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Iran is facing an uncertain future, trying to reform itself gradually while still remaining a strong, independent, united nation. However, internal pressures as well as those from outside have made this difficult to achieve.

The participation of thousands of Iranians July 9 in street protests, despite a government ban, underscored the mounting dissatisfaction in the country with the ruling regime. This mood was most directly represented by influential Iranian cleric Jalaleddin Taheri, who resigned his post that same week and denounced supreme leader Ayatollah Khamenei’s conservative clergy -- which has used its control over the judiciary and other major institutions to hamper reform -- as corrupt and incompetent.

More than a week later, Iran’s largest reform party -- the Islamic Iran Participation Front -- threatened to quit the government and parliament if hardline elements continue to block social and political changes. The vice speaker of the party, also the brother of President Mohammad Khatami, said democratic reforms were the only way to run the country.

Meanwhile, the Bush administration continues to apply pressure on the "axis of evil" member, accusing it of sponsoring terrorism and engaging in the proliferation of weapons of mass destruction. Iran cannot be ignored or underestimated when it comes to Washington’s goals in Eurasia or in attempts by China or other powers to counter U.S. supremacy. It also must be taken into account regarding U.S. interests in Afghanistan and a likely war against Iraq.

In short, the future of Iran is of great geopolitical importance for both world powers and neighboring regions. And while Iran’s integrity and unity will survive in the short term, two events may shake the country in the longer run: social upheaval within Iran’s fast-growing population and a military confrontation with the United States.

Iran’s Geopolitical Agenda

The country’s conservative Islamic elite is united in its vision of Iran as a major future power in the Middle East, able to defend its integrity against any foreign attack and to secure its national interests. The regime believes its top external security threats come from the United States and Israel, while its prime internal threats are a possible social explosion and endemic drug trafficking.

The elite feels that to serve the country’s national interests, Iran first must achieve the ability to produce whatever weapons it needs for defense. Second, the government must maintain economic growth and distribution to feed the expanding population and keep it from lashing out at the regime.

Third, Iran should command enough influence in the Middle East, Central Asia and the Caucasus to make sure neighboring countries cooperate with the government and do not side with its enemies. Fourth, Iran should form partnerships with as many important foreign powers as possible to make sure its position in the world is stable.

Fifth, Tehran must make certain its energy wealth makes it stronger and helps ensure its importance in determining global energy policies. Sixth, Iran should become the most influential Islamic nation in the world, which requires further support for the Palestinians and the Lebanon-based Islamic Hezbollah militia group.

However, the elite is divided deeply over how to become a regional power and secure these goals. President Mohammad Khatami believes the ideal way is to transform the nation slowly into a state where Islamic and democratic values can co-exist.

In his mind this will make the country socially stable and unleash a desire among the people to make Iran stronger. The Western media have compared Khatami to former Soviet leader Mikhail Gorbachev, who supervised perestroika and the end of the Soviet Union. Iranian government sources say Khatami hates this comparison because he believes Gorbachev’s economic, political and social reforms ruined his country, and Khatami wants his reforms to strengthen Iran.

Ayatollah Khamenei is not in favor of making the country more democratic and is reluctant to implement any reforms. But there are growing signs that even he has realized after the last few turbulent years that something should change in Iran if the country is to succeed.

STRATFOR sources within Iran’s diplomatic and other government circles say that Khamenei, fearing both the collapse of current cleric rule and the end of Iran as it is known today, seems to have reached a consensus with Khatami that the country will be transformed very gradually, with the Islamic nature of the nation preserved.

The latest evidence of this tacit agreement is a message Khamenei broadcast nationwide ahead of the country’s weekly prayer ceremony June 12. Khamenei said he agreed with criticism of the regime laid out by the rebelling cleric Taheri, "because I also have been saying for several years that we have to mobilize all possible means to fight poverty and corruption," Agence France-Presse reported. Khamenei also warned Iranian officials to pay attention to what they say, as "any unjust criticism encourages enemies and counter-revolutionaries who benefit from the support of the United States and Israel."

A Society Polarized

The problem for both of the country’s top leaders is that many of their supporters have become radicalized and do not intend to listen to them. Some Khatami supporters, especially in student organizations, are growing impatient with the snail’s pace of reform. Their protests will become only more aggressive with time.

Student-led protests now and in the short-term do not pose a threat to the regime -- the several-thousand-strong protests July 9 are still minor in a country of 65 million people. But they have the serious potential to become an engine for much larger and broader protests all around the country.

These actions could be similar to or bigger than demonstrations July 16, when about 15,000 workers gathered in front of Tehran’s social security department to protest poor working conditions and low pay. Iranian police dispersed the crowd by firing into the air and using tear gas.

