rethinking dual containment

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�� © International Institute for Strategic Studies

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Rethinking Dual Containment��

Consistency in foreign policy is often deemed a virtue. It provides clearlyarticulated and reliable signposts for friends and foes alike in the formation oftheir own policies; it helps domestic constituencies to grasp the underlyingstrategic objectives of a policy despite occasional tactical adjustments; and itcreates a dependable set of rules for government officials who must applythose rules in a variety of circumstances. Consistency creates an image of stead-fastness and constancy that is prized both by statesmen and editorial writers.

Consistency, however, is not to be valued when it perpetuates a failingpolicy, when it inhibits policy-makers from recognising and acknowledgingchanged circumstances, when it obscures a turning-point as policy costs beginto outweigh benefits or when it stifles creativity and thereby leads to missedopportunities. In these conditions, consistency is merely another word forobstinate denial, and the price for being consistent can be high.

Since 18 May 1993, when US National Security Council official MartinIndyk outlined what he called Washington’s ‘dual-containment’ policy in thePersian Gulf, the US has displayed remarkable consistency in its policy.1

Hostility towards Iraq and Iran has been unrelenting; official US rhetoric hasbeen as predictable as it has been incendiary; and the prodigious US efforts toisolate these two powers have helped to redefine coercive diplomacy in thepost-Cold War era. With few exceptions, official Washington has maintained aremarkably united front for nearly half a decade. The few dissonant voices thathave emerged were concerned primarily with procedure, rather than anydispute over the substance of the policy, which has advanced smoothly fromprescription to practice.

Controversial from the start, dual containment has increasingly beencriticised for being unduly rigid, for failing to achieve its announced objectives,and, most recently, for creating a potentially serious confrontation between theUS and many of its most important allies. This article examines the origins andobjectives of dual containment, the escalatory competition that it has producedin US domestic politics, its accomplishments and shortcomings with regard to

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Iraq and Iran, and the challenges and opportunities of changing circumstancesin the region. A more flexible policy, it is argued, would be more effective insolving some of the security dilemmas in the region, while avoiding anunnecessary and possibly harmful dispute among the members of the coalitionthat so successfully fought the 1991 Gulf War.

�� Although a great deal has been written about dual containment, the mostaccurate and economical statement of its elements remains Indyk’s originaldescription.

�� For the past quarter-century, the US has pursued a policy of balancing Iran orIraq against the other as a means of maintaining a degree of regional stabilityand to protect the smaller, oil-rich Arab states on the southern side of the Gulf.From the early 1970s to the Iranian Revolution in 1979, the US ‘two-pillar’policy was a strategic alliance with Iran and Saudi Arabia. The alliance withIran – the stronger of the two pillars – was intended to strengthen Iran inrelation to Iraq, as well as making the former a barrier to Soviet expansion intothe Persian Gulf.

This policy led, among other things, to a tripartite covert action with Israelto destabilise Iraq by supporting a Kurdish rebellion against Baghdad. Thisplan was adopted in May 1972 when President Richard Nixon and his NationalSecurity Advisor Henry Kissinger visited Tehran; it collapsed in 1975 when theShah, without consulting the US, reached an agreement with Saddam Husseinand abandoned the Kurds. This operation established a precedent for viewingthe Persian Gulf as an extension of the Arab–Israeli conflict and for US–Israelicooperation in the region.2 The ‘two-pillar’ policy fell apart when the mainpillar collapsed in the Iranian Revolution.

After the Revolution, US efforts to play a balancing role between Iran andIraq became more improvisational. During the Iran–Iraq War, when itappeared that revolutionary Iran might gain the upper hand, Washington lentcovert intelligence support to Iraq and adopted the Operation Staunch policy toprevent Iran from buying weapons on the international market. In 1985–86,when concern about US hostages in Lebanon combined with fears of growingSoviet influence in Iran, the US cooperated with Israel in the covert sale of armsto Iran – the so-called ‘Iran–Contra affair’ – which disintegrated into débâcle andscandal.3

After the Iran–Iraq War, Washington pursued a policy of accommodatingIraq in an effort to bring Saddam Hussein’s government into the Arabmainstream as a secular bulwark against Iranian ambitions and Islamicfundamentalism. That effort came to a sudden end with Saddam Hussein’sAugust 1990 invasion of Kuwait and the 1991 Gulf War.

It should be apparent even from this abbreviated story of betrayal, tragedy,bungled policy initiatives and miscalculations why any US leader might be

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wary of a balancing strategy. Indyk proclaimed the policy bankrupt andrejected it ‘because we don’t need to rely on one to balance the other’.4 Iraq wasboxed in by United Nations sanctions, Iran was nearly prostrate after the eight-year war with Iraq, and the US was the predominant power in the Persian Gulfwith the ‘means to counter both the Iraqi and Iranian regimes’.5

��As originally conceived, the objective of dual containment regarding Iraq wasto sustain the coalition that had defeated the armies of Saddam Hussein inOperation Desert Storm and to ensure that Baghdad complied with all UNresolutions. Indyk stressed that this requirement would apply not only toSaddam Hussein, but to any successor regime as well. The US characterised theexisting regime in Iraq as criminal and irredeemable. It called for widerrecognition of the Iraqi National Congress as a democratic alternative.

The only major alteration in this policy since 1993 was US Secretary of StateMadeleine Albright’s March 1997 announcement that ‘a change in Iraq’sgovernment could lead to a change in US policy. Should that occur, we wouldstand ready, in coordination with our allies and friends, to enter rapidly into adialogue with the successor regime’. If concerns about Iraq’s behaviour weresatisfied, Washington would be willing to ‘ease Iraq’s re-integration’, includingan array of economic and security measures.6 Albright’s statement was widelyinterpreted as an inducement to forces in Iraq to overthrow Saddam Hussein,which did not appear in Indyk’s formulation.

The Indyk speech suggested, but did not say outright, that Washingtonwould insist on retaining sanctions against Iraq as long as Saddam Husseinremained in power. Albright’s statement edged closer to such a declaration:

To those who ask … how long we will insist that the international community’sstandards be met, our answer is – as long as it takes. We do not agree with thenations who argue that if Iraq complies with its obligations concerning weapons ofmass destruction, sanctions should be lifted.7

In the years after adopting the policy, the US reportedly budgetedapproximately $15 million per year for covert actions to destabilise SaddamHussein’s regime and to support various Iraqi opposition groups.8 The USCentral Intelligence Agency (CIA) attempted to organise several operations todepose Saddam Hussein, including a major covert action just before theClinton administration took office in January 1993, and at least two others in1995 and 1996.9

The US, in cooperation with France and the United Kingdom, has main-tained military overflights of the no-fly zones in northern and southern Iraqsince 1991. On two occasions, in June 1993 and September 1996, Washingtoncarried out retaliatory missile strikes against Iraq. On another, in October 1994,it rapidly augmented the forces deployed to the region in response to evidencethat Iraqi forces were positioning themselves for a possible offensive move-ment to the south. In October 1997, as Iraqi aircraft appeared to be challenging

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the southern no-fly zone, the US rushed an aircraft carrier, the USS Nimitz, tothe Gulf as a show of force. Ultimately, however, the political and militarysituation with respect to Iraq has changed very little since adopting dualcontainment in 1993.

��In Indyk’s original formulation, dual containment called for changes in Iran’sbehaviour in five areas:

• supporting international terrorism;• support for Hamas and attempted sabotage of the Arab–Israeli peace talks;• subversion through supporting Islamic movements in Sudan and elsewhere;• acquisition of conventional weapons that would permit Iran to dominate the

Persian Gulf region; and• prospective acquisition of weapons of mass destruction (WMD).

In pursuing this policy, Indyk said, the US would attempt to persuadeEuropean powers – together with China, Japan and Russia – to reject Iranianrequests for WMD and conventional weapons that might constitute a regionalthreat. Washington would also oppose development loans to Iran by the WorldBank and the International Monetary Fund (IMF). It would further seek topersuade its allies to maintain pressure on Iran so it could not ‘pursue normalcommercial relations’. Iran, he observed, ‘does not yet face the kind of inter-national regime’ of sanctions imposed on Iraq.10 The word ‘yet’ seemedominous, and possibly prophetic.

Although Indyk’s speech was administration policy, some of his originalformulations were resisted by the Department of State – in particular thephrase ‘dual containment’, since it implied that Iran should be equated withIraq. Shortly after the policy was announced, the Assistant Secretary of State forNear East Affairs, Edward Djerejian, testifying before a House sub-committee,provided an intriguing reformulation of the policy. He emphasised that theword ‘dual’ did not mean that the administration equated Iran with Iraq, andhe refused to use the word ‘containment’ to describe the policy.11

Djerejian refined and reordered the areas of US nervousness with Iran,dropping the objection to conventional-weapons purchases and replacing itwith human-rights concerns. He denied that the US would try to hinder Iran’snormal commercial activities; on the contrary, he said, ‘we do not seek a totalembargo or quarantine of Iran’.12

Despite this public airing of inter-agency differences, policy remainedunchanged. The State Department caveats had no visible operational effect,and within a few years the US had placed a total embargo on Iran.

