (EU) has conducted since October 2003 have won valuable time. But: The EU-3 need the backing of the U.S. Only security guarantees from the U.S. can be of interest to Iran.

There are at least five major reasons why Iran is strategically significant. These are:

1.    its nuclear ambitions;
2.    its importance to stability in Iraq;
3.    its support for extreme Arab factions - such as Hezbollah and Hamas - who themselves are obstacles to stability in Lebanon and to the Palestinian-Israeli peace process;
4.    its status as a major oil and gas producer; and
5.    its importance to the flow of oil through the Straits of Hormuz.

What Does Iran Want?

Iran is a country that is three times larger than France, with a population of 70 million. Its lands are rich in the history and culture of a Persian empire that stretches back 6,000 years. What all Iranians share, however, is a deeply felt national pride and a desire that their country be respected and recognized for its history and its accomplishments.

Wich are Iran's main policy goals?

-    They want their legitimate right to civilian nuclear technologies as a member of the Nuclear Non-Proliferation Treaty to be respected;
-    They want stability on their borders, most notably with Iraq and Afghanistan - and they don't want the civil war in Iraq to spin out of control, with millions of Iraqi refugees spilling into Iran and other neighbouring countries;
-    They want to be free of external security threats, either from within the region (Israel) or outside the region (the United States);
-    They want to be able to develop regional energy and economic partnerships;
-    They want integration into the global economy, including membership in the World Trade Organization and an end to trade and financial embargoes.

Clearly, Iran's own behaviour has been counter-productive to these ends. Iran must vastly improve its policies before it may expect other nations to accept it as a legitimate major player on the global stage. Above all, Iran must start respecting UN resolutions and stop supporting international terrorists. And President Ahmadinejad needs to stop threatening Israel and denying the Holocaust.

We have many differences with the Iranians, but we and our allies also have common interests with them. I hope that we can encourage the Iranians to come out of the cold, and to build more constructive relationships with the international community.

What Do We Want from Iran?

Iran must not acquire nuclear weapons: virtually the entire international community agrees about this. The P 5+1 countries - the five permanent members of the United Nations Security Council plus Germany - have been negotiating with Iran, and in June 2006 offered the Iranians a package of incentives to give up their nuclear enrichment efforts.

The P 5+1 package represents an excellent starting point for negotiations and included the following important elements:

-    Acknowledgment of Iran's right to peaceful nuclear energy;
-    The creation of a five-year fuel bank/buffer stock of nuclear fuel for Iran;
-    An international fuel-cycle center in Russia involving Iran;
-    An energy partnership among Iran, the European Union, and others
-    Trade and investment incentives;
-    A regional security forum involving Iran, other regional states, the US, Russia and China;
-    A willingness on the part of the United States to talk directly with Iran.

On this last point, especially the EU and the U.S. have other interests that must discuss directly with Iran, including:

-    Iran's help in forging stable governments in Iraq and Afghanistan;
-    The end of threats and inflammatory rhetoric against Israel;
-    Concrete and verifiable steps to end military support for Hezbollah, Hamas, and other violent groups.

The achievement of these goals would constitute a fundamental change in Iran's role in the world.

First of all, the Iranian economy is in trouble - and high unemployment and widespread discontent are a threat to the regime's political future. Despite being one of the world's largest oil producers, Iran has only one refinery, and imports more than $ 4 billion a year of refined oil products. It imports half its gasoline and food. Inflation, high unemployment, low infrastructure investment, and burdensome government subsidies of 40 billion $ a year shackle economic growth.

The international community can leverage these realities to induce Tehran to reform as well, and to recognize that Iran's future lies with its integration into the global economy. Both China and Russia have considerable economic leverage over Iran, and the threat of disinvestment could put great pressure on the regime.

However, no constructive dialogue with Iran is possible until we break the vicious cycle of suspicion and hostile rhetoric. We need to stop threatening the Iranians and talking about regime change. We also must dialogue with moderate and pragmatic elements in both the Iranian political class and in the broader society - including business people and students who have supported moderate politicians in the past, and may do so again in the future.

How Do We Get There?

So, how do we proceed? As you know, US government representatives have met in the last months with Iranian officials to discuss Iraq, and there have also been US-Iranian meetings to talk about Afghanistan. These are all steps in the right direction.

I think our message to Iran must always have two components:

1.    We must respect their legitimate right to peaceful nuclear energy, and we must let them know that gestures toward peace and reconciliation will be reciprocated with meaningful economic benefits and security guarantees;
2.    We must stand absolutely firm with our international partners in letting the Iranians know that we will never allow them to acquire nuclear weapons, and that they will pay a high price if they continue to support international terrorists.

In short the message to the Iranians must be clear: work with the international community and you will be safe and prosperous. Continue to defy the international community and you will suffer economically and politically-damaging international sanctions.

I believe that US-Iran bilateral talks will occur within the broader context of on-going discussions with Iran being conducted by the International Atomic Energy Agency, the European Union, and Russia and China. Each of these partners can bring special points of leverage to bear on different matters: The IAEA naturally has the lead on nuclear issues, while the European Union can be helpful on trade and finance issues and helping to integrate Iran into the global economy. Russia and China have been moving toward greater energy cooperation with Iran.

And I think there are other actors who have important stakes in helping to facilitate more moderate behaviour on the part of Iran:

One is the Gulf Cooperation Council (GCC), whose members have recently expressed greater interest in civilian nuclear power - as a direct consequence of Iran's push for mastery of the nuclear fuel cycle.

And there are also the other Sunni Arab countries in the Middle East - Egypt and Jordan especially - who fear destabilization of the region that would naturally flow from heightened US-Iran tensions and possible conflict.    

Summary

Negotiating directly with Iran will be difficult and may take time to produce results. Much will depend on Iranian leaders recognizing that their current policies - especially their nuclear policies - are counterproductive if Iran truly wants better security and economic growth. 
Most experts believe that Iran is still several years away from being capable of building nuclear weapons. We should use that time constructively to build peace, rather than rushing toward another catastrophic war. We know it is possible to deal with such threats diplomatically because last February the Bush administration made a deal with another member of the "Axis of Evil," North Korea, to dismantle North Korea's nuclear program in favour of promises of economic aid.

What is really needed on all sides is the rebirth of statecraft, seeing that carrots and sticks must be wielded together to solve diplomatic problems. It is our last, best chance.

Thank you.