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Ray Takeyh: Thanks for inviting me. I see a number of people in the audience that I know so this talk they may have heard already – I only have one act. Unless you go on the road, if you stay in the same city, you have a tendency of being repetitious. Flynt back there – it is probably the third time this week he is hearing this act. I will try to mix it up for you a little bit.

I was asked to assess US policy toward Iran and maybe even offer some suggestions. There are as we speak two types of American foreign policy toward Iran. One takes place outside the region and one takes place within the region. You can draw your own conclusions about which is more effective because neither of them seem to have produced the desired result as far as the United States is concerned.

Outside the region, in terms of the US approach toward the international community and its approach toward Iran, the most direct and visible manifestations of that have been a series of Security Council resolutions. I think two have already been enacted and there is a possibility of a third. If you look at the individual Security Council resolutions they are not particularly robust and they are not particularly coercive. They do not have much teeth in them. Nevertheless the purpose of those Security Council resolutions has not been to necessarily impose inordinate economic pressures on Iran but to allow for an impression of international solidarity against various Iranian infractions, in this particular case in the nuclear issue. So in that sense they do have some degree of effectiveness because they are the products of – however you want to say it – 5 + 1 or, as the Germans like to say it, 3 + 3, the three European states and the three other members of the Security Council, the United States, Russia and China.

The idea is once you have that overarching sanctions policy and overarching resolutions and rebukes through the United Nations, then within that you have the legal authority or at least the moral authority to pressure countries to enact a series of other, more binding resolutions in a sort of coalition of the willing arrangement. We have seen that in terms of the administration’s attempts to get various international lending organizations and banks and so forth to stop servicing Iranian loans. That specific aspect of those sanctions are more important and arguably more significant.

I realize there is a GAO report that has suggested that those informal sanctions have not been effective. I always say it is very difficult to quantify the cost of sanctions. It does seem to me that those sanctions would probably have some effect. They certainly have raised the price of Iranian commerce. I have not read the GAO report so I am not capable of taking issue with it. The economics and mathematics of sanctions largely elude me but it seems to me reasonable to suggest that those particular sanctions have had some effect. Whether or not those sanctions are contingent on passage of further UN Security Council resolutions is hard to tell. But that effort has had some successes in terms of imposing costs on Iran.

Along with those particular sanctions is an American offer of negotiations with Iran, should it suspend the uranium component of its nuclear program. That offer of negotiations has been broadened over time. In May 2006 when it was announced it was largely confined to the nuclear issue but right now the United States is seemingly prepared to discuss all issues of concern with Iran should it suspend its enrichment activities. Even at the Davos conference Secretary Rice suggested normalization of relations potentially could be the byproduct of those negotiations. Obviously the precondition has not been fulfilled and therefore those negotiations have not taken place.

So what is the critique of the sanctions policy? There are three that I can think of.

First, ostensibly the purpose of the sanctions as applied to Iran was that it would divide the Iranian elite. Once the cost of Iranian misbehavior became obvious then in this multi-factional political order there would be defections from the official government line and pressure, and therefore the Iranian government would change its policies. In essence one of the purposes of the sanctions policy and perhaps the primary purpose of the sanctions policy was that it would provoke divisions within the state and within the body politic.

I would suggest that has not happened. On core security issues today there is a widespread consensus within the Iranian body politic, whether on continuation of the nuclear issue or projection of power in the Gulf or on intervention in Iraq. Outside the reform movement or outside elements of the reform movement, I am not quite sure there is anyone within the Iranian system that is prepared to acquiesce to the nuclear demands of the international community. The reform movement tends to look at the nuclear issue through the prism of Iranian domestic politics, the idea being that the longer Iran becomes subject to international sanctions, the more it becomes isolated, it provokes a security environment within Iran itself that makes democratic reforms and the empowerment of civil society implausible. For them as they look at the nuclear issue, it is more to do with how it affects the domestic political scene in Iran as opposed to how it affects the nuclear program. If there is a reformist government I suspect it would reevaluate their approach toward the sanctions but even within the reform movement you are talking about the left wing of that left-wing coalition.