�� The dual-containment policy was from the outset played out on the stage ofdomestic US politics.13 Revolutionary Iran had never been popular in the US,

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especially after the prolonged holding of US hostages in Tehran in 1979–81.Iran’s image as a deceptive and hostile power was enhanced by furtherhostage-takings in Lebanon by pro-Iranian factions, as well as the Iran–Contraaffair. Yet President George Bush, who had personally been singed by theseevents, was able to say in his inaugural address in January 1989, in a clearreference to Iran, ‘Good will begets good will. Good faith can be a spiral thatendlessly moves on’.14 There was, however, no talk of good will by the Clintonadministration. Instead, as part of the dual-containment policy, US officialsdeveloped a special vocabulary in which Iran was routinely branded as a‘rogue’, ‘terrorist’, ‘outlaw’ or ‘backlash’ state.15

These attacks – the mirror image of Iranian depictions of the US as the‘Great Satan’ – had its effects on the media, on the US Congress, on the publicand in the attitudes of lower-level bureaucrats. With Iran clearly identified aspublic enemy number one, attention shifted away from any consideration ofpolitical developments inside Iran – some of which might have been regardedas favourable from the US perspective – to a debate over what was to be doneto contain the Iranian threat.16

��With a Democrat in the White House and the Republicans in control ofCongress, a contest developed over which political party could be mostvigorous in promoting US policies to deal with Iran. The debate was galvanisedin 1995 by the US oil company Conoco’s announcement that it had signed a $1billion contract with Iran to develop the Sirri gas field in the Persian Gulf.Although Conoco’s negotiations with Iran had been under way for years andhad been reported to lower-level State Department officials, Conoco didnothing to prepare the White House, Congress or even own parent board,DuPont, for this development.

The Conoco deal was entirely legal under US law at the time. It was anexcellent deal for the company, which could use its share of the gas for anunrelated project in nearby Dubai. Iran obviously intended it as a friendlygesture to the US. Perhaps Conoco believed that would be enough. It wasclearly not ready for the wave of outrage that greeted the announcement. Thegas deal was seen as opening a gaping hole in the US containment wall aroundIran and as undercutting US efforts to persuade Europeans and others to gettough on Iran.

Under intense public pressure, DuPont renounced the deal. RepublicanSenator Alphonse D’Amato, working closely with the American–Israel PublicAffairs Committee (AIPAC), began preparing legislation that would end alltrade with Iran and punish any corporations that engaged in investments there.President Bill Clinton, preparing for his 1996 re-election campaign, quickly pre-empted D’Amato by issuing two Executive Orders that made it illegal for USoil companies to operate in Iran and established penalties for any US person orcorporation doing business with the country.17 Both decisions were announcedby senior administration officials before major Jewish organisations. The US

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business community, apparently intimidated by the public outcry, remainedsilent.18

�� This process of competition between Congress and the White House wasreplayed in the presidential election year of 1996. D’Amato prepared a bill inlate 1995 that would impose sanctions on any foreign corporation thatinvested $40m or more in the Iranian oil and gas sector. Although the bill waswidely – if privately – regarded as an extreme piece of legislation that prom-ised to do more harm than good, the public animus towards Iran, fuelled bythe administration’s broadsides, ensured significant support in the Senate.The bill slipped through on a voice vote in the Senate after DemocraticSenator Edward Kennedy had succeeded in adding Libya to the sanctionsregime. Again the Clinton administration chose to endorse the bill, with somemodifications, rather than fight it.

In the House of Representatives, vigorous debate over the bill was silencedby the explosion of TransWorld Airlines (TWA) flight 800 on 16 July 1996,which came shortly after the bombing of the US military barracks at Al-Khobar in Saudi Arabia. Ten days later, a pipebomb exploded during theOlympic Games in Atlanta, Georgia. Although the TWA disaster now appearsto have resulted from a mechanical problem, and responsibility for the Al-Khobar and Atlanta bombings has yet to be determined, the US Congress sawthe Iran–Libya Sanctions Act (ILSA) as an opportunity to take a public standagainst terrorism. The bill passed by 415–0 votes and was signed into law byPresident Clinton in August 1995.19

Thus, a cycle of policy escalation became a familiar element of US policytowards Iran in the first five years of the Clinton administration. First, theharsh words of the White House and other government departments fannedan atmosphere of fear and distrust in the public and the media. Publicattitudes then fed back into Congress, which sought to surpass the executivebranch in its hostility to Iran. In response, the administration increased itsown anti-Iranian actions and rhetoric in order to retain the political initiative,at which point the cycle began again. Even when the administration doubtedthe wisdom of a particular piece of legislation – as in the case of ILSA – itpreferred to accept bad legislation rather than run the political risk of beingseen as softening its posture on Iran.

In this environment, it was virtually impossible to conduct a rationaldiscussion about Iran. Even officials who were privately doubtful about theeffectiveness of the US containment strategy kept quiet rather than risk theirjobs in what would be a futile effort to challenge the anti-Iran dogma. Theatmosphere resembled US official silence in the years just before the 1979Revolution, when any criticism of the Shah was regarded as sufficientgrounds for losing one’s job. Just as Washington’s policy then would havebenefited from some critical analysis of the Shah’s regime before it collapsed,more recent policy regarding Iran would have been well served by a critiquethat rose above the level of political slogans.

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�� The effects of Washington’s dual-containment policy are mixed, andassessments of its achievements vary depending on the observer’s viewpoint.

��There is very little debate in the US about the desirability – even the necessity– of maintaining strict sanctions against Saddam Hussein’s government. Thesubstantial US consensus in favour of severe sanctions can be attributedlargely to the Iraqi leader himself. The nature of his attack on Kuwait, thedestruction that followed, his ruthless suppression of dissent, his near-genocidal tactics against his own people, the discovery that he was muchcloser to having nuclear and chemical weapons than had been supposed, hissystematic obstruction of UN investigations (including physical interferenceand mass falsification of documents), and his continued military forays andthreats whenever he believes he can get away with it – all of these have firmlyimplanted an image of evil and constant threat. That image underlies andreinforces US insistence on what is the most elaborate network of sanctionsever imposed on a UN member-state.

There is considerable sympathy in the US for the plight of the Iraqi people.Iraqis are now in their eighth year of deprivation and hardship underinternational sanctions and their eighteenth year since Saddam Hussein’sinvasion of Iran began a terrible eight-year war that affected the entirepopulation.20 This popular concern was no doubt a factor in Washington’sdecision to acquiesce in the limited sale of Iraqi oil under terms negotiated bythe UN in 1996.21 The US has insisted, however, that the Iraqi people’s miseryis directly attributable to Saddam Hussein, not only because of his earlieraggressive actions, but because he has consistently resisted terms forproviding humanitarian relief, using his people’s deprivation as a bargainingchip.22

With a few relatively minor exceptions, the US position has prevailed.Sanctions continue to be approved by the United Nations Security Council(UNSC) every six months in the absence of full Iraqi compliance with demandsthat it cooperate fully with UN inspectors looking into its programmes fordeveloping WMD.

After the Gulf War, France, the UK and the US established no-fly zones inthe north and south of Iraq to protect the Iraqi minority populations in thoseregions (Kurds in the north and Shia in the south). These patrols, which operatefrom bases in Turkey and several Gulf states, have evolved into routine airsurveillance and are not covered by existing UN resolutions. France, whichcontinues to participate in the southern no-fly zone over Iraq, withdrew fromthe northern no-fly zone at the beginning of 1997, claiming that it had lost itshumanitarian function.

On two occasions, the US launched cruise missiles against targets in Iraq.Twenty-six missiles were fired at Iraq’s intelligence headquarters in June 1993in response to an Iraqi plot to assassinate former President Bush while he wasin Kuwait. Forty-one missiles were fired at Iraqi air-defence sites in southern

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Iraq in September 1996 in retaliation against Iraqi ground-force incursions innorthern Iraq in cooperation with the Kurdish Democratic Party (KDP).23

The latter operation was particularly controversial since the targetsappeared to be unrelated to the offence and had no effect on Iraq’s occupationof Irbil in northern Iraq. Paris withheld support, suggesting publicly that theattack was primarily motivated by US domestic politics in a presidentialcampaign.24 However, the US, with significant help from a number of allies andthe UNSC, succeeded for more than five years in keeping Saddam Hussein inwhat Albright called a ‘strategic box’. The real test of its dual-containmentpolicy towards Iraq would come later.

Companies from China, France and Russia – all permanent UNSC members– have signed contracts with Iraq for developing major oil fields that willbecome active once sanctions have been removed. Several US Arab allies in theGulf, including the United Arab Emirates (UAE) and Qatar, have also madeclear their opposition to indefinite extensions of sanctions.

If and when UN Special Commissioner Richard Butler determines that Iraqhas complied with UN demands to eliminate WMD, pressure will becomeintense to remove the sanctions on Iraq’s oil sales.25 The US has vowed to resistthis pressure, and it is very likely that there will be a confrontation among thecoalition members who fought the Gulf War. Only the timing is in doubt.

