This is part of a strategic dialogue on Iran. You can read Bernd Kaussler’s piece here.

The conventional wisdom on Iran is, as The Economist wrote, that Iran’s “ultraconservative, military-backed government…has a physical hold on the Islamic Republic,” and that the regime uses an “uninhibited resort to coercion.” But a closer analysis of Iran reveals a government that is moving to the center by shifting its nuclear ambitions, focusing on meeting the economic needs of the country, and lessening its authoritarian grip on the population.

The current demonization of Ahmadinejad fails to place the current situation in the proper historical context. Under the Shah, when my father was in elementary school, government soldiers came into his class one day requiring that every child join the Shah’s political party. Every child did this, save one. A soldier took him away and 30 minutes later, he came back to the classroom and joined the party. My grandmother’s uncle, Mohsen Khajenouri, a former senator and land developer during the Shah’s regime, was executed after the revolution simply because he was affiliated with the previous regime. These are two examples of Iranian authoritarianism that are unparalleled today. While it’s difficult for opposition leaders Mir-Hossein Mussavi and Mehdi Karroubi to vocalize their ideas, the fact that they are given some avenue to organize and protest the regime represents a stark contrast to pre-revolutionary Iran.

The opposition movement has scored impressive victories despite the odds and political repression of the current regime. As a result of the post-election protests and domestic strife, Mahmoud Ahmadinejad’s regime has moved cautiously away from the right and towards the center, in particular over its nuclear, foreign, and economic policy.

Short of an outright revolution, political moderation is a lagging indicator of success. For example, citizens in the United States had to endure eight years of George W. Bush’s presidency before enacting change under the new Obama administration. In order to continue to nudge Iran in the right direction, the United States should make good on its promise of engagement and inclusion, doing so will be a big step towards creating a peaceful Middle East.

The Nuclear Paradigm

On September 25th 2009, Iran revealed to the IAEA that it has a second nuclear facility under construction near Qom. This announcement, coupled with Iran’s test firing of long-range missiles, sent shockwaves throughout the international community. The new facility will be equipped with more advanced technology than their existing facility at Natanz, allowing Iran to enrich uranium at a much higher rate and potentially enabling Iran to produce weapons-grade uranium.

Iran has stated and IAEA reports have confirmed that there has been no evidence of a move towards constructing a nuclear weapon. Iran is still adamant in its desire to pursue a nuclear program; however, Ahmadinejad is more open than ever to compromise and make concessions. Iran has returned to the table to discuss its nuclear policy with the 5+1 group, in which it outlines its nuclear proposal and nuclear ambitions. Furthermore, Iran allowed the IAEA to inspect its new facility on October 25th.While some skeptics argue that Iran has made calculated moves in unveiling its new facility and is making a “concession” to the international community to allow inspections, at face value Iran is complying with international law and procedure. The likely reason for this change in attitude is the tenuous domestic situation caused by the opposition movement’s protests.

Another positive sign is the tentative agreement brokered by the IAEA, in which Iran will export its low-enriched uranium to Russia to be turned into reactor fuel. It will then be sent to France for further enhancement and returned to Iran, to be used for medical and other research purposes. While this concept isn’t unprecedented (the U.S. has exported enriched uranium to India), it can serve as a model for dealing with other countries with nuclear ambitions such as North Korea or even other Gulf states. Recent reports indicate Iran may be backpedaling. The United States and the international community should still encourage this arrangement.

Iran is a highly influential regional actor, and how it pursues its nuclear ambitions will have an impact on the entire Middle East. Noted Iran scholar Amir Taheri argues that the current path is leading to a nuclear arms race. He wrote, “Since Tehran’s nuclear ambitions hit the headlines five years ago, 25 countries — 10 of them in the greater Middle East — have announced plans to build nuclear power plants for the first time.” There is already evidence of military build-up in the region, as the perceived threat of Iran has increased since the fall of Saddam’s Iraq. The United States (the largest supplier of arms in the region) has begun to arm states such as Israel, Jordan, and Egypt, while Saudi oil money funds their arms program.

Iran’s persistence on pursuing a nuclear program must be understood as a political ploy. Its current nuclear policy has two goals: enhancing its authority as a regional power and fulfilling a desire to be a part of the “nuclear club.” Iran’s nuclear insistence is as much a product of its own glorified ambitions of becoming a dominant nation as it is the West’s treatment of it as a pariah state. A new policy that gives Iran a chance to be a part of strategic discussions on regional affairs and increased dialogue between Iran and the West would serve to ease tensions and facilitate regional cooperation. While the outcomes of these nuclear talks are yet to be determined, initial signs are positive.

A More Sober Approach: Economic Rapprochement

In 2005, Mahmoud Ahmadinejad’s focal campaign promises were a redistribution of oil revenues to the people and restoring Iran to a plateau of prestige in the Middle East. On the first promise, millions of dissatisfied Iranians as well as economists such as Djavad Salehi-Isfahani deemed his first term a failure. Indeed, opposition movement candidates Mir-Hossein Mussavi and Mehdi Karroubi based their campaigns on reforming the economy.

Mindful of this opposition, Ahmadinejad is now focusing on repairing the damaged economy. Djavad Salehi-Isfahani conducted a study on the economic potential of Iran in “Contemporary Iran: Economy, Society, Politics” and determined that the country has many opportunities for massive economic growth, propelled by a growing and increasingly educated labor force. He also points out that massive inflation rates and falling oil prices have had damaging effects on the economy, and is urging the regime to reverse bad economic policies and increase privatization.

