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980 March9,1994 CONTAINING IRAN INTRODUCTION Iran now looms as the chief threat to American interests in the Middle East. The dissolution of the Soviet Union and the defeat and isolation of Iraq, Irans traditional archrival, has given Iran the opportunity to expand its influence. Although Iran has toned down its revolutionary rhetoric since the death of Ayatollah Ruhollah Khomeini in 1989, it remains a dangerous ex porter of Islamic revolution and terrorism. Iran also has launched a major mili tary buildup, in cluding nuclear, chemical, and biological weapons of mass destruction, that poses a long term military threat to the security of Israel, Saudi Arabia and the other Arab oil-exporting states in the Persian Gulf.

The United States cannot allow Iran to dominate the Persian Gulf region, the strategic store house of two-thirds of the worlds oil supplies, any more than it could afford to allow Iraq to do so by invading Kuwait in 19 90. Acquiescing to Iranian regional hegemony would undermine Western energy security by jeopardizing the free flow of Persian Gulf oil at reasonable prices. Moreover, it would allow Iran to exploit the enormous oil wealth of the Persian Gulf to acceler ate and augment its military buildup and bankroll greater numbers of Islamic radicals and ter rorists. Iran remains a volatile revolutionary state, although the power of Iranian radicals has waned since the 1989 election of President Ali Akbar Hashemi Rafsanjani, a champion of pragmatism. Tehran continues to denounce t he U.S. as the Arrogance, calls for the expulsion of American influence from the Middle East, seeks to discredit and overthrow moderate Arab governments friendly to the U.S., advocates the destruction of Israel, and adamantly opposes the U.S.-spon sored A rab-Israeli peace negotiations. Irk also has increased its financial, political, and military support for radical Islamic funda mentalist movements throughout the Middle East and Southwest Asia It has developed close ties with Sudan, which it uses as a tra ining ground for Islamic militants from throughout the re gion. In the short run Iran poses more of an ideological, subversive, and terrorist threat than a military threat to America and its Middle Eastern allies. In the long run, however, Irans mili tary buildup, particularly its development programs for nuclear, chemical, biological, and mis sile weaponry, will pose an increasingly grave challenge to the security of American forces and allies in the region. The Deja Vu Scenario. Much of Irans military buildup, like Iraqs in the 1980s, is subsidized by foreign borrowing. Iran rapidly has accumulated a foreign debt of 30 billion, which it has found increasingly difficult to finance, let alone repay. By the end of the 1990s Iran could find itself mired in debt, hamstrung by a sta nant economy and equipped with a large army that casts a long shadow over its neighbors. Similar circumstances led Iraqs Saddam Hussein to in vade Kuwait in 1990 The U.S. must contain t he expansion of Iranian military power and revolutionary influence. This containment, in cooperation with regional allies such as Kuwait, Saudi Arabia, Turkey and the other Arab Gulf states, must befirmlyand consistently maintained It should be vigi lantly pursued until Iran either moderates its foreign policy and halts its export of revolution and terror or until the Islamic regime collapses due to economic incompetence and political frailty. While it took more than forty years for Western containment to weaken and tame the Soviet Union, a similar policy may bring much faster results with Iran. The revolutionary ardor of most Iranians already has cooled because of the war-weariness from the bloody 1980-1988 war with Iraq and the widespread fatigue caused by 15 years of turmoil and sacrifice in the name of the revolution. Rising discontent over declining living standards triggered spontaneous anti-re gime riots in four cities in 19 92. Ceremonies marking the fifteenth anniversary of the Iranian revolution, on February 1, 1994, were marred by a failed assassination attempt against Presi dent Rafsanjani and a political uprising in the eastern Iranian city of Zahedan. President Rafsan janis political fortunes, and perhaps even the survival of his regime, now h inge on the extent to which he can cure Irans ailing economy. Iran may be vulnerable to economic sanctions in the immediate future because of its looming debt crisis and the weak international oil market, which has depressed prices for Irans main ex port. The U.S. should take advantage of Irans growing need for Western debt rescheduling to slow Irans military buildup and press President Rafsanjani to abandon Irans terrorism and vio lent support of Islamic revolution. The Clinton Administration initially to ok a hard line against Iran, denouncing