This prospect became unmistakably clear in late 1997, when SaddamHussein denied the UN Special Commission on Disarmament (UNSCOM)access to key sites and temporarily ejected American members of theinvestigation teams. Although the UNSC remained united on the question ofaccess and team membership, there was no consensus on increasing sanctions,as proposed by Washington, and outright opposition to any military response.France and Russia began to press for a termination date for the WMDinspections, while some Arab members of the 1991 coalition called for anabatement of the economic sanctions on humanitarian grounds and areintegration of Iraq into the Arab fold.

��The US dual-containment strategy has created political and economic problemsfor Iran. Washington’s accusations and its relentless lobbying of friends andallies to impose tough restrictions on Iran have complicated Tehran’s efforts toimprove its international image and to develop new bilateral ties, especiallywith Europe and Japan.

The imposition of sanctions on virtually all economic intercourse with Iranhave adversely affected the country’s ability to get its economic house inorder. When two US Executive Orders imposing severe trade sanctions onIran were issued in March and May 1995, the Iranian rial’s exchange rateplummeted against the dollar, forcing Tehran to institute exchange controlsand reduce its foreign trade to bring the rate back in line. A number of largeoil companies, especially those (such as Royal Dutch Shell) which hadextensive US operations, put their negotiations with Iran on hold while they

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assessed the potential effects of US sanctions on their own business interests.Iran has been denied development loans from the World Bank and the IMF,and Japan has been persuaded to withhold credits for a hydro-electric projectin southern Iran. Stringent US visa and monetary regulations hindered allaspects of Iranian interaction with the US, from commercial and professionalcontacts to family visits and academic exchanges.26

There has never been any question that the US, as a global economicsuperpower, could harass Iran and make its economic life more difficult. Thequestion is whether these tactics either have in the past, or are likely in the future,to change Iran’s behaviour. Since US policy objectives were defined in thebroadest possible terms, with no benchmarks and few specific examples,observers are free to interpret the policy according to their own understandingand on the basis of highly selective evidence. As a consequence, two observerscan look at the same set of circumstances and draw opposite conclusions.

The areas of Iranian policy that require assessment in this context arepolitical assassination; opposition to the Arab–Israeli peace process; terrorismand subversions; and the pursuit of WMD. Iran has almost certainly engagedin all these activities at various times.27 From a policy perspective, thequestion is whether Iran’s engagement in terrorism has changed over timeand whether US policies have had, or are likely to have, an impact on thatbehaviour.

• ��Assassinating political foes is the area of Iran’s purportedterrorist activity that has attracted the widest public attention in recent years.This is primarily because of the sensational trial in Germany that indicted thehead of the Iranian intelligence service, Hojjatolislam Ali Fallahiyan, andimplicated senior Iranian officials in the killing of a Kurdish opposition leaderin a restaurant in Bonn. The shooting took place in 1992, before the Clintonadministration took office. Another assassination in Rome of a former Iraniandiplomat and opposition leader in March 1993 also appeared to have Tehran’sfingerprints on it. That occurred just after the Clinton administration came topower and two months before the dual-containment policy was announced.Since then, there have been no documented cases of Iranian assassinations inEurope.28

Although Iran denies responsibility for these killings, the evidence suggeststhat Iran may have decided to halt such operations as early as spring 1993. Ifso, the timing suggests that this was probably due to European pressure onIran through its policy of ‘critical dialogue’, rather than Washington’s dual-containment policy, which was not adopted until 1993.

The underground war of harassment and assassinations by Iran against themojahedin-e khalq has continued, however, in northern Iraq and, occasionally, inTurkey.29 Iran’s policy closely resembles that of Israel, a country that has morein common with Iran than is often realised.30 In fact, Israel’s record of extra-territorial assassinations and kidnappings is far more extensive than Iran’s,even if all the cases attributed by the media to Iran are true.31

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This type of policy is as illegitimate for Israel as it is for Iran, but both stateshave chosen to strike back at elements that conduct cross-border terroristoperations against their people and their governments. Far more Iranians havebeen killed and wounded in terrorist attacks than Israelis, and many of Iran’stop leaders bear personal scars from assassination attempts.32 The mojahedin-ekhalq, which operates from bases inside Iraq and which was in October 1997designated as a terrorist organisation by the US Department of State, hasboasted that it conducted 294 operations inside Iran during the first ninemonths of 1997.33 Shortly after this announcement, Iranian aircraft attacked themojahedin-e khalq camps, comparable to Israel’s periodic forays against Hizbollahtargets in southern Lebanon.

Rightly or wrongly, this confrontation policy is seen – in Iran as in Israel – asdirectly related to national security. It is highly unlikely that economicsanctions or the pressure of a US containment policy will force Iran to alter itsbehaviour without a change of circumstances on its borders.

• �� The second set of charges against Iranrelates to its opposition to the Arab–Israeli peace process and its support for avariety of violent opposition organisations, such as Hamas and Hizbollah. Iran’sopposition to Israel and to the Palestinian negotiations tends to vary with thestate of the peace process. Since the May 1996 election of Prime MinisterBinaymin Netanyahu and the subsequent near-collapse of the peace process,Iran’s position has become even more outspoken than before. However, Iranhas developed a three-pronged position that appears to offer some room forexploration. First, despite Iran’s opposition to the present peace process as one-sided and unfair, if the parties come to an agreement, Tehran will accept it.34

Second, although Iran will continue to voice its opposition to this process, itwill ‘not do anything disruptive’ to interfere with it.35 Third, Iran is prepared toparticipate in peace discussions ‘if the Palestinians are not denied their rights’.36

These three points are carefully hedged and might prove empty ordisingenuous if tested. They do represent, however, a considerable evolution ofIranian declaratory policy from the hardline positions of the 1980s. They relatedirectly to Iran’s complex relationship with Syria as well as its interest inportraying a more conciliatory and constructive image to the internationalcommunity. These formulas have acquired the status of dogma for the Iranianforeign-policy élite, but they have received little attention in the West.

It would be difficult to make a persuasive case that this ‘new thinking’ inIran is the result of the dual-containment policy. Unfortunately, even if thatwere true, the very nature of that policy and its focus on unrelenting pressurehas obscured recognition of potentially significant shifts in the Iranian position.At present, these three assertions by Iran are floating in rhetorical limbo,untested by any serious diplomatic probing. At a minimum, Iran needs to beheld to its own formulations.

• �� The third category of alleged Iranian terroristactivity encompasses a wide range of accusations of Iranian participation in,

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planning, financing or controlling acts of terror or subversion throughout theMiddle East and elsewhere. Was Iran associated with the bombings of USforces in Riyadh and Dhahran in November 1995 and June 1996 respectively, orwas that the work of Saudi dissidents? Was there an Iranian hand behind theattempted assassination of Egyptian President Hosni Mubarak in Ethiopia of 26June 1995, or was that a Sudanese operation? Is the rebellion in Bahrain fuelledby Iranian encouragement and support, or is it a home-grown phenomenon?There is scarcely a terrorist event anywhere involving Islamic militants thatdoes not arouse either suspicion or outright accusations of Iranian associationor responsibility.

Iran itself helps to perpetuate the myth of a rampaging, ideologically crazystate. In a telling moment, former Iranian President Rafsanjani described thedilemma. In one of his weekly public addresses, he complained that Iranalways seems to be blamed for any radical activity anywhere in the world:‘Everywhere there is a movement, the name of Islam and Iran is mentioned.The enemies even mention Iran’s name where Iran is not present … In manyevents we really are not involved; yet, they point to Iran’. He paused for amoment and added: ‘Of course we accept it and take pride in the fact that theroot of all this lies in the Islamic revolution. Iran is the mother of Islamicnations’.37

Exporting the Revolution was a major theme of its early days. This policy isenshrined in the Constitution of the Islamic Republic, which enjoins thegovernment to ‘exert continuous efforts in order to realise the political,economic and cultural unity of the Islamic world’. At the same time, virtuallyevery major figure in the Islamic Republic has at one time or another insistedthat ‘export of the revolution’ is not intended to be conducted by the sword.Instead, they assert, the Revolution’s power is the appeal of its ideas, not theforce of its weapons. Thus, President Rafsanjani said in a 1993 press conference:‘The phrase “exporting the revolution”, if it is mentioned here, means that weintroduce our revolution and anyone who wishes to use our experience can doso. But interference and physically exporting [revolution] has never been ourpolicy’.38

In practice, however, it has never been so simple. Clearly, Iran has beenwilling to tolerate and encourage armed interventions in its neighbours’territories by radical factions, and the fiery rhetoric of dissident movements –often replayed through Iran’s official media – could justifiably be perceived asintervention by nations on the receiving end of the invective. Periodicintelligence reports leaked to the press, especially in the US and Israel, citepersuasive evidence of Iranian supply of training, weapons and money todissident groups.

