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Tehran's Take:
Understanding Iran's U.S. Policy

July/August 2009
Mohsen M. Milani

Although a great deal has been written about the United States' policy toward Iran, hardly anything comprehensive has been produced about Iran's policy toward the United States. Given Washington's concerns that the United States faces "no greater challenge from a single country than from Iran," as the 2006 National Security Strategy put it, this lack of serious attention is astonishing. What does exist is sensationalistic coverage about Iran's nuclear ambitions and about mad mullahs driven by apocalyptic delusions and a martyr complex. That picture suggests that Iran's policy consists of a series of random hit-and-run assaults on U.S. interests and that its leaders, being irrational and undeterrable, must be eliminated by force.

In fact, Tehran's foreign policy has its own strategic logic. Formulated not by mad mullahs but by calculating ayatollahs, it is based on Iran's ambitions and Tehran's perception of what threatens them. Tehran's top priority is the survival of the Islamic Republic as it exists now. Tehran views the United States as an existential threat and to counter it has devised a strategy that rests on both deterrence and competition in the Middle East.

To deter any possible military actions by the United States and its allies, Iran is improving its retaliatory capabilities by developing the means to pursue asymmetric, low-intensity warfare, both inside and outside the country; modernizing its weapons; building indigenous missile and antimissile systems; and developing a nuclear program while cultivating doubts about its exact capability. And to neutralize the United States' attempts to contain it, the Iranian government is both undermining U.S. interests and increasing its own power in the vast region that stretches from the Levant and the Persian Gulf to the Caucasus and Central Asia. Although it is being careful to avoid a military confrontation with the United States, Tehran is maneuvering to prevent Washington from leading a united front against it and strategically using Iran's oil and gas resources to reward its friends.

Iranian foreign policy today is as U.S.-centric as it was before the 1979 revolution. Mohammad Reza Shah Pahlavi relied on Washington to secure and expand his power; today, the Islamic Republic exploits anti-Americanism to do the same. Policy has been consistent over the years partly because it is determined by the supreme leader, who is also the commander of the security and armed forces and serves for life. Iran's defiance has in some ways undermined the country's national interests, but it has paid huge dividends to the ruling ayatollahs and helped them survive three tumultuous decades in power.

Today, Ayatollah Sayyid Ali Khamenei is the supreme leader, and he makes all the key policy decisions, usually after Iran's major centers of power, including the presidency, have reached a consensus. This means that the outcome of the presidential election in June will have some, although probably limited, ramifications for Iran's foreign policy. President Mahmoud Ahmadinejad and his two major reformist rivals, Mir Hossein Mousavi and Mehdi Karroubi, have all supported engaging in negotiations with Washington -- a political taboo just a few years ago. Ahmadinejad would be less likely to compromise than his more moderate competitors, but, thanks to the support he has among major anti-American constituencies inside and outside the Iranian government, he would be in a better position to institutionalize any shift in policy. Although Iran's president can change tactical aspects of the country's foreign policy, he cannot single-handedly alter its essence. Only Khamenei, the ultimate decider, can do that. And he will do that only if a fundamental change in policy would not undermine his own authority and if it enjoys broad support from among the major centers of power.

THE HUNGRY WOLF AND THE FAT SHEEP

The roots of anti-Americanism in Iran -- really, an opposition to U.S. policies -- can be traced to the 1953 coup against Mohammad Mosaddeq, which was backed by the CIA and MI6. Anti-American sentiment was strengthened when in 1964 Ayatollah Ruhollah Khomeini, who would become Iran's first supreme leader after the revolution, opposed a treaty granting legal immunity to U.S. military advisers in Iran and declared that Iran had become a "U.S. colony." By 1979, the revolutionaries were portraying the Iranian monarch as "America's shah" and had made "independence" a defining slogan of their movement. After the taking of hostages at the U.S. embassy in Tehran that year, anti-Americanism became an enduring feature of the state's Islamic ideology. Since then, Iran's leaders have deftly linked the survival of the Islamic Revolution to Iran's independence, depicting the United States as antithetical to both. No one has drawn this link more vividly than Khomeini: he called the United States "the great Satan" and compared U.S. relations with Iran to those between a hungry wolf and a fat sheep. As hostility between the two states intensified, a Manichaean security paradigm developed in both of them. Each one came to perceive the other as a mortal enemy in a zero-sum game. Anti-Americanism and anti-Iranian feelings became two sides of the same coin.

