Weekly Iranian Foreign Policy News Digest-No 2

Iran’s most notable foreign policy developments over the past week were as follows:

• Khamenei on Iran-P5+1 nuclear talks and sanctions; In an annual meeting with the members of the Assembly of Experts (an elected clerical body which has the power to appoint and dismiss the supreme leader) on Thursday, March 7,  Iran’s supreme leader Ayatollah Ali Khamenei downplayed the apparently shifting Western approach to Iran’s nuclear issue in the recent Almaty talks, describing it as “merely a slight acknowledgement of part of Iran’s rights”  and far short of being referred to as a concession. Noting the West’s track record of reneging on its promises toward Iran, Ayatollah Khamenei stated that Western sincerity on Iran’s nuclear issue remains to be tested in the upcoming talks. On another note, Ayatollah Khamenei acknowledged that Iran’s economic woes are in part due to Western economic sanctions and partly are the consequences of particular domestic economic policies and management.  Khamenei, however, characterized Iran’s economic problems as manageable and ironically as opportunities for home-grown development, innovation and self-reliance. 

• Public condemnation of terrorist attacks against Pakistani Shi'ites builds up in Iran;  Iranian seminary students and clerics held public protests on Saturday , March 9,  in the holy city of Qom and other cities, including Tehran, against the escalation of terrorist attacks against Shiites in Pakistan. In a related development, the head of the National Security and Foreign Policy Committee of the Iranian Parliament, Allaeddin Boroujerdi, also called for serious action by the Pakistani Intelligence Service to put an end to the continuing violence against Shiites in Pakistan.  Boroujerdi  also called on the UN Security Council to take action on the terrorist attacks against Shiites in Pakistan. On Sunday, March 10, Iran’s parliament speaker Ali Larijani also lent his weight to the public condemnation of terrorist attacks against Shiites in Pakistan and called on the Pakistani government to take necessary actions to end the escalating sectarian bloodshed in Pakistan.

• Iran mourns the demise of anti-imperialist Chavez; The Iranian cabinet declared a national day of mourning on Wednesday, March 6, on the occasion of the demise of the anti-imperialist Venezuelan president Hugo Chavez. The Iranian president Mahmood Ahmadinejad eulogized Chavez as a martyred champion of freedom and justice in the world and a bastion of resistance against world imperialism. President Ahmadinejad attended the funeral ceremony of Chavez held in Caracas. The late Venezuelan president had paid several visits to Iran during the tenures of both former president Mohammad Khatami as well as the current president Mahmood Ahmadinejad and had nurtured close ties between the two countries.

     

Weekly Iranian Foreign Policy News Digest-No 1

• Iran-P5+1 nuclear talk held; Almaty, Kazakhstan; Iranian and the P5+1 nuclear negotiators rapped up their latest round of talks on Feb 27, 2013 in Almaty, Kazakhstan. In an official communique, Iranian  negotiating officials expressed cautiously optimistic sentiments toward the latest round of nuclear talks between the P5+1 and Iran, characterizing the new Western approach to Iran’s nuclear issue as relatively more realistic and closer to Iran’s core negotiating positions. Iranian negotiating officials, however, acknowledged that there is still a wide gap to be bridged between the positions of the two sides. Western officials sounded less upbeat about the results of the Almaty talks.  The two sides, however, have agreed to resume their talks at the level of chief nuclear negotiators next April in Almaty while their technical experts are scheduled to meet earlier on March 18 in Istanbul to prepare the grounds for their upcoming talks.

• Food stamps back in Iran; Tehran;  The Iranian parliament approved a bill on Tuesday, Feb 26, requiring the government to supply essential commodities and food products, including rice, cooking oil and meat, to low-income Iranian families on a quarterly basis. This measure, which is reminiscent of more statist economic policies prevalent in Iran during the 1980s is meant to ensure food security for vulnerable segments of the Iranian society in the face of rising inflation.