The social conditions in Iran are ripe for upheaval. Although Iran posted GDP growth of 5.6 percent last year, according to EU figures, this was not enough to take most of its exploding population out of poverty. Government policies to restrain astronomic birth rates are failing in a country where abortions are banned by religion. High oil prices this year are the only reason for the GDP growth, but there is little development in the energy sector and Iran’s expenses continue to grow. If energy prices drop for a sustained period of time, the country could be in big trouble.

Jobless and low-paid youth are quickly becoming the majority in impoverished towns and the countryside. The official unemployment rate in Iran is 13.5 percent, but in reality it is probably closer to between 15 percent and 25 percent. This translates into millions of hungry young people who are primed for revolution unless the situation improves dramatically and quickly. Such an explosive situation also may be used by the current regime’s enemies.

So far student-led opposition protests in big cities, and economic protests in small towns and rural areas, have been disunited. But sources inside the country say the opposition is ready and trying to reach out to impoverished people.

Despite this threat, Khamenei’s ultra-conservative supporters reject his reluctant compromise with Khatami over gradually reforming the country. Though this group is a minority even in the conservative cleric camp, it is well organized and enjoys some sympathy from Iran’s security apparatus. Its vehicle for countering the reform movement is the government’s Islamic fundamentalist Bassij religious militia, as well as various non-governmental religious militias. But more crackdowns by these groups could cause or provoke serious bloodshed that might lead to a popular uprising.

So far Tehran has been able to keep a lid on the potentially regime-threatening level of violence, thanks largely to the fact that both Khatami and Khamenei can still rein in the majority of their supporters. But even though the radicals in both camps are in the minority, their numbers appear to be increasing.

There also are other organizations and groups in Iran struggling against the Islamic regime. Their actions, except for those of the guerrilla Mujahideen-e-halk group, are rarely reported in Western media. But intelligence from human sources in Iran indicates that their anti-government activities and the number of their supporters are also on the rise.

Add to this the growing number of disgruntled citizens in each strata of society. The impoverished masses want food and jobs. Businessmen want more privatization and no economic restrictions. Intellectuals and youth want more freedom in everything, including the opportunity to travel abroad.

Professionals want decent salaries. Growing numbers of clerics want to reform the role of Muslim religious institutions. And some in the elite dream of reaping even higher profits and benefits in a more open-market society. This is what happened with Russia’s elite oligarchs, who came to the conclusion before the fall of the Soviet Union that they could even better enrich themselves when they became big businessmen.

On the whole, the internal political situation in Iran is much more complex than the simple media-portrayed division between reformists and conservatives. For instance, the media impression that all so-called "reformists" strive to build a liberal market society is utterly wrong. Though some do, a vast majority only care about protesting against the government -- no matter what "cause" they may represent.

In addition, there are many reformists who strive to build what they call an Islamic democracy, which would call for a more open market but still would have social protections and Islamic regulations. Other reformists, including the militarily strong Mujahideen-e-halk, struggle to establish people’s rule in Iran, combining socialist and Islamic ideas of equality and justice in which every Iranian would benefit from the country’s energy riches. There also are some expatriates and home-based Iranians who dream of restoring a monarchy, though they are in the clear minority.

In addition to the "reformists," there is a corresponding rise in the struggle by ethnic groups for more rights or independence. For instance, there are millions of Azeris and Kurds in Iran dreaming of better times, with some forming not only opposition political organizations but also guerrilla movements engaged in sabotage against the central government.

There are separatist movements among Arabs in the southwest, the Balouges in the southeast, and even in Iranian sub-ethnic groups in Eastern Iran. The ancient Iranian religion of Zoroastrism -- the main religion in Iran before the advent of Islam -- is gaining favor among Kurds and some Iranians who are fed up with the state of the country under Islamic rule.

Thus, Iranian society not only is deeply divided along many lines but also is polarized. Revolutions usually happen when lower classes do not want to live the way they do, and the upper classes can no longer rule the way they do. Iran is coming close to crossing that line. This already happened once when the Shah was overthrown in the 1970s. In the longer run, a revolution against clerical rule in Iran is possible.

Why Iran Is Preparing for War With the U.S.

However explosive the internal situation in Iran may be, its problems internationally are no less grave. Having always been at odds with Washington since the overthrow of the Shah and the capture of the U.S. Embassy in 1978, Tehran believes that this long-simmering conflict finally will boil over under the Bush administration.

The Iranian leadership is not too concerned that a U.S. attack will come soon, since Washington has bigger targets right now, including Iraq. But Tehran feels an attack in the future is inevitable and is preparing to defend the country against a much superior foe.

