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Iran Approaches a “Gorbachev Moment”

The United States and Iran have reached a historic interim accord that would limit sanctons and Iranian nuclear enrichment, subject to IAEA inspections. Iran confronts a transformative moment, explains Robert A. Manning of the Brent Snowcroft Center for International Security at the Atlantic Council. Western sanctions have contributed to high inflation, unemployment and other economic woes for Iran. “Like Mikhail Gorbachev in 1985, Rouhani inherited economic catastrophe and ascended to power with a mandate to fix the economy and improve a tarnished standing in the world,” Manning writes. If verification proceeds and both parties act in good faith, the six-month accord could lead to a final deal. Iran has reason to pursue pragmatic policies, and the US must ensure that region-wide security is the outcome. Neither side should risk flouting compromise. Active diplomacy is in play, and the biggest challenge for the two presidents is assuring skeptics at home and among allies. – YaleGlobal

Iran Approaches a “Gorbachev Moment”

US-Iranian interim accord could offer a transformative moment for the Middle East
Robert A. Manning
YaleGlobal, 26 November 2013
A deal for change? US Secretary of State John Kerry shake hands with Iranian Foreign Minister Mohammad Javad Zarif at the conclusion of a nuclear deal last week; US President Ronald Reagan and Soviet leader Mikhail Gorbachev meet in Geneva in 1985, an encounter that ultimately brought changes in the Soviet Union

WASHINGTON: The debate over the nuclear deal with Iran may obscure an intriguing new reality: Iran approaching a “Gorbachev Moment.” Of course, the skeptics may be right. It could all be a ruse, with Iran pocketing the benefits and biding its time. But is it just possible that the logic leading Iran to temper its nuclear ambitions is the result of a perfect storm of sanctions wrecking a grossly mismanaged economy, internal political shifts and Persian Imperial Overstretch? 

The interim accord restricts Iran’s enrichment to 5 percent; neutralizes its stockpile of 20 percent enriched uranium, easily refined to weapons grade; halts key elements of construction of Arak, its plutonium-producing facility; and provides adequate International Atomic Energy Agency verification, though that needs to be more intrusive in a final agreement, lending confidence of early warning in the event of any nuclear breakout. The accord offers Iran only modest sanctions relief, maintaining incentives for a comprehensive deal. This may be all the political traffic will bear.

Some would resist any deal that doesn’t completely dismantle Iran’s nuclear program. But there is also danger that, if the US is viewed as rejecting a reasonable compromise, the global coalition putting the sanctions in place could unravel.

Even conceding a dearth of strategic acumen in the White House, any time the Saudi and Israeli governments and naysayers on Capitol Hill are in a de facto coalition to oppose US policy ought to give one pause. The geopolitical aftershocks of a US-Iran détente could cut different ways, but if viewed by Sunni Arab states and Israel as part of a retreat from the US security guarantor role in the region, this could further inflame a region already in turmoil. In any case, a final accord and US-Iran détente would expose divergent interests of the US and its Arab allies: Washington has little stake in the ongoing Sunni-Shia conflict, though a less confrontational Iran might ameliorate it.

Iran’s nuclear program has far more to do with geopolitical ambitions than with producing electricity.

Let’s be clear – Iran’s nuclear program has far more to do with its geopolitical ambitions than with producing electricity. At the end of the day, only a change in the regime’s basic behavior – both internally and externally could quell concerns about Iran. To date, there is scant evidence of any such change. That said, many moving parts paint a more complex picture.

First, sanctions deepened Iran’s economic disaster, which cut its ability to sell oil and barred its use of the international banking system. Oil exports, accounting for three-fourths of Iran’s total exports, have dissipated as production shrunk from 2.3 million barrels a day (m/bd) in 2011 to below 1 m/bd. Of the remaining $80 billion in annual oil revenues, much of that is tied up in escrow due to sanctions and unavailable to Teheran.

The World Bank estimates inflation in the 50 percent range, diminishing the value of oil revenues; the Rial, Iran’s currency, has lost more than two-thirds of its value since 2011. Unemployment is officially 12 percent, but believed to be twice that; youth unemployment may be as high as 40 percent, accelerating a brain drain. President Hassan Rouhani is under pressure to deliver change considering that 35 percent of Iran’s population is between 15 and 29.

Add to that economic picture: chronic inefficiencies and mismanagement, as religious foundations run by Iran’s Revolutionary Guards, IRGC, control perhaps one-third or more of the economy and oil prices appear to be flattening out. Sanctions have hit the Bazaaris, or merchant class, and the middle class particularly hard.

