Overview

Iran is a fast-growing regional power that aspires to influence every Middle East issue – and it sits on the world’s second-largest proven reserves of oil and natural gas. It has a theocratic system of government based on an interpretation of Shia Islam – a minority form of Islamic practice. But Iran’s older religious leaders must contend with a demographic volcano of young people who want jobs, freedom, and improved ties with the West and more power and prestige for their country. These competing forces, combined with Iran's nuclear aspirations, present not only a potentially serious threat to the U.S. and our allies, but also opportunities for cooperation.

For years, American policy in the Persian Gulf was based on playing Iran and Iraq off each other, thus containing both. The Bush administration’s catastrophic Iraq policy tipped the balance, allowing Iran to step into the power vacuum and expand its involvement in Iraq and the Middle East. Iran is now an ascendant power with increasing influence, which it often uses to oppose American interests. The U.S. has three chief issues with Iran: its activities inside Iraq; its efforts to acquire nuclear weapons technology; and its support for violent extremist groups elsewhere in the Middle East.

In Iraq, Iran has supported various Shia militias, provided weapons and at times played a role in fueling the violence. However, Iran has a longer-term interest in fostering some semblance of stability in Iraq, and at times has played a role in restraining some of its allies.

Concern over Iran’s nuclear capabilities and intentions remains real. The U.S. intelligence community concluded in its 2007 National Intelligence Estimate (NIE) that Iran suspended its nuclear weapons program in 2003, but is still enriching uranium under the cover of its civilian program, and could restart the weapons program any time. The NIE also made clear that there is still time and potential for a sustained diplomatic effort to prevent Iran from acquiring nuclear weapons.

Elsewhere in the Middle East, Iran is attempting to increase its influence by supporting extremist groups such as the Palestinian Hamas and especially Hezbollah in Lebanon. This has led to greater instability in the region, and has made it more difficult to achieve progress toward ending the Israeli-Palestinian conflict or stabilizing Lebanon.

For years, the Bush administration refused to talk to Iran, and instead pushed the unrealistic and highly provocative agenda of regime change. It then tried to contain Iran by working with America’s Arab allies in the Persian Gulf. But the Gulf States doubt the Bush administration’s competence and commitment to any strategy. Our allies are also skeptical of the current approach to containing Iran’s nuclear ambitions, which requires Iran to verifiably suspend its uranium enrichment program before any other agenda items can even begin to be discussed. This skepticism has allowed Iran to escape or delay sanctions, and harmed U.S. credibility.

There is another way: dialogue toward a more constructive relationship, twinned with hard-nosed scrutiny on the security issues. In the short term, Iran and the U.S. have important common interests, beginning with ensuring that Iraq and Afghanistan do not completely crumble. In the long run, cooperation combined with confidence building measures could lead to improved relations. If Iran agreed to play a more constructive role in the region, as well as to limit and allow supervision of its nuclear program, it could be recognized as a legitimate actor on the world stage and, through its improved relations with the U.S., gain wider access to the world economy.

Policy Recommendations

It’s time for a new strategy: One that sets priorities, matches tools to ends, and takes a comprehensive approach. One that restores our credibility, serves our interests, and respects our values.

The U.S. must develop a coherent and comprehensive diplomatic strategy to deal with Iran. The U.S.-Iranian relationship is a web of complex, interrelated issues. The Bush administration's approach was incoherent and did not focus clearly on American interests.  It’s time for a change. We need a wholesale reevaluation of our policy, with a clear prioritization of the most important issues, and a plan for what the U.S. could hope to achieve by talking directly with Iran, both in the short and long-term. This strategy must include collaboration with our European allies, Russia, China, Saudi Arabia and other Gulf States towards achieving our interests.

The U.S. and Iran should begin talking directly, without preconditions, and pursue a number of confidence building measures. It is absolutely critical that we engage in direct dialogue, without preconditions, on key issues, including Iran’s uranium enrichment program, the situation in Iraq, and Iran’s support for terrorism. Talking and negotiating with unfriendly nations is an important element of diplomacy. During the Cold War the U.S. kept open lines of communication with the Soviet Union. Members of the Obama administration must tone down the cowboy diplomacy and regime change rhetoric with the expectation that Iranian counterparts would respond in kind. Moving away from the harshest rhetoric would signal to the Iranians that we are serious about improved relations.

The U.S. must pursue a comprehensive diplomatic strategy for the region that constructively engages all of the players, especially Iran. Iraq’s neighbors, especially Iran, will continue to intervene in Iraq. They have serious national interests at stake because they have to deal with the refugees, violence, crime, economic shocks and all the other consequences of Iraq’s instability. The only way to address these issues is to create a dialogue that includes all the regional players. This requires sustained engagement by the U.S. and the international community. The U.S. needs to lay out a comprehensive diplomatic strategy for Iraq’s neighbors that relies upon various regional working groups to tackle different issues.

Military action against Iran at this time would exact an extraordinary cost, and all efforts must be made to avoid it. Ultimately, air strikes against Iran’s nuclear facilities (the only viable military option, with U.S. ground forces mired in Iraq and Afghanistan) would exact an extraordinarily high cost on the U.S. Iran would likely retaliate by fomenting more chaos in Iraq and elsewhere in the region. Also, our intelligence is not good enough to guarantee that such air strikes would significantly delay Iran’s nuclear capability, and Iran would likely respond by accelerating its nuclear program.

The military option should not be completely taken off the table, although the reckless saber rattling must stop. The U.S. military is the most powerful in the world, and the credible threat of force can be a useful tool both in deterring Iranian behavior and in encouraging cooperation at the negotiating table. However, threats of force should be used judiciously and only when we are prepared to back them up if necessary. Needless tough talk empowers Iranian radicals and undermines diplomacy.

Economic levers should continue to be an important tool in our arsenal. The struggling Iranian economy continues to be a tremendously important issue for the Iranian people, making it a valuable point of leverage for the U.S. The U.S. should agree to lift certain sanctions in exchange for Iranian concessions. As part of such an agreement, the U.S. can offer other incentives, such as closer economic ties or membership in the World Trade Organization. The U.S. should put on hold further sanctions to allow diplomatic efforts some space to develop, unless Iran is seen to be taking significant new steps to undermine American interests.

The Conservative Record

The incompetent execution of the war in Iraq has strengthened Iran. By deposing Saddam Hussein and the Taliban in Afghanistan, the U.S. eliminated Iran’s two greatest regional threats, but we missed the opportunity to work with Iran on these common interests. Now, with the U.S. military bogged down in Iraq, we are less able to curb Iran's growing influence across the region, its nuclear aspirations, and its support for Hezbollah. If we were to launch any kind of military action against Iran, it would likely retaliate by significantly escalating the violence in Iraq, further threatening our interests in the region and the safety of American troops.

The Bush administration’s failures made Iran a greater threat. Due to the Bush administration's choices and actions, Iran is more of a threat today than it was eight years ago. Iran's nuclear program, its influence inside Iraq and across the Middle East, and its support for Hezbollah and Hamas have all grown on the Bush administration's watch. In response, the administration pursued an unrealistic policy of regime change.

The Bush administration pursued an incompetent diplomatic strategy. Rather than follow the recommendations of the bipartisan Iraq Study Group for direct discussions with Iran, the administration has refused to talk without Iran first suspending its uranium enrichment program. When the administration did allow Ambassador Ryan Crocker to hold talks with Iranian representatives in Iraq, the scope of the talks was so limited as to make progress unattainable. Moreover, the U.S. has been unable to persuade its Persian Gulf allies to support its attempts to balance growing Iranian influence.