According to government sources, the common belief among Iran’s national security establishment is that the country almost inevitably will become the Bush administration’s top target once Iraq has fallen under the U.S. thumb. Bush’s harsh rhetoric against Tehran helps to reinforce this impression, as do several other factors.

First, the sharp conflict between Washington and Iran’s geopolitical goals and interests makes reaching any compromise very difficult. Washington wants to secure its national interests in the Middle East and will not tolerate Iran’s attempts to assert its own regional influence. And Iran knows that it has no chance of establishing its influence with the United States calling the shots in its backyard.

Even if Bush is not explicit on this now, Washington wants a regime change in Tehran, or, at very least, wants Iran to adopt a more pro-U.S. policy. However long it takes, it is probably only a matter of time before a clash, especially since the Bush administration is adopting a new strategy of pre-emptive strikes against countries deemed to represent enough of a threat.

Second, both the United States and Iran have close political allies they cannot abandon even for the sake of preventing a confrontation. The U.S. government will not abandon Israel, while even if Khatami takes full control of Iran, he will never end support for Hezbollah and Palestinian militants, since this allows Iran to project power far from its borders and to attack and distract Israel.

Like almost all of Iran’s elite, Khatami sees Israel as the country’s sworn enemy, one that constantly is trying to provoke Washington to attack it. Since Tehran is convinced that the influence of the pro-Israeli lobby over U.S. government policy is total, it believes that one day Israel will succeed in persuading the United States to go to war with Iran. Additionally, if Tehran were to stop supporting Islamic militants against Israel, it would face more domestic backlash.

Third, the Bush administration believes that control over Persian Gulf and Central Asian energy riches is vital to the national interest. This includes control or influence, in some form or another, over Iraqi and Iranian energy resources. Iran is trying to counter this by working on achieving a more prominent role in the global energy market through OPEC.

Fourth, after Sept. 11 Iran has watched helplessly as the U.S. military has encircled it. Except for strategically unimportant borders with neutral Turkmenistan and Armenia, American troops and personnel are present in all of Iran’s neighbors: Afghanistan, Pakistan, Oman, Bahrain, Qatar, the United Arab Emirates, Saudi Arabia, Turkey, Azerbaijan and even Iraq -- U.S. Special Forces reportedly are stationed in Kurdish areas and U.S. fighters continue to monitor Iraqi air space.

Fifth, Iranian intelligence reports that the United States and Israel are significantly boosting their satellite, technical and human surveillance activities. STRATFOR has written already about a U.S. unmanned aerial vehicle that crashed in Iranian territory in late May. As we wrote, the UAV may have gone off course, or it could have been attempting to survey future targets in preparation for a strike on Iraq. Israel May 28 also launched a new Ofek-5 spy satellite to be used for conducting surveillance on Iran, Iraq and Syria. This will give Israel a better view of the development of Iran’s Shahab-3 surface-to-surface ballistic missile, which is capable of striking anywhere in Israel.

Sixth, Iran sees the ranks of its allies melting under severe U.S. pressure. The hardest blow has been the apparent decision by Russian President Vladimir Putin to slowly end Russia’s involvement in the construction of the Bushehr nuclear plant in Iran, which the Bush administration fears will be used to help Tehran’s nuclear weapons capabilities. Moreover, the Iranian government is worried that Russia may end all military-technical cooperation between the two sides that is worth billions of dollars in new arms for Iran.

Iran’s Strategy To Avoid Potential Confrontation With the U.S.

In order to counter the U.S. geopolitical offensive and deter a potential attack in the longer run, Iran has embarked on a three-pronged foreign policy and security strategy. The first leg of this policy has been an extensive defense-building program, including enhancing both conventional and non-conventional capabilities for the armed forces.

There is no proof that Iran is building a nuclear bomb, but intelligence services in various countries report that Tehran may well have chemical weapons. However, Washington is concerned mostly with Iran’s longer-range missile program. Though Iranian missiles have no chance at reaching U.S. territory, they can hit American forces in the Middle East and Israel.

Iran says the number and quality of its missiles are extremely low compared to American and Israeli stockpiles, and that its arsenal is meant to serve as a deterrent. Washington, however, deems this arsenal aggressive.

Tehran knows it will never match the U.S. military potential and would be hard-pressed to match Israel’s arsenal either. Furthermore, this capability gap may widen further if Moscow reneges on its promises to sell about $6 billion worth of modern weaponry to Tehran. Nevertheless, Iran will continue to build its military in hopes of gaining the potential to inflict enough losses to U.S. forces to dissuade Washington from attacking.