For decades, the Iranian regime has used anti-Americanism to crush its opponents at home and expand its power abroad. After 1979, documents selectively released by the radical students who occupied the U.S. embassy were invoked to establish links between opponents of the Islamic Republic and the U.S. government. Hundreds of people were consequently defamed, jailed, or exiled. In the 1980s, when the young regime was simultaneously struggling to consolidate its rule and fighting a war with Iraq, allegations that the U.S. government was attempting to stage coups in Tehran and prevent Iran from winning the war strengthened the sentiment.

Over time, anti-American constituencies in Iran have proliferated and gained ground in various institutions. Some of them oppose the United States for purely ideological reasons. Others have substantial economic interests in preventing the normalization of relations between Tehran and Washington: they profit from domestic black markets and international trade routes established to bypass U.S. sanctions. Moreover, the foreign organizations that Iran supports throughout the Middle East, and that Washington considers to be terrorist groups, have created effective lobbies in Iran that thrive on this animosity.

Yet now, as under Khomeini, the intensity of the anti-Americanism prevailing in Iran is ultimately determined by the supreme leader. As president, Khamenei declared in 1981, "We are not like [Salvador] Allende [a Chilean president ousted by a coup allegedly backed by Washington], liberals willing to be snuffed out by the CIA." Today, Khamenei still considers the United States to be an existential threat. Washington surrounds Iran with bases in Bahrain, Kuwait, and Qatar and massive troop buildups in Afghanistan and Iraq. It makes friends with the leaders of Iran's neighbors. And its nuclear-equipped naval carriers patrol the Persian Gulf. Khamenei sees the United States as isolating Iran, strangling it with economic sanctions, sabotaging its nuclear program, and beating the drums of preemptive war. He thinks Washington is pursuing regime change in Tehran by funding his opponents, inciting strife among Iran's ethnic minorities, and supporting separatist organizations such as the Baluchistan-based Sunni insurgent group Jundallah, which has killed scores of Revolutionary Guard members.

PREFER TO DETER

Tehran has responded to Washington's policy of containment with a strategy of deterrence. Tehran first developed this strategy against Iraq after Iraq invaded Iran in September 1980 and then, as the 1980s unwound and the menace of Iraq faded, redirected it toward the United States. Today, this approach is the result both of Iran's perception of its vulnerabilities and of the constraints that the international community has imposed on the country.

Iran's deterrence strategy has four components. The first is developing the means to fight an asymmetric, low-intensity war, inside and outside the country. In recent years, particularly after U.S. troops arrived in Afghanistan and Iraq, the Revolutionary Guards have played an increasingly important role in maintaining internal order. They have also improved Iran's retaliatory capability in case of an invasion or surgical strikes against its nuclear facilities or the headquarters of its security forces. Khamenei's recent decision to decentralize the command-and-control structure of the Revolutionary Guards serves this purpose. So do the alleged ability of Iran's troops to transform themselves into nonconventional forces within days and Iran's thousands of small Iranian-made assault boats, which could create havoc for the U.S. Navy, as well as its thousands of motorcycles equipped with light artillery, which could impede the advances of an invading army. Iran's support for terrorist actions against U.S. interests in the Middle East is part and parcel of its strategy of asymmetric warfare. For example, in 1983, during the civil war in Lebanon, a group associated with the Iranian-backed Hezbollah killed 220 U.S. marines.

The modernization of Iran's weapons systems is the second component of its deterrence strategy. Decades of arms embargoes from the West have left Iran with limited access to advanced weapons, and Iran has consequently purchased relatively small arms supplies. Between 2002 and 2006, it spent $31 billion on military purchases, compared with $109 billion for Saudi Arabia and a total of $48 billion for Bahrain, Kuwait, Oman, and the United Arab Emirates -- four states with a combined population smaller than that of the city of Tehran. The embargoes have also caused an indigenous military-industrial complex to develop, controlled and financed by the state. It employs thousands of people and is connected to the country's major universities and think tanks. Most important, it is in charge of research and development for Iran's missile and nuclear technologies.

