Iran: A Narrow Window, after the Bombs

Published on January 10, 2020

The United States and Iran stood at the brink of all-out war barely 72 hours ago — and blinked.

*** But we understand the decision to stand down by both sides reflects more than just an immediate imperative to step back from the edge of a potentially devastating war: it is also opening a narrow diplomatic window to resume back channel negotiations for a broader de-escalation that could even lead to an eventual new deal between the United States and the Islamic Republic of Iran. A potential deal would build on back-channel negotiations between Tehran and Washington that have been on and off again for nearly a year through high-level third party intermediaries, first through Japan’s Prime Minister Shinzo Abe, then France’s President Emmanuel Macron, and now, it appears, tentatively back again to Abe. ***

*** Tensions will remain high, including an announcement today of additional, (but token), sanctions on Iran by the US, and the redoubling of pressure by Iran on Iraq’s acting Prime Minister Adil Abdul Mahdi to follow through on his threats to push US military forces out of Iraq. Critically, we understand the Iranian leadership does not have the appetite to re-ignite tensions with the US in the near term to a level that could trigger another US military response and, in turn, close the revival of negotiations that Tehran hopes will lead to the lifting of the crippling US-imposed sanctions. ***

*** Sources with knowledge of the Tehran’s thinking believe the bar to an “interim” agreement could now be low, in which a limited, perhaps 90-day, reprieve on some of the oil export sanction exemptions that were eliminated by the US in May 2019 would be a first stage “trust building” exercise. In return, issues problematic with the original Joint Comprehensive Plan of Action, or JCPOA, such as its “sunset clause,” would then be opened for review by Tehran. ***

*** The window for turning the current implicit cease-fire into a more meaningful de-escalation is narrow, and the proverbial ball is now in Trump’s court. If there is no diplomatic overture from Washington soon to move beyond  the current “maximum pressure” policy of economic sanctions, there is a sense the existential concerns of its economically embattled, and now militarily embarrassed, leadership is near certain to push Tehran back to resuming its “asymmetrical” proxy wars against US forces and allies in the region to scrape the little leverage it has left against the economic and military pressure from Washington. ***

An Openness to Talks

President Trump has made no bones since his election in November 2016 about his desire to negotiate a new, broader deal on what he considers would be better terms than the JCPOA agreement with Iran reached by his predecessor, President Barack Obama, leading the “P5+1” of the five permanent UN Security Council members plus Germany. Iran, for its part, has quietly responded with a willingness to talk and consider new terms. But the execution of that policy objective has been fraught with internal divisions, and a deep mistrust of motives, on both sides.

To start, an openness to limited talks, in light of Tehran’s insistence that there can be no negotiations unless all sanctions are lifted, has been critical to breaking the impasse in negotiations between the US and Iran.

French President Macron understood this when he stepped in as intermediary between Iran’s President Hassan Rouhani and President Trump and proposed, in September, a limited deal – a downshift in hostilities in exchange, from what we understand, for a limited, 15 billion Euro exemption for Iran to export its oil to the EU.

Trump, reportedly, was amenable to that partial agreement, but wanted to meet with Rouhani first, whereas Rouhani, mistrusting Trump, wanted the sanctions lifted, even if partially, before the two heads would meet. Trump, we are told, then suggested he could come to a summit with a letter in his pocket, but Rouhani refused, literally leaving the French president standing in the foyer to his hotel suite during the annual meetings of the United Nations in New York.

Then in mid-November, with inflation already soaring and the Iranian Rial in freefall, the government slashed fuel subsidies in a desperate attempt to counter the squeeze on Iran’s budget from the US-imposed sanctions. Starting in the evening of November 15, riots erupted in cities across Iran in opposition to the Islamic regime itself. With deep suspicions in Tehran that the riots were at least in part being stoked by the US, or the Saudis, the back channel negotiations collapsed, and all bets were off.

Trump, nevertheless turned, in November, back to Japan’s Prime Minster Shinzo Abe, who had played intermediary already, unsuccessfully, with Rouhani back in June. Rouhani dutifully traveled to Tokyo to meet with Abe for another try, but that meeting devolved into a plea by Iran for Japan not to participate with the US naval convoys in the Persian Gulf.

Against this deteriorating back drop, a tit for tat escalation started between the US and Iran, beginning with Iran-affiliated Shia militias launching a series of attacks on US forces in Iraq that led to the killing of a US contractor at one of the US military bases; the US responding with air strikes on the Shia militias, in which several Iran Revolutionary Guard officials were killed; followed by the storming of the US embassy inside the Green Zone in Baghdad, and in its wake, President Trump’s authorization of the killing of IRGC Quds Force commander Major-General Qasem Soleimani.