it as an out law state and announcing a policy of dual containment, designed to contain both Iran and Iraq. But the Administrations tough rhetoric has not been backed up by concrete actions In particular, Washington has been unable to enlist its European and Japanese allies in concerted international efforts to restrain Irans ambitious military buildup. France, Germany, and Japan continue to seek expanded trade ties with Iran, rationalizing their business-as-usual po l icies, in cluding billions of dollars of loans to Iran, as efforts to support and cultivate Iranian moder ates t/ Reject any attempt to normalize relations until Iran clearly has moderated its aggressive t/ Rule out searching for Iranian moderates 4 To st rengthen containment of Iran, the Clinton Administration should foreign policy 1 2 See Michael Eisenstadt, DejaVu All Over Again: Foreign Loans and Irans Military Build-up, Washington Institute for Near East Policy, Policy Watch No. 79, April 16, 1993. For an excellent analysis of the Iranian threat, see Patrick Clawson, Irans Challenge to the West: How, When and Why Washington, D.C Washington Institute for Near East Policy, 1993 2 I J Take a hard line against Iranian terrorism J Maintain strong US. and al l ied military forces in the Persian Gulf to deter Iran J Thwart and delay Irans military buildup J Deny Iran Western loans and aid J Prohibit American oil companies from buying Iranian oil J support Iranian .opposition groups NAT IRE OF THE IRANIAN THREAT Since the 1979 Iranian revolution, Tehran has seen itself as the leader of the Muslim world. The U.S which Khomeini referred to as the Great Satan, is hated for its support of the Ira nian regime of Shah Reza Pahlavi, for its support of Israel, which Irani an radicals seek to de stroy, and for its support of moderate Arab regimes such as those in Egypt and Saudi Arabia culture, which Iranian revolutionaries believe seduces Muslims and undermines Islam. This ideological motivation explains why Iranian-suppor ted terrorists in Lebanon in the 1980s at tacked targets affiliated with the American University of Beirut and Christian churches, in addi tion to the U.S. Marines. For the past fifteen years, Iran has been more of an ideological, subversive, and terrorist threat to its neighbors than a military threat. Tehran has enjoyed only limited success in foment ingrevo1ution;in part because Irans Shiite brand of Islam is shared by only about 15 percent of all Muslims. The Sunni (orthodox) Muslims who make up more t han 80 percent of the Is lamic world tend to be more respectful of state authority and distrustful of Shiite radicals. Irans greatest success has come in war-tom Lebanon, where it helped to create, finance, arm and train the radical Shiite Hezbollah (Party of God) movement. Several hundred Iranian Revo lutionary Guards, the militant shock troops of the Iranian revolution, work closely in support of Hezbollah in Lebanons Bekaa valley. Tehran also supports less powerful Shiite fundamentalist groups in Iraq a nd Afghanistan. But Shiite revolutionaries have seized power nowhere outside Iran. In fact, Shiite rebellions have been crushed in Iraq (1991) and Saudi Arabia (1979 and an Iranian-backed coup attempt was quashed inBahrain in 1981. Iranian-supported Islamic revolutions, however, now have much better prospects for success. The dissolution of the Soviet Union not only has opened up Central Asia to Iranian influence but has deprived secular Arab nationalist regimes in Algeria, Iraq, Libya, and Syria of a sour ce of political, military, and economic support. The failure of Arab socialism in such countries as Algeria, Egypt, and Tunisia has left them with feeble economies unable to absorb the huge number of youths who are entering the labor market. Faced with a b leak economic future young Arabs are turning to radical fundamentalist movements to find hope and meaning in their lives. Some Arab fundamentalists, radicalized by the Islamic holy war (jihad) against the Soviet Union in Afghanistan, have returned home to spearhead anti-government violence in their own countries. Iranian-supported Muslim fundamentalists are well-positioned to exploit the collapse of Soviet communism and Arab socialism. Iran has established good working relations with several Sunni fundamen talist groups since 1990, including Hamas (the Palestinian Islamic Resistance Movement Islamic Jihad for the Liberation of Palestine, the Islamic Group of Egypt, and similar groups in Algeria, Jordan, and But regardless of its policies, the U.S. is hated f or its values and the powerful influence of its 3 THE Tunisia. The opening of Arab-Israeli peace talks at the Madrid Conference in October 199 1 gave Iran and Palestinian fundamentalists a common interest in disrupting the U.S.