Developing indigenous missile and antimissile systems is the third leg of Iran's deterrence strategy. Tehran began building missiles during the Iran-Iraq War and accelerated its program after the "war of cities," in 1988, when both states showered the other's cities with missiles. Iran has used technical support from China and Russia to to develop its missile technology. Now, it manufactures its own missiles and claims that two types, the Shahab and the Ghadr, can reach Israel. These missiles are known for their inaccuracy and limited offensive application. But they give Iran the power to retaliate against attacks, particularly in the Persian Gulf, where it could readily upset international navigation.

The fourth component of Iran's deterrence strategy is its nuclear program. The Iranian government claims that its program is designed for peaceful purposes -- using nuclear weapons would violate Islamic law, it says -- but Washington (and much of the West) accuses it of having a secret program to build the bomb. So far, the International Atomic Energy Agency has found no smoking gun or any evidence that Iran has diverted its nuclear program toward military purposes. But nor has it been able to confirm Tehran's peaceful intentions, because the Iranian government has refused to answer some major questions. Now that Iran has joined a small club of countries that can enrich uranium to a low level of purity, it seems unlikely to cave in to international pressure and accept zero enrichment in the future.

Why, given all the sanctions imposed by the United Nations, does Iran not cry uncle and stop its nuclear program? For one thing, by insisting that its nuclear project is essential for the country's domestic energy needs and scientific development, Tehran has effectively turned U.S. opposition to its program into a nationalist cause, pointing to it as proof that Washington intends to hold Iran back. (In an attempt to awaken national pride, the government has had the atom symbol printed on 50,000 rial bills.) For another, the nuclear impasse creates an excellent bargaining chip for Tehran in future negotiations. This may be the reason that Iran's leaders are cultivating uncertainty about the country's actual capability. It does appear, however, that they have decided to develop the infrastructure to build the bomb but not yet the bomb itself. (Former President Ali Akbar Hashemi Rafsanjani claimed in 2005, "We possess nuclear technology that is not operationalized yet. Any time we decide to weaponize it, we can do so rather quickly.") Iran and the United States seem to be engaged in a game of poker, with Tehran not showing its cards about its nuclear capabilities and Washington refusing to exclude the possibility of attacking Iran. Washington has the better hand, but the better hand does not always win.

COUNTERCONTAINMENT

For three decades, the United States has sought to contain Iran and has imposed on it a variety of sanctions in an effort to do so. To try to neutralize these measures' effects, Iranian leaders have played major powers off against one another, forged alliances of convenience, and asserted Iran's interests at the regional and global levels.

First, Iran has tried to create a wedge between the United States and the United States' European allies. Iran's leaders believe that increased trade with the European Union will allow them to exploit differences among the organization's 27 members and discourage it from supporting regime change in Tehran, the total containment of Iran, or a military attack. In other words, they see the EU as a potential counterweight to the United States. After Iran restarted its uranium-enrichment activities in 2003, the EU ended its "constructive engagement" policy and imposed limited sanctions on Iran to tame its nuclear ambitions. Although these restrictions have prevented both Iran from gaining access to advanced technologies and European firms from making substantial investments in Iran, they have had a negligible impact on the overall volume of trade. The EU remains Iran's leading trading partner, accounting for about 24 percent of Iran's total international trade: the EU's total imports from Iran (mostly energy) increased from 6.3 billion euros in 2003 to 12.6 billion euros in 2007, and its exports to Iran (mostly machinery) remained the same, at about 11.2 billion euros, during that period. On the other hand, the fact that France, Germany, and the United Kingdom supported the referral of Iran's case from the International Atomic Energy Agency to the UN Security Council in 2005 proved the limits of Iran's wedge policy. The move, which highlighted the determination of the major Western powers to tame Iran's nuclear ambitions, was a major defeat for Tehran and a major victory for Washington.