In essence, in terms of its approach toward the elite, I would suggest it has unified as opposed to divided the elite – irrespective of criticism that you hear of President Ahmadinejad, which has often been misconstrued and misrepresented as criticism of the country’s nuclear strategy. It is a criticism of the country’s presentation of its foreign policy. It is also criticism of his style in terms of dealing with the domestic constituency. It has to do with his arrogance and so forth, not necessarily with his commitment to the nuclear program as such.

The other critique I would have of the sanctions policy is something that has come up recently. In my opinion the idea of sanctions and negotiation is incompatible. It is contradictory. First of all, sanctions do create legal and practical legislative barriers to efforts of engagement. I always thought why American administrations that contemplate economic concessions on Iran do such Mickey Mouse stuff – pistachios, airplane parts. Well, because they cannot do the big stuff because there has been such accumulation of the sanctions policy that it is very difficult to make a significant gesture towards Iran. So the more these institutions become sanctions, whether it is the banks, whether you are declaring the Revolutionary Guards a terrorist organization, it makes the idea of negotiations more difficult because it limits the room and leverage that you have in terms of actually being able to offer significant concessions. You can still do that but the accumulated weight of sanctions over the years lessens the possibility of being able to make economic concessions. When you declare Bank Saderat a proliferator and a terrorist supporter, you are actually saying that bank is Al Qaeda. Then if you want to have some sort of economic outreach with Iran where Iranian loans have to be serviced, to that extent it makes that possibility more limited.

The other criticism of the sanctions that I would make is on moral grounds. Here I would differentiate. There are some people who suggest that “I am not for military force, I am for sanctions.” Sanctions at their very core are a blunt instrument. They affect everyday people. The essential thesis of the sanctions policy is by having pressure on the population you can get that population to put pressure on the regime and therefore for the regime to change its course of action. So it is a blunt policy that tends to impact everyday human beings. You can put the word “selective” or “smart” in front of sanctions but that does not mean you can calibrate the cost of sanctions.

One of the things that many in the United States applaud themselves is they have helped stimulate inflation inside Iran. They say one of the reasons why there is a greater degree of price increases in Iran today is because of the sanctions policies that have been enacted lately. Everyday human beings suffer as a result of that inflationary pressure.

So there is no moral high ground being appropriated by being for sanctions and not for use of arms. That is the other aspect of it.

So that is the essential American policy outside the region. There is a policy inside the region and that was rather apparent when the president recently went to the Middle East. The idea, which is not particularly original, novel or imaginative, is to ally with the status quo Sunni states to contain Iran. That has been the US policy ostensibly since 1979: containment of Iran.

Nevertheless in the current geography of the Middle East there are those who perceive opportunities for containment of Iran that perhaps had not been existent before, as Iran becomes more empowered, as Iran becomes more nuclear-capable – perhaps that can provoke regional anxieties and then you can coalesce those regional anxieties into a wall of containment that would be a barrier to the Iranian projection of power. There are several things wrong with that thesis and I will go through about four.

First, the notion of Arab consensus on Iran does not exist. There is no consensus on Iran within the Gulf. There has never been a consensus on Iran within the Gulf. During the Iran-Iraq war there were disagreements. Oman and UAE had very good relationships with Iran throughout the war. So the idea that all the regional states share their anxiety toward Iran in equal shares is not the case.

More importantly, that is not where the Middle East is today. There are certain anxieties and concerns about Iran’s behavior, which is often impetuous and certainly provocative, but as the president found on his recent trip to the Middle East, the region in large measure is trying to absorb and integrate Iran as a means of dealing with the Iranian danger. That had to do with the very significant improvement of relations between Iran and Egypt, the reception that President Ahmadinejad has been given at the GCC and the various dialogues that have taken place between them, an increase in some level of commerce. Ironically, President Ahmadinejad may be the most successful of Iranian presidents in terms of his regional policy. It could very well be under his auspices that Iran and Egypt finally normalize their relationship, something that eluded President Khatami despite the fact that early in his term there was an attempt to reach out to the Egyptians. Certainly he has been granted audiences and privileges in the Gulf that were unavailable to his predecessors who were pragmatic and moderate in many cases – certainly more pragmatic and moderate than he.

