A Hard Bargain

Imagine a pious Muslim faced with a ban on fabricating a certain kind ofweapon. He is committed to obeying unquestioningly the fatwas of hisreligious leader and yet discovers that producing such a weapon, or threateningto do so, is a strong lever for gaining benefits from a powerful group living inthe neighborhood. Replace "a pious Muslim" with "Iran," and"a powerful group" with the 25-member European Union (EU), and theabove sentences aptly sum up the current Iranian-EU relationship.

Enriched by millions of daily encounters in bazaars, Iranians are adept atbargaining and confident in the knowledge, acquired over centuries, thatskillful bargaining and brinkmanship go hand in hand. This is what just happenedin Paris between the officials of Iran and the the EU troika -- France, Germanyand the United Kingdom. The subject was Tehran's nuclear program; the occasion,the run-up to the finalization of an International Atomic Energy Agency (IAEA)report for its 35-strong board of governors on November 15. The Iranians draggedout the bargaining until the last minute before initialing a deal subject to theapproval of the Supreme National Security Council (SNSC) in Tehran.

It was a deal that was meant to prepare the way for further negotiations.Iran has agreed to suspend its uranium enrichment and reprocessing programsuntil a "grand bargain" is reached in which the EU guarantees nuclear,political, and trade concessions in return for Tehran's indefinite suspension ofthe same programs. Though negotiated by the troika, the agreement's ownershiplies with the European Union as a whole. To the undisguised relish of theIranians, this deal killed the Bush administration's pet plan to refer theIranian case to the United Nations Security Council for censure or the possibleimposition of sanctions for its alleged breaches of the IAEA nuclear protocol.

Both Iran and the EU have a stake in seeing that the next round ofnegotiations, starting on December 15, succeeds. By clinching a deal with theEuropean Union, the Iranian leadership aims to achieve two strategic objectives:improve Iranian living standards through a Trade and Cooperation Agreement withthe EU, and forestall the Bush administration's "hegemonistic designs"by widening of the political gap between the United States and the EuropeanUnion over Iran.

The EU threesome has stayed firmly on the Iranian diplomatic path, despiteAmerican pressures, in order to protect the interests of its companies whichalready have lucrative contracts in Iran's oil and gas industry and are hopefulof securing more in the future.

Countering American Hegemony

With the collapse of the Soviet Union in 1991, the Islamic Republic'sopposition to the imperial ambitions of the two superpowers narrowed to thewinner of the Cold War: Washington. At a joint press conference with visitingRussian Defense Minister Igor Sergeyev in February 2000, for instance, HassanRouhani, secretary-general of Iran's SNSC, summarized his country's foreignpolicy in this way: "Cooperation among Iran, Russia, India and China isvery important if one hopes to confront the hegemonic policies of America."

That was one year before the arrival of George W. Bush in the WhiteHouse, his unveiling of a thoroughly unilateralist foreign policy based on"preventive" force, the ominous inclusion of Iran in his "Axis ofEvil," and, of course, his illegal invasion of Iraq in 2003. That, in turn,led French President Jacques Chirac to articulate a competing vision of amulti-polar world in which the United States, the European Union, China, India,and Russia all would be poles. In this context, it was no accident that Pariswas chosen as the venue for the recent Iranian/EU negotiations.

In Iran, even diehard conservatives now agree that developing cordialrelations with the European Union is an effective and necessary way to curbWashington's designs on their country. They are also realistic enough not tounderestimate the power of the Bush administration: It successfully pressuredJapan to withhold its signature on a $2 billion deal to develop the enormousAzadegan oilfield in Iran, and the EU to suspend its nine-month-old negotiationswith Tehran on the Trade and Cooperation Agreement (TCA).

But then, Iranian conservatives and others are equally aware that,singularly, on the issue of Iran, even Britain has stood apart from the U.S. andwith its European partners. As a consequence, the British Foreign Minister JackStraw -- as they are well aware -- is derided by the hawks in Washington, theeffective makers of Middle East policy, as "Ayatollah Straw." Theywish to see this policy gap between Washington and London maintained, if notwidened.

To Each Its Own Interests

At the same time, Iranian leaders want to extract maximum possible benefitsfor their country in their dealings with the European Union. The most effectiveway to do this, unsurprisingly, was to acquire as many bargaining chips aspossible. And so they resumed the manufacture of centrifuges for enrichinguranium in July -- but only after the EU troika had reneged on its part of adeal it had signed with Tehran in October 2003. The three European countriesdelivered neither promised technological and economic benefits to Iran, nor didthey address Tehran's security concerns which are closely tied up with thedenuclearization of the Middle East (read: Israel and its sizeable nucleararsenal). They even failed to get the Iran file downgraded at the subsequentIAEA governors' meeting -- as stated in the agreement.

So on October 31, amid chants of "Allahu Akbar" ("Godis great") and "Death to America," all 247 members present in theIranian parliament unanimously called on the government to restart the country'suranium enrichment program, using its already manufactured centrifuges, and toexercise its right to complete the nuclear fuel cycle enshrined in the nuclearNon-Proliferation Treaty (NPT) to which Iran is a signatory.

A nuclear fuel cycle consists of mining uranium ore (in which only seven outof every 1,000 uranium atoms are the lighter fissile isotopes U235, the restbeing the heavier U238), processing it into uranium oxide (yellow cake),transforming it into uranium tetraflouride (UF4) gas, and then uraniumhexafluoride (UF6) gas, followed by enriching UF6 to varying degrees of U235purity: 3.5-4% pure for use in nuclear power reactors, 10-20% pure for use inresearch reactors, and 90%-plus pure and so usable in nuclear weapons.

