Global Insight Perspective

Significance

The idea of incentives marks a shift in strategy from the European Union (EU) and the United States, who had alienated Russia and China in more heavy-handed attempts to browbeat Iran into submission over the suspension of controversial aspects of its nuclear programme.

Implications

Iran has said it will consider the proposals, but will not give up on uranium enrichment - which is certain to be a key demand in any quid pro quo. However, some flexibility exists over the scale of nuclear activities, according to the foreign ministry, suggesting scope for negotiation at least.

Outlook

While the window for de-escalation has been forced further open – these proposals are very much an EU/U.S. attempt to regain the initiative through building international consensus. This holds clear dangers for Iran should it choose to continue its rejectionist stance, although it may seize on any signs of uncertainty over the "stick" elements of the proposal to see just how much further rejectionism can take it.

Powers Prepare for Viennese Waltz

After two months of international impasse over how to deal with Iran's nuclear ambitions, world powers look set to agree a more balanced package of incentives and penalties later this week - in an attempt to halt the country's drive to master the nuclear cycle.

The EU-3 (Germany, France and the U.K.), along with the U.S., Russia and China, will meet in Vienna, Austria, on Thursday this week to "fine-tune" the proposals, which are expected to include trade initiatives and security assurances in exchange for the suspension of more controversial aspects of the country's programme, such as uranium enrichment. Also included, and still to be fully agreed, are a number of punitive measures and a timetable for action - should Iran continue its rejectionist stance. The U.S. is pushing for a detailed and graduated list of penalties to a timetable, including an arms embargo and banking restrictions on the regime and its officials in an attempt to ratchet up the economic pressure on the regime of President Mahmoud Ahmedinejad. As yet, Russia and China remain more circumspect over the "stick" elements of the plan, having already blocked Western attempts to continue with a purely punitive approach at the United Nations Security Council (UNSC).

Iran has said that it will study the proposals when they are formally presented, although it has no intention of giving up its "right" to civilian nuclear technology provided for in the International Atomic Energy Agreement, of which it remains a signatory. Some consideration will be given to holding off from the "industrial"-scale enrichment promised earlier this year, according to Foreign Ministry spokesman, Hamid Reza Asefi, although the suspension of uranium enrichment is not a point for compromise. Iran has already announced its ability to enrich uranium to levels of under 5%, as part of its efforts to generate nuclear power at home. Western powers continue to claim that the technology can be extended to nuclear weapons capacity in future, a threat that they are not willing to countenance at this stage (see Iran: 12 April 2006: Iran Storms Nuclear Club as Members Protest).

Outlook and Implications

The apparent realignment of international powers around this proposal represents another "danger point" for Iran, which saw its nuclear conduct referred to the UNSC, followed by a presidential statement when the major powers were last in accord. While the offer clears out a new route for de-escalating this crisis - after previous options became increasingly choked up in the diplomatic dust of recent months - this initiative should be seen for exactly what it is, namely an attempt by the EU and U.S. to regain the initiative at the international level and generate some momentum for action. They may have been prepared to take a step backwards in an effort to bring Russia and China on board, but gaining support from the Eastern powers for punitive action is at the forefront of their calculations, as the West looks every which way in order to bring Iran to book.

A key element in Iran's response will be how credible it believes this consensus to be, and most importantly, how far it believes that China and Russia are prepared to go in pursuing punitive aspects of the proposal, in the event that Iran holds out for more. As yet, both of the Eastern powers have rejected the idea of sanctions in any form, graduated or otherwise. For Iran, this reluctance to clamp down may be all the encouragement it needs to continue its current rejectionist course, which has already allowed it breakthroughs in uranium enrichment technology and helped set the Ahmedinejad administration back on a more popular course, after a few wobbly months last year. Nevertheless, that has to be balanced against the increased risks of unilateral U.S. action should it judge efforts at the multilateral level to be in vain. This is a scenario that has been publicly ruled out by Iranian planners so far, but is likely to remain a more pressing concern behind the scenes.

Raul Dary

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