It is impossible to address this issue precisely. In the murky world of covertoperations and counter-intelligence, uncertainty reigns. Nevertheless, it ispossible to state confidently that direct Iranian involvement supportingterrorist and subversive groups has declined from the early days of theRevolution. In the early 1980s, and during much of the Iran–Iraq War, Iranianoperations in various regional states were blatant and unapologetic, including

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public statements by high-level officials, anti-regime propaganda broadcastfrom Iran’s state-controlled media and even stationing revolutionary guards inLebanon. These revolutionary guards have now been removed and Iran’sofficials and media actively promote improved relations with their regionalneighbours.

This trend was well established years before the Clinton administration tookoffice and long before the dual-containment policy. It is one of the ironies ofdual containment that it chose to castigate Iran’s policies of subversion andterrorism just at the point when it appeared that Iran was making aconsiderable effort to change its past behaviour. Iran’s attempts to controlintelligence operations, foundations (bonyads) and private revolutionarynetworks was not to please Washington, but rather because these uncontrolledoperations were excessively costly for its broader interests and politicalimage.39

Iran’s record in bringing these organisations under control has been mixed;much remains to be done. On the whole, however, the US policy of unrelentinghostility and its failure to acknowledge any positive steps by Iran probablystrengthened the hands of the radicals who could claim – with somejustification – that efforts to please the Great Satan were both futile andhumiliating. No one will ever know if a policy of carrots as well as sticks wouldhave hastened positive changes in Iran’s performance in this and other areas.

• �� In the Revolution’s early days, Iranabandoned the Shah’s elaborate nuclear plans. This decision was reportedlytaken after considerable internal debate and ultimately at the behest ofAyatollah Khomeini, who regarded such weapons as indiscriminate in natureand hence contrary to Islam.40 That position was maintained at great costthroughout the Iran–Iraq War, despite Iraq’s nuclear programme and itswidespread use of chemical agents against Iranian troops.

After Khomeini’s death in 1989, and especially after the revelations aboutSaddam Hussein’s WMD programmes after the 1991 Gulf War, Iran recon-sidered its options. Plans for a partially completed nuclear power plant atBushehr, which was bombed seven times by Iraq during the war, wererevived.41 Iran began urging its own nuclear scientists, who had gone into exileat the time of the Revolution, to return.

When the German company Siemens proved unwilling to return toBushehr, Iran approached Russia and China. There were also reliable reports ofIranian efforts to procure sensitive nuclear technology in Europe, SouthAmerica and elsewhere.42 This flurry of activity inspired some alarmingestimates from US and Israeli intelligence, suggesting in 1992 that Iran couldhave a nuclear weapon by the year 2000 or even earlier.43

As time passed, those dates were extended into the next millennium. By1997, as it became evident that Iran’s nuclear programme was in some disarrayand that progress was much slower than expected, estimates focused on thepossibility that Iran would purchase fissile material or even a nuclear weapon,

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rather than develop an indigenous weapons programme. The centre of mediaattention then shifted from nuclear weapons to long-range missiles. It was nowestimated that Iran would have intermediate-range ballistic missiles by the endof 1998.44

Based on my own investigations, including interviews with Iranianspecialists and policy officials, several key points seem to emerge:45

First, Iran is probably developing the underlying infrastructure that wouldpermit it to mount a fully fledged nuclear-weapons programme at relativelyshort notice if it should find itself threatened by a revived Saddam Hussein orsome other direct nuclear threat. At the moment, this is not a crash programmeand is not given very high priority.

Second, Iran is a signatory of the Nuclear Non-Proliferation Treaty (NPT)and an active participant in the International Atomic Energy Agency (IAEA). Ithas publicly welcomed intrusive inspections into its nuclear programme andhas proclaimed its intention to be entirely transparent. Iran has taken the leadin calling for a nuclear-free zone in the Middle East.

Third, and perhaps most important, there is a sizeable constituency amongsenior decision-makers in Iran that opposes the development and use ofnuclear weapons on Islamic grounds. These opponents of nuclear weapons citeKhomeini’s disapproval to support their position. This point of view seems tohave become the new Khatami government’s predominant policy perspective,as evidenced by the strong denunciation of such weapons by the new foreignminister, Kamal Kharrazi, in September 1997: ‘The Islamic Republic of Iran, onthe basis of Islamic beliefs, considers WMD inhumane and illegitimate’.46

Statements alone are not enough to make the West drop its guard about anIranian nuclear programme. The international restrictions prohibiting tradewith Iran in dual-use technology must remain and should be rigorouslyenforced. However, as indicated by the three points above, there are somesignificant differences between Iran and other present and past proliferatingstates, such as India, Israel, North Korea, Pakistan and South Africa. Iran’sprogramme appears to be much less urgent and less determined than theirs; itsacceptance of the IAEA’s new and more intrusive inspection regime and itssupport for the NPT provide a practical basis for inspection and verification;and the high-level internal opposition to the concept of WMD provides anopening for negotiation that should not be ignored.

Analysts should also resist falling into the trap of attributing their ownstrategic calculus to others. An excellent case can be made that Iran should bedeveloping nuclear weapons, given its strategic situation. But that should notbe taken as proof that Iran is engaged in a crash programme.

�� One of the most frequent criticisms of dual-containment is its static nature, theabsence of a clear endgame, and its apparent lack of flexibility to deal withaltered circumstances in a region that is noted for sudden and unexpectedchanges. With regard to Iraq, the policy effectively requires that Saddam

18��


Hussein be replaced before any change can occur in the sanctions regime. In thecase of Iran, the policy calls for a substantial transformation of Iran’s policiesand behaviour without establishing any benchmarks by which Iranian actionscan be measured and without identifying how those changes might alter USpolicy.

In both cases, the policy has created rifts with key US friends and allies. TheIraqi situation, as indicated earlier, will become a major issue with the allies ifand when UNSCOM determines that Iraq has fulfilled its responsibilities ineliminating and accounting for its WMD programmes. The Iranian case is morecomplex and more difficult to predict.

�� !��In May 1997, Seyyed Mohammed Khatami was elected to a four-year term asPresident of Iran. Khatami is a cleric and had participated in establishing theIslamic government in 1979. Only five years before his election as president,however, he was forced to resign a cabinet post because he was deemed too‘liberal’ on crucial issues of cultural tolerance and freedom of expression.Unrepentant, he conducted a grass-roots campaign on the issues of the rule oflaw, civil society and dialogue among competing ideologies. His campaignstruck a resonant chord with the Iranian population, particularly amongwomen and the burgeoning number of young people, many of whom had nomemory of the former regime. Paired against the well-known speaker of themajles (parliament), who represented revolutionary orthodoxy, Khatamiattracted the largest number of voters in Iranian history and won a decisivevictory with 69% of the vote. He carried all of the urban centres in the countryand virtually every province.

This election has been rightly described as a second Iranian Revolution, butthe seeds of change had been growing for years. Within the ruling élite, apolitical reform movement had begun to coalesce around the followers offormer President Rafsanjani. This group had fielded a slate of candidates in themajles elections of 1996 and showed well against the social conservatives.Khatami, however, provided the voice and the programme that galvanised arather inchoate grouping of technocrats and intellectuals into a mass politicalmovement.

During his first months in office, Khatami initiated a number of changesthat pointed Iran in a new direction. He appointed a cabinet composed largelyof technocrat veterans of Rafsanjani’s presidency, but the new cabinet alsobroke new ground in several sensitive areas. The former minister ofintelligence, Fallahiyan, who was personally identified with some of the past’smost egregious blunders, was removed and replaced by a man of unquestionedintegrity who was known and trusted by all political factions, Hojjat ol-EslamQorban Ali Dorri Najafabadi. The previous foreign minister, Ali AkbarVelayati, who had been in office for nearly the entire post-revolutionary periodand who symbolised the confrontational policies of the past, was replaced by arespected diplomat who had represented Iran for nearly nine years at the UN,

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Kamal Kharrazi. The key portfolios of Interior and Islamic Guidance weregiven to outspoken critics of past repressive policies. For the first time since thefounding of the Islamic Republic, the new cabinet was approved without asingle rejection by the majles, suggesting that the conservative members of theparliament had seen the election results and were unwilling to dispute anoverwhelming popular mandate.

The Iranian election was decided almost entirely on the basis of domesticissues. However, from the beginning, the new president indicated that hiselectoral themes could and would be extended to Iran’s foreign policy.Contrary to expectations, the most striking accomplishments of the Khatamigovernment in its first five months were in the realm of foreign policy.

Kharrazi’s maiden speech at the UN set out Iran’s new foreign-policyagenda. In emphasising ‘global civil society’, respect for international law andcalling for a ‘dialogue of civilisations’, it represented a unique vision ofinternational affairs that bore little resemblance to the stiff ideologicalpronouncements of earlier years.47

By the end of 1997, Iran had mended its fences with many of its Arabneighbours in the Persian Gulf, invigorated its role in the United Nations,hosted a very successful Islamic summit, and restored relations with theEuropean community, Turkey and Bahrain. Most striking was therapprochement with Saudi Arabia. Saudi Crown Prince Abdullah attended theTehran summit of the Organisation of the Islamic Conference (OIC), met twicewith President Khatami, and openly praised the new president. The OICsummit was one of the most harmonious in the organisation’s 27-year history,with all 55 member-nations attending and consenting unanimously to the 142resolutions in the final communiqué.48 Iran, which was credited with aneffective performance, will head the OIC until 2000, and it began almostimmediately to promote an activist agenda on issues of great importance to theIslamic community, including multilateral initiatives to stop the killings inAlgeria and to end the civil war in Afghanistan.

