Summer 2007

Surviving in a Dangerous World: What Iran’s Leaders Really Want

Dilip Hiro

Iran’s leaders would like to see the United States withdraw its troops from Iraq, and leave it to Iraq’s popularly-elected Shiite-led government to overcome chaos and insurgency with the active assistance of its neighbours. They believe it is in the interests of all of these – Kuwait, Saudi Arabia, Jordan, Syria and Turkey as well as Iran– to ensure that Iraq does not descend into a fullyfledged civil war or break up. In either case, it would threaten the stability of the neighbouring regimes and play havoc with production of the oil on which the world’s economy depends.

The rulers in Tehran would like the Pentagon’s evacuation of Iraq to be a preamble to its withdrawal from the rest of the oil-rich Persian Gulf region. It would like the eight states in the area to be left in peace to devise their own regional security agreement.

One way to do this might in their view be to expand the 26-year-old Gulf Cooperation Council, which contains six countries, by admitting Iran and Iraq as members. In that case, Iran – being the largest, most populous and most strategic country – would emerge as a leading player in the region.

Graph showing real GDP on the left hand scale going to 70 US dollar/BBL and OPEC basket price on the right hand scale going to 60 US dollar/BBL
Oil Rich US Billion dollars from 1980-2005

Source: Sources: World Bank, OPEC, Datastream

Besides its demographic and geo-strategic assets, Iran enjoys the second largest reserves of oil and natural gas in the world. These reserves give its government a strong hand at home and abroad. Worldwide demand for oil is rising sharply thanks to the industrialization of India and China, and supply is struggling to keep up.

At 4.3m barrels per day (bpd), Iran is the fourth largest petroleum producer and, at 105 billion cubic metres per day, the third largest gas producer in the world. It is the second largest exporter in the Organization of Petroleum Exporting Countries (OPEC) after Saudi Arabia. That is the main reason why America and its western allies are reluctant to impose an oil embargo on Iran. Cutting off its crude supplies would cause a sharp rise in prices. That would curtail economic growth in the West as well as China and India.

So far United Nations sanctions on Iran for defying the Security Council’s resolution to cease enriching uranium have not hurt the country’s economy substantially. But they have cooled the interest of Western petroleum corporations and banks in Iran’s hydrocarbon projects.

Nuclear advantage

Do Iran’s leaders want to make an atomic bomb? It is instructive to respond with a question: Why did Israel’s leaders embark on the nuclear weapons programme in the mid-1950s?

Uncertain how long they could maintain the edge they had over the combined forces of their Arab neighbours in conventional weaponry and the quality of their troops, they concluded that the effective deterrent for a beleaguered country in extremis was the nuclear bomb. During the early days of the 1973 Arab-Israeli War, when the invading Arab armies made striking gains, Israel equipped its specially adapted bombers with its 25 atom bombs. The bombers did not take off because Israel soon gained the upper hand on the battlefield.

For countries that feel threatened, acquiring nuclear weapons is about the survival of the nation or the régime. During the Cold War, nuclear arms proved to be an effective deterrent and preserved peace. The starting point in the nuclear fuel cycle is the enrichment of uranium. At the low end, 5% enriched uranium is suitable for generating electricity; and at the high end, 90% enrichment is needed to produce a nuclear bomb. The same machine – a centrifuge – yields results at both ends of the spectrum.

In the eyes of the Iranian ruling elite, surrendering the right to enrich uranium is equivalent to giving up nuclear weapons in the future. This, in their view, would be tantamount to abdicating their right to protect their régime.

If Washington were to give Iran a cast-iron guarantee of nonaggression as well as non-interference in its domestic affairs, that would reassure its leaders. It would establish a solid base to solve the problem of its nuclear activities. In the absence of such American guarantees, the ruling clerics will continue to treat their ability—or potential ability—to make nuclear weapons as a deterrent.

Would Iran attack?

On the other hand, there are many American policymakers who worry that Tehran will mount a nuclear attack on Israel with its medium range missiles. If that were to happen, Israel would retaliate by hitting Iranian targets from submarines equipped with nuclear weapons. But there is a difference: Israel has a second strike capability; Iran does not.

So far the International Atomic Energy Agency (IAEA) has failed to find evidence to prove that Tehran is pursuing a nuclear-weapons program. At the same time, it refuses to give Iran a clean bill of health because its government has failed to answer all its questions satisfactorily. In the words of an IAEA official, The facts don’t support an innocent or guilty verdict at this point.” Earlier this month the IAEA director, Muhammed El-Baradei, told the government that Iran had slowed down’ its uranium enrichment programme and, following a meeting in Tehran between Iranian and IAEA officials, Iran agreed to let agency inspectors visit the site of the heavy water research reactor at Arak, a request it had rejected before.