So there is a degree of divergence between American perceptions and the Gulf states’ reactions, not to mention the larger Middle East. As I said, that is what the president found when he went there, when he realized that anxieties expressed in palaces do not always become public declarations outside those palaces and certainly do not result in concerted actions against Iran.

The Gulf states and indeed many of the other Middle Eastern states are cautious and conservative. What they will always try to do is balance their relationship with the United States and Iran. They will always try to have that sort of a balance. On the one hand they are never going to embrace Iranian demands for a regional security system free of external powers, which I should say has been an Iranian demand going back to the Shah’s time, but nor will they ever embrace the totality of American coercive policy against Iran. So the idea of building the wall of containment using local states and in some cases with Israel and America implied as implicit partners is rather a stretch given the temperament of Middle Eastern states, particularly the Gulf states.

Second, if there is going to be conflict or containment between the two states – the United States, Iran and the Sunni states – that conflict is going to play itself out in Iraq. You cannot contain Iran and stabilize Iraq at the same time, particularly at a time when General Petraeus seems to have his own Iran policy. He is negotiating with Iranians. There is a lot of talk about the level of discussions, private and secretive, between the American presence in Iraq and the Iranians – secret meetings which I cannot attest to their viability or whether they happened between Foreign Minister Mottaki and Ryan Crocker. But at any rate there is not a great deal of appetite for a confrontation with Iran on the part of multinational forces in Iraq. If there is going to be a confrontation in the Gulf, Iraq is not going to be exempt from immunized from that particular conflict. Therefore a policy of containment is likely to further undermine the Iraqi regime and stability in that country.

Fourth, during the time of the Cold War containment of the Soviet Union led to mobilization of capitalism and democracy. Today containment of Iran and a rising Shi’a power will lead to mobilization of Sunni militancy. That is how Sunni states have always reacted to Shi’i resurgence. That is what happened in the 1980s when it was revolutionary Iranian Islam versus Saudi Islam. You saw that even in the aftermath of the 2006 Lebanese war when Salafiyya groups and so forth began to mobilize against Iran.

So one of the things that could happen as a result of so-called containment of Iran is radicalization of the region’s political culture. The last time the region’s political culture became radicalized in the 1980s it ultimately yielded unintended offspring – Al Qaeda and the Taliban. The Middle East has always been divided against itself and we have always been participant in those divisions, but to participate in a sectarian conflict will make the region’s troubles even more immutable.

What is to be done? I would just caution about the limits of engagement to those who argue for engagement. At the end of the day I do not think the United States and Iran will go back to the 1970s, where they were two allies sharing many of the same impulses and in some cases the same values. I think the Iranian hardliners tend to object to the United States not just as a great power, not just as a superpower, not just as an antagonistic power, but as a cultural phenomenon. They tend to be very averse to American cultural influence and the possibility of cultural contamination of their country that will come through a broad-based normalization of relations.

So those are some of the limits of it. Nevertheless within that there is a possibility of shared interests that can be affected through limited compacts here and there, whether it is stabilization of Iraq, cooperation in Afghanistan, having some kind of regional security system for the Gulf. There are things that the two countries can at this point cooperate on and perhaps over time those cooperative linkages will result in a greater degree of relationship between the two countries that may even in some mythical future lead to normalization. But it is going to be a very long and difficult process.

Patrick Clawson: As David said in his introduction, the three of us – or at least me – enjoy controversy. I would love to run through Ray’s seven points and explain why I disagree with each and every one of them but I thought that would be a poor use of my time. What I would rather do is talk about the very poor choices that face us regarding Iran. It is fun to poke holes in, point out the problems with any given policy alternative that the United States has regarding Iran because each and every one of them stinks. They are all poor. The chances of success of any one of the policy options is limited. I would have to say as an analyst they are at best 50-50. Furthermore there are grave risks that each one of these entail.