On 14 December 1997, Khatami held a wide-ranging press conference withthe international media who had come to cover the summit. In an attempt todefuse the most serious dispute between Iran and its Arab neighbours,Khatami offered to go to the UAE to discuss the territorial dispute over AbuMusa and the Tunbs islands. He also called for a dialogue with the US and saidthat he would like to speak directly to the American people.49

�� It is a historical fluke that less than 60 days after Khatami took office, theFrench oil company Total, together with state-owned partners Gazprom ofRussia and Petronas of Malaysia, concluded a $2bn deal to develop an Iraniangas field. These negotiations, which began shortly after Conoco had beenforced to withdraw in 1995, placed Total and its partners in apparent violationof ILSA, which mandated US sanctions against any company investing morethan $20m in the Iranian oil and gas sector.50

20��


The European Union (EU) and Russia warned that any US attempt to applysanctions against one of their companies for conducting normal commercialrelations with Iran would be challenged, raising the possibility of a trade war.Washington reacted cautiously, but proponents of sanctions on Capitol Hillpressured the administration to proceed with sanctions or risk the collapse ofthe sanctions regime.

�� Even before Khatami’s election, many senior policy observers and former USofficials were calling for changes in the dual-containment strategy. Theyincluded two former national security advisers, a former secretary of defence,three former assistant secretaries of state for Near East affairs, and the formercommander of US forces in the Persian Gulf, among others.

Washington has provided some cautious indications that it was consideringa modification of its past policies. President Clinton responded to the news ofKhatami’s election quite positively – at least in comparison to past US rhetoric:

… as to Iran, obviously it’s a very interesting development and for those of us whodon’t feel privy to all the details of daily life in that country, it’s at least areaffirmation of the democratic process there. And it’s interesting, and it’s hopeful… I have never been pleased about the estrangements between the people of theUnited States and the people of Iran. And they are a very great people, and I hopethat the estrangements can be bridged.51

Clinton’s words, however, were watered down in subsequent adminis-tration statements to the Congress. Acting Assistant Secretary of State DavidWelch used the following formula:

We have no quarrel with the people of Iran. We do not wish to have a quarrel withthe government of Iran, but we cannot and will not turn a blind eye to its actions.The election of Mohammed Khatami as president is an interesting development tothe extent that it reflects the Iranian people’s desire for change. We will have to waitand see whether it produces any positive changes in Iranian policies that threatenour interests.52

In addition to these cautious words, the US government took severalpractical steps that suggested some willingness to modify its previouspositions. In July, the State Department announced that the proposed gaspipeline from Turkmenistan to Turkey across Iran did not constitute a violationof the US sanctions since it did not involve the purchase of gas from Iran.53 Thiswas consistent with the previous US approval of oil swaps by land-lockedCentral Asian states through Iran, and it was regarded primarily as a gesture toTurkey and the Central Asian states, rather than Iran. It did, however, suggestto the international business community that Washington was more willing toconsider Iran as an oil and gas transit route than previously.

A more direct signal was the US inclusion of the mojahedin-e khalq in the listof proscribed terrorist organisations that are not permitted to operate on US

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soil. The group’s operation in the US had long been a sore point with Iran, andthis was perceived in Tehran as a positive step.

There was also evidence that US officials were taking some care to avoidinflammatory statements or to provoke a confrontation with Iran. When theUSS Nimitz was ordered to proceed to the Persian Gulf ahead of schedule inOctober 1997, US spokesmen deliberately pointed out that the deployment wasrelated to Iraq, not Iran, and stated that this message had been conveyed toTehran through diplomatic channels.54 They played down the significance oflarge-scale Iranian naval manoeuvres occurring when the carrier battle grouparrived.55 These were minor concessions, but they did appear to represent adegree of restraint that had been largely absent for more than four years.

�� "��#��"�On 7 January 1998, President Khatami addressed what he referred to as ‘thegreat American people’ in an extended televised interview with Cable NewsNetwork (CNN) reporter Christiane Amanpour.56 In his opening comments hestressed the themes of liberty and religion, citing the American experience as amodel of how ‘liberty found religion as a cradle for its growth, and religionfound protection of liberty as its divine calling’. That, he suggested, was theaspiration of the Islamic Revolution in Iran.

Concerning relations with the US, Khatami stressed Iran’s grievances. Herecalled the ‘grave affront by a former US defense secretary’; he recalled NewtGingrich’s proposal for covert action to overthrow the government of Iran; hereminded American listeners of the shooting-down of an Iranian civilianaircraft in 1988; and he wondered about the sincerity of US calls for officialtalks (‘they say that they want to have a dialogue … They are in fact trying toput the other side on trial’).57 He criticised the US for departing from its ideals,particularly in its dealing with Iran and the Iranian Revolution.

In his responses to a series of questions, Khatami restated but sharpenedwell-known Iranian positions as described above.

� On terrorism: ‘Any form of killing of innocent men and women who are notinvolved in confrontations is terrorism. It must be condemned, and we, in ourturn, condemn every form of it in the world’.

� On the peace process: ‘We have declared our opposition to the Middle Eastpeace process because we believe it will not succeed. At the same time, we haveclearly said that we don’t intend to impose our views on others or to stand intheir way’.

� On WMD: ‘We are not a nuclear power and do not intend to become one’.

Khatami also went as far as any Iranian political figure can in expressingregret about the hostage crisis, and he pledged that such ‘unconventionalmethods’ would not and could not be employed in today’s Iran. He denounced

22��


burning the American flag, a standard ritual in Iranian political demon-strations. With regard to Israel and US–Israeli relations, he was souncompromising as to be insulting, asserting that ‘certain foreign policydecisions of the US are in fact made in Tel Aviv and not in Washington’, andthat ‘the improper American policy of unbridled support for the aggressions ofa racist terrorist regime does not serve US interests’. Curiously, Khatami didnot mention Iran’s ‘frozen assets’ in the US, nor did he insist that US forcesleave the Persian Gulf, both of which are standard Iranian demands.

Khatami noted that one effect of the US sanctions had been to reduce Iran’sdependence, so today, ‘we feel no need for ties with the US’. Instead, he said,‘There must first be a crack in this wall of mistrust’. To that end, he proposedan exchange of ‘professors, writers, scholars, artists, journalists, and tourists’.

Khatami offered very little in the way of substantive change on the majorissues of concern to the US, and he stopped short of calling forgovernment-to-government talks. In this major media event, however, themedium was the message. The image of a smiling, self-confident, conciliatoryIranian leader defying his own hardline opponents to speak directly to theAmerican people was compelling. Only the most hardened US devotees of dualcontainment and sanctions were willing to suggest that it was a cynical ployand that Khatami’s appearance was simply evidence of US pressure at work.58

Iranian hardliners had a similar problem; the Tehran-based newspaper IranNews observed: ‘Khatami’s unprecedented move in presenting an address tothe American people was a serious political shock to Iran’s anti-Americanfront’.59

Khatami’s principal contribution was to legitimise discussion of US–Iranianrelations in both Iran and the US and to introduce a new vocabulary of respectand thoughtfulness into the ‘dialogue by media’.

The Khatami address hastened several trends in the US that had slowlybeen gathering momentum ever since Khatami’s inauguration. Officials in theUS had stopped using the old epithets of ‘rogue’, ‘outlaw’ and ‘terrorist state’when referring to Iran, just as Iranian officials no longer referred to the GreatSatan. White House and State Department spokesmen declined, despiterepeated prodding by journalists, to describe US Persian Gulf policy as ‘dualcontainment’.60

The US call for official talks with Iran, which for years had been delivered asa warning to Iran about the stern sermon the US intended to deliver if they gotthe opportunity, now assumed a new importance, even urgency. The US for thefirst time acknowledged that it would be willing to listen as well as preach, andreportedly sent an official message to Tehran via the Swiss protecting powershortly after Khatami’s inauguration requesting direct talks.61 Khatami’s pressconference in December 1997 and his TV address in January 1998 constituted areply of sorts to the US overture, but it was evident from the public debate inIran that his room for manoeuvre was limited. There was little support forgovernment-to-government talks, and domestic opposition to some ofKhatami’s conciliatory statements was harsh.62

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After some hesitation, the US welcomed the idea of cultural exchanges andindicated that it would re-examine its highly restrictive visa regulations. Theappearance of a warming trend prompted two major oil companies – BritishPetroleum (BP) and Royal Dutch Shell – to open offices in Tehran for the firsttime since the Revolution, even though US sanctions remained in place.63

�� Even assuming some willingness on the part of the US to re-examine its policytowards Iran, the process will not be easy. In addition to the psychologicalclimate, an entire structure of statutes and regulations now exists that will, at aminimum, serve as legal impediments and irritants in relations among the US,Iran and key US allies.

