by Tomas Valasek

The US caused a small earthquake in the foreign policy circles when it announced, in November 2007, that it believes that Iran is no longer producing nuclear weapons. It was a massive departure from the previous, 2005 national intelligence assessment (NIE), which found Iran guilty of producing the bomb. Anyway one looks at it, the new NIE is certainly good news. It implies that the Middle East is a somewhat safer place than previously believed, and it puts off the possibility of a US military strike on Iran, with its certain destabilising effect on Iraq, Afghanistan, and elsewhere. Does it also mean that Javier Solana should declare victory and call off EU negotiations to stop the Iranian enrichment programme?

Not so fast. While Iran seems to have suspended weapons production in 2003 (or so Washington now believes), it also continues to enrich uranium on a scale inconsistent with its energy needs – it is building facilities to make more enriched uranium than it needs for its power production. That raises suspicions that Tehran’s true intent still remains to produce fuel for nuclear bombs. And because enrichment is the most difficult part of producing weapons, Iran can afford to stop working on the actual bomb and resume work only when it has made enough fuel. That is why the UN Security Council continues to take a dim view of Iran’s plans, and it is poised to pass a third round of sanctions (Iran is already in violation of two previous resolutions calling on it to halt enrichment).

But the new intelligence assessment is, in a way, a welcome break for the EU’s diplomacy. For all his valiant efforts, Javier Solana, the EU high representative, found progress with Tehran very hard to achieve. Iran is a country with a long history of deceit by and disappointment in foreign powers. This history has bred a mindset of suspicion about outsiders, which is now colouring the EU-Iranian talks on the country’s nuclear programme. Iran is also an incredibly opaque country, with power struggles taking place behind the scenes which the outsiders understand only poorly. This matters – the nuclear programme is a domestic political issue in Iran. Europe would like to understand better and perhaps exploit the fissures between the various actors. But that is proving very difficult.

With a relatively weak deck of cards in his hands, Solana has set out to win the trust of his counterparts in Iran, and to gradually change their views on nuclear bombs. At every meeting Solana points out patiently that Iran stands to lose more than to gain from acquiring nuclear weapons, and that they do not bring prestige and that they may in fact weaken Iran’s security by destabilising the neighbourhood. The philosophy behind Solana’s approach is simple – he wants to win an ally in the Tehran government. Only an insider can turn around Iran’s thinking on nuclear weapons; Solana himself cannot. And in his long-time counterpart, former Iranian negotiator, Ali Larijani, Solana found an attentive ear, if not necessarily an ally.

The limitations of the strategy are obvious. It is not clear that any Iranian negotiator, no matter how well Solana does at winning him over, can turn around the Tehran government’s position on nuclear weapons so long as the top leaders remain deeply suspicious of the West. The second reason for pessimism is that the Iranians of course understand Solana’s game. When he appeared to be making progress with Larijani, and when Larijani appeared to be offering the faintest glimmer of hope for a breakthrough, he was replaced. With that one act, Iran’s president, Mahmoud Ahmadinejad, undid much of the progress that the EU had been able to accomplish to date.

The EU did win two significant victories, one in the form of gaining US support for its negotiating efforts, and the other in the form of two (soon to be three) rounds of United Nations Security Council sanctions against Iran. These have come as somewhat of a rude shock to Iran. Only a few years ago, Iran had been able to defeat a Western effort to strengthen the Nuclear Non-Proliferation Regime, the NPT, at a review conference in 2005. The Iranians had reasons to believe that because of the unpopularity of the United States, and because of what they believed to be a generally supportive stance from Russia and China, they would be able to avoid UN sanctions. That turned out not be the case; Russia and China have allowed the UN Security Council sanctions to pass. That has shown Iran’s global position to be weaker than Tehran has generally thought, and Solana’s people believe that it made Iran more willing to negotiate.

Despite these partial successes, the odds of a breakthrough on Iran seemed long, at least until the new US intelligence assessment came out late last year. Since then, a slew of events within Iran gave some hope that a change may be in the offing.

It turns out that the best thing to do about Iran may be: nothing. The moment that US pressure on Iran ceased (with the release of the new NIE), President Ahmadinejad started getting into trouble. He had previously covered up years of inept governance by pointing at the US threat and posing as a defender of Iran against the bellicose West. But with the West sheathing its swords for now, the ordinary Iranians’ attention turned to other things – like the 17 per cent inflation rate (up from 12 per cent in 2006), an estimated 16 per cent unemployment rate, or the lack of basic commodities like gas or petrol in what is one of the world’s most resource-rich countries. Ayatollah Khamenei, the country’s supreme leader, has recently taken to openly criticising Ahmadinejad’s economic policies. The president responded the way most populists do, by throwing money at the problem – he increased government spending, mostly on social programmes, by 17 per cent in the 2008 budget. But this is only likely to exacerbate Iran’s economic woes in the long run.

One wonders if the new NIE just might hasten Ahmadinejad’s departure. The president has considerable time left in office, and may yet in theory regain his footing. But Iran will hold legislative elections in March, and, on current trends, the president stands to lose much of his support in the parliament. And with the economy in trouble, even Ahmadinejad will find it difficult to stage a comeback. His downfall would not end the nuclear programme per se, but it would most probably bring back to power people like Ali Larijani, who seem more open to a negotiated settlement. If this optimistic scenario does unfold, it may turn out that the EU’s biggest achievement in Iran to date lied in buying sufficient time until the US eased pressure on Iran, allowing Ahmadinejad’s domestic woes to play themselves out.

Tomas Valasek is director of foreign policy and defence at the Centre for European Reform.