In their continuing talks with European Union officials, Iran’s representatives have promised full information if the Security Council return responsibility for the nuclear question to the IAEA. For their part, America and its western allies have undertaken to stop demanding more sanctions on Iran at the UN Security Council on one condition: they want Iran to cease further development” of its uranium enrichment activities – thus implying their acceptance of Iran’s programme so far – as a prelude to renewed talks aimed at a long-term freeze and a reversal of Iran’s enrichment activities.

Domestically, while differences between conservatives and reformists remain acute, Iranians are almost unanimous on the right to enrich uranium which is allowed by the nuclear Non-Proliferation Treaty (NPT), signed by Iran. Equally, they are looking forward to the commissioning of the nuclear power plant, under construction since 1994 by the Russians, near Bushehr in October.

Part of the reason for Iran’s resolve to master the uranium enrichment technology is that if Russia refuses to supply the nuclear fuel for the Bushehr power station in the future, its own facility will be able to do so.

The home front

Those reformists who have criticised President Mahmoud Ahmadinejad on the nuclear issue dislike his defiant and provocative manner, rather than the substance of the policy. In any case, Supreme Leader Ayatollah Ali Khamanei is the one who decides the nuclear policy and not the president. But, unlike the indirectly-elected Supreme Leader, who is not accountable to voters, the directly elected president is.

Ahmadinejad won the presidential contest two years ago by pledging to put the oil money on the tables of ordinary Iranians. With petroleum prices at their highest in recent times, Iran’s treasury is overflowing with foreign exchange. This has allowed the government to continue subsidising food and fuel to the tune of $12 billion a year. But the promised redistribution of the national wealth has not yet happened. This has engendered discontent among the working and lower-middle classes— Ahmadinejad’s main constituency.

The official unemployment rate of 15% is widely regarded as conservative. Equally, 20% inflation rate does not tally with anecdotal evidence of rents rising by 50% in Tehran over the past six months. And, while the protest against the recent petrol rationing has died down, this unpopular measure will swell the joblessness rate: many living by plying private taxis as before.

Poor planning by the state-run National Iranian Oil Company has led to the bizarre situation where it imports two-fifths of Iran’s petrol needs at $2 a gallon, only to sell it at 34 cents a gallon. Large segments of the public sector undertakings are run inefficiently. The government’s plan to privatise them have been only partially successful due to lack of interest by private investors.

Iran is suffering from a brain drain. Many talented university graduates, particularly in computer sciences and information technology, are leaving the country for better prospects abroad. Iran’s leaders would like to stop the brain drain but that would require a radical shake-up of the domestic economy – as proposed by a group of 60 economists in their recent letter to Ahmadinejad – which is not on the cards.

Young versus old

Around half of Iran’s population of 70m is under 21, and two-thirds under 25. They lack direct experience or even memory of the pre-Islamic régime of the Shah, and their commitment to the Islamic régime is less than total. The post-revolutionary educational system has not socialized them in the way the clerical rulers would like. Such extra educational efforts as setting up youth radio and television channels, carrying Iranian pop music, have been only partially successful.

What impinges on the daily lives of young Iranians are the restrictions on their social and personal freedoms: going to mixed sex parties, holding hands with someone other than a marriage partner, drinking alcoholic beverages, listening to modern Western music, watching foreign television channels via satellite, and having extra-marital sex. While reformers recognize that such restrictions are alienating the young from the régime, their conservative opponents justify them as necessary to uphold Islamic morality.

In practice, however, these prohibitions are being undermined, partly through the use of satellite dishes to receive foreign television channels, and partly by bribing the police. A ban on satellite dishes imposed in 1995 has not stopped their use.

During the presidency of Muhammad Khatami (1997- 2005) there was steady liberalisation in the social sphere, with some male and female classes being merged at universities. The enforcement of the Islamic dress code for women, requiring them to cover their bodies except the face, has been relaxed.

That slowly began to change under Ahmadinejad, and the trend accelerated following the Supreme Leader’s speech in March, when he warned that nobody would be allowed to damage national unity when the West was mounting psychological warfare against Iran. Political dissent is now being curbed, and strict Islamic morality enforced.

But westerners should not hold their breath. Any backlash against the recent tightening of the screw by the authorities is highly unlikely to escalate into a popular uprising against the Islamic régime.

Dilip Hiro is the author of Iran Today, and the forthcoming Blood of the Earth: Global Battle for the Vanishing Oil, both published by Politico’s Publishing, London, or at