Let me just note to you that when we were having such disagreements with the Europeans in the early 1990s about what to do about Iran, the two sides – the United States and Europe – were following dramatically different policy options toward Iran. Neither of us got very far with our policies. The Europeans were convinced that their critical dialogue and their extending $40 billion in loans to the Iranians over the course of the four years of Rafsanjani’s first term would gain them much influence with Iran. In fact we now know in retrospect that that was the time when Iran was racing ahead with the clandestine nuclear program to which the Europeans now so violently object.

I would suggest that when you hear a speaker explaining why a particular policy option towards Iran is poor, I am sure you will be convinced by what they have to say. That however is not proof that that policy is inappropriate. Until you have examined the full menu of options you really cannot say that that poor choice is necessarily to be ruled out because it is quite conceivable that if you look at all of them you will decide that all of them are bad, and that that first one – poor as it is – may indeed be the best way to proceed.

In that context let me suggest that the Bush administration’s policy has probably played a weak hand about as well as they could have. Let’s face it: the Bush administration has been rather preoccupied with other problems. Some might even say bogged down in Iraq and Afghanistan for much of the last few years. The Bush administration has been weakened by the opinion of the American public, much less of the world, that its intelligence is not always accurate and that its judgment is not necessarily the best. Faced with that situation, the Bush administration’s decision was to focus on unity of the great powers in order to have a united stance to try to change the Iranians’ position.

In order to accomplish that the Bush administration has been prepared to make some rather dramatic changes in US policy which it has not necessarily wanted to call people’s attention to. Let me remind you that Mr. Clinton spent eight years bitterly opposing the construction of a nuclear power plant at Bushehr. This was the subject of several largely unsuccessful summit meetings that he held with Russian President Yeltsin that foundered over precisely this issue. Yet now it has become a mantra of the Bush administration to accept Iran’s right to have nuclear power. This is an example of the Bush administration accepting something which was anathema to the Clinton administration. As I say, I do not think the Bush administration particularly wishes to call people’s attention to the fact that on something which Mr. Clinton said was an unacceptable risk to American national security Bush has been prepared to accept.

Also the Bush administration has not wanted to call attention, for reasons that rather mystify me, to the fact that Javier Solana, when he holds those discussions with Iran, is speaking on behalf of the United States government as much as he is speaking on the behalf of any other government in the world. Solana is not there as the representative of the European 3. He is there as the representative of the 3 + 3 or the 5 + 1. He is speaking for all six governments. He speaks for the United States government as much as for the government of any other country. The idea therefore that the United States is not involved in talks to the Iranians about nuclear matters is rather interesting in that many people think that the Europeans are involved in talks with the Iranians about nuclear matters because Solana is talking to them. Solana has no more authority to speak on behalf of the British, French or German government than he does to speak on behalf of the American government. If therefore the Europeans are involved in talks with the Iranians about nuclear matters, so is the United States.

That has not been the only US approach by any means. The United States has also adopted complementary steps taken on its own and in conjunction with the European Union in some cases. Indeed, as we heard from our lunchtime speaker – actually, let me back up. The United States has taken complementary measures in three realms: economic, security and diplomatic.

As we heard from our lunch speaker the United States’ financial actions have been at least as effective in impacting the Iranian economy as any multilateral sanctions, which is intriguing since many people – including some people present in this room – informed us in 2005-06 that the United States was sanctioned out. There was not much more the United States could do to apply pressure on Iran. That was wrong. In fact the financial sanctions that the United States has taken, it has been quite successful getting international support for. The United States has been able to get the Financial Action Task Force to warn the world’s banks about transactions with Iran. You may not pay attention but the world’s banks do, because FATF is the international body whose instructions to banks guide regulators in not only its thirty-plus member countries but in many other countries around the world. There are few international banks which are prepared to ignore FATF warnings. Indeed I would suggest that if you take a look at the statements of the Chinese banks about this matter, they are quite different from the statements of the Chinese government about the matter. The banks realize the problems of ignoring FATF actions.