The second component of Iran's strategy to undermine the United States' containment measures is to move closer to states that could counterbalance the United States. Iran has signed major economic and military agreements with China and Russia. It sees these two countries as natural allies, since they oppose the United States' unilateralism and its efforts to isolate Iran and have only reluctantly backed the sanctions against Iran. But the fact that they have supported the UN sanctions at all has proved to Tehran that when pressed, Beijing and Moscow are more likely to gravitate toward Washington than toward Tehran. Russia has not yet finished building the Bushehr nuclear reactor, which it had committed to completing by 2006, and Moscow may be willing to pressure Tehran to change its nuclear policies if the Obama administration decides not to build antimissile systems in Russia's neighborhood.

But Iran continues its efforts. With little alternative but to rely on China and Russia as counterweights to the United States, it recently asked to upgrade its status in the Shanghai Cooperation Organization, a six-party security organization that includes China and Russia, from observer to full member so that it would receive assistance from other members if it were ever attacked. It has also become much more active in trying to popularize anti-Americanism within the Nonaligned Movement and the Organization of the Islamic Conference, and it has solidified its ties with Washington's most vocal opponents in the United States' backyard: Bolivia, Cuba, Ecuador, Nicaragua, and Venezuela.

The third facet of Iran's countercontainment strategy is to use its energy resources to reward its allies. No country in the region is as well endowed with energy resources as Iran is, not even Saudi Arabia: Iran's oil reserves total about 138.4 billion barrels, and its natural gas reserves total about 26.5 trillion cubic meters. (Although Saudi Arabia's oil reserves, which total approximately 267 billion barrels, are larger than Iran's, its natural gas reserves, which total about 7.2 trillion cubic meters, are much smaller.) Oil diplomacy has long been a strategy of Tehran's, of course. During the Rafsanjani presidency, it briefly served as a means to start normalizing relations with Washington. In that spirit, Iran signed in early 1995 a $1 billion oil deal with the U.S. energy company Conoco, the largest contract of its kind since 1979. But the deal was soon terminated when, under pressure from the U.S. Congress and U.S. interest groups opposed to any opening toward Iran, President Bill Clinton issued an executive order banning U.S. companies from investing in Iran's energy sector. A year later, the Iran-Libya Sanctions Act was passed, which penalizes foreign companies that invest more than $20 million in Iran's energy industry. In reaction, in 1997 Tehran signed a $2 billion deal with the French oil and gas company Total.

Meanwhile, many Western companies that have continued to want to do business in Iran have struggled to bid for its huge and untapped natural gas reserves. And to immunize itself against the effects of the sanctions and any potential boycott by the West, Iran has shifted its oil trade from the West to new markets. Before the 1979 revolution, the top five importers of Iranian oil were, in decreasing order, France, West Germany, the United Kingdom, Italy, and Japan. By 2008, they were Japan, China, India, South Korea, and Italy. Iran has also recently helped open up the Persian Gulf to China and Russia, signing multibillion-dollar contracts with the Chinese company Sinopec and granting Russia major concessions and access to the Azadegan oil field. Khamenei has even proposed forming with Russia a natural gas cartel modeled after OPEC.

Despite U.S. opposition, Iran has also made good progress on the construction of a so-called peace pipeline that would carry gas from the Persian Gulf to India through Pakistan, a project that would strengthen Iran's position as a major source of energy for those two countries. Nor should one underestimate the negative long-term implications for U.S. interests of China's and Russia's increasing involvement in the Persian Gulf, which Iran has facilitated, or of Tehran's recent move to use the euro in its international transactions, which has weakened the dollar. On the other hand, the sanctions have hurt Iran badly. Its plan for gas and oil pipelines that would connect the Persian Gulf to the Caspian Sea has stalled because of the restrictions. And its oil industry has been deprived of access to important modern technologies: as a result, Iran's oil production today remains significantly below what it was in 1979. In other words, the sanctions have been a lose-lose economic proposition for both the United States and Iran.