It would also be a mistake to assume that Iran will be a willing participantin any US effort to improve ties. In some respects, the effect of the US sanctionshas been almost exactly the opposite of that intended. The Iranian economy,instead of collapsing under the pressure of sanctions, has done rather well inrecent years. Iran, like other major oil producers, has benefited from the globalincrease in oil prices and the strengthening dollar since the mid-1990s.64 Iran’sforeign reserves have strengthened; it is currently paying off the hard-currencydebts it acquired after the Iran–Iraq War ended. It is carrying out an ambitiousprogramme of hydro-electric and gas-substitution projects without outsideassistance, and is even exporting its own technology in some engineering fields.Inflation is subsiding, and its domestic production has expanded considerablyto meet the needs of its own consumers. Problems remain, and Iran has not yetfully recovered from the huge dislocations caused by the Revolution, buttrends are positive, not negative.65

As a consequence, there is a new sense of confidence and self-reliance,reflected in Khatami’s speech, that contrasts sharply with the previouseconomic dependence on the US and the West. Although US products are stillavailable in Iran at a premium, they are rapidly being replaced in Iranianhomes and businesses by competitively priced European and Asian goods.Iran’s fleet of Boeing aircraft is being replaced by Airbus. US oil companies –formerly the major purchasers of Iranian crude oil – have been replaced bycustomers in Europe and Asia. As one Iranian official told me, ‘You[Americans] are getting out of our lives’.

Iranian leaders have no illusions about the predominance of US militarypower in the Persian Gulf, and they make no secret of the fact that US oil andgas technology would be immensely valuable in developing their own energyresources. But, as US sanctions have failed to bring Iran to its knees and asalternative markets and sources of technology have appeared, the Iranianleadership appears increasingly confident that the threat is manageable. Thisself-assurance may be exaggerated. The Chairman of the Iranian Economists’Association, Manouchehr Farhang, has predicted that Iran needs about $90bnof investment for the oil industry in the coming ten years to preserve its presentoutput, and the majles has approved $6.3bn in foreign financing, including

24��


$900m in medium-term credits, on development projects in the 1998–99budget.66 The sharp drop in oil prices that began in late 1997 forced the majles toreduce its estimate of annual oil revenues from $17.50 to $16 per barrel,suggesting a considerable shortfall in national revenue and raising the prospectof a period of retrenchment in Iran’s ambitious development plans.67

Tehran and Washington will not find it easy to extricate themselves fromthe web of acrimony they have woven so tightly over the past generation, evenif they wish to do so. Any reconciliation process must begin with animprovement in the public dialogue. This appears to have begun on both sidesafter the election of Mohammed Khatami.

There are, of course, a host of substantive issues that could be addressed atany time the two sides come to believe it is in their national interests to do so. Aprime candidate is the ongoing operation of the Iran–US Claims Tribunal at theHague, which was established by the Algiers Accord at the end of the hostagecrisis in 1981. To date, Iran has paid a total of more than $2bn to US claimants.68

The major remaining claim is ‘Case B/1’, which deals with US handling ofIran’s military trust fund after the Revolution. This case is highly contentious,and it will almost certainly involve a significant payment by the US to Iran.After 18 years, however, the moment may have arrived to bring it to resolution.The twentieth anniversary of the hostage-taking is less than two years away,and completion of the Tribunal’s work would be an appropriate way to markthe occasion.

As indicated earlier, Iranian positions on terrorism and WMD appear towarrant further exploration. Without any direct contacts between the US andIran, these subjects might initially be explored in greater detail by US allies whohave regular access to the Iranian government. A more ambitious approachwould be to station an American consular official at the Swiss Embassy inTehran (the US protecting power) and permit Iran to do the same inWashington. The US has announced that it intends to undertake a review of itsunilateral sanctions policy.69 One element of that review should be adetermination of how sanctions can be used not only as a punishment but alsoas a lever in possible future negotiations with Iran.

One area where Iran could genuinely contribute to better understandingrelates to the Khomeini fatwa against the British author Salman Rushdie.Former Iranian President Rafsanjani made a serious attempt to back away fromthe fatwa, but was forced to recant when faced with an intense politicalbacklash.70 Subsequently, the Iranian foreign minister negotiated a set ofassurances with the EU that Iran would take no action to carry out the edictagainst Rushdie, but in the end he balked at signing the statement, leadingNorway to withdraw its ambassador from Tehran.71 Despite the politicalsensitivity of this subject, Iran must take some steps to break the currentimpasse. One useful starting point would be to crack down on Ayatollah YusefSane’i, the head of the 15 Khordad Foundation, who has offered a $2m bountyon Rushdie’s life.

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�� The first rule of foreign policy should be ‘Do no harm’. The US dual-containment policy has failed to produce its intended results in either Iran orIraq. Moreover, it has enmeshed Washington in a web of rhetorical positionsand statutes that immobilise US policy-makers and act as a constant irritant inUS relations with some of its most trusted allies. With regard to Iran, the policyeventually lost sight of its objectives and became an end in itself.

In Iraq, the policy has thus far failed to produce the overthrow of SaddamHussein. In that brittle, one-man state, it is impossible to predict what willhappen next, but if Saddam Hussein remains in power for the next severalyears, some modification of the sanctions regime will become almost inevitable.That does not mean that sanctions could or should be entirely lifted or that UNinvestigatory and monitoring functions should come to an end. On thecontrary, vigilance will become even more critical as Iraq is permitted toresume at least some limited elements of normal life. But it will not be possibleto maintain maximum sanctions as some of the files on Iraq are progressivelyclosed.72

The policy object should be to prevent any Iraqi resumption of WMDprogrammes and to deter against any new Iraqi adventurism in the region,while protecting the Iraqi people as much as possible against the excesses oftheir rulers. That means intensive monitoring and a continued total ban of Iraqiarms imports, but it should not prevent some measure of commerce, perhapsunder close UN supervision. That will require finding a balance betweensecurity and humanitarian objectives, and the present all-or-nothing US policyis not well suited to such a diplomatic exercise. The US should considerreverting to the original text of UN Resolution 687, which states that the ban onIraqi exports will be lifted once Iraq fully eliminates its weapons of massdestruction. That would provide an incentive for Iraq to cooperate with theinspectors and would remove one of the most serious potential conflicts withthe coalition members on the Security Council.

Iran is more complex. Iran is too large, too wealthy and too politically activeto be isolated, especially by unilateral measures. Iran’s oil and gas reserves willbe an important component of international energy supplies into the twenty-first century. Inhibiting the peaceful development of those resources is likely toprove a futile and costly way to express disapproval of the Iranian Revolutionand its policies. The geographic relationship of Iran to the oil and gas fields ofthe Caspian Basin cannot be legislated away, and the sheer magnitude of Iranin the regional context cannot be ignored.

The policy objective should be to integrate Iran into the regional and globaleconomic and security environment in return for abandoning any WMDprogrammes and support for violent terrorist operations. It will not be easy tosatisfy Western critics of Iran’s good faith, and it will be difficult for Iran toaccept the kind of intrusive scepticism that must accompany such a ‘grandbargain’. However, there are clear signs that, despite its revolutionary legacy,Iran is committed to becoming a more responsible member of the international

26��


community. The dual-containment policy has been so busy battling with thepast that it has failed to recognise the changes that were under way in Iran.That may now be changing, but there still is a very long distance to go – onboth sides.

Policy in the Persian Gulf tends to be driven by events, and there is noreason for that to change. The July 1996 Al-Khobar bombing is still underinvestigation, and it could result in a finding that would pressure the US tointervene with Iran in a way that could destroy the very limited steps that haveoccurred to date. Iraq’s belligerence in resisting the operation of the USinspectors of UNSCOM and its continuing attempts to deny access to key sitesof suspected biological and chemical weapons development suggest that a newround of military confrontation remains a very real possibility. Either eventcould produce unpredictable and possibly uncontrollable consequences.

Change, not consistency, is the answer. The comfortable status quo of 1993is not sustainable, and US efforts to institutionalise it with the dual-containment policy have created a looming crisis with many of its closest allies.The rigidity of the present policy has become self-defeating, and that fact isbeginning to be recognised even at high levels in the US government. A policyof flexibility, using more subtle tools of diplomacy, will not easily solve themany security contradictions of the Persian Gulf region, and it may be harderto explain to a public grown accustomed to simple political slogans. It will,however, permit Washington to seek workable solutions for some of the mostpressing security problems while steering away from its present collisioncourse with its most important allies.