By the way, the European Union has also taken some actions. Our diplomatic speaker at lunch did not point out to us that it is the European Union which has gone further than the United Nations required in Resolutions 1737 and 1747 to freeze the accounts and ban the travel of a variety of individuals and institutions not named by the United Nations. The United States has not even acted against everybody listed in those resolutions. That is the economic front.

On the security front, in the last year and a half $60 billion in arms sales have been announced to the states in the region. There is an arms race going on. More arms have been sold to this region in the last year than were sold in the eight years of Khatami as president, and it is aimed at Iran. Iran is starting an arms race which it is going to lose because it does not have the money and it does not have the powerful friends to sell it those kind of arms. We are doing a very good job of showing Iran that its nuclear pursuit is hurting Iran’s security.

Plus even their good friends in Iraq are pointing out that it would be necessary in order to secure Iraq’s borders for the United States to stay in a large presence in Iraq for another 8-12 years. It is border security that is going to require that. The United States is vigorously negotiating agreements and establishing a presence throughout the region, precisely what Iran does not want. Furthermore thanks to Iranian actions the French have established their first overseas base anywhere in the world outside of their former colonies or countries they have occupied. Just in case you were wondering what that base is for, the first exercise is coming up later this month. It is an exercise involving French, Emirati and Qatari personnel and it “involves a fictitious island in the Strait of Hormuz which becomes hostile and attacks oil platforms.” I wonder who that could be?

On the diplomatic front, that is an area where the Bush administration has not done very much. To be blunt, the Bush administration does not do carrots. The Bush administration has been of two minds about whether or not it is a good idea to speak to bad people. I think we can assume that whoever is the next president of the United States, that person will want to show that they are quite different from George Bush. Therefore we should anticipate that the next president is going to want to engage Iran, possibly even before the Iranian presidential elections next spring. The question is how do we do that in a way that reflects US interests.

The last times that we tried to engage the Islamic Republic of Iran were not a success. In 1979 National Security Advisor Brzezinski met with the Iranian prime minister and foreign minister in Algiers. Three days later the hostages were seized at the embassy by students who said they were concerned that this was plotting a coup against the Islamic Republic. We tend to forget that relationship; it is well established in their writings about the matter. The next major initiative the United States has to engage Iran comes in 1984 when a former national security advisor flies to Tehran for high-level meetings there. You may recall this affair, otherwise known as the Iran-Contra Affair. Not necessarily a victory for American diplomacy. We have a series of initiatives in the Clinton administration, trying to take small initiatives and laying out a roadmap for better relations. I recommend Ken Pollack’s book on the results of this and how limited they were. Then we have the Bush administration talks with Iran in 2001-03. From the perspective of the Bush administration they would argue that this brought little advantage to the United States.

The basic problem we face is that there is a lack of a common strategic interest, the kind of interests that Ray outlined. Things we have in common are relatively small and certainly nothing to compare with what brought China and the United States together in the early 1970s, namely that all-important struggle for both of them against the Soviet Union. Plus there is tremendous suspicion on the two sides.

I would therefore suggest that the prospects for success are quite limited. That will remain the case so long as the strategic situation is so good for Iran. Our basic problem with our Iran policy is not that we do not know Iran, is not that we have not had the right approach. The basic problem is that so long as the price of oil is so high, we are bogged down in Iraq and Afghanistan and jihadism seems to be doing so well in places as diverse as the Palestinian territories and Lebanon, Iran is going to think that it is in a strong position and we are in a weak position. I happen to think that fundamentally Iran is weak and we are strong – a very important point that Hooshang Amirahmadi made about how Iran’s economy is slipping relative to that of everybody else in the region. I think eventually that will show up. I would suggest, as our lunchtime speaker put it, it will only show up at the last minute. That is the style of negotiations with the Iranians – stalemate until breakthrough. We will not know that we are just about to achieve an agreement with the Iranians until the very last minute.

Hillary Mann Leverett: It is always nice to be the last speaker from a long day of many speakers, so I hope I can hold your attention. Wave frantically if I am not and I will throw this talk out.