RISING IN THE REGION

After three decades of Washington's containment policies, Iran has nonetheless emerged as a regional power. The collapse of the Soviet Union allowed Tehran to expand its influence in the former Soviet republics, many of which it shares historical ties with. A decade later, the United States accelerated the process by overthrowing the Taliban and Saddam Hussein, Iran's neighboring nemeses. And by failing to reactivate the Arab-Israeli peace process and mismanaging the occupation of Iraq, Washington created enticing opportunities for Iran to expand its power. For the first time in a long while, Iran's influence now radiates west, north, and east. Iran now rightly considers itself an indispensable regional player.

These ambitions pit Tehran against Washington. As Mohsen Rezai, a former commander of the Revolutionary Guards, stated in 2007, "It is our principal and indisputable right to become a regional power," and the United States "would like to prevent us from playing such a role." According to a March 2007 article in The New York Times, a recent UN sanctions package against Iran's nuclear program was passed in order to rein in what U.S. officials saw as "Tehran's ambitions to become the dominant military power in the Persian Gulf and across the broader Middle East."

A pivotal element of Iran's strategy of neutralizing the United States' containment policy is to create spheres of influence in Syria, Lebanon, and among the Palestinians, as well as in Afghanistan and Iraq, by supporting pro-Iranian organizations and networks there. (As Rezai put it, "Iran has no meaning without Iraq, Lebanon, Palestine, and Syria.") An especially controversial part of this strategy is Iran's support for Syria, Hezbollah, Palestinian Islamic Jihad, and Hamas -- the rejectionist front in the Arab-Israeli conflict. Iran's three-decade-long alliance with Syria is one of the most enduring alliances between Middle Eastern Muslim countries since the end of World War II. Iran's support of the Shiites of Lebanon and the Palestinians goes back many years. Rafsanjani was incarcerated in the 1960s for translating a pro-Palestinian book into Persian; Khomeini condemned the shah in 1964 for his de facto recognition of Israel; Khomeini also authorized Hassan Nasrallah, the leader of Hezbollah, to collect religious taxes on his behalf in support of the Lebanese Shiites; and many of Iran's current leaders received training in Lebanon in the 1960s and 1970s. At first, Iran's support for Hezbollah and the Palestinians had an ideological basis; now, it has a strategic rationale. It gives Tehran strategic depth in the heart of the Sunni Arab world and in Israel's backyard, which translates into a retaliatory capacity against Israel, as well as bargaining power in any future negotiations with the United States. Moreover, after centuries of using its influence mostly to defend Shiites, Iran is now increasingly trying to transcend the sectarian divide by supporting the Sunni groups Hamas and Palestinian Islamic Jihad. This, in turn, has undermined the regional position of such powerful Sunni countries as Egypt and Saudi Arabia.

That said, Iran's financial and logistical support for Hamas and Islamic Jihad should not be exaggerated. Tehran remains a peripheral player in the Arab-Israeli conflict. It has no compelling national interest in the dispute and is simply taking advantage of the failure of the peace process between Israel and the Palestinians. What makes Iran an influential player is not its financial support alone -- Saudi Arabia and other Arab countries contribute substantially more to the Palestinians -- but also the model of resistance it champions. Iran has helped Hezbollah develop an approach that combines Islamic solidarity, populism, some trappings of democracy, strict organizational discipline, extensive economic and social support for the needy masses, and pervasive anticolonial and anti-Western sentiments -- all in an effort to mobilize the streets of the Islamic world against Israel and the United States and expand its own power. The effectiveness of that model, and of its asymmetric strategies, was on display during Hezbollah's 34-day war with Israel in 2006. The group's use of antitank missiles and portable rockets, which Israel claimed Iran had provided -- a charge Iran has denied -- inflicted enough damage on Israeli cities to create havoc and mass fear. Hezbollah appeared to have won because Israel could not score a decisive victory against it; the conflict marked the first time that an Arab force was not humiliatingly defeated by Israel. It boosted Hezbollah's popularity in many Sunni countries, gave Iran more credibility in the region, and undermined Washington's traditional allies, such as Egypt and Saudi Arabia, which had not supported Hezbollah. The war, along with the chaos in Afghanistan and Iraq and what the Iran expert Vali Nasr has called "the Shiite revival," has convinced Tehran that a new order is emerging in the Middle East: the United States no longer dominates, and Iran now plays a major role.

