Is A Window Of Opportunity Opening In Iran?

Iranians weren't the only ones surprised by Mohammed Khatami's landslide upset in Iran's May 23 presidential election. In Washington, startled U.S. policymakers looked at the "moderate" cleric's victory over the conservative Islamic Establishment candidate as a potential crack in icy relations between the two nations. "This is an important development," notes a Clinton Administration official.

Although American and Iranian officials caution against hopes for any overnight thaw, Khatami's election could pave the way for the first timid move toward a dialogue in a decade. The big question is whether Alphonse or Gaston will take the first step. In the wake of Khatami's election, each side is beckoning the other to make the initial goodwill gesture.

Since the 1991 Persian Gulf war, Washington has used sanctions and embargoes to isolate both Iran and Iraq. This "dual containment" policy enjoys strong bipartisan support in Congress. But the Iranian vote could prompt a change in that strategy. Some foreign policy analysts say the U.S. should keep the pressure on Iraqi strongman Saddam Hussein while looking for ways to open commercial and diplomatic ties with Iran, whose size and energy resources make it a far more vital regional player.

ON THE SIDELINES. Certainly, U.S. business interests, which see Iran as an important market, are urging such a shift. "If we're following a policy of engagement in China, where the government is less than democratic, there's an argument for at least exploring possibilities in Iran," contends J. Daniel O'Flaherty, vice-president of the National Foreign Trade Council, a group of more than 600 U.S. companies.

That business argument is one that is likely to be made with increasing force in Washington. When Clintonites pressured Conoco Inc. in 1995 to withdraw from a $1 billion deal with National Iranian Oil Co. to develop two offshore oil fields, the contract went to French oil group Total. Now, Total and Royal Dutch/Shell Group are competing for an even richer prize, tapping Iran's South Pars gas field, the world's largest. With American oil companies out of action, "Total is using U.S. anti-Iran sanctions as a real asset," says Pierre Terzian, president of Paris-based oil industry analysts Petrostrategies.

Whether Washington budges, however, is largely in the hands of Khatami, who takes office in August. U.S. officials are watching for signs of softening. One key indicator will be who succeeds Foreign Minister Ali Akbar Velayati, an old stalwart of the regime. The Clinton Administration also wants to see such positive moves as a repeal of the death threat against author Salman Rushdie, an end to assassination of Iranian dissidents abroad, and a halt to the regime's bankrolling of terrorist groups.

To be sure, powerful forces in Tehran and Washington could scuttle any budding detente. Khatami did capture 70% of the vote, but Iran's religious leader, Ayatollah Khamenei, is the country's real power and can curb the new President's executive authority. And Iran's conservative parliament must approve Cabinet appointees. Although he is the first Iranian leader in years to enjoy electoral legitimacy, "Khatami's power is diluted by the nature of the system," says Richard N. Haass, head of foreign policy studies at the Brookings Institution. "He won't have a free hand."

ARMS SEARCH. Indeed, some analysts believe that with Europe taking an increasingly tough line with Iran, Khatami could shun the West and forge strategic alliances with Russia, China, and India. While those ties could satisfy Tehran's appetite for arms, these countries would provide little technological or financial help for an economy in desperate need of capital and modernization.

For his part, President Clinton will face domestic political obstacles to any overtures he might want to make down the road. After the Administration barred U.S. companies from doing business with Tehran, Congress--prodded by the American-Israel Public Affairs Committee--went even further and passed legislation that imposed sanctions on foreign companies providing assistance to Iran's energy industry. So without gestures from Tehran, Clinton is unlikely to risk antagonizing the pro-Israel lobby and Congress. "I think there would be a fairly strong bipartisan reaction against an Administration shift," says an AIPAC lobbyist.

That's why any change in policy will be painfully slow. Still, Khatami's election might be a harbinger for tiny steps that could end two decades of enmity. For U.S. strategic and business interests, that could be a big leap forward.

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