by Charles Grant and Clara O’Donnell

The conspicuous role of Hamas in the recent release of Alan Johnston was not only good news for the BBC correspondent. Hamas showed that it cares about how it is perceived abroad, that it wants to be considered a credible actor, and that it hopes to end its international isolation. This means that the EU and other outsiders have potential leverage over the organisation that rules Gaza. Several European governments believe that the Union should rethink its current policy of refusing to engage with Hamas. They argue, with much justice, that the attempt to weaken Hamas by isolating it has failed; and that this policy seems to have strengthened support for Hamas among Palestinians, while Fatah, its great rival, has suffered from being seen as the West’s favoured friend.

It is time for the EU to consider talking directly to Hamas. Currently, the position of the EU – alongside the other members of the quartet, the UN, the US and Russia – is that it will not talk unless three conditions are met: recognition of Israel, renunciation of violence, and acceptance of existing peace accords. And there remain many good arguments against the EU engaging with this Islamic group, such as its ambition for Islamic rule, its refusal to recognise Israel's right to exist, its links to violence and terror, and its numerous rocket attacks on Israelis. Although it won the last Palestinian elections, Hamas used force to seize power in Gaza in June 2007. That episode damaged its international credibility and its legitimacy as a winner of democratic elections, and it also limited the chances of getting Hamas and Fatah to work together constructively. Without a single government accepted as legitimate by most Palestinians, Israel has no partner to make peace with.

However, the EU should take note of some conciliatory moves from Hamas since it won the elections in January 2006. Hamas respected a unilateral ceasefire for six months. And when it became part of the government of national unity that was brokered by Saudi diplomacy at Mecca, Hamas tacitly accepted the Palestinian Authority’s existing international agreements. Furthermore, while Hamas has still not officially recognised Israel, its leader in Damascus, Khaled Meshaal, has said that the state of Israel is a "reality" and that “there will remain a state called Israel, this is a matter of fact”. At the moment Hamas is clearly not the kind of credible international actor that could be a serious partner for Israel; the argument is over the best way to turn it into such actor. And it is clear that the current policy is not working.

The EU should recognise that the policy of boycotting of Hamas but showering favours on Fatah in the West Bank has been at best ineffectual, and at worst it has contributed to radicalising Hamas and provoking Fatah’s overthrow in Gaza. The grim gap that now separates the two parts of Palestine is imposing unacceptable humanitarian costs – the Gaza economy is already in a dire state, largely because Israel closes most of the border crossings most of the time. So long as the EU continues to reject the outcome of legitimately-conducted elections, it exposes itself to accusations of double standards and reduces its credibility in the eyes of the many in the Arab world.

The EU should seek to entice the moderate elements in Hamas with the prospect of recognition and financial assistance, in exchange for good behaviour and a constructive attitude towards talks with Fatah. That could facilitate the return of a single government for all the Palestinian territories, which is a precondition for the revival of the peace process. The EU should not abandon the concept of conditionality, but of the three conditions the one it should worry about is the renunciation of violence. Were Hamas to return to suicide bombs or rocket attacks on Israel, the EU should have nothing to do with it.

Of course, there can be no peace in the region without the support of Israel and the US, both of which are strongly opposed to the recognition of Hamas. The EU must think very carefully about how it sells a new policy on Hamas to Israel and the United States. The ultimate goal in the Middle East is peace between Israel and the Palestinians, and if EU engagement with Hamas leads to a breakdown in the Union’s relations with Israel and the US, it will have achieved little. But the EU has a very strong argument to make. In the long term, it is in Israel’s interests that the moderate elements within Hamas – the strongest political entity in Palestine – be strengthened. Talks between the EU and Hamas could and should focus on that objective. The very process of talks with Hamas could have a transformational effect on the organisation, as was the case with the talks between the British government and the Irish Republican Army. Evidently, the talks might not produce that positive outcome. But neither the US nor Israel can claim that the status quo is doing much to enhance the security of Israelis.

The US, in its current pre-election phase, will be very reluctant to contemplate talking to Hamas. But in the Bush administration – which does not have to worry about winning votes in the next presidential election – moderates such as Condoleezza Rice now have the edge over hard-line Israel-firsters such as Dick Cheney. It is not inconceivable that the US could discreetly encourage the EU to take the lead in engaging with Hamas (as it earlier encouraged the EU to talk to Iran), while itself remaining aloof. The broader regional perspective may yet encourage the US – and possibly even Israel – to welcome the EU playing such a role. Given the growth of both Islamism and Iranian influence in the region stretching from Lebanon to Afghanistan, the US could reason that engaging Hamas would help to prevent an increase in the influence of either Iran or al-Qaeda in Gaza.

