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September 2008
The United States has been trying since 1991to stop Iran rom acquiring nuclear weaponcapabilities. The surest way to do that wouldbe a permanent cessation o Iran’s uraniumenrichment and plutonium separation activi-ties, because acquisition o fssile material isthe most crucial step in producing nuclear weapons. Ater nearly three years o negotiations withFrance, Germany, and the United Kingdom,Iran declared in 2005 that it would neveragree to abandon its uranium enrichmentprogram, thus ending a negotiated voluntary suspension o enrichment and other uel-cycle-related activities. The International AtomicEnergy Agency (IAEA) then reported Iran tothe UN Security Council, which subsequently passed our resolutions demanding that Iransuspend all enrichment and reprocessing-related activities. The fve permanent mem-bers o the Security Council, plus Germany,have oered economic, technological, and po-litical incentives to comply. Iran has spurnedthese overtures.The Bush administration, in particular, hassent mixed signals to Iran and the rest o the world. First it consigned Iran to the so-calledaxis o evil and cast threatening shadows o military attack or coercive regime change be-ore and shortly ater the 2003 invasion o Iraq, then it halheartedly endorsed Europeannegotiations with Tehran. In the second term,the administration became more supportiveo diplomacy, although it reused to partici-pate directly in nuclear talks with Iran until July 19, 2008. The president, Vice President
Ian Says “N”—Nw Wa?
GeorGe perkovIch
Vice President for Studies, Carnegie Endowment for International Peace
ENDOWMENT FOR INTERNATIONAL PEACE
C
 ARNEGIE
n
Neither Iran nor the United States can achieve all it wants in the current nuclear standoff.
n
Iran has demonstrated its unwillingness to comply with IAEA and UN Security Council demands to cease its enrichmentactivities or to negotiate seriously toward that end.
n
The United States and other interlocutors should offer Iran a last chance to negotiate a suspension of its enrichmentprogram until the IAEA can resolve outstanding issues in return for substantial incentives.
n
If that package were rejected, the P-5 plus Germany should withdraw the incentives and commit to maintainingsanctions as long as Iran does not comply with IAEA demands.
n
Simultaneously, the U.S. should take force “off the table” as long as Iran is not newly found to be seeking nuclearweapons or committing aggression.
Summar
 
F  O R E I  G N  P O L I  C Y  
f o r  t h e  N e x t  P r e s i d e n t 
 
2POLICY BRIEF
Cheney, and other senior officials still soundeddiscordant threatening notes. Since the arrivalof Robert Gates as secretary of defense inDecember 2006, the administration hastended to emphasize that it wants the nuclearissue to be resolved diplomatically, but top of-ficials repeatedly say military force “remainson the table.” The United States suggests it is willing to deal constructively with Iran, yet atthe same time it funds programs to supportopponents of its theocratic government and,reportedly, covert action to undermine it.Outside the White House, a new strategicmantra is heard. First hummed by 
New York Times 
columnist Thomas Friedman in June2008, the mantra is: “When you have lever-age, talk. When you don’t have leverage, getsome. Then talk.” Gates and others echo thisline, yet it is not clear how to get leverage withsuch high oil prices; U.S. objectives in Iraqand Afghanistan cannot be achieved withoutIranian cooperation; Hizbollah is strongerthan before in Lebanon; Arab states doubtthe wisdom and durability of U.S. power intheir region; and Russia and China prefer anIranian government that will never be close with the United States over one that couldmake up with Washington and leave them worse off.To be sure, Iran has big liabilities, too. Itsannual oil production is falling; unable toproduce more without a massive infusion of technology and capital, the country is export-ing less than its OPEC quota. Given that oilcomprises half of the state’s revenue, this de-clining productivity affects a range of govern-ment programs, which in turn affect publicopinion and prospects for the future. Despitehigh oil prices, the government is spendingmore money than it takes in and is strugglingto maintain inefficient subsidies to ameliorateinflation in commodity prices. Inflation andunemployment amplify the widespread politi-cal discontent and disillusion among Iranians.Non-Western sources can provide the capitalthat Iran needs to modernize its energy sector,but only the West possesses the necessary tech-nology and know-how. Indeed, to the privateconsternation of Iranian enterprises and econ-omists, European governments and investorshave been withdrawing from Iran.Furthermore, Iran’s nuclear leverage is moretenuous than it often appears. Iran is gettingaway with defying Security Council demandsto suspend uranium enrichment, but it can-not end the standoff with the International Atomic Energy Agency that prompted theSecurity Council sanctions unless it providesinformation to disprove suspicions that it hasviolated its obligation not to pursue nuclear weapons. This has become increasingly diffi-cult for Iran for two reasons: The IAEA has ac-cumulated evidence that heightens doubt thatIran’s nuclear program is purely peaceful, andTehran has been unable or unwilling to resolvethose concerns. The Iranian regime looks andfeels stronger when it’s contesting a threaten-ing and unpopular United States, but whenthe focus is strictly on its own performance,the Iranian government looks troubled.In sum, the next U.S. president will inherita long-standing, portentous standoff in whichneither the West nor Iran has enough leverageto achieve its preferred outcome. The policiespursued by both Democratic and RepublicanU.S. administrations for thirty years since theIranian Revolution have clearly not worked,although the revolutionary government sharesresponsibility. The magnitude and urgency of the nuclear issue require the United States todevelop a revised strategy now that might yielda better outcome. Time and bipartisanship areof the essence; the United States can ill affordto wait for a new administration and Congressto settle in or to allow political competition tomuddle policy toward Tehran. Iran continuesto advance its uranium enrichment program,and with the passage of time it will be peril-ously close to acquiring the nuclear weaponcapability that both Barack Obama and JohnMcCain have said is unacceptable. Thus thepolicy shift recommended here synthesizes el-ements associated with both Democratic andRepublican thinking.
George Perkovich
is vicepresident for studies—globalsecurity and economic devel-opment and director of theNonproliferation Programat the Carnegie Endowmentfor International Peace.His personal research hasfocused on nuclear strat-egy and nonproliferation,with a focus on South Asia;and he has authored andco-authored many articlesand books, including
India’sNuclear Bomb.
He was the lead authorof
Universal Compliance: AStrategy for Nuclear Security 
 (Carnegie 2005). In 1989–1990 he served as a speechwriter and foreign policyadviser to Senator JosephBiden.His work has appearedin
Foreign Policy, Foreign Affairs, Atlantic Monthly,Weekly Standard, Wall Street  Journal,
the
WashingtonPost,
the
Washington Times,
and the
New York Times.
 