WHERE THE HARD THINGS ARE

The complicated nature of the U.S.-Iranian relationship is most evident in Afghanistan and Iraq, where the convergences and divergences of the two sides' interests are the clearest. After the Soviet occupation of Afghanistan in 1979, Tehran became intensely engaged with its neighbor, and Iran subsequently became home to some two million Afghan refugees. Gradually, throughout the 1980s, it built new alliances and new networks with Shiite and Persian- and Dari-speaking minorities. (As the Afghanistan expert Barnett Rubin has put it, during that period, "ironically, the United States was indirectly aligned with 'fundamentalists' while Iran courted the 'moderates.'") Then, in the 1990s, while Pakistan and Saudi Arabia were providing critical support to the Taliban government, which itself backed al Qaeda, Tehran created a sphere of resistance in Afghanistan by supporting the Northern Alliance -- a force that cooperated with the invading U.S. troops in 2001 in order to liberate Afghanistan from the Taliban. In helping dismantle the Taliban, in other words, Tehran effectively sided with the U.S. government -- even providing Washington with intelligence.

Tehran maintained its policy toward Afghanistan even after U.S. President George W. Bush said Iran belonged to "an axis of evil." Today, still, it entertains close relations with the pro-U.S. government of Afghan President Hamid Karzai. And the convergence between Tehran's interests and Washington's interests in Afghanistan remains substantial. Both want to keep the country stable and prevent the Taliban's resurgence. Both want to control and possibly eliminate drug trafficking, the economic backbone of the region's terrorists and warlords. Both want to defeat al Qaeda (which considers Shiism to be a heresy). And both want to eventually rebuild Afghanistan.

At the same time, Iran's heavy involvement in the reconstruction of Afghanistan has allowed it to create a sphere of economic influence in the region around Herat, one of the most prosperous regions in the country. This, in turn, has helped stabilize the area by preventing al Qaeda and the Taliban from infiltrating it. Iran has also empowered the historically marginalized Afghan Shiites, such as the Hazara and the Qizilbash, who constitute about 20 percent of the Afghan population. At a donors' conference in Tokyo in January 2002, Iran pledged $560 million for Afghanistan's reconstruction, or approximately 12 percent of the total $4.5 billion in international reconstruction assistance that was promised then. During a donors' conference in London in 2006, it pledged an additional $100 million. And unlike many other donors, it has delivered most of its promised assistance. The bulk of the funds are targeted at developing projects for infrastructure, education, agriculture, power generation, and telecommunications. Iran hopes to become a hub for the transit of goods and services between the Persian Gulf and Afghanistan, Central Asia, and possibly also China.

This quest for influence in Afghanistan pits Iran against the United States in some ways. For example, Tehran opposes the establishment of permanent U.S. bases in Afghanistan. And to ensure that Washington will not be able to use Afghanistan as a launching point for an attack on Iran, Tehran is pressuring Kabul to distance itself from Washington. Uncertain about Afghanistan's future and Washington's intentions in the country, Iran is keeping its options open and trying to increase all its possible retaliatory capabilities against the United States. It maintains close ties with the Northern Alliance, as well as with warlords such as Ismail Khan, various Shiite organizations, and the insurgent leader Gulbuddin Hekmatyar and other anti-American fighters. It is turning the region around Herat into a sphere of influence: the bazaars there are loaded with Iranian goods, the area receives the bulk of Iran's investments in the country, and the Revolutionary Guards are reportedly visible and active.