I think the key starting point for any US policymaker in terms of US policy on Iran would be this observation: Iran’s geostrategic location at the crossroads of the Middle East and Central Asia and in the heart of the Persian Gulf; its enormous hydrocarbon resources; its influence and standing in key arenas and on important issues for the United States; and its historic role make it a critical country for the United States. But too much of today’s discourse about what to do regarding Iran treats Iran instead as if it were some badly behaved child. From that starting point some argue that you need to coerce this immature polity to act more appropriately. Others argue that in essence you need to cajole Iran into good behavior through various inducements to raise their self-esteem.

But I think the starting point really needs to recognize that Iran is a strategically important country, that since the death of Ayatollah Khomeini in 1989 has been increasingly prepared to think about and act on its foreign policy in terms of national interest. It is in our national security interest to try to get Iran, even with its flawed government, to work with us wherever and whenever possible instead of against us. That should be our guiding principle. It is in our national security interest to have Iran as integrated into the global political, legal and economic system because they see it in their interest to do so, not because they have been bludgeoned to get there.

The only way we can achieve this is by entering into unconditional, comprehensive talks with the Iranians with the goal being to resolve our differences, normalize our bilateral relationship as well as Iran’s role in the region. A mutually beneficial US-Iran relationship, even with an Iran that does not agree with all US positions, should not be seen as a potential reward for Iran’s good behavior. A mutually beneficial relationship is in America’s strategic interest per se on its own, on the merits.

I have come to this view of Iran through the prism of my own experience. I negotiated with the Iranians for the US government with Ryan Crocker for over a year and a half, from 2001 to 2003, over Afghanistan, Al Qaeda and eventually Iraq. When I dealt with my Iranian counterparts they were straightforward and constructive. They did not do everything we wanted but they did do much of what we needed them to do. They provided substantial support for US objectives on Afghanistan and Al Qaeda after 9/11 and they wanted to play a similar role with us in Iraq.

My experience negotiating with Iranians over Afghanistan and Al Qaeda leads to a bigger argument. It is certainly the case that since the advent of the Islamic Republic in 1979 Iran has worked against US interests on a number of fronts. As a result every US administration since 1979 has sought to sanction, isolate and contain Iran. Yet Iran’s undeniable importance in the Middle Eastern balance of power and in many areas of critical interest to the US has prompted every US administration – the Reagan, George H.W. Bush, Clinton and this George Bush administration – to explore some kind of opening to Iran either through tactical cooperation or by testing the waters publicly.

Iran’s tactical cooperation with every US administration since 1980 was fundamentally positive in character. The Iran-Contra scandal was not Iran’s fault – that was something that the US did to cease the talks with Iran. The discussions during the George H.W. Bush administration over Lebanon were cut short by that administration. The tactical cooperation between the Clinton administration and Iran – getting weapons to the Muslims in Bosnia – was something that was cut short by the United States. The tactical cooperation that we had with Afghanistan during the George Bush administration that I participated in was cut off by the United States, not Iran.

From my direct experience and others who worked in those engagements I saw firsthand that Iran could deliver much – not all but much of what we needed. Unfortunately this two-track approach to dealing with Iran – through sanctions and pressure on one hand and tactical engagement on the other hand – has time and again failed to achieve any sustained improvement in US-Iranian relations. Over the years my Iranian counterparts told me they consistently anticipated that their tactical cooperation with the US would lead to a genuine strategic opening between our two countries. In most cases however the tactical cooperation fell apart not because the Iranians did not deliver, not because there were no authoritative or pragmatic Iranians to deal with, but because the US broke off each of these talks due to concerns about US domestic politics or because a terrorist attack or arms shipment might have been linked to someone in Iran despite official Iranian denials.

In this context the increased imposition of sanctions over time against Iran by the US has only reinforced Iranian perceptions that the US is not interested in living with the Islamic Republic. Although tactical cooperation has repeatedly provided short-term benefits to the US, the repeated US cutting off of these talks has shattered confidence, led to harder-line decisions and policies in both the US and Iran, and worsened the overall relationship. Without a strategic understanding of where the US and Iran want to go, a kind of final-status arrangement akin to what the Israelis and Palestinians have been trying to do, there will always be a terrorist attack or an arms shipment or a nasty statement that can always be used to cut off whatever tactical talks we are able to establish with Iran, be they over Iraq or over the nuclear issue, or to impose even more sanctions on Iran.

