Tehran's changing.

Photographer: Simon Dawson/Bloomberg

Iran Is a Jekyll-and-Hyde Problem

Marc Champion writes editorials on international affairs. He was previously Istanbul bureau chief for the Wall Street Journal. He was also an editor at the Financial Times, the editor-in-chief of the Moscow Times and a correspondent for the Independent in Washington, the Balkans and Moscow. He is based in London.
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It doesn't take long in Iran before you start looking at the country through a Dr. Jekyll and Mr. Hyde prism: how to get rid of the monstrous Hyde without also harming the well-intentioned Jekyll, when they share the same body.

The Hyde part of this analogy seems clear: It's Iran's clerical regime. It retains power by dictating who can stand for election, repressing and censoring political and cultural opposition and executing about 1,000 people per year. Abroad, it arms terrorist groups and tests ballistic missiles emblazoned with the words "Israel must be wiped out."

The Jekyll side is less understood. This is the Iran where an American is more likely to get an enthusiastic reception than in any other country I've visited in the Middle East; as far back as 2002, survey data suggested that three-quarters of Iranians wanted closer relations with the U.S. Iranians are better educated than citizens of other countries in the region and women make up 60 percent of the university student body (enough for the regime to try to start excluding them from certain courses). The economy, though far too oil-dependent, is more diversified than others in the Persian Gulf. Above all, Iran is a stable nation state with thousands of years of history in a region of shifting sands.

Photographer: Marc Champion/Bloomberg

Tehran rush hour.

As sanctions lift under the nuclear deal signed in January, the trick is to make sure that any unfrozen assets and investments that pour into the country strengthen "clean" private-sector companies, and starve those with links to the Iranian Revolutionary Guard Corps. Economic success should lift moderate politicians such as President Hassan Rouhani, and help them to bring Guard-owned companies into the tax system and generally undermine hard-line opponents. The hope is that over time -- say, by the time restrictions on Iran's nuclear fuel program expire in 15 years -- the regime will be changed by the country's opening up to human contact and financing from the outside world.

I tested this idea on two men with contradictory views on how the West, and more particularly the U.S., should deal with Iran.

Ali Khedery was the longest-serving senior U.S. official in Iraq from 2003 to 2009, after which he went to work for ExxonMobil. From there went on to set up Dragoman Partners, a consultancy based in Dubai, where we met. His experience in Iraq, where Iran supplied roadside bombs to kill U.S. soldiers and organized Shiite militias that terrorized Sunnis, left him with a deeply unsentimental -- and hostile -- view of his near neighbor:

You cannot separate Dr. Jekyll from Mr. Hyde. President Obama and his very inexperienced and ideological team have bet the farm on their ability to separate the regime from the Iranian people. But you are dealing with a real regime, one that has deep roots planted since 1979.

Khedery went on to describe the regime's vice-like grip on political power -- proved by its crushing of pro-democracy protests in 2009 -- and over Iran's economy. As a result, he said, the idea that hardliners will allow Western capital and interaction penetrate the country to such an extent that it can erode their power and change the nature of the regime is dangerously wrong:

They are not stupid. The model they have adopted is something like Russia's or China's. There will be a lot of foreign direct investment, but they will make sure it is directed towards the government.

Khedery's understanding of Iran (he says he can't visit the country because "it would be a one way ticket") leads to several conclusions. First, that the nuclear deal with Iran was a mistake; in 15 years the same regime with the same goals will be able to develop an industrial-scale nuclear fuel program, making it a threshold nuclear state by right. Second, having made that mistake, the U.S. should apply as much pressure as possible on Iran and its economy, using residual sanctions to constrain both U.S. and European business with Iran. Above all, it should contain the IRGC:

There is a storm gathering in the region. I think we're in a 1913/1938 moment, because appeasement -- as [then British Prime Minister Neville] Chamberlain learned -- doesn't work when you have a regime with violent, expeditionary instincts baked into its DNA.

Some things don't change.
Photographer: Marc Champion/Bloomberg

For the alternate view, I spoke in Tehran with Saeed Laylaz, a former economic adviser to Iran's former, reformist President Mohammad Khatami. To start with, says Laylaz, while "the U.S. is the only country that has the power to affect domestic politics in Iran," it can do so in only one direction. That's because U.S. interference -- any attempt to pressure on Iran in any way -- simply creates more leverage for the country's radical conservatives:

Radicals in Iran love it. If you sent ballot boxes to Iran in November, all of the radicals would vote for Donald Trump, not Clinton.

Laylaz gave an example of how this works. After the terrorist attacks on New York and Washington on Sept. 11, 2001, he recalled, Supreme Leader Ayatollah Ali Khamenei offered Iranian airspace and cooperation to help the U.S. fight the Taliban and al-Qaeda in Afghanistan. Not long afterwards, U.S. President George W. Bush called Iran part of an "Axis of Evil." Then he invaded Iraq, bringing U.S. troops to Iran's border:

What was the message? Please be as strong as possible, or we will destroy you. They forced Khamenei to go kick out Khatami.

Eight years of hardline rule and expansion of the Revolutionary Guard's control of the economy followed, under Khatami's replacement, Mahmoud Ahmadinejad . Far from being naively ideological, Laylaz believes U.S. President Barack Obama has shown political courage by upending U.S. policy towards Iran, which for 70 years -- from engineering a coup in 1953, to today -- has been based on trying to force compliance on governments in Tehran.

"Pressure will help the regime," said Laylaz. "If the U.S. would leave us alone, we can solve our problem with the conservatives." He sees Rouhani's recent success in parliamentary elections as evidence to support the country's ability to change.

Sure, there are no guarantees, says Laylaz. But the U.S. has been trying for more than 35 years to contain Iran -- from funding Iran's invasion by Iraq in 1980, a war that cost hundreds of thousands of lives, to imposing economic sanctions over Iran's support of terrorism and its nuclear fuel program. The policy has failed. The regime in Tehran remains as much in control, as conservative and as anti-American as ever. With the nuclear deal implemented, why not at least give the other approach an honest try?

These are both powerful cases. It isn't obvious which will prove correct. In Robert Louis Stevenson's novella, Jekyll eventually killed himself, because he could no longer prevent his transformations into the monster. There was no way to divide his body and dispense with only Hyde. Everyone should hope Iran's future proves otherwise.

(Corrects spelling of Ali Khedery throughout article published March 17.)

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Marc Champion at mchampion7@bloomberg.net

To contact the editor responsible for this story:
Therese Raphael at traphael4@bloomberg.net