Charles Grant is the director and Clara O’Donnell is a research fellow at the Centre for European Reform.

The EU and Arab reform
by Charles Grant and Tomas Valasek

The Arab Reform Initiative held its annual conference in Amman, Jordan, on 18th April. Founded in 2005, ARI is a consortium of a dozen research centres that advocate peaceful and gradual political, economic and social reform in the region. A few non-Arab think-tanks are also involved, including the Centre for European Reform, but it is very much led and managed by Arab research centres (the CER’s own website has a page on the ARI see http://www.cer.org.uk/ari_new/index_ari_new.html). The CER is part of ARI because it believes that ARI offers an excellent opportunity to encourage reform in a region that is deeply suspicious of outside influence.

The mood among the Arab think-tankers in Amman was relatively bleak. Prince Turki Al Faisal of Saudi Arabia set the tone. The prince is known for being both strongly pro-reform and somewhat sceptical of the United States, despite having served as ambassador in Washington until recently. However, as he said, US influence is increasingly corrosive of the very cause of reform in the Middle East. The invasion of Iraq – which the prince described as ‘illegitimate’ – had been particularly damaging. The message that Arab reformers took from the conflict and its aftermath was that solutions devised outside the region would not work, and that they must distance themselves from Washington if they are to have credibility with their own people.

The second blow for reformers was the West’s reaction to the 2006 elections in Palestine that brought Hamas to power. Khalil Shikaki, a respected Palestinian researcher, noted that the refusal by Washington to engage a legitimately elected Hamas government sent a terrible message, showing contempt for free and fair elections. In doing so Washington had sided with the entrenched authoritarian elite in Fatah, which had been discredited in the eyes of many Palestinians. And by throwing its support behind President Abbas and strengthening his office at the expense of the Prime Minister, even directly funding the presidential guard, Washington had undermined the Palestinian constitution. Not surprisingly, concluded Khalil Shaliki, support for democracy among the Palestinians had dropped after the events of the last year.

There is no doubt an argument to be made that without a heavy US intervention in the form of the Afganistan and Iraq wars reforms may never have become as prominent an issue as they are today. By jumpstarting the movement even at the expense of damage to its popularity, Washington may already have accomplished its most important goal in the region. This will be a question for historians to resolve. For the time being, US influence on Arab governments and societies seems at an all-time low. Reforms must indeed come principally from within, from the relevant governments and initiatives such as ARI. Nevertheless, one outside body, the European Union, can play a legitimate supporting role. In fact there is probably no greater challenge for Europe than getting its relationship with the Muslim world right. Because of the intertwined nature of European and Middle Eastern societies, Europeans have more direct interest than Americans in wanting to encourage reform in the Arab world.

The EU does have its ‘Barcelona process’, through which it tries to promote closer political and economic ties with the Mediterranean states. But though this process has soaked up billions of euros of EU money, nobody seems to think that it has achieved a great deal. One problem has been the reluctance of the governments in the region to accept the concept of conditionality – the idea that they should only get trade and aid if they behave in certain ways – and the reluctance of EU governments to apply that principle.

The EU also has its ‘neighbourhood policy’, which now applies to several Arab countries. The EU has agreed ‘action plans’ with Jordan, Morocco, the Palestinian Authority, Tunisia and Egypt. The EU promises closer relations with the countries concerned in return for their fulfilling promises to reform. The neighbourhood policy includes the concept of ‘positive conditionality’, rewarding good performers with extra funds, which may be easier to apply politically than old-fashioned negative conditionality. Jordan has been a star pupil and thus won extra EU funds in 2006.

The Barcelona process and the neighbourhood policy have undoubtedly done some good in some ways. But ultimately what affects Arab views of the EU is its performance on the Middle East peace process. And to judge from the mood in Amman, most Arab intellectuals have a poor view of the EU’s role. Last summer, when Israel invaded Lebanon, the EU’s initial inability to condemn the act as ‘disproportionate’ – because of the reluctance of the UK and some others to break from the US line – was noted with contempt. More recently, the EU’s divisions over whether to talk to Syria and Hamas have not impressed Arab think-tanks.

Indeed, Bassma Kodmani, the feisty lady who runs the ARI, remarked that the EU’s efforts to forge a common foreign policy were benefiting no one. The European insistence on unity meant that the EU could not engage with Hamas – though the Swiss and the Norwegians were doing so. She said it would be much better for those EU countries that were willing and able to engage with Hamas to do so on their own.

