On January 29, the Middle East Program at the Woodrow Wilson Center hosted a meeting, “The Nuclear Issue: Why is Iran Negotiating” with Bijan Khajehpour, Managing Partner of Atieh International; Alireza Nader, International Policy Analyst at RAND Corporation; and Michael Adler, Wilson Center Public Policy Scholar. Haleh Esfandiari, Director of the Middle East Program at the Wilson Center, moderated the event.

Khajehpour outlined Iran’s economic challenges, describing 2012 as the worst year for the country’s economic development since the end of the Iran-Iraq war in 1988. He argued that while externally imposed sanctions have exacerbated Iran’s financial woes, the overall economic situation could be more accurately attributed to the regime’s weak populist policies and to failures in the post-subsidy reform process. Khajehpour explained that the sanctions have, in fact, had mixed results, serving to benefit certain economic interest groups while hurting others.

For instance, he argued that government and semi-government entities have benefited the most from sanctions. Politically, they can ascribe the economic crisis to the Western-imposed sanctions rather than take responsibility for their own failing economic policies. Additionally, with tighter restrictions on trade, Iran has resorted to using indirect trading routes, making financial and commercial exchanges opaque and susceptible to corruption. Moreover, the regime has used this political and economic crisis as an excuse to clamp down on political dissent in ways they would not have been able to before. He cited the arrest of over 14 journalists in the past week as an example.

Khajehpour concluded that, overall, the Iranian economy has suffered as a result of sanctions. However, the regime is not ready to soften its approach in the nuclear negotiations. Supreme Leader Ayatollah Khamenei and his advisors still mistrust the United States, and the private sector and middle class, who are the main elements in the country supporting liberalization, have been stifled under the pressure of sanctions.

Alireza Nader provided insight into Iran’s domestic politics, which could explain why negotiations between P5+1 and Iran have been delayed. Nader argued that Khamenei appears reluctant to engage in negotiations, and ultimately he makes the decisions on all matters in Iran. Nevertheless, he must consider the mounting pressures from various factions within the country, including the reformists, pragmatic conservatives, the pro-Ahmadinejad political camp, the pro-Khamenei conservative establishment, and the Iranian population. Nader noted that Iran’s presidential election will frame any future negotiations with the P5+1.

Regardless of Khamenei’s reluctance to negotiate, key regime supporters, especially the Revolutionary Guards, may feel enough economic pain in order to pressure Khamenei to be more flexible regarding negotiations.

A diplomatic solution to the nuclear crisis is not guaranteed. However, Nader concluded that without a diplomatic solution, Iran’s economy will flounder under external pressures, and the Iranian people will not stand idly as their country goes to ruin. Iran has a large, highly educated middle class who seeks engagement with the international community, and it is this sector of Iranian society that may one day rise up against the regime.

Michael Adler ended the discussion by offering his understanding of the stalled negotiation process. He reviewed the history of the decade-long nuclear crisis in Iran, which has failed to rein in Iran’s nuclear ambitions. Instead, after 10 years, the international community is on the verge of possibly having to face, as Adler described, a stark binary choice, being forced to decide whether to strike Iran militarily or learn to live with an Iranian bomb.  

However, Adler continued to explain, it is unlikely that Iran will be able to make a nuclear weapon in the immediate future. According to Israeli intelligence reports, Iran will not have the capability until 2015 because the Iranians are deliberately slowing the process. According to Adler, this indicates that Iran’s nuclear program is less threatening than commonly believed. It also indicates that there will be further delays in the negotiation process because Iran’s own leadership is not clear about their intentions. He concluded that until presidential elections in Iran in June are over, Iran has little incentive to negotiate seriously with the P5+1. Therefore, it is likely that the talks scheduled in February will once again end in a standoff.

By Darya Razavi, Middle East Program