Recently Iran has introduced some measures of privatization by allowing foreign banks to open branches in Iran. Measures such as a joint oil-refining venture with Iraq, opening up to Swiss investors, and increasing its trade with Asian countries have been carefully planned to lessen Iran’s reliance on oil, boost a struggling economy, and circumvent UN and U.S. sanctions. But Research and Markets estimates that economic growth has slowed to approximately 2.4%, a decrease from last year’s growth. While the report links the decline in growth to falling oil prices and the global economic crisis (confirming Salehi-Isfahani’s analysis), it’s important to note that Iran has avoided a recession. Increased privatization serves as a sign that the government seems willing to give up some measure of control to appease the opposition movement and dissident population. However, to what extent Iran is willing to give up control over the economy is still unknown.

On his second promise, increasing Iran’s prestige, Ahmadinejad has produced credible results, although many disagree with his rhetoric and his methods. In the past four years Iran has become a preeminent power in the region largely with the indirect help of the United States, who eliminated two of Iran’s primary regional competitors, Iraq and Afghanistan. Iran has built a network of influence throughout the Middle East, including with the Shia of Iraq and Afghanistan, the Hezbollah in Lebanon, Hamas, and Syria.

Ahmadinejad’s first term was characterized by strong anti-Western, anti-Israeli sentiments and tensions rose to dangerously high levels, with Israel often threatening to attack Iran’s nuclear facilities and Bush deliberating war with Iran. But since the June 2009 elections, Iran has toned down its rhetoric and developed a more sober approach to its foreign policy.

One of the leading explanatory factors in Iran’s more cautious foreign policy is the domestic struggle raging within the country. Ahmadinejad understands the unstable ground on which he stands, realizing that a majority of Iranians favor regional cooperation over dominance, and a robust economy rather than a powerful military machine. With the opposition movement still vibrant and protests still rampant, Ahmadinejad has been treading cautiously in terms of his foreign policy. Further, in the all-important Lebanese parliamentary elections in June 2009, Hezbollah suffered an unsuspecting defeat, weakening one of Iran’s major regional allies. Reports of Iranian sponsored and funded terrorist activities have dried up in recent months and dialogue between Iran and its neighbors has increased, with Iran establishing valuable trade links with Armenia, Iraq, and Turkmenistan. However, it’d be erroneous to assume Ahmadinejad has turned a new leaf, as the recent testing of long-range missiles and the fusion of the Basij and Revolutionary Guard has shown that Iran is still intent on posturing itself as a major regional military force.

The Opposition Movement and Progress

Progress has been made since the June elections: Iran and the United States have had their first formal talks in decades. The Iranian government, in a less aggressive stance, complied with IAEA stipulations and opened its second nuclear facility for inspection. Domestically, it’s moving to reverse poor economic policies and decisions. But more work needs to be done. While the tens of thousands of angry Iranians who paraded the streets and were violently repressed by Basij forces have subsided, the opposition movement has since further organized its movement and found ways to circumvent media censorship in order to keep its message alive.

A recent letter by opposition leader Mir-Hossein Mussavi stressed the continuation of the movement through respectful means. In addition, former President Mohammad Khatami and Mir-Hossein met last week to discuss the domestic crisis in Iran, warning that the regime should “not create a situation where the forces that are against the principles of the Revolution and the system become active.” This warning has been heeded by the government and it is a success of the opposition movement that has influenced Iran’s recent progress.

The root of the opposition has taken a more behind-the-scenes approach. Mussavi quietly challenges the legitimacy of the regime while pushing for moderation. And there are two pieces of good news for the opposition’s future prospects: The age and health of Ali Khamenei suggest he will not remain in power for much longer, and Mahmoud Ahmadinejad cannot run for re-election in 2013. Until then, the opposition movement must weather the storm and should continue working to force Ahmadinejad and his hard-line supporters to leave the right and reach a middle ground, eventually leading to increased stability. Failure to do so could lead to catastrophic consequences for Iran, ranging from revolution to regional war.

Help Us, Obama

If President Obama wishes to fully earn the mandate bestowed upon him by the Nobel Peace Prize, successfully negotiating with Iran is perhaps his most important task. There are three areas where the United States can have a direct impact on Iran: engaging in nuclear negotiations, lifting economic sanctions, and helping create a regional security network.

With Iran adamant on continuing its nuclear program and many reports confirming that no move towards weaponizing have been made, the Obama administration should work with Iran to ensure that it has the tools necessary to maintain a peaceful nuclear power and research program. The new plan for Iran’s low-enriched uranium is a great start, and the United States should offer its support.

Next, the U.S. should consider lifting economic sanctions against Iran, provided the UN, United States, and Iran agree on on how the additional money would be used. In an attempt to push Iran to openness in nuclear negotiations, the House of Representatives recently passed a bill threatening protections for U.S. companies who wish to withdraw investments in Iran. Economic sanctions are one of the major factors crippling Iran’s economy, so this policy should be rejected. The Obama administration should stipulate additional funds for raising the standard of living, increasing development throughout the country, and creating jobs to relieve the masses of unemployed Iranians. The United States should offer to help Iran create a new five-year plan to address these issues.

Lastly, the United States should work towards creating a regional security network that will bring together all countries in the Middle East. This will allow dialogue between countries and facilitate regional cooperation. Obama has the popularity and governmental backing to be a catalyst for these changes, and can play a major role in fomenting peace throughout the region.

A Different Light

Instead of the doom-and-gloom sensationalism flooding Western media about Iran focusing only on the oppression of the people, more emphasis should be placed on the successes of the opposition movement. Mussavi’s movement has achieved real success in the tangible altering of Iran’s nuclear policy, heightened efforts at economic stabilization, and a toned-down foreign policy. If Khatami and Mussavi can find reasons to smile, perhaps we should begin to rethink our characterization of Iran and find more positive ways to support the movement towards change.

Duran Parsi is an intern for the Foreign Policy In Focus project at the Institute for Policy Studies.

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