As part of the second leg of its policy to deter a U.S. attack, the government is actively seeking partnerships with major foreign powers for economic and military benefits and to organize a large enough consensus against U.S. aggression. This policy is called "the dialogue of civilizations," whose author and most active proponent has been Khatami.

Under this policy Iran has succeeded in establishing close relations with almost all important world players -- except the United States -- including China, India, Russia and European countries. Tehran also is establishing or re-establishing ties with all its important neighbors -- Pakistan, Syria and even former foes such as Saudi Arabia, Iraq and most recently Turkey. Finally, Iran has seen external national security threats other than from the United States and Israel diminish or disappear.

This has come with the fall of the anti-Iranian Taliban regime in Afghanistan, Turkey rethinking its own anti-Iranian policy and Iraq’s recent overtures for Iranian cooperation. Even Washington’s attempts to isolate Tehran with an embargo and diplomatic pressure on third countries have failed. If creating an anti-Iraq coalition is proving to be difficult for the United States, it would be impossible in regard to Iran.

However, Tehran knows the Bush administration would not be afraid to act unilaterally against Iran. Hence the third leg of Iran’s current policy toward the United States: the attempt to engage Washington in dialogue. Neither side entertains the illusion that they can ever reach an eternal peace. But that does not mean that confrontation cannot be postponed or a compromise on the most pressing issues between them cannot be reached, at least temporarily.

Both sides are busy with more immediate problems -- the United States is fighting al Qaeda and preparing to hit Iraq, and Iran is building itself as a regional power while avoiding social explosion -- and so neither would mind reaching some level of detente.

Attempts To Reach Compromise Between Iran and the United States

Tehran has assigned the task of negotiating with the United States to its third-most influential man, Hashemi Rafsanjani, former Iranian president and chairman of a powerful political council called the Expedience Council. Contrary to media reports, STRATFOR’s sources say that when Rafsanjani recently dispatched a delegation to meet with U.S. representatives in Cyprus, he was not acting on his own.

Both Khamenei and Khatami agreed that Rafsanjani would make some secret attempts to initiate a dialogue with the United States to ease tensions. It was agreed that if the attempt became known, which it subsequently did when Iranian lawmakers made it public, the government would deny it.

New evidence suggests that Rafsanjani is continuing his attempts to engage Washington with the covert support of the other two top leaders. The sources from Iran say that he may be approaching the United States with an offer to stay on the sidelines of a United States-Iraq conflict in return for Washington ceasing its efforts to change the regime in Tehran.

The most important and practical sign of this offer has been Tehran’s decision to allow a delegation of the Supreme Council for Islamic Revolution in Iraq to meet with other Iraqi opposition and State Department officials in Washington last month. The Iran-supported Supreme Council is the only Shia resistance group in Sunni minority-ruled Iraq, and is for the most part the only competent opposition force in Iraq except for Kurdish groups in the north.

Iran knows that Washington will attack Baghdad no matter what it does, so the pragmatic Rafsanjani is attempting to make the best of a bad situation. By putting the Supreme Council into the mix, he is trying to improve the chance that Shias will dominate a new government in Baghdad, which would give Shia-ruled Iran more of a say in how a new Iraq does business.

So far the United States -- pre-occupied with building a viable Iraqi opposition military and political force -- has welcomed the prospect of the Supreme Council joining the ranks of the opposition. But aware of that group’s pro-Iranian nature, Washington is likely to make sure during the war that the Shia do not get Baghdad as a prize.

Iranians also fear that the United States would use Shia fighters as cannon fodder to get to Baghdad and install a pro-United States and anti-Iran government, possibly including Sunni generals under the former regime of Saddam Hussein. Sources in Iran say that Khamenei supported Rafsanjani’s offer to trade with the United States on Iraq because having a Shia government in Baghdad has been his geopolitical-religious wish for many years.

But Khatami is opposing the idea, mainly because he fears that, no matter what it does, Iran will become the next target for the United States if Iraq falls. That is why he has encouraged the restoration of ties with Syria, Iraq and Saudi Arabia.

The United States seems to be looking at Rafsanjani’s initiative as a kind of trial balloon. And Iran is using this secret "proposal" to probe the U.S. reaction -- especially on whether Washington will agree to soften its policy toward Iran -- while its top leaders and Foreign Ministry continue to state publicly that a U.S. attack on Iraq is impermissible.

Intriguingly enough, it is Vice President Dick Cheney, not the dovish Secretary of State Colin Powell, who is leading the U.S. effort for dialogue with Iran. His ties with American energy giants interested in returning to Iran’s lucrative energy market are the main factor for this drive.