• Larijani visits India; New Delhi; Iran’s parliament speaker, Ali Larijani, paid a five-day visit to India, (spanning Feb 25-March1) at the invitation of his Indian counterpart Meira Kumar, seeking the expansion of economic and political ties between Iran and India on both bilateral and multilateral issues. During his five-day visit, Larijani was accompanied by Iranian economic officials including the head of Iran’s chamber of commerce. Prior to his arrival at the Indian capital New Delhi, Larijani held meetings with Indian investors and commercial officials in Mumbai.

• Pakistani president visits Tehran; Tehran; Pakistani president Asif Ali Zardari paid a two-day visit to Tehran holding meetings with his Iranian counterpart Mahmood Ahmadinejad and Iran’s supreme leader Ayatollah Ali Khamenei. High Iranian and Pakistani officials reportedly discussed the expansion of their mutual political and economic ties, including the implementation of the so-called Peace Pipeline Project exporting Iranian natural gas to Pakistan. While discussing other issues of mutual interests between Iran and Pakistan at his meeting with Zardari, the Iranian supreme leader also expressed concern at the escalating sectarian violence in Pakistan.

• Syrian foreign minister visits Tehran; Tehran; Syrian foreign minister Walid Al Muallem visited Tehran on March 1, following his trip to Moscow. The Syrian foreign minister held separate meetings with his Iranian counterpart Akbar Salehi, secretary of Iran’s National Security Council Saeed Jalili and Iranian President Ahamadinejad. While expressing support for the Syrian government in its fight against internal armed rebellion and emphasizing the need to address the legitimate rights and freedoms of the Syrian people, Iranian officials calledfor the cessation of violence and a genuine dialogue between the conflicting parties aimed at settling the protracted civil conflict in Syria. During his visit to Tehran, the Syrian foreign minister called for Iran’s pressures on Turkey and Qatar to end their logistical and financial support for what he termed ‘the al-Qaeda-linked terrorists” operating in Syria. Tehran and Moscow have both lent their diplomatic weights to finding a peaceful solution to the Syrian crisis by playing mediating roles between the Syrian opposition forces and the Syrian government.   

                                                     

Blocking medicine to Iran

Source: New York Times; Over the past three months, I led a group of independent business consultants with expertise in Iran to evaluate the problem. After conducting extensive interviews in Tehran and Dubai with Iranian importers and manufacturers of pharmaceuticals and medical equipment and their Western counterparts, we concluded that even though in theory the sanctions regime imposed on Iran by the United States and the European Union is supposed to allow humanitarian trade, in reality it impairs the delivery of drugs and medical equipment to Iran.

Although the Iranian government deserves firm criticism for incompetence in handling the crisis, poor allocation of scarce foreign currency resources and failing to crack down on corrupt practices, the main culprit are the U.S. and European sanctions that regulate financial transactions with Iran.

The system is irrational: There is a blanket waiver to the sanctions to facilitate humanitarian trade, but other laws restricting financial transactions with Iran make it impossible to implement that exception. So the trade of medical supplies is legal in theory and virtually impossible in practice because Iran cannot pay for the Western medicine it needs. Continue reading. 

The coming collapse of Iran sanctions

Source: Aljazeera. Western policymakers and commentators wrongly assume that sanctions will force Iranian concessions in nuclear talks that resume this week in Kazakhstan - or perhaps even undermine the Islamic Republic's basic stability in advance of the next Iranian presidential election in June. 

Besides exaggerating sanctions' impact on Iranian attitudes and decision-making, this argument ignores potentially fatal flaws in the US-led sanctions regime itself - flaws highlighted by ongoing developments in Europe and Asia, and that are likely to prompt the erosion, if not outright collapse of America's sanctions policy.  
    

Virtually since the 1979 Iranian revolution, US administrations have imposed unilateral sanctions against the Islamic Republic. These measures, though, have not significantly damaged Iran's economy and have certainly not changed Iranian policies Washington doesn't like.