In a nuclear power plant, the fuel consists of sealed rods containinghundreds of pellets of 3.5-4% pure uranium. When hit by high energy neutrons,these pellets undergo a controlled chain reaction, emitting intense heat whichtransforms the surrounding light (ordinary) water into steam. That then runs theplant's electricity generating turbines. Once these fuel rods have yielded theirenergy, they are called "spent rods." These can be reprocessed withthe aim of extracting from them plutonium (Pu239 or Pu241), which could be usedas fissile material for nuclear weapons. (Although as yet there are nocommercial electric plants using plutonium fuel, Pu239 and Pu241 do contributetowards generating heat for uranium-fuelled plants.) Nuclear fuel thus producesboth electric power and more nuclear fuel, and is therefore, in principle, arenewable source of energy.

Therein is the rejoinder to those in the United States who argue that, givenIran's enormous oil and gas resources, its government does not need nuclearpower plants. Oil and natural gas deposits, being finite, will not last foreverwhereas a nuclear fuel cycle can be self-perpetuating. These critics ignore thefact that, despite its vast oil deposits and the largest gas reserves in theworld, Russia has a thriving nuclear power industry at home. Furthermore, itexports its technology. Having already built the Iranian nuclear power stationnear Bushehr, it remains the favorite contractor for the eight more such plantsthat Iran plans to build in the near future.

Meanwhile, it is Iran's hydrocarbon resources -- an estimated nearly 10% ofglobal petroleum reserves and the second largest gas deposits in the world --that are at the root of the pressures that British and French oil companies areexerting (discreetly) on their respective governments to cut a diplomatic dealwith Tehran on the nuclear issue, and thus torpedo the American plan to take theissue to the UN Security Council with the possibility of economic sanctions or,in the future, worse.

The list of the European oil companies with ongoing oil contracts with Iran-- Royal Dutch-Shell, Elf, Total SA, Agip of Italy, as well as BG (British Gas),Enterprise, Lasmo, Monuument, and so on -– is so extensive that no majorEuropean Union member can afford to ignore such interests.

The Europeans are not the only ones. Last month the visiting Chinese ForeignMinister Li Xhaoxing signed an oil-and-gas deal with Iran, and Chinese officialsassured Hussein Mousavian, deputy to Rouhani,, in Beijing that China would blockany move at the IAEA to refer the Tehran nuclear dispute to the UN SecurityCouncil.

Bargaining over the Shape of the World

Whatever agreement emerges out of the "grand bargain" between Iranand the European Union, its nuclear component will be verified by theInternational Atomic Energy Agency. In his annual report to the UN GeneralAssembly on November 1, IAEA director-general Muhammad El Baradei said that Iranneeded to restore the international community's confidence by suspendingenrichment after previously providing the IAEA "information that was attimes changing, contradictory and slow in coming."

A fortnight later, what the EU troika actually got from Iran was an agreement"to cease to develop or operate facilities to produce fissile material,including any enrichment or reprocessing capability.""Reprocessing," a term that applies to the spent fuel rods, had notbeen demanded by the IAEA.

The Iran-EU deal came on the heels of a direct intervention by IranianSupreme Leader Ayatollah Ali Khamanei. In his Friday prayer sermon on November5, he declared that "developing, producing or stockpiling nuclearweapons" is forbidden under Islam and "our believing nation," andadded: "They accuse us of pursuing nuclear weapons program. I am tellingthem as I have said before that we are not even thinking about nuclearweapons."

What apparently drove Khamanei to this public statement was his determinationto frustrate the Bush administration's plan to isolate Iran. He had used asimilar argument when, in October 2003, protests arose at home over Iran'sagreement to sign an additional protocol allowing IAEA inspectors access to anysites they wished to visit. He insisted then that the decision to cooperate withthe IAEA was taken "widely and carefully" in the interests of theIslamic Republic to "foil an American-Zionist maneuver" to isolateIran.

Since that moment both Iran and the EU threesome have raised their horizons.Besides adding in the reprocessing of the spent nuclear fuel rods from civilianprojects, the Europeans plan to introduce the issues of human rights andpolitical reform into their upcoming negotiations with Iran for the "grandagreement. "

Tehran's wish list includes the reaffirmation of its right to a nuclearenergy program for peaceful purposes; access to imported nuclear fuel at marketprices for its reactors; support for Iran's acquisition of a light waterresearch reactor; help with regional security concerns, including combating drugtrafficking; the resumption of talks on the Trade and Cooperation Agreement;support for Iran's application for World Trade Organization membership; and thekeeping of the Iraq-based Mujahedin Khalq Organization on the EU's list ofterrorist organizations.

Much tough talking lies ahead between the EU and the Middle East's moststrategic nation. All the more so when, as 34 IAEA governors welcomed Iran'sdecision on the suspension of all enrichment and reprocessing activities, JackieSanders, the Bush administration's representative, promptly followed up her veryreluctant yes-vote with a nine-page statement asserting repeatedly that Iran hasa clandestine nuclear weapons program without offering any back-up evidence.

Dilip Hiro is the author of Secretsand Lies: Operation "Iraqi Freedom" and After as well as TheEssential Middle East: A Comprehensive Guide. His forthcoming book is TheIranian Labyrinth: Journeys Through Theocratic Iran and Its Furies (NationBooks). He is based in London, writes regularly for the New York Times,the Washington Post, the Observer, the Guardian, and the Nationmagazine, and is a frequent commentator on NBC, CNN, BBC, and Sky TV.  Aversion of this piece will appear in print in issue #740 of Middle EastInternational Copyright C2004 Dilip Hiro. This piece first appeared on, andappears here, courtesy Tomdispatch.com