-sponsored negotiations by e s calating terrorist attacks against Israel. Iran invited a Hamas delegation to at tend an October 1992 international conference held in Tehran to coordinate opposition to the peace process. Tehran subsequently agreed to help train Hamas terrorists give Ham a s 30 mil lion over two years, and permit Hamas to open an embassy in Tehran. Irans increased aid has boosted the number of attacks against Israeli forces in the security zone in southern Leba non from 170 attacks in 1992 to 330 attacks in 1993.4 Irks effo i ts to reach out to Surini fundamentalists have been facilitated by Irans closest ally, Sudan, which is ruled by the only radical fundamentalist regime in the Arab world. Arab officials maintain that Sudan has helped Iran establish ties with Hamas, the Mus l im Brother hood in Egypt and Jordan, the Renaissance fundamentalist movement in Tunisia, and the Is lamic Salvation Front in Algeria 3 RAN-SUDAN AXIS Iran has become the chief supporter and ally of Sudans National Islamic Front, a Sunni fun damentalist mo v ement that came to power following Lt. General Omar Hassan Bashirs 1989 coup. Sudan, Africas largest state, offers Iran a strategic foothold to outflank Saudi Arabia and extend its revolutionary influence throughout North Africa and the Horn of Africa. Ir anian-Su danese cooperation escalated following President Rafsanjanis December 199 1 visit to Sudan. At least 2,000 Iranian military advisers and Revolutionary Guards were dispatched to Sudan to help train the Sudanese Army and internal security forces, according to Sudanese officials6 Ira nians are-believed to be assisting Sudans radical regime in its l ong-running war against Chris tian and animist Sudanese rebels in the south. Although Iran claims that most of these personnel in Sudan are engaged in construction pro jects, persistent reports indicate that the Revolutionary Guards are training Islamic fu ndamental ist revolutionaries and terrorists, primarily from Algeria, Egypt, and Tunisia? U.S. officials maintain that Iranians train terrorists in five camps around Khartoum that are equipped and fi nanced by Iran8 The Egyptian government contends that 2 , 500 Egyptian fundamentalists have received training from Iranians in Sudanese camps. Egyptian intelligence officials claim to have evidence that Iran was responsible for training and organizing terrorists who have at tacked foreign tourists in Egypt. Alge r ia expelled Iranian diplomats in November 1992 and broke diplomatic relations with Iran in March 1993 after accusing Tehran of supporting Islamic radicals that have waged a guerrilla war against Algerias military regime 9 3 Foreign Broadcast Information S e rvice, Daily Report: Near East and South Asia, December 8,1992, p. 10. 4 Israel Line, January 26, 1994, p. 2. 5 The New York Times, March 18, 1993, p. AS. 6 Foreign Broadcast Information Service, Daily Report, Near East South Asia, March 30, 1992, p. 15. 7 Kenneth Katzman, Iran: Current Developments and U.S. Policy, Congressional Research Service, updated May 27 1993, p. 8. 8 Is SudanTerrorisms New Best Friend Time, August 30, 1993, p. 30. 9 Mary AnneWeaver, TheTrail of the Sheikh, The New Yorker, April 12 , 1993, p. 84. 10 Patrick Clawson, Hamas, Iran and Radical Opposition to the Peace Process, Peace Watch No. 42, Washington Institute for Near East Policy, December 16, 1992, p. 2 4 Sudan has become in effect a new Lebanon where Iranian revolutionaries arm, train, and equip Arab fundamentalists for political violence while denying responsibility for their actions. Significantly, Irans ambassador to Sudan, Majid Kamal, helped create Hezbollah when he was the Iranian charge daffaires in Beirut in the early 198 0s. But unlike Lebanon, where Irans free dom of action is constrained by Syrias military domination the fundamentalist Sudanese gov ernment fully shares Irans revolutionary goals. Sudan also is a valuable ally for Iran because of its key role in helping I ran to expand its con tacts with Sunni fundamentalists, especially Egyptian and Palestinian groups opposed to peace negotiations with Israel. Iranian-supported Egyptian fundamentalists easily can infiltrate the po rous Sudanese-Egyptian border, seeking to overthrow the Egyptian government. The Islamic Group, which considers Sheik Omar Abdul Rahman to be its spiritual leader, has launched ter rorist attacks that have killed 290 people in the last two years. Egyptian President Hosni Mubarak, alarmed at Irans growing support for his fundamentalist opposition, warned Central Intelligence Agency Director James Woolsey about Irans increasingly aggressive policies dur ing the latters secret trip to Cairo in April 1993 Egypt is one of Irans most important targets f o r subversion because of its historic role as the preeminent Arab power An Islamic revolution in Egypt would send shock waves throughout the Arab world and incite Islamic revolution elsewhere. Moreover, a radical fundamentalist Egypt would break its peace t reaty with Israel and render moot the U.S.