The United States and Iran have tried to strike a fine balance in Iraq as well, but with much less success. If anything, Iraq has become center stage for their rivalry; there they have some common goals but also many more diverging ones. Iran's top strategic priority in Iraq is to establish a friendly, preferably Shiite government that is sufficiently powerful to impose order in the country but not powerful enough to pose a serious security threat to Iran, as Saddam did. Iran was the first country in the region to recognize the post-Saddam government in Baghdad. Since then, it has provided Baghdad with more support than even the staunchest of the United States' allies. It has a close relationship with the two parties that dominate the government of Prime Minister Nouri al-Maliki, as well as with the two major Kurdish parties. Like Washington, Tehran supports Iraq's stability, its new constitution, and its electoral democracy, albeit in the parochial interest of ensuring the dominance of the country's Shiite majority. Like Washington, Tehran opposes Iraq's Balkanization, in its case partly for fear that such fragmentation could incite secessionist movements within Iran's own ethnically rich population. And like Washington, Iran considers al Qaeda in Iraq to be an enemy and seeks to eliminate it.

But as in Afghanistan, Iran is eager to engage in Iraq's reconstruction mainly in order to create an economic sphere of influence in the country, especially in the predominantly Shiite south, where many people of Persian descent live. It has pledged to spend more than $1 billion for Iraq's reconstruction. Tehran seems to believe that with its existing influence in southern Iraq, including close ties to the major Shiite seminaries in Najaf, it can transform the region into a kind of southern Lebanon, creating a ministate within a state.

And then there are some major disagreements between Tehran and Washington. Tehran is determined to keep Washington mired in Iraq and prevent it from scoring a clear victory there. During the sectarian violence in 2004-7, Tehran supplied weapons to Shiite insurgents in Iraq, who then used them against U.S. troops. It supported the Mahdi Army and its founder, Muqtada al-Sadr, the radical Shiite cleric who opposes the U.S. presence in Iraq. Tehran is also vehemently opposed to the establishment of permanent U.S. bases in Iraq, for fear, as with those in Afghanistan, that the United States could use them to attack Iran. The status-of-forces agreement signed by the United States and Iraq in 2008 does seem to have diminished some of Iran's concerns, however. The agreement stipulates that U.S. forces will withdraw from Iraq no later than December 31, 2011, and that "Iraqi land, sea, and air shall not be used as a launching or transit point for attacks against other countries."

Iran's policies toward Iraq in the past few years suggest that when Iran feels threatened and its legitimate security needs and national interests are ignored or undermined, it tends to act more mischievously than when it feels secure. Its Iraq policy, therefore, is directly correlated with its perception of the threat posed by the United States. The security talks between Tehran and Washington launched at the urging of the Iraqi government in 2005 are thus very important. After these meetings began, and after the U.S. government launched its "surge" strategy in Iraq, the level of violence in Iraq subsided. Iran played a role in stabilizing the situation by pressuring its allies, including the Mahdi Army, to refrain from violence against Sunnis or U.S. troops. The simple fact that Baghdad is a close ally of both Tehran and Washington offers a chance for those two governments to build on their interests in Iraq.

FULL ENGAGEMENT

Anti-Americanism is not an insurmountable obstacle to normalizing relations with Iran. For one thing, Iran's elites are heterogeneous; they consist of two rival factions, both of which have come to favor, like a significant portion of the population, normalizing relations with the United States. For another, maslehat, or "expediency," is a defining feature of Iranian politics. Even the most ideological of Iran's leaders favor a cost-benefit approach to decision-making. According to the 2007 U.S. National Intelligence Estimate, Iran halted its nuclear weapons program in 2003 based on a cost-benefit calculation. Although the accuracy of that conclusion is debated, there is no question that Tehran has often resorted to that approach. When Iran needed advanced weapons during the Iran-Iraq War, Khomeini approved secret dealings with Israel and the United States, culminating in the Iran-contra fiasco. Despite its general opposition to the presence of U.S. troops in the region, Tehran remained actively neutral during the 1991 Persian Gulf War, seeing it as an opportunity to weaken its archenemy Saddam and improve relations with the West. The Revolutionary Guards, the most ideological group in the Iranian armed forces, rubbed shoulders with U.S. forces when they assisted the Northern Alliance in overthrowing the Taliban in 2001. Far from being a suicidally ideological regime, Tehran seeks to ensure the survival of the Islamic Republic while advancing the country's interests through negotiations.

