Guidelines and Recommendations for Opening Dialogue with Iran

While Iranian President Mahmoud Ahmadinejad grabs the headlines, it is Supreme Leader Ayatollah Ali Khamenei who is Iran's most powerful figure. And according to a new RAND Corporation report, it is Khamenei's sense of strategic confidence, distrust of the United States and his focus on Iranian sovereignty that are the sources behind Tehran's aversion to compromise.

The report by RAND, a non-profit research organization, serves as a guide to help U.S. policymakers understand the Islamic Republic. It offers a set of brief analytical observations about the processes, institutions, networks and actors that define Iran's politics, strategy, economic policy and diplomacy.

It also sets out an argument for appreciating the challenges and fundamentals of negotiating with Iran, about which the authors say policymakers place too much emphasis on the country's “abnormal" and "exceptional" characteristics.

The study offers nine recommendations, emphasizing that U.S. negotiators need to understand that Iranians have specific, unique negotiating characteristics.

"There is value in negotiating with Iran, even if the likelihood for a breakthrough is distant," said Frederic Wehrey, the report's co-author and an adjunct senior policy analyst at RAND. "Negotiations broaden U.S. contacts inside the regime, and may reduce misunderstandings that can escalate into conflict. They also help de-mystify a country that is widely misunderstood."

Among the report's key findings:

• Khamenei holds the power. He is often overlooked as a weak and indecisive leader, but in practice he is Iran's ultimate political authority. Since Ahmadinejad's 2004 election, Khamenei's influence has grown, to a large extent as a result of Ahmadinejad's radical posturing and increasing unpopularity, which make Khamenei appear more moderate and favorable by comparison.
• Nationalist pride is important. Iran's recent gains in the wake of the U.S.-led invasion of Iraq, the 2006 Lebanon war and other regional events have caused Khamenei to enjoy a sense of strategic triumphalism – the belief there is a "new Middle East" tilted in favor of Iran.
• The 125,000-member Islamic Revolutionary Guards Corps exerts significant influence over Iran's politics and economy and is closely tied to Khamenei. The force fulfills a number of functions related to internal security, external defense and regime survival. A number of ex-commanders and veterans hold powerful posts in the Cabinet, national Legislature, media, business and education sectors.
• Understanding Iran's oil economy is critical to understanding the nation's political processes and gauging the regime's stability. Iran's oil exports ($65 billion in 2007) make up 35 percent of the nation's gross domestic product; however, this reliance on a natural resource hinders growth in the remainder of the economy. Government interference in the economy also deters foreign direct investment. Iran's citizenry, particularly the middle class, is hit hard through fuel rationing, electricity blackouts and skyrocketing inflation, all of which have provoked a backlash against Ahmadinejad.
• Iran's nuclear ambitions are stoked by factional struggles and bureaucratic interests, making the issue less sensitive to external pressure than is commonly recognized. While most Iranians agree on their right to seek modern technologies, consensus fades over the price they are willing to pay in terms of sanctions, loss of confidence in investment, capital flight and estrangement from the international community.

While negotiating with Iran offers a unique challenge to the United States, the authors argue it should be done. They cite how the Bush administration's aversion to discussions with Iran squandered several opportunities to reduce tension: in 2001, on the margins of the Bonn talks on Afghanistan, and in 2003, on the eve of the 2003 invasion of Iraq.

"In both cases, Iran came to the table because of gratitude and fear, two motives that are largely absent today," said co-author Charles Wolf, a senior economic advisor with RAND. "They are replaced by strategic confidence and the perception of diminished U.S. credibility in the region."

The study was sponsored by the Smith Richardson Foundation, which seeks to help ensure the vitality of our social, economic, and governmental institutions. It also seeks to assist with the development of effective policies to compete internationally and to advance U.S. interests and values abroad.

The third co-author was Jerrold D. Green, former director, RAND Center for Middle East Public Policy and now of the Pacific Council on International Policy. The report, "Understanding Iran," is available at www.rand.org.

The study was prepared by the International Security and Defense Policy Center within the RAND National Security Research Division, which conducts research and analysis for the Office of the Secretary of Defense, the Joint Staff, the Unified Combat Commands, the defense agencies, the Department of the Navy, the Marine Corps and the U.S. Intelligence community.