-backed Israeli-Palestin ian peace talks, which Iran has denounced as treason. As the leading Muslim power un equivocally opposed to Israels existence, Iran stands to gain much from prolonging the Arab Israeli con f lict IRANS SUPPORT OF TERRORISM Iran is the worlds most dangerous state sponsor of terrorism, with over twenty terrorist acts attributed to it or its surrogates in 1992, according to the State Departments most recent re port on terrorism. l2 Iranian intel l igence agencies support terrorism, either directly or through extremist groups, primarily aimed against Iranian opposition movements, Israel, or moderate Arab regimes. Tehran has established over 20 ideological and military training camps in Iran Lebanon, and Sudan staffed by Arabic-speaking Revolutionary Guards. Hezbollah, Irans most important surrogate, has become the worlds principal international terrorist organization according to CIA Director Woolsey bloodiest terrorist act in 1992, the March bombing of the Israeli Embassy in Buenos Aires which killed 29 people. l4 The Lebanon-based organization has established roups of support ers as far away as Australia, Canada, India, Indonesia, and South America Hezbollahs long list of terrorist atrocities inclu d e the 1983 bombing of the U.S. Embassy in Beirut, the 1983 bombing of the U.S. Marine barracks at Beirut Airport, and the kidnapping of most of the fif teen Western hostages held in Lebanon between 1984 and 1991 Hezbollah was responsible for the 11 The Ne w YorkTimes, April 18, 1993, p. 8 12 U.S. Department of State, Partems of Global Terrorism: 1992, April 1993, p. 22 13 Testimony before the House Foreign Affairs Committee, July 28, 1993 14 An unnamed senior State Department official asserted that there we r e strong indications that Iranian diplomats helped plan the bombing. The Washington Times, May 8, 1992 15 Paul Wilkinson, Terrorism, Iran and the Gulf Region, Junes Intelligence Review, May 1992, p. 226 5 The last American hostages held in Lebanon were re l eased by Hezbollah at Iran's direction in late 199 1, after Tehran concluded that it could gain nothing from holding the hostages any longer. Iran's use of terrorism as an instrument of policy remains undiminished, however. In re cent years, Tehran has st epped up its terrorist attacks against Iranian exile leaders and Israel. More than a dozen Iranian dissidents have been assassinated in European cities since 1987, in cluding the August 1991 murder of former Iranian Prime Minister Shahpour Bakhtiar in Pari s and the September 1992 murders of four Kurdish opposition leaders in Berlin. Although Iranians recently have not been caught launching terrorist attacks on American tar gets Irk furnishes' substantial financial, logistical, and training support to terro rist groups that continue to target Americans. Tehran provided financial support, at minimum, for some of the Islamic militants arrested for the February 1993 bombing that killed 6 people at the World Trade Center in New York. Sheik Omar Abdul Rahman, the radical Egyptian cleric who in spired the bombers, and may have directed them, long has been funded by Iran's intelligence service, according to Vincent Cannistraro, former head of CIA counterterrorism operations l6 Middle Eastern intelligence sources mai n tain that Sheik Omar regularly was given large sums of money by Iran's delegation to the United Nations.17 Iranians also may have helped to organ ize and direct the bombers.18 The blast that shook the World Trade Center was enhanced with compressed hydrog en, the same technique that Hezbollah terrorists used to magnify the impact of the 1983 bomb that killed 241 Marines in Beirut. Although no direct Iranian participation has been established in the World Trade Center bombing, senior U.S. officials warned in March 1993 that Iranian-backed terrorist groups ap peared to be becoming more aggressive." Iran also reportedly has begun cooperating with non fundamentalist terrorist groups such as the Abu Nidal Organization, a renegade Palestinian ter rorist group tha t has launched some of the bloodiest and most indiscriminate terrorist attacks such as the December 1985 massacres at the Rome and Vienna airports?o Iran also financially supports the Popular Front for the Liberation of Palestine-General Command (PFLP-GC a pro-Syrian group which it asked in 1988 to bomb a U.S. airliner in retaliation for the July 1988 accidental downing of an Iranian airliner by the U.S.S. Vincennes.21 Iranian-supported terrorists have been particularly active against targets in Turkey. Th e Turk ish Islamic Jihad claimed responsibility in 1992 for the murder of an Israeli diplomat and the bombing of an Istanbul synagogue. It also is believed to be responsible for a series of murders of Turkish