After the days of mourning, Iran undertook “and closed” its retaliation with the measured missile strike on the US air base in western Iraq, a distance from their launch in Iran that, while inflicting no casualties, left an unmistakable message of Iran’s capabilities for Riyadh and other regional capitals within range of the Iranian ballistic missiles.

Narrowing the Scope for Negotiations

At this stage, even as it pushes back on the US military presence in Iraq, we understand Tehran is looking for an acknowledgement by Washington that all its issues with Iran cannot be negotiated at the same time to help restart negotiations with the US. Those issues were neatly summarized recently into “three buckets” by South Carolina Senator and close Trump ally Lindsey Graham: nuclear, ballistic, and regional activities.

To take one example, Iranian officials note the US demands after the JCPOA accord that Iran cease its regional proxy activities, in Iraq, Lebanon, Syria and Yemen, were being made at the same time the US was selling approximately $100 billion worth of arms to its Gulf state allies. Internally, that set off a heated exchange in Iran between the supporters of the JCPOA, and the hardline IRGC.

Iran, the hardliners said, had traded away its most valued asset — its nuclear program — in exchange for little more than cash, and in the process eroded the country’s regional conventional weapons advantage.

Whether true or used as a pretext, that argument was then leveraged internally to double down on Iran’s ballistic missiles program (and regional ambitions), and is now cited as evidence for why any agreement on Iran’s missile capabilities would have to also be approached on a regional, and much more complex, basis, and not just bilaterally with the US.

While broadening any resumption of negotiations to include the regional powers like Saudi Arabia would immensely complicate the process, Riyadh is said to be quite open to a new round of negotiations after it and its Gulf allies like the United Arab Emirates were shaken by Iran’s attacks on tankers in the Straits and the missile and drone strike on Saudi Arabia’s Abqaiq oil facility.

Indeed, Soleimani was in Baghdad when he was killed not just to orchestrate activities against the US, but also at the invitation of acting Iraqi Prime Minister Adil Abdul-Mahdi, who was himself acting as an intermediary between Riyadh and Tehran on overtures to reduce tensions (see SGH 1/7/20, “Saudi Arabia: Message to Trump”).

Competing Forces in the US

Domestically, Trump’s political position has clearly been strengthened, at least for now, by the military success of his swift strike on Soleimani and Iran’s measured non-lethal response.

But his room for diplomatic maneuver with Iran is most directly limited by election year political calculations, namely a desire not to set off contradictory pressures from factions within his own Republican base still strongly lobbying for a full “roll-back” strategy against Tehran versus those who share Trump’s own desire to renegotiate with Tehran and in time, preferably sooner rather than later, to lower the US footprint in the Middle East.

Knowledgeable sources note, however, that the fallout from the killing of Soleimani may have weakened the hands of those advocating, even if implicitly, for regime change in Iran.

The massive outpouring of grief by millions of Iranians in response to the killing of Soleimani, who in life was a controversial figure, is said to have gone far beyond anything the Islamic Republic itself was expecting or could have orchestrated on such short notice, and the crowd size across the country appears to have raised eyebrows in Washington as well.

Short lived as it may prove to be, the three days of mourning in Iran for Soleimani are now seen in Iran to have stoked a strong sense of national unity and to be a turning point of sorts — even the aging Ardeshir Zahedi, the former Shah’s Ambassador to Washington and no fan of the Islamic regime, is said to have hailed Soleimani as a “patriot and son of Iran,” not for his activities against the US, but for protecting the country, and region, against ISIS (Daesh), and al-Qaeda.

In short, while the death of Soleimani has clearly weakened the IRGC command and control capabilities, as well as the Guards’ prestige at home and abroad, it has, if anything, strengthened, at least for now, the hand of Supreme Leader Ayatollah Ali Khamenei, the government under President Rouhani, and with it their confidence and domestic position to eventually resume negotiations with the US, when only two months ago Iran was wracked by anti-regime riots.

For Washington, that means any deal will likely have to be concluded with the current regime, and not to wait for a potentially more friendly government to take hold, to the dismay most certainly of some US hardliners, many in the Iranian expatriate community, and Iranian dissidents back home.

It is no coincidence that in the wake of the Soleimani funeral, Secretary of State Mike Pompeo, one of Trump’s most hawkish advisors on Iran, sent a directive warning US embassies and consulates to stay away from any overtures, at least for now, from Iranian opposition groups.

That directive includes a freeze on all contact with the Mujahedeen-e-Khalq (MEK) group that is domestically toxic in Iran, always quick to lobby Washington, and always quick to take credit for any and all attacks on the Islamic regime.

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