Between 2006 and 2010, America got the UN Security Council to adopt six resolutions authorising multilateral sanctions against Iran - also with limited impact, because China and Russia refused to allow any resolution to pass that would have harmed their interests in Iran. Continue reading. 

Western economic sanctions and Iran's survival strategy

This article is simultaneously published in Foreign Policy In Focus, Asia Times, Eurasia Review, Middle East Online, Foreign Policy Journal and Online Opinion.  

It is by now common knowledge that Western-imposed economic sanctions on Iran have detrimental impacts on the Iranian economy. In fact, Iranian officials have long since shifted their public statements from outright denial to explicit acknowledgement of the effect of sanctions on Iran’s economy. They have, for instance, acknowledged that sanctions were partly to blame for Iran’s recent currency depreciation as well as its rampant inflation.

On what regards the impact of sanctions on Iran’s oil exports, Western media have reported  a loss of over $50 billion in oil revenues by Iran over the last year, an estimate which Iranian officials have so far been reluctant to acknowledge. Although, according to some sources, Iran’s petroleum minister recently reported the loss of around $40 billion in oil revenues over the last nine months, his ministry’s spokesman swiftly dismissed the report as unfounded,  a fact which indicates the controversial nature of the issue. Regardless of the existing controversy over the degree of effectiveness of Western sanctions on Iran, they have won the praise of Israeli officials who have generally been skeptical of the effectiveness of non-military options towards Iran. Heartened by Iran’s recent sharp currency depreciation, the Israeli finance minister went even so far as to characterize the Iranian economy as on the verge of collapse.      

Insofar as the economic effectiveness of Western sanctions is concerned, it is safe to conclude that they have partly contributed to the sharp rise in the price of commodities and other consumer goods in Iran, thus eroding the general welfare of ordinary Iranians and may create further economic hardships for them down the road, if not mitigated. In the longer run, Western-imposed sanctions may also significantly undermine the capacity of the Iranian government to provide public welfare programs and other social services to its people by cutting its revenues and hindering its capacity to engage in financial transactions with foreign countries to import necessary foodstuffs and medicine.

Whether Western crippling economic sanctions will meet their ostensible political goal of bringing change in Iran’s nuclear position is a different story. Although initially advertised as ‘targeted’ and ‘smart’ aimed only at disrupting Iran’s nuclear procurements and to deny it financing sources for its nuclear program, it has become increasingly difficult for Western officials to sweep under the rug the indiscriminate and ‘dumb’ nature of their crippling sanctions on Iran. The extent and depth of current Western economic sanctions cannot fail to reveal the fact that they are geared toward pressuring the Iranian government by inflicting economic hardships on ordinary Iranians in the hope of inciting public discontent and possible revolts against it.    

What is clear is that crippling economic sanctions on Iran have not yet produced the Western-desired outcome of economic collapse and public revolts in Iran or otherwise a substantial change in Iran’s nuclear posture. Finding itself the target of an economic onslaught of unprecedented scale by Western powers, Iran pursues its own three-pronged strategy to survive and emerge victorious. Iran’s survival strategy consists of economic, diplomatic and psychological dimensions.        

On the economic front, Iran’s strategy is geared toward rendering the sanctions ineffective or minimizing their adverse effects on its general population. For example, anticipating the US plan to impose gasoline embargo on it in recent years, the Iranian government moved in advance to produce extra gasoline domestically by shifting the operations of a number of its petrochemical complexes to gasoline production. Iran also adopted price measures to effectively curb domestic gasoline consumption thus obviating the need for gasoline imports. In other areas, Iran’s economic strategy has taken the form of government intervention in the market to regulate and control prices. The recent measure by the Iranian government to establish a parallel currency exchange center was meant to stifle further currency depreciation by providing alternative sources of foreign currency supply for imports and other needs. In similar crisis situations, it is expected that the Iranian government will intervene more forcefully in the market by taking over some economic activities, imposing stricter price regulations and, if push comes to shove, rationing essential commodities. To these measures, one should also add a variety of initiatives to curb inessential imports, encourage domestic production as well as bypass the sanctions.                          