A strategic understanding means that Washington would have to address Tehran’s core concerns. You rarely hear that in Washington. This would require the US to be willing as part of an overall settlement to extend a security guarantee to Iran. Effectively this would mean an American commitment not to use force to change the borders or form a government of the Islamic Republic; to recognize the Islamic Republic; to acknowledge Iran’s role in the region; and to bolster such a contingent commitment with the prospect of lifting US unilateral sanctions and normalizing bilateral relations. This is something that no American administration has ever offered and that the Bush administration explicitly rejected. In fact the Bush administration insisted that all significant references to security assurances be deleted from the EU incentives package that we agreed to join in 2006 if Iran again suspended its enrichment.

In that regard the Bush administration also broke with past administrations and refused to reaffirm America’s commitment to the Algiers Accord, the 1981 agreement by the US not to interfere in Iran’s internal affairs. In the shadow of our Iraq regime change policy, even the most pragmatic and pro-Western Iranian officials have seen this and other activities by the administration as indicative of a US regime change strategy targeted at them.

But no American administration has ever been able to provide a security guarantee to the Islamic Republic because of legitimate, real US concerns about Iran’s suspicious nuclear developments and regional role in support of terrorist organizations. How could any administration provide a security guarantee to terrorists? It would not make sense.

But this Catch-22 – how can we address Iran’s security concerns when they themselves are seen by us as a security threat? – ignores the basic feature of post Ayatollah Khomeini, post-1989 Iran: that Iran pursues a strategy of asymmetric warfare in large part for what it sees as a defensive means for regime survival. Whether we like their regime or not, from 1989 on a lot of this has been focused on regime survival. We may not like it or agree with their assessment or choices but at its core that makes this a diplomatically resolvable problem.

So how can we untie this Gordian knot? The Iranians proposed a way forward in May 2003 in the form of a roadmap for resolving US-Iranian differences. The key to the roadmap or a grand bargain approach is in putting all the key issues on the table at the same time and agreeing to resolve them as a package – again, akin to a final-status arrangement between the Israelis and Palestinians. Each item – sanctions, dealing with terrorist groups, the nuclear program – if treated on its own would essentially require one party to surrender on a very difficult issue for them and hope that the other party at some point would find it in their hearts to make good on a separate issue. One of the Iranians that I negotiated with said Iran tried this futile approach with the Bush 41 administration over Lebanon and recalled President Bush stating, “Goodwill will beget goodwill.” But as this negotiator bemoaned, Iran learned the hard way that the United States does not work that way.

Implementing the reciprocal commitments entailed in a US-Iranian grand bargain would almost certainly play out over time and perhaps a long time, and in phases. But the key is that all the commitments would be agreed upfront as a package so that both sides would know what they were getting. It would start with the definition of a strategic framework for improving relations between the US and the Islamic Republic. In effect, an analogue to the Shanghai communiqué that conditioned the strategic rapprochement between the US and China in the 1970s. Patrick referred to this as well but I stress that this happened in the 1970s between the US and China; the relationship between the US and China today is not perfect but if we had not reached the strategic rapprochement with China in the 1970s, just think where we could be with the world’s number-one rising economic power.

To meet both sides’ strategic needs in a genuinely comprehensive manner, a framework structuring a US-Iranian grand bargain must address at least three sets of issues. First, Iran’s security interests, perceived threats and place in the regional order. Second – you could also put the US first and Iran second; I’ll put the US second. Second, US security interests, including stopping what we see as Iran’s pursuit of weapons of mass destruction and its support for terrorism. Third, the development of a cooperative approach to regional security. First I will outline what Iran would need from the United States and then I will outline what we would need from Iran.