Like Gorbachev in 1985, Rouhani inherited economic catastrophe and came to power with a mandate.

This economic malaise, worsened by populist economic policies of the previous Ahmadinejad government, helps explain the surprise presidency of Rouhani, cleric and former nuclear negotiator. The global coalition that imposed such crippling sanctions is a rare and underappreciated Obama diplomatic achievement.

Add the possibility of Persian Imperial Overstretch to this picture. Iran is usually portrayed as 10 feet tall, opportunistically pursuing the opening inadvertently provided by the US war and occupation in Iraq, which produced the first Shia government in the Arab world since 1041. Iran’s missionary Shiism, stretching tentacles into Lebanon via Hezbollah, Gaza via Hamas, and Syria has sowed mischief across the Middle East. But that may be taking a toll in blood and treasure. Support for the Assad regime economically and militarily, with IRGC Qods force troops doing no small share of the fighting, has cost, by some estimates, $8 billion to $9 billion.

Like Mikhail Gorbachev in 1985, Rouhani inherited economic catastrophe and ascended to power with a mandate to fix the economy and improve a tarnished standing in the world. Rouhani’s ascendance also reflects an effort at internal political rebalancing. Under Ahmadenijad, the power of Iran’s clerics was challenged by his network of Iranian neoconservatives and IRGC acolytes. In an effort to empower his presidency, Ahmadinejad mixed his “Mahdiism,” belief in the imminent return of the 12 Imam, with economic populism and Persian nationalism. This challenged posed a threat to the clerical hierarchy.

The combination of misguided populist economic policies tanking the economy and the political threat to the clerical establishment may help explain why Supreme Leader Ayatollah Khamenei backs the more pragmatic Rouhani.

If this is the case, Iranian domestic political dynamics may align with efforts to revive the economy and move Iran toward the mainstream, at least enough to persuade potential foreign investors in Iran’s technology-starved oil and gas industry of no undue risks.

Diplomacy is the art of the possible. The perfect should not be the enemy of good enough.

Of course, it would be preferable if all Iran’s centrifuges stopped spinning. But diplomacy is the art of the possible. The perfect should not be the enemy of good enough. Just as President Barack Obama and Secretary of State John Kerry must be able to justify the outcome, Rouhani also must demonstrate that Iran did not lose face.

So long as removing the crippling financial sanctions is the endgame, and the tit-for-tat sanctions relief for curbs on nuclear activity is proportional, no clear better option exists. To be sure, the new round of sanctions that US Congress is debating should remain in play. But often the threat of such sanctions may be more useful than actual legislation.

If this assessment is correct, and Iran has compelling political and economic reasons to pursue more pragmatic and less ideological policies, then the West would be remiss not to fully test them. The debate over whether Gorbachev was for real or not lasted almost until the Berlin Wall came down. If Iran plays games, dragging out the next round of nuclear talks while centrifuges keep spinning, then negotiations are back to square one.

One way to test Iranian intentions may be to enlarge the problem, that is, test whether Teheran is serious about becoming a more normal international actor. The United States and Iran have interests that overlap: counter-narcotics cooperation, counterterrorism (recall the recent bombing of the Iranian Embassy in Lebanon) and Afghanistan as US presence winds down.

Expanding the playing field is one way to take measure of Rouhani and test if Teheran can work with Great Satan.

As with the nuclear issue, one must “mistrust but verify.” The deal is a long way from lifting all sanctions, and granting access to international finance and investment in Iran’s energy sector is the big prize. The intriguing question is whether a nuclear deal is the harbinger of change in Iran. And if so, is the model of change China’s “adaptive authoritarianism” or the USSR? After all, Gorbachev’s fate is well known.


The author is a senior fellow of the Brent Scowcroft Center for International Security at the Atlantic Council and its Strategic Foresight Initiative. He served as a senior counselor to the UnderSecretary of State for Global Affairs from 2001 to 2004 and a member of the US Department of State Policy Planning Staff from 2004 to 2008.

Rights:Copyright © 2013 The Whitney and Betty MacMillan Center for International and Area Studies at Yale

Comments on this Article

26 November 2013
Yes, Gorbachev's fate is well known and positive for him personally, but the fate of USSR and Russia was not something that one should purposely plan for. Russia was plundered by the West's do-gooder's, something it is still trying to recover from.
-Dev , Yes, Gorbachev's fate is well