On the diplomatic front, Iran has left the door open for a face-saving compromise over its nuclear program. Although it is unimaginable that the Iranian government would compromise its core right of nuclear enrichment under the NPT in light of both the principled beliefs of Iranian political elites and the social costs involved in pursuing such an option, Iran possesses the necessary bargaining chips, short of suspending its core nuclear enrichment activities, to reach a deal with Western powers to achieve at least a partial removal of the sanctions. Suspending its 20-percent level nuclear enrichment activities, providing further transparency on its nuclear activities in cooperation with the IAEA and implementing the IAEA Additional Protocol are among such bargaining chips.   

 

On the psychological front, Iranian officials are well aware that economic hardships do not automatically and mechanically produce public revolt against the government. What is obviously more important than the scope of objective economic hardships is how they are perceived by the general public in Iran.  Iranian officials have made their best effort to convince their general public of the logic of their resistance against Western pressures on their nuclear program and to encourage them to make sacrifices in the face of sanctions-induced economic hardships. As I have noted elsewhere, the general Iranian public are presented with the official narrative that economic hardships are the price that they need to pay to safeguard their political independence. Western demands on Iran’s nuclear program are represented as illogical and discriminatory and thus must be resisted. Adopting this attitude naturally defines a higher tolerance threshold for average Iranians in the face of sanctions-induced economic hardships.

On top of the above factors, the self-sustained nature of Iran’s economy, which is capable of producing most of its own commodities and consumer durable goods, Iran’s geographical location, which provides numerous outlets  to the outside world and gives it potential control over the strategic region of the Persian Gulf, as well as its political influence in the greater Middle East region, which gives it a degree of deterrence against its adversaries in the event of heightened confrontations, all seem to give Iranian officials confidence that they will be able to weather the storm of crippling economic sanctions. 

The battle of logics: Iran and Western nuclear positions

 This commentary is also  simultaneously published in Online Opinion and Foreign Policy Journal.

The expert meeting of P5+1 countries and Iran was held last week in Istanbul following the agreement of their chief nuclear negotiators last month in Moscow to continue their talks at lower level until common grounds for further rounds of high-level talks are created. The expert meeting has reportedly further clarified the positions of both parties on various issues of common concern and is to be followed by the meeting of deputy chief nuclear negotiators on July 24th in the same venue. Recently, a series of official documents outlining Iran’s detailed responses, presented at Moscow talks, to the P5+ 1 proposal, tabled at Baghdad talks, have become publicly available in both some Western and Iranian media outlets which provide new insights into Iran’s thinking on various issues relating to its nuclear program.

While the full text of the P5+1 proposal has not been released, its main elements were earlier reported to include Western demands from Iran to suspend its 20-percent uranium enrichment activities and close its Fordow uranium enrichment center in return for providing ready fuels for Tehran research reactor and lifting, seemingly temporarily, the long-held Western embargo on the sale of civilian aircraft parts to Iran. Apart from presenting Iran’s own responses to the P5+1 proposal, the released documents also divulge more details on the substance of the P5+1 proposal to Iran.

On what regards the rationale behind the Western demand for the closure of Fordow uranium enrichment center, it becomes clear from Iran’s responses to specific quotes from the P5+1 proposal that Iran’s Western interlocutors consider the operation of 20-percent enrichment activities and the fortified nature of the Fordow center as causes for concern. In other words, because the Fordow center hosts Iran’s 20-percent enrichment activities, which are considered by Western powers to be unnecessary and uneconomical in light of their readiness to supply Iran with ready fuel for Tehran research reactor and the fact that it is protected with passive defense arrangements and thus is not easily vulnerable to military attacks by Iran’s adversaries its continued operation poses concern to Western powers and hence is demanded to be closed.