From an Iranian perspective, one of the essential foundations for a US-Iran grand bargain is the US attitude toward the Islamic Republic. For a grand bargain to be possible the US should clarify that it is not seeking a change in the nature of the Iranian regime but rather changes in Iranian behavior and policies. Secretary Rice’s late in the game statements to this effect were undermined in the view of many Iranians by President Bush’s pointed and explicit refusal to endorse her statements. Literally the day after she made the first statement he was on “Charlie Rose” and he explicitly and pointedly refused to endorse her statements. The Iranians have been through this before, in the first term of the Bush administration, when Secretary Powell and Deputy Secretary Armitage would make one set of statements and then Secretary Rumsfeld, Vice President Cheney and the president himself would make a different set of statements.

I will go through the five key points that Iran would need from the United States. They would need these assurances.

First, as part of a strategic understanding addressing all issues of concern to both sides, the United States would commit not to use force to change the borders or form a government of the Islamic Republic.

Second, assuming that our concerns about Iran’s nuclear program and opposition to a negotiated settlement to the Arab-Israeli conflict were addressed satisfactorily and that Iran stopped providing military equipment and training to terrorist groups, the US would commit to ending unilateral sanctions against Iran imposed by executive order; reestablish diplomatic relations; and reach a settlement of all other bilateral claims.

Third, under the same conditions the US would also commit to work with Iran to enhance its future prosperity and pursue common economic interests. Under this rubric the US would encourage Iran’s peaceful technological development and the involvement of US corporations in Iran’s economy, including the investment of capital and provision of expertise in their oil and gas sector.

Fourth, assuming Iran also ended its financial support – I am differentiating between their military and training support and their financial support – for terrorist organizations in addition to fulfilling the conditions I laid out a moment ago on the military and training (I am distinguishing it because the Iranians proposed ending material support in their 2003 offer), the US would commit to terminate Iran’s designation as a state sponsor of terror and lift the sanctions associated with that state sponsorship. To allow Iran to continue to support the Lebanese and Palestinian people financially, the US would commit to establish international steering groups to manage and distribute flows of financial aid for humanitarian relief and economic reconstruction in Lebanon and the Palestinian territories, with full Iranian representation and participation in these bodies. We did that with Iran in Afghanistan. They were fully represented on the international steering committee for reconstruction in Afghanistan and they were very forthcoming and effective.

Fifth, we would commit to the Iranians to begin an ongoing strategic dialogue with Iran as a forum for assessing each side’s implementation of its commitments and for addressing the two sides’ mutual security interests and concerns.

From an American perspective, an essential foundation for a US-Iranian grand bargain is the definitive resolution of US concerns about Iran’s possible pursuit of weapons of mass destruction and its support for terrorist groups. Some would also add human rights to that equation. To that end, the US would need the following commitments from Iran.

Iran would carry out measures negotiated with the US, other states and the IAEA to definitively address concerns about Iran’s fuel cycle capabilities. A similar provision would deal with chemical and biological issues and also pursuant to the agreement in October 2003 between Iran and the EU-3 the Iranians would finally ratify and implement the Additional Protocol.

The remaining elements would be that Iran would issue a statement that it was not opposed to a negotiated settlement to the Arab-Israeli conflict and accept Resolutions 242, 338, 1397 – doing it all under a UN Security Council rubric. We could also put on the table for them to support the Arab League contingent commitment to normalize relations with Israel after peace was achieved.

The third point would be Iran’s support for transforming Hezbollah into a purely political and social movement. This is something they also put on the table in 2003 and President Khatami gave a speech about in Beirut.

The fourth point would be for Iran to work with us for a stable political order in Iraq.

The fifth point would be to enter into a human rights dialogue with the United States. The Iranians did that with the EU and I think the US can make that even more vigorous by including members of NGOs from both sides into that dialogue.

The commitments I have laid out on each side are not easy but it is what each side needs to do and for the other side to address each side’s concerns. Some may want to negotiate these elements down within each side before talks between the US and Iran would actually begin but that would only serve to prevent a real, coherent and strategically based resolution of our bilateral differences.

I would close with a simple fact. No other approach actually seeks to resolve the differences between the US and Iran and therefore no other approach will resolve those differences.