Strategic Premises ofa New Approach
To induce Iran’s fractious leadership to seriouslyconsider heeding UN Security Council demands,the costs of defiance and the benefits of coop-eration need to be significantly greater.
 By expressing apocalyptic alarm over Iran’snuclear activities and demonizing the coun-try, the United States and its allies haveunintentionally inflated the value of thesecapabilities. What was an obscure, secretivenuclear program pursued in violation of estab-lished international rules has been elevated toa nationalist project symbolizing modernity and defiance of neocolonial imperialism.It is unrealistic to expect the United States,Israel, and other states to have tempered theiralarm over Iran’s nuclear intentions and capa-bilities as they did not know how else to prodthe IAEA board of governors and the UNSecurity Council to exert strong pressure onIran. But the intensity and hostility expressedduring the first term of the Bush administra-tion raised the price Iranians would demandto comply.The slow, limited penalties of uncertain du-ration that have been imposed on Iran havenot matched the value that militants in Tehranhave found in defiantly advancing the enrich-ment program. Nor has the key “buyer” fromIran’s point of view—the United States—dem-onstrated willingness to come close to pro-viding the beneficial price that would makeIranian Supreme Leader Ali Khamenei con-sider a deal. Khamenei revealed his outlook  when he said in late July that “the idea thatany retreat or backing down from righteouspositions would change the policies of thearrogant world powers is completely wrongand baseless.” Ali Larijani, Iran’s former leadnegotiator and current speaker of the parlia-ment, once pooh-poohed the deal being of-fered for an end to Iran’s enrichment programas “bonbons for pearls.” President Mahmoud Ahmadinejad lambasted the West for offering“walnuts for gold.”
The United States alone cannot compel Iranto stop the buildup of its uranium enrichmentand heavy-water reactor capabilities. To raisethe costs for Iran, the United States needs closecooperation with Europe, Russia, China, Japan,and India.
The United States can unilaterally destroy many people and things in Iran, but it cannoton its own change the character or activitiesof the Iranian government, or the environ-ment in which it calculates its interests. Norcan it physically negate all of Iran’s potentialto make nuclear weapons because it cannotknow that it has located and destroyed allrelevant facilities, equipment, material, andknowledge. Even if the United States couldlocate and destroy all of Iran’s nuclear assets, itcould not manage the repercussions withoutinternational support. U.S. military leaders,including Admiral Michael Mullen, the chair-man of the Joint Chiefs of Staff, and Admiral William Fallon, former commander of theU.S. Central Command, have acknowledgedas much in recent comments. And the longrecord of often unilateral sanctions has amply demonstrated that U.S. economic sanctionsand political denunciations alone cannotameliorate Iranian behavior.Redirecting Iran’s nuclear program away from acutely threatening activities requires thecooperation of the five permanent membersof the UN Security Council (P-5) and othermajor powers, particularly in Asia, as well asthe IAEA.Economic sanctions and coordinated with-drawal of economic cooperation, backed by international support for military action, arekey to influencing Iranian calculations if Iran
IRAN SAYS “NO”—NOW WHAT?3
The Iranian regime looks and feels stronger when it’scontesting a threatening and unpopular United States,but when the focus is strictly on its own performance,the Iranian government looks troubled.
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