Iran’s responses to the above concern make it clear that it detaches the issue of 20-percent enrichment from the operation of the Fordow center. While offering logical arguments in defense of the continuation of its 20-percent enrichment activities, Iran rejects the idea that the sole purpose of the Fordow center is enriching uranium to 20-percent level by noting that R&D and laboratory activities as well as storing Iran’s LEU stockpile are among the other purposes of the center. Iran also finds it absurd that the Western party is concerned about the protection of the Fordow center, noting that “established international mechanisms for nuclear security highlight the need for strong protection of nuclear facilities”. Iran makes it clear that any rational state would do its best to protect its nuclear facilities from military attacks and thus as a country “facing constant threats, we need a backup facility to safeguard our enrichment activities”. Iran has further questioned the rationale behind Western demands for the closure of the Fordow center arguing that this center is under the same IAEA safeguard measures as Iran’s other nuclear facilities as it is subject to round-the-clock camera surveillance and regular inspections by the IAEA.

It is also evident from Iran’s responses to the P5+1 proposal that it does not consider the offered incentives as reflecting any genuine desire by Western powers to reach a mutually-satisfactory solution to Iran’s nuclear issue. More specifically, Iran declines to treat some offered incentives as real concessions, arguing that the supply of civilian aircraft parts and medical isotopes for cancer patients deal with basic human rights and should not be politicized, thus questioning the morality and humanity of Western embargos in these fields in the first place. Iran also treats the Western party’s declared willingness to cooperate in providing ready fuels for Tehran research reactor as too little and too late, thus devoid of any practical value to it. Iran refers to its own proved capability to manufacture fuel rods and plates for its nuclear reactors as explaining its lack of interest in such offers.

All in all, Iran’s arguments against the P5+1 proposal, as elaborated by its nuclear negotiators at Moscow and more recently at the experts meeting in Istanbul, should not be treated as adamant refusal to engage on its nuclear issue and reach a compromise with the Western powers on at least some elements of its nuclear program. Rather, Iran has argued that the Western powers have not tabled any proposal of practical value and commensurate with the extent and nature of concessions that it has been demanded to make. While the Western powers have demanded that Iran make concrete and specific concessions on its nuclear issue, such as by suspending its 20-percent uranium enrichment activities and transferring its stockpile of 20-percent enriched uranium abroad, Iran believes it has been offered no meaningful reciprocal concessions framed in tangible and unambiguous terms. Iran’s foremost priority is to normalize its nuclear issue and terminate unilateral and multilateral sanctions against it and has declared its flexibility and willingness on various occasions to consider the suspension of its 20-percent uranium enrichment activities and cooperate with the IAEA in providing further transparency on its present and past nuclear activities should they materialize that goal. It is thus very unlikely that Iran would agree to any core Western demands on its nuclear issue short of genuine reciprocity meeting the substance of its declared priority.

The West's unrealistic optimism on Iran sanctions

The full text of this article is accessible through this blog on the World Politics Review. Reprint of this article is subject to the rules of the World Politics Review.   

The latest round of nuclear negotiations between Iran and the P5+1 countries came to a stalemate in Moscow last week, as the two sides once again failed to bridge their differences. Although the previous meeting in Istanbul generated some optimism that a mutually satisfactory solution to Iran’s nuclear program could be within reach, these hopes turned out to be premature in light of the negotiating positions the parties have taken over the past several months.

It is now obvious that Western powers were wrong to expect that increased unilateral economic sanctions on Iran could effect some change in Iran’s negotiating position and thus realize some of the West’s tactical, if not strategic, goals with regard to the country’s nuclear program. Specifically, the U.S. and its allies had hoped that Iran would agree to at least suspend its 20 percent uranium enrichment activities, ship its current stockpile of 20 percent enriched uranium abroad and close its Fordo uranium enrichment center, all in return for fuel rods for Tehran’s nuclear research reactor and some other sweeteners, such as a lifting of the embargo on civilian aircraft parts. Continue reading.