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Saturday, February 24, 2007

Iran politics: Tighter squeeze


The tensions arising from Iran's nuclear programme have been ratcheted up a few notches following the latest progress report from the International Atomic Energy Agency (IAEA). The report, unsurprisingly, found that Iran had failed to abide by the demand of the UN Security Council on it to halt all uranium enrichment activities by February 21st, and indicated that the programme was likely to take a big step forward in May with the start-up of 18 cascades, involving 3,000 centrifuges, at the Natanz enrichment plant north of Isfahan. The IAEA also noted that Iran had agreed to periodic inspections, but had ruled out permanent monitoring by remote cameras.

Iran's refusal to yield on its basic position of exercising what it claims to be its right to acquire the capability to produce fuel for nuclear power stations means that confrontation with the international community will continue. Foreign ministers of the five permanent members of the UN Security Council plus Germany are to meet at the end of February to discuss a possible expansion of the sanctions agreed in December in resolution 1737. A military strike at Iran's nuclear and defence installations could be launched at any moment, although the US continues to maintain in public that it has no such intention, for the time being.

Slow grind

The Economist Intelligence Unit has elaborated a medium-term scenario that accords a 65% probability to a non-military outcome to the Iran nuclear issue. This incorporates a 45% likelihood of Iran managing to achieve its goal of completing the nuclear fuel cycle, either with IAEA scrutiny and international approval or in the teeth of sanctions and with the exclusion of IAEA inspectors. We consider an outcome whereby Iran fails to achieve its objective, either because of sanctions or through an agreement to scale down its programme, as having 20% probability. That leaves a 35% chance, in our view, of a military outcome, which would be likely to slow down the programme, but cannot be guaranteed to destroy it completely.

The leading international powers have maintained a united front on the principle of preventing Iran from acquiring the potential to develop nuclear weapons, but this unity is likely to come under increasing strain as the options of tougher sanctions and, ultimately, of a military threat come into the reckoning. Iran claims not to be bothered by the prospect of sanctions--even though its economy has already suffered some damage through the fraying of its commercial and financial links with the outside world. Iranian officials have also downplayed the risk of military attack from the US, on the grounds that US forces are bogged down in Iraq, while emphasising that Iran would hit back hard if such an attack were to be launched.

The sanctions approved under Resolution 1737 were focused on inhibiting the supply of equipment for the nuclear fuel programme (although not for the Bushehr power station). They also entailing freezing the funds and assets of a number of designated entities and individuals tied to the nuclear programme and to Iran's military industries and a travel ban on these individuals. Again, this is hedged around with numerous exceptions, including one framed to ensure that contractual payments to Russia for work on the Bushehr project are not affected. The entities include the Defence Industries Organisation, "some of whose subordinates have been involved in the centrifuge programme making components, and in the missile programme," according to an annex to the resolution. The individuals are listed as either being involved in the nuclear programme or involved in the ballistics programme--with one exception, Major General Yahya Rahim Safavi, the commander of the Islamic Revolutionary Guards Corps, who is listed as being involved in both.

The proposed new package of sanctions is thought to include imposing a travel ban on all of the individuals named in the earlier resolution. There has also been talk of restricting the provision of government-backed loans and credit guarantees to Iran, but such a step would be likely to be resisted by some of Iran's main trading partners--including Japan, South Korea, France, Germany and Italy--which would face the prospect of meeting large claims on existing transactions.

Russian privilege

Another possible element in a fresh sanctions package would be an embargo on weapons sales. However, this would be strongly opposed by Russia. Vladimir Putin, the Russian president, said in a recent interview with Qatar-based Al Jazeera television that he considered it important to maintain a certain level of co-operation with Iran so as to convince the country's people and leadership that it is not surrounded by hostile forces. He observed that Russia's weapons supplies to Iran were of relatively limited scope, and of an exclusively defensive nature. At the same time, however, Mr Putin said that Russia remained "categorically opposed to the proliferation of nuclear weapons". He said that Russia remained in contact with Iran's leaders, and that he hoped that Iran would give consideration to Russia's recommendations--which would entail Iran subcontracting part of the fuel production process to Russia so as to provide a guarantee against a military application--but he conceded that Russia had not heard anything constructive on the particular issue of Iran suspending its enrichment activities while negotiations are held on a political resolution.

Russia has applied pressure on Iran in its own way through raising the issue of supposed late payments for work on the Bushehr project. Iran has contested these claims, but it seems clear that Russia is in no hurry to complete the 1,000-mw power station project, which is based on an agreement for Russia to supply the fuel and to dispose of the spent fuel rods. The inauguration of the plant would provide an opportunity for Iran to flaunt its ability to defy international pressure, and would thus be embarrassing for the project's Russian sponsors. Bushehr would boost Iran's total power generating capacity by 2.6%, from its present level of 38,000 mw.


The influence of Russia is likely to ensure that the next moves by the UN Security Council are not unduly severe, leaving the way for Iran to be persuaded of the benefits of negotiation, rather than seeking to bludgeon it into submission. This would give Iran several more months in which to build up the capacity of its Natanz facility. In the view of the US, Iran has, in effect, been thumbing its nose at the international community, not only forging ahead with a programme assumed to be aimed ultimately at developing nuclear weapons, but also building up its capability to retaliate against or, indeed, to pre-empt a US (and/or Israeli) military attack. Iran's missile batteries are capable of threatening US bases in Iraq, Kuwait, Qatar and Bahrain, and, according to (possibly self-serving) reports from Israel, Iran has been working to build up the missile and anti-tank capabilities of its two main Arab allies, Hizbullah and Syria. The US has made much in recent weeks of Iranian involvement in arming Shia militias in Iraq with the aim of increasing the pressure on US forces.

The absence of any dramatic shift--such as a surprise US attack or an Iranian U-turn--the pattern of confrontation that has been set over the past 18 months is likely to continue, with Iran doing just enough to keep the diplomatic ball in play, while relying on its regional allies to highlight the message that the issue has effects reaching far beyond Iran's borders. The Bush administration, meanwhile, will be seeking to turn the tide in its favour in Iraq, while holding a firm line against Syria and Hizbullah; the other Arab states, led by Saudi Arabia, will do their best to steer a middle path.

The Economist Intelligence Unit
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