Cheney has long proposed lifting sanctions against Iran, but he has not been able to get through severe objections posed by other administration heavyweights, such as Defense Secretary Donald Rumsfeld, National Security Advisor Condoleezza Rice and Deputy Secretary of State Paul Wolfowitz. Nevertheless, Cheney was able to convince the president that some secret dialogue with Iran would be useful, if only to get some minor concessions out of the regime first.

Thus, Cheney and Rafsanjani have organized a series of secret meetings between U.S. and Iranian officials for the last few months. But, judging by the continued rift between the two nations, little has come out of them in terms of results.

However, both Cheney and Rafsanjani are likely to continue their efforts. From the United States’ standpoint, it would not hurt to simultaneously try three options in regard to Tehran: probing though back channels about whether Iran would be scared enough to give meaningful concessions, encouraging the Iranian opposition to overthrow the regime and -- if those two fail -- applying more pressure on the government.

There has been no decision by the Bush administration so far to attack Iran -- nations sometimes have a cold war for decades and never have a hot war. But if Washington decides at some point that all other options have failed and Iran still stands in the way of its designs for the region, then a battle could ensue.

As for Rafsanjani’s offer over Iraq, it is unlikely to succeed in changing the U.S. view of Tehran. All of the regime’s previous geopolitical gestures -- not interfering in the U.S. war on terrorism, giving permission for U.S. planes to make emergency landings during the operation in Afghanistan, deporting anti-United States Afghan warlord Gulbuddin Hekmatyar, forcing Hezbollah to decrease its anti-Israel attacks in some instances this year -- do not appear to be enough.

What Washington wants most, Tehran is unlikely to give: It will not terminate its support for Arab militants, halt its defense build up or surrender the Islamic regime in order to conduct a more pro-United States foreign policy.

Tehran certainly cannot end its support for Hezbollah, which is the government’s tool for influencing Middle East politics and gaining leverage against Israel. Iran supports Hezbollah not so much because it is composed of Iran’s Shia brethren but mainly because it is one of the few real military and political forces within the global Shia Islamic community. Even if the conservative clerics are gone and a reformist Khatami has a free hand to rule Iran, he would not abandon Hezbollah.

This is only one of the conflicts between the United States and Iran that might eventually lead to a military confrontation. So far Tehran has succeeded in postponing this confrontation, at least until Iraq is defeated. Tehran also has broken out of its isolation -- it does not appear that Washington has the international support for an attack yet. If it wanted to unilaterally force a regime change in Iran in the future, it would have to do much more extensive and longer preparation than it did even in the wars in Afghanistan or Iraq.

Future Likely To Bring More Trouble

So Tehran has some time to continue its attempts to defuse U.S. pressure in the hope that a new administration in Washington will soften its stance. But anything could happen before the elections in 2004, with Washington’s new pre-emption policy doctrine and its expanding global reach making an attack on Tehran possible by that year.

A full-scale war may be deemed too costly, while strikes against suspected WMD and missile program sites might be a more viable option. An even less military-intensive way for the United States to get at Iran would be to increase the oil flow coming out of a defeated Iraq, driving down global prices and bankrupting the regime.

This is why Tehran wants to focus on building its defenses, but cannot due to political, social and economic pressures at home. Washington thus can apply even more of its own pressure from the outside on the ruling regime as well as encourage more decisive action by the Iranian opposition. If the current regime is toppled from within, then Washington might get a more pro-United States government without military intervention, though this would be difficult.

The disunity between numerous opposition forces and protest groups will help Tehran keep its Islamic regime alive in near future. A secret (or not-so-secret) alliance between Khatami and Khamenei will be the main factor keeping the nation together. Their control over both the military and security forces will help as well.

But, in the longer run, only economic success and an improvement in living conditions will help the current regime survive -- and this could prove too difficult to achieve. It would be naïve to think that liberal market reforms would work fine in Iran. But the current moderate "Islamic market" encouraged by Khatami is not working either, leaving millions in poverty and ready to join protest movements.

It remains to be seen what (if anything) Khatami can do about this. If he fails, social explosion will become inevitable, and then the question would be: Who benefits from such a situation? A no less important question also would be: Would Iran maintain its status as an important independent regional player, or would it become a puppet of foreign powers?

A return to the time of loyal U.S. ally the Shah is highly unlikely, given the sharp difference in geopolitical interests between Iran and the United States, as well as the unpopularity of Washington even in the eyes of many reformist leaders in the country. So a nationalistic course directed at securing Iran’s national interests -- no matter how the big powers dislike it -- should be expected from any Iranian government in the future.

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Date Added: Thursday, July 18th, 2002
Contributed by: RCN Administrator