!��1 Martin Indyk, ‘The ClintonAdministration’s Approach to theMiddle East’, Keynote Address to theSoref Symposium on ‘Challenges to USInterests in the Middle East: Obstaclesand Opportunities’, Proceedings of theWashington Institute for Near EastPolicy, Washington DC, 18–19 May 1993,pp. 1–8. Indyk was on the NSC stafffrom May 1993–February 1995; served asUS ambassador to Israel, 1995–97; and iscurrently Assistant Secretary of State forNear East affairs.2 Israel had a well-developed strategy,known as the ‘Doctrine of thePeriphery’, to outflank its hostile Arabneighbours by promoting relations withnon-Arab states on the fringes of the

conflict. It had a very close strategicrelationship with Iran for over 20 years.3 See Theodore Draper, A Very Thin Line:The Iran-Contra Affairs (New York: Hilland Wang, 1991).4 Indyk, ‘The Clinton Administration’sApproach to the Middle East’, p. 4.5 Ibid.6 Secretary of State Madeleine K.Albright, remarks at GeorgetownUniversity, Washington DC, 26 March1997, as released by the Office of theSpokesman, US Department of State.7 Ibid.8 Elaine Sciolino, ‘CIA Asks Congress forMoney to Rein In Iraq and Iran’, NewYork Times, 12 April 1995, p. 1.9 These three operations were later

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publicly confirmed by former senior USgovernment officials. See DonOberdorfer, ‘US Had Covert Plan ToOust Iraq’s Saddam, Bush AdviserAsserts; Effort to Remove Leader Came“Pretty Close”’, Washington Post, 20January 1993, p. 1; and ABC News,‘Unfinished Business – The CIA AndSaddam Hussein’, Transcript 97062601-j13, 26 June 1997.10 Indyk, ‘The Clinton Administration’sApproach to the Middle East’, p. 6.11 Hearing of the Europe and MiddleEast Subcommittee of the House ForeignAffairs Committee, 27 July 1993, FederalNews Service. A similar reluctance wasdemonstrated by Djerejian’s successor,Robert Pelletreau, who responded intestimony a year later: ‘[Dualcontainment] is a phrase used frequentlyby members of the administration. I tendto shy away from it myself’. See Hearingof the Europe and the Middle EastSubcommittee of the House ForeignAffairs Committee, 4 October 1994,Federal News Service. To the best of myknowledge, the phrase ‘dualcontainment’ has never been uttered informal remarks by the US President orthe Secretary of State.12 Djerejian testimony, ibid. He identifiedthe following areas of concern: Iran’squest for nuclear and other WMD; itscontinued involvement in terrorism andassassination world-wide; support andadvocacy of violence to stop the Arab–Israeli peace process; threats andsubversive activities against itsneighbours; and Iran’s dismal human-rights record.13 For a more detailed analysis of thepolitical evolution of dual containment,see Gary G. Sick, ‘The United States andIran: Truth and Consequences’,Contention, vol. 5, no. 2, Winter 1996, pp.59–78.14 See Bush’s inaugural address, NewYork Times, 21 January 1989, p. 10. Iranwelcomed this remark and responded by

helping to free the US hostages inLebanon. It is a sore point with manyIranians that this gesture, in their view,was never reciprocated by the US.15 See, for example, Anthony Lake,‘Confronting the Backlash States’,Foreign Affairs, vol. 73, no. 2, March–April 1994.16 For a discussion of the Islamicregime’s evolution towards a lessconfrontational set of internationalpolicies, see Gary Sick, ‘Iran: TheAdolescent Revolution’, Journal ofInternational Affairs, vol. 49, no. 1,Summer 1995, pp. 145–66.17 See Executive Order 12957, 15 March1995; and Executive Order 12959, 6 May1995, in Presidential Papers, 1995,available at www.whitehouse.gov.18 For a detailed analysis of the politicsassociated with the developments ofIranian sanctions, see Laurie Lande,‘Second Thoughts’, The InternationalEconomy, vol. 11, no. 3, May–June 1997,pp. 44–49.19 Democratic Representative LeeHamilton, one of the few outspokencritics of the bill, was originally quotedas saying, ‘I wouldn’t vote for it’, but inthe emotional aftermath of the TWAcrash he did. See Robert S. Greenberger,‘Iran Creates Fresh Problems For ClintonAdministration’, Wall Street Journal, 1September 1995, p. 1.20 The casualty figures for the Iran–IraqWar are often exaggerated. MohsenRafiqdust, the former head of the IranianRevolutionary Guard Force, told thejournalist Robert Fisk that 220,000Iranians were killed and 400,000wounded during the Iran–Iraq War. SeeFisk, ‘Oh! What a Lovely Holy War’, TheIndependent, 25 June 1995. That isroughly consistent with Iranian officialstatements and with independentWestern estimates. Iraq has neverpublished any figures on its losses, butAmatzia Baram, a specialist on Iraq atHaifa University, has estimated that

28��


150,000 Iraqis were killed. See ‘After theIran-Iraq War – What?’, JerusalemQuarterly, no. 49, Winter 1989, pp. 85–86.21 Under the terms of UN SecurityCouncil Resolution 986, Iraq is permittedto sell up to $2bn of oil in two 90-dayperiods after each authorisation. Thefirst sales began on 10 December 1995.The sales contracts are monitored closelyby the UN, and the proceeds are allottedto humanitarian relief, again under UNcontrol, as well as beginning to repayclaims from the war and to cover UNexpenses in Iraq.22 UN Special Commissioner Rolf Ekeusestimated that Iraq deliberately depriveditself of $100bn in revenues by refusingto cooperate with UN weaponsinspections. See ‘For the Record’,Washington Post, 31 January 1997.23 See Reuters News Service on-line, 26June 1993 and 4 September 1996.24 See Reuters News Service on-line, 3September 1996.25 Butler, an Australian disarmamentspecialist, replaced Rolf Ekeus in July1997 as the head of UNSCOM, the UNSpecial Commission that monitors Iraq’scompliance.26 The network of such regulations affectmany individuals who are engaged inentirely innocent activities. I becameaware, for example, of a young man whowished to take the examination for theteaching of English as a foreignlanguage (TOEFL). He was rejected bythe European branch of the US testingservice on the grounds that this wouldconstitute a financial transaction withIran, which was forbidden by theregulations. In another case, an over-zealous official of the US NationalScience Foundation very nearlysucceeded in curtailing Iran’s access tothe internet.27 The most comprehensive summary inthe public domain of internationalterrorist activities is the annual report bythe US Department of State, ‘Patterns of

Global Terrorism’. The most recentreport in this series covers activities in1996. See US Department of State,www.state.gov.28 An Iranian exile was shot dead in aParis suburb in May 1996; an Iranianwas later detained in Germany inconnection with the shooting. There wasno obvious political motive for thekilling, and the details of theinvestigation have not been made public.29 The mojahedin-e khalq is a Marxistunderground guerrilla movement.Initially part of the revolution againstthe shah, it later broke with theKhomeini regime to operate first fromFrance and then from military basesnear the Iran–Iraq border.30 Israel and Iran are both states whoseidentity is closely associated with areligion that is regionally in the minority(Judaism and Shi’ia Islam) and whoseadherents often suffer discrimination.Both are non-Arab but live in apredominantly Arab environment. Bothhave been regarded as illegitimate bymany of their neighbours, and both havehad to fight wars of national survival.Both have deadly enemies that operatefrom neighbouring states and thatregularly conduct terrorist operationsagainst them. Both have facedinternational isolation and pariah status,and both have concluded that they mustrely first and foremost on themselves fortheir own national security. Among themany ironies of this Middle Eastern ‘oddcouple’ is the fact that they were onceclose allies but are now sworn enemies.Although Iran is now regarded as athreat to US interests, both Iran andIsrael have a history of special relationswith the US and have even collaboratedwith Washington on sensitive securityissues.31 In February 1992, Hizbollah leaderAbbas Musawi, his wife and son werekilled in South Lebanon by an Israelihelicopter attack; in May 1994, Hizbollah

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leader Mustapha Dirani was kidnappedin Lebanon and has been held withouttrial ever since. In April 1995, YahyaAyyash, ‘The Engineer’, was killed inGaza by an exploding phone; in October1995, Islamic Jihad leader Ahmad FathiShiqaqi was shot dead on a street inMalta; and in September 1997 twoMossad agents attempted to assassinatea Hamas leader in Jordan. At about thesame time as the Mykonos trial inGermany, an Israeli Mossad agent wasbeing convicted in a Lebanese court ofkilling 17 people in a 1991 car bombingin Beirut. Israel does not deny its role inthese operations.32 Ayatollah Khamene’i was nearly killedby a bomb concealed in a tape recorderin 1981; his right arm is stillhandicapped. Khamene’i’s brother waswounded in a grenade attack in January1982. Former President Ali AkbarHashemi Rafsanjani was stabbed by aman in his home in 1979. More than 70of Iran’s top leaders were killed in amojahedin-e khalq bombing in 1981. Abomb exploded in the Imam Reza shrine,the holiest site in Iran, in June 1994,killing 26 people and wounding manymore. The list of terrorist attacks againstIran is extensive, but has been largelyunreported in the West.33 Press release, cited in Reuters, 2September 1997.34 President Rafsanjani stated: ‘If there isgoing to be a peace which makes Syriacontent, we will not have any problemwith Syria’. See his interview with CableNews Network (CNN), cited inAssociated Press, 2 July 1995. Thisstatement was subsequently expandedto include the Palestinians: ‘Regardingthe Palestinian question in our view, thepeace plan is not going to work out …But if the content of the peace plan isjust, the substance is just, we shall goalong with it’. See Rafsanjani’s interviewwith George Nader, ‘From Tehran toWaco: Rafsanjani Talks Tough on