Iranian policy toward the United States has a logic. It is a logic driven not by a single faction or a single issue but by a stable and institutionalized system of governance with both authoritarian and democratic features, with domestic constituencies and long-standing international alliances. It is a logic that made Iran into a regional power with substantial influence in Afghanistan, Iraq, Lebanon, and the Palestinian territories, and among millions of Muslims around the world. And it is a logic that, despite mounting international pressure, has made it possible for Iran to make advances in asymmetric warfare, nuclear technology, uranium enrichment, and missile and satellite technologies. Now, Iran legitimately demands that Washington recognize these advances and Tehran's new role as a major regional power.

Unless Washington understands that Tehran's U.S. policy has a rationale, it will not be able to develop a reasonable long-term strategy toward Iran. Invading the country is not a viable option. Nor are so-called surgical strikes against Iran's nuclear facilities, which would most likely lead to a protracted retaliation by Iran; a Tehran more defiant and more determined to become a nuclear weapons power; more terrorism; greater instability in Afghanistan, Iraq, Lebanon, and the Persian Gulf; and higher oil prices.

The challenge for the U.S. government is to give Iran incentives to reevaluate its strategy toward the United States. A carrot-and-stick approach designed to stop progress on Iran's nuclear program is unlikely to work. Focusing on a few contentious issues, such as Iran's uranium-enrichment activities, would do little to change the fundamental logic of Iran's U.S. policy. Moreover, the stick part of that approach would only strengthen the anti-American constituencies in Iran while hurting its people. Nor will democracy promotion work. More a feel-good fantasy than a viable strategy, this approach misleadingly assumes that democracy can be exported, like cars, or imposed by force and that a democratic Iran would no longer have any serious conflicts with the United States or pursue nuclear ambitions. Iran was considerably more democratic under Mosaddeq than under the shah, and yet its relations with the United States were much worse then.

A better approach is a strategy of full engagement, one predicated on gradually increasing economic, educational, and cultural exchanges between the two countries; exploiting the commonalities shared by their governments; and establishing concrete institutional mechanisms to manage their remaining differences. Washington must recognize that there is no diplomatic magic wand that can fix its "Iran problem" overnight; normalizing U.S.-Iranian relations will be a long and difficult process. Unless Tehran and Washington make a strategic decision to normalize relations, the many forces that continue to pull them apart are likely to derail the process.

As a first step, the United States should allay Iran's fears about regime change. It can do this by explicitly recognizing that Khamenei is the center of gravity in Iran's decision-making process and establishing a line of communication with his office. Holding direct, comprehensive, and unconditional negotiations with the Iranian government is Washington's least bad option. The two countries' negotiating teams must meet face-to-face to learn firsthand about each other's priorities and interests on all the important issues and break the psychological barriers that have kept the parties apart for three decades. Meanwhile, Washington should provide assurances to Israel and its Arab allies that they should not fear its rapprochement with Tehran and that Iran's nuclear policy will remain the main item on the United States' Iran agenda.

As the Obama administration reviews its options when it comes to Iran, it would do well to examine how, three decades ago, President Richard Nixon brought China back into the community of nations. It took almost eight years after the secret trip by Henry Kissinger, then U.S. national security adviser, to Beijing in 1971 for the United States and China to establish diplomatic relations. Anti-Americanism under Mao Zedong, China's support for North Vietnam, and China's arsenal of nuclear weapons were infinitely more threatening to the United States then than Iran's policies are now. Yet Nixon and Kissinger had the foresight to map out a new strategic landscape for Beijing. They did not punish it for its policies of the past; they gave it a reason to want something better in the future. And then the two countries built a better relationship on their common recognition of the threat posed by Soviet expansionism. Washington can, and should, do something similar with Tehran today and finally end three decades of hostility by highlighting the two governments' shared interests in defeating al Qaeda and stabilizing Afghanistan and Iraq. Tehran, for its part, must recognize that without some kind of understanding with Washington over the issues that matter to the U.S. government, it will not be able to fully benefit from its recent ascent as a regional power -- and could even lose much of what it has gained.

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