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Iran’s Leader Must Choose Between Enmity and Economy

Author: Ray Takeyh, Hasib J. Sabbagh Senior Fellow for Middle East Studies
May 15, 2012
Financial Times


Diplomacy is reclaiming a role in Iran's nuclear drama, but little attention is being paid to a conflict of interests that is likely to complicate Tehran's path to a settlement. The objectives of the western powers are clear: a series of confidence-building measures yielding a durable arms control agreement. Iran's Supreme Leader, however, has to reconcile opposing aims. Ali Khamenei needs America as an enemy and a robust nuclear infrastructure to legitimise his rule. For a long time, he believed he could advance the nuclear programme at a tolerable cost to Iran's economy. Yet now, persisting with convenient enmities will further erode the economy – and could threaten his hold on power. Washington's latest diplomatic gambit depends on whether Ayatollah Khamenei can resolve this dilemma.

As a recalcitrant revolutionary, Ayatollah Khamenei has long pursued a confrontational foreign policy as a means of reinforcing his regime's ideological identity. It is rational for the leaders of the Islamic Republic to adopt self-defeating policies abroad in order to buttress a certain ideological character at home. The theocratic state needs an American enemy and some degree of estrangement from the international community to sanction its grip on power. Enemies lurking abroad, hatching imaginary plots, make it easier for Ayatollah Khamenei to justify his revolutionary verities. Given this need for useful enemies, he must carefully calculate the impact of any agreement with nefarious westerners.

Iran's quest for nuclear capability is also rational, since nuclear empowerment has become a core element of the Islamic Republic's strategic conception. An enhanced nuclear capacity allows Iran to assume a more domineering role in a region beset by unpredictable transitions. Moreover, the history of proliferation suggests that nuclear-armed states receive more favourable treatment from the international community in terms of resumed diplomatic and commercial relations. The argument that a nuclear-armed nation is too dangerous to remain isolated and must be reintegrated into the global system has proved compelling over time. It is therefore no surprise that Ayatollah Khamenei is averse to concessions that would arrest Iran's nuclear trajectory.

Despite its frequent professions of autonomy and self-sufficiency, Iran depends on global economic structures. It subsists on revenues derived from an export commodity whose price and means of transport are determined by actors beyond its control. For Iran to sell its oil, it requires access to global financial institutions, tankers insured by European companies and customers that have alternative suppliers. Can a state really reject global norms and yet benefit from the prevailing mechanisms of international trade? And here lies Ayatollah Khamenei's dilemma: his revolutionary foreign policy and his quest for nuclear capability are increasingly at odds with the vulnerabilities of his state.

The Supreme Leader today faces a choice he would rather not make. He would far rather persist with his anti-western rhetoric, while incrementally expanding his nuclear apparatus and somehow managing Iran's anaemic economy. Ironically, what may allow him to defer fundamental decisions is protracted diplomacy. A multi-stage diplomatic process suits his inclination to muddle through, as he can trade some modest compromises for some easing of sanctions. In this way he can protect the essential aspects of the nuclear programme while giving his regime some breathing room.

Despite the limitations of the diplomatic process, there is still much the west can do. After decades of sanctions and pressure, the international community is finally placing Ayatollah Khamenei in a position where he can no longer have both his enmities and his economy. The western powers would be wise to stress that sanctions will not be lifted until Iran takes a fundamentally different approach to proliferation. The European boycott of Iranian oil scheduled for July should therefore be implemented irrespective of the offers Iran is sure to dangle between now and then. It is entirely possible that the Supreme Leader will opt to preside over a country with a nuclear programme and a permanently degraded economy. Still, the aim of allied diplomacy should be to force him to make a choice.

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