Clinton, Rushdie and the Rights ofBranch Davidians’, Washington Post, 9September 1995, p. 1.35 President Ali Akbar HashemiRafsanjani, Press Conference, 11 March1996, text published by the IslamicRepublic News Agency, 14 March 1996.Similar statements have been made byRafsanjani and other officials on manydifferent occasions. Israel and the US,citing intelligence information, stronglydispute this point, claiming that Iran’ssupport for Hamas and Hizbollah goesbeyond verbal and moral support toinclude arms and military training.36 Former President Ali Akbar HashemiRafsanjani, interview with Al-Qodsnewspaper, cited in Reuters, 28September 1997. He stated, ‘If thePalestinians are given their rights, thenJews, Moslems and Christians can havea peaceful coexistence. And we willapprove of that … Iran can hold handswith the United Nations, the UnitedStates, Arab countries and Europe andcreate an atmosphere, where thePalestinians and others can elect theirfuture government’.37 Friday prayer sermon, TehranUniversity, 19 March 1993, as reportedin BBC Summary of World Broadcasts,Middle East, Africa and Latin America,Iran, 22 March 1993.38 Press conference, 31 January 1993;broadcast by Vision of the IslamicRepublic of Iran; published in ibid., 3–4February 1993.39 The bonyads are unique parastatalinstitutions that emerged during andafter the Revolution as repositories ofconfiscated businesses and as politicalaction committees. They tend to be moreradical than the government, whichoften has little control over theiroperations, and they have come to wieldgreat political and financial influence.40 See, for example, Shahram Chubin andCharles Tripp, Iran and Iraq at War(London: I. B. Tauris, 1988), p. 50. For an

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analysis of Islamic teachings on thissubject, see Hamid Algar, ‘The Problemof Retaliation in Modern Warfare’, inFarhang Rajaee (ed.), The Iran–Iraq War:The Politics of Aggression (Gainesville, FL:University Press of Florida, 1993), pp.191–97.41 Letter from Iran to the InternationalAtomic Energy Agency, cited in byIslamic Republic News Agency (IRNA),19 July 1988. See www.irna.com.42 For a comprehensive summary ofIran’s overt nuclear programme, see theinterview with the head of Iran’s nuclearprogramme in Reza Abri, ‘The Situationof Atomic Energy in Iran’, Daneshmand,vol. 34, no. 396, September 1996, pp. 10–17. For a thorough survey of the openliterature, see Greg J. Gerardi andMaryam Aharinejad, ‘Report: AnAssessment Of Iran’s Nuclear Facilities’,The Nonproliferation Review, vol. 2, no. 3,Spring–Summer 1995.43 See Director of Central IntelligenceRobert Gates, testimony before theHouse Armed Services Committee, 27March 1992, cited in Washington Post, 28March 1992, p. 1; Director of CentralIntelligence James Woolsey, testimonybefore the Senate Governmental AffairsCommittee, text in Federal NewsService, 24 February 1993; and USSecretary of Defence William Perry andIsraeli Prime Minister Yitzhak Rabin,joint press conference, 9 January 1995, asreported in Reuters on-line.44 Martin Indyk, in his confirmationhearings to become Assistant Secretaryof State for Near Eastern Affairs, citedIsraeli intelligence estimates that Iranwould be able to produce long-rangemissiles within 12–18 months. See IsraelLine, on-line news service, 19 September1997. These charges were subsequentlyreplayed in all major media in the USand Israel. For a detailed survey, see‘Curb the Iranian Threat’, Jerusalem Post,on-line edition, 12 October 1997.45 These conversations, over a period of

several years, were conducted on a non-attribution basis.46 Statement by Kamal Kharrazi beforethe Fifty-second session of the UNGeneral Assembly, New York, 22September 1997, available atwww.irna.com.47 Ibid.48 See BBC Summary of WorldBroadcasts, Middle East, ‘SpecialSupplement: Eight Summit of theOrganization of the Islamic Conferencein Tehran: Proceedings and Speeches’(ME/D3101/S1), 15 December 1997.49 See ‘President Khatami’s IntroductorySpeech at News Conference’, FBIS-NES-97-348: Daily Report: Near East/South Asia,14 December 1997; and ‘Khatami HoldsNews Conference’, FBIS-NES-97-348:Daily Report: FBIS Translated Text: NearEast/South Asia, 14 December 1997.50 The trigger level was reducedautomatically from $40m to $20m inAugust 1997.51 Press conference with the UK PrimeMinister, US Newswire on-line, 29 May1997.52 Testimony of Acting AssistantSecretary of State David Welch beforethe House International RelationsCommittee, ‘Hearing Held To AssessIran Libya Sanctions Act One YearLater’, Federal News Service, 23 July1997.53 Testimony of Deputy AssistantSecretary of State Alan Larson before theHouse International RelationsCommittee, ibid.54 See the State Department briefing, 9October 1997, available on-line atwww.state.gov.55 State Department spokesman JamesRubin said: ‘They [Iranians] conductexercises on a regular basis each yearcalled Victory 8. It’s the culmination oftheir annual naval training period. Weconsider these events routine … We arenot expecting a confrontation with Iran,nor are we looking for one. The Nimitz

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… deployment isn’t related to theIranian exercises’. See Dow Jones Newson-line, 9 October 1997.56 ‘Transcript of interview with IranianPresident Mohammad Khatami’, 7January 1998, CNN Web, www.cnn.com.The following quotes are all from thetranscript unless otherwise indicated.The interview was actually taped on 6January and edited by CNN for a45-minute programme. In Iran, the entireinterview, including material omitted byCNN, was shown on national televisionseveral times.57 The ‘grave affront’ Khatami referred toby a US Secretary of Defense was that ofCaspar Weinberger, who once said,‘There must be a totally different kind ofgovernment in Iran, because we cannotdeal with the irrational, fanaticalgovernment of the kind they now have’.See Weinberger’s comments in the NewYork Times, 28 September 1987, p. 3.58 See, for example, the comments byPeter Rodman, Director of NationalSecurity Programs, the Nixon Center forPeace and Freedom, Washington DC,and senior editor of National Reviewmagazine, on the National Public Radioshow ‘Talk of the Nation’, 8 January1998, NPR Transcript 98010802-211; andPatrick Clawson, ‘Khatami’s Dialoguewith America, not with Washington’,PolicyWatch, no. 293, WashingtonInstitute for Near East Policy, 8 January1998.59 Cited in ‘Iran Hotly Debates Khatami’sRegrets for US Embassy HostageTaking’, Agence-France Presse, 12January 1998.60 See US Department of State DailyPress Briefing, DPB 182, 17 December1997, available at www.state.org.61 See Barton Gellman, ‘US ProposedDirect Talks in Overture to Iran: Letter,Delivered by Swiss Envoy, FollowedKhatemi Inauguration’, Washington Post,9 January 1998, p. 1.62 See, for example, ‘Mr. Foreign

Minister! America is an Enemy of theIranian Nation’, Jomhuri-ye Eslami, 7January 1998, p 2, translated inFBIS-NES-98-012, 12 January 1998; and‘America Has Not Changed’, Keyhan, 6January 98, p 2, translated inFBIS-NES-98-012, 12 January 1998.63 Robert Corzine, ‘BP/Shell Eye IranOpenings’, Financial Times, 12 January1998, p. 1.64 Oil is denominated in dollars, so anyrise or fall of the dollar’s value isinstantly translated into profits or losses.65 See Jahangir Amouzegar, ‘Adjusting toSanctions’, Foreign Affairs, vol. 76, no. 3,May–June 1997, pp. 31–41.66 On the Iranian Economists’Association’s prediction, see Farhang’scomments in the Iranian dailynewspaper Etela’at , 20 December 1997,also cited in the Xinhua on-line newsservice of the same date. Onparliament’s approval of foreignfinancing, see Reuters on-line, 13January 1998.67 ‘Majles Seeks to Reduce Budget BillExpenditures’, FBIS-NES-98-012, DailyReport: Near East/South Asia, 12 January1998.68 For an update on the status of thevarious claims at the Hague Tribunal,see White House Press Release, ‘Text ofa Letter from the President to theSpeaker of the House of Representativesand the President of the Senate’, 25November 1997, available atwww.whitehouse.gov.69 See the speech by Under Secretary ofState Stuart Eizenstat to the NorthAmerican Committee of the NationalPolicy Association, Washington DC, 7January 1998, as reported by USIA,www.usia.gov/.70 At Friday prayers on 16 February1990, Rafsanjani commented that, ‘theimam’s edict is an Islamic expert edictand nothing else … Now let us imaginethat this verdict is not unanimous …others may say that the verdict should

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be different’. Translated in ForeignBroadcast Information Service, 20February 1990.71 Norway was particularly sensitive onthis issue since William Nygaard, theNorwegian publisher of Rushdie’s TheSatanic Verses, had been shot and

wounded by an unknown assailant inOctober 1993.72 France and Russia’s ambassadors tothe UN have called for the nuclear fileon Iraq to be closed, while continuing towork on the biological issue. SeeReuters, 17 October 1997.

rethinking dual containment

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