Such frustration with the slowness of EU decision-making is understandable. But in fact Arab think-tanks should not oppose the EU’s efforts to forge a common line. When it does pursue such a line, as it has done on Iran, it can make a difference and influence the behaviour of others. A united EU has more potential to shift the policy of Israel or the US than half a dozen EU states forming a sub-group of their own.

Many Arab think-tankers now seem to think that the EU is no better than the US. Indeed they cite the example of the EU’s diplomacy over Iran as an example of its ‘doing the US’s bidding’. Although many Arab governments are suspicious of Iran’s nuclear plans, Arab researchers criticise the EU’s diplomatic efforts to prevent Iran developing a nuclear bomb. Iranian President Ahmedi-Nejad has become a popular figure in many Arab countries, on account of his standing up to the West. At the ARI conference, when a CER panellist defended the EU’s Iranian diplomacy, pointing out that it was not only the ‘West’, but also Russia, India, China, Mohammed el-Baradei and the UNSC who were trying to persuade Iran not to build a bomb, Prince Turki nodded in approval. But nobody else did.

The EU faces few more difficult tasks than balancing its interest in continued close transatlantic relations with a stronger European role in the Middle East.

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

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.

by Clara Marina O'Donnell

Earlier this month, the Arab Reform Initiative (ARI) presented its first report on the state of democratic reform in the Arab world. ARI is a consortium of a dozen leading Arab research institutes which try to promote peaceful democratic reform across the Middle East (CER and a few other non-Arab think-tanks are associated with the initiative).

The report is a groundbreaking venture. It is the first collective and coordinated effort by Arab research institutes to evaluate the state of their political systems. By highlighting the progress towards democracy, or more to the point, the lack thereof, ARI hopes to pressure Arab governments into further reforms.

Launched at a conference in Alexandria, the report looks at eight Arab countries – Jordan, ‘Palestine’, Lebanon, Egypt, Algeria, Morocco, Saudi Arabia and Yemen from July 2006 to June 2007. The report’s ‘democracy index’ measures progress towards democracy on the basis of four criteria: strong public institutions, respect for rights and freedoms, the rule of law, and equity and social justice. The results will open a few eyes. Jordan ranked first, ahead of Morocco. And Palestine came third, ahead of Egypt.

Unfortunately, the rankings don’t give us the full picture on the ground. Most such indices are somewhat arbitrary but this one will be particularly controversial. The choice of criteria and how they are assessed explain the surprising results. For example military conflict is not taken into account, which partly explains Palestine’s good marks. Wage equality is used as an indicator for democratic progress, allowing poverty-ridden Yemen to score top marks in that category and increase its overall performance. For future ARI reports to make real difference, the authors will need to refine the methodology (something they recognise).

The Alexandria conference was remarkable as much for the conversations that took place as for the long-awaited report. Rami Khouri from the American University of Beirut argued that the push towards democratic reform has slowed down, and in some places collapsed, over the last few years because of wars and foreign influence (in particular the US ‘war on terror’); ideological conflicts; and the resistance of the ruling regimes. Democratic rights have become less important compared to security and stability. This is particularly the case for countries in conflict such as Lebanon, Iraq and Palestine. But the current situation is also being exploited by some governments, such as in Syria and Jordan, where authorities justify postponing reforms by the need to maintain stability.

Khouri also argued that the arrival in politics of Islamic parties, the strongest opposition movements in most Arab countries, has been a double-edged sword. On the one hand, it has increased the amount of people calling for democracy. But at the same time it has reduced the desire for reform from the governing elites and western powers, who do not want to see Islamists in government.

Professor Mustapha Kamel Al Sayyid from Egypt lamented the lack of links between Arab movements for democratic reform and European and American civil society. Most Arab groups are averse to Western assistance because they perceive it as neo-colonial. But Kamel argued that European civil society groups had been a valuable source of support during the transitions to democracy in Latin America and that Arab movements were losing out.

While taking into acount the many obstacles, the conference and the report concluded that the Arab region ‘showed an initial disposition towards democratic transformation, albeit a still embryonic one’.

But even the conference itself was full of reminders of how difficult the current situation is. One ARI member has been inactive for a year because it is being hassled by its government. And the Lebanese participants could not get home as Hezbollah had cut off access to Beirut airport.

Clara Marina O'Donnell is a research fellow at the Centre for European Refom.