journalists. Iran also supports the Marxist Kur d ish Workers' Party, which has waged a long-running terrorist war against the government in eastern Turkey 16 The Washington Times, March 17, 1993, p. A7 17 "Washington Whispers U.S. News and World Report, May 31, 1993, p. 23 18 Egyptian officials maintain that Mahmud Abouhalima, one of the suspected bombers, told them that the plot had been hatched in Afghanistan by Arab fundam'entalists and approved by Iranian intelligence agents in Peshawar, Pakistan. Abouhalima later denied this confession, which he sai d he made under torture after being arrested in Egypt. The New YorkTimes, July 16, 1993, p. 1 19 The New YorkTimes, March 18, 1993, p. AS 20 Joseph Matar Arafat's Marked Men The Jerusalem Report, July 15, 1993, p. 24 21 The plot was disrupted by the arres t of a terrorist cell in Germany in October 19 88. Libyan agents reportedly then bombed Pan Am Flight 103 over Lockerbie, Scotland in December 19 88. L. Paul Bremer Iran and Syria: Keep the Bums Out The New YorkTimes, December 17, 1991 6 Under Iranian tutelage, Sudan has emerged as a leading sponsor of international terrorism. Sudan has given sanctuary to a wide spectrum of terrorist groups, including many Arab mili tants who participated in the fundamentalist jihad in Afghanistan. Sudan gave Sheik Omar A b dul Rahman sanctuary before he moved to New York. Two Sudanese diplomats were impli cated in the aborted plot by the Sheiks followers to bomb the United Nations headquarters in New York. Moreover, five of the eight suspected terrorists arrested for the p lot in June 1993 were Sudanese. Sudans escalating involvement in international terrorism led Washington in August 1993 to add Sudan to the State Departments list of states that sponsor terrorism, which also has included Iran since.the.list was first compi led in 19 79. This prohibits the transfer of U.S. military equipment, military technology, and foreign aid to the terrorist state, strips it of fa vorable trade privileges, and requires the U.S. to block loans by international financial institu tions IRANS MILITARY BUILDUP Iran currently poses only a limited conventional military threat to its neighbors. Since the 1979 revolution, its armed forces have been weakened by political purges, huge losses of up to 60 percent of its major weapons systems in its eight-year w ar with Iraq, and shortages of spare parts for U.S. and Western arms supplied before 19 79. But President Rafsanjani has accorded a high priority to building Irans military strength. Shortly after coming to power in July 1989 Rafsanjani travelled to Moscow to sign a $1.9 billion arms deal that included 48 modem MiG 29 Fulcrum fighters and 100 T-72 tanks. His government, in January 1990, allocated $2 billion per year for five years to buy advanced arms Irans ambitious military plans have sparked considerabl e concern that Tehran seeks to estab lish regional hegemony by building its military capabilities far beyond its legitimate defense needs. Irans long-term objective is to acquire a modem air force of roughly 300 advanced com bat aircraft (principally Russi a n-made MiG-29 Fulcrum, MiG-3 1 Foxhound and Su-24 Fencer fighters and fighter-bombers a modem army with 5,000 to 6,000 tanks, 2,000 self-propelled artillery pieces, and thousands of armored personnel carriers; and a navy upgraded with 3 ad 22 vanced Russi an Kilo-class submarines and scores of fast patrol boats armed with missiles. Iran also has purchased hundreds of ballistic missiles and the technology to produce them from North Korea and China. By late 1992 Tehran had acquired at least 300 SCUD-B surface to-surface missiles with a range of approximately 185 miles, and an unknown number of im proved SCUD-Cs, which have a range of approximately 370 miles.23 These missiles enable Iran to attack states across the Persian Gulf. Iran also reportedly has agreed to buy 150 North Korean Nodong 1 missiles with an estimated range of over 600 miles. These surface-to-surface missiles are ca able of delivering conventional, chemical, or nuclear warheads on targets as far away as Israel. Irans missile buildup is especia lly worrisome given Tehrans determined efforts to build weapons of mass destruction. The CIA estimates.that Iran. has-produced. and stockpiled up to 2,000 tons of chemical warfare agents, which it used at least once during the Iran-Iraq warF5 34 22 Amos G i lboa, The Iranian Armed Forces, in Shlomo Gazit, ed The Middle East Military Balance: 1992-1993 Tel Aviv: Jaffee Center for Strategic Studies.Te1 Aviv University, 1993 pp. 144-149 23 Ibid p. 146 24 James Wylie, Iran-Quest for Security and Influence, Janes Intelligence Review, July 1993, p. 312 7 Iran also has an active biological warfare program and is trying to buy biological agents from Europe that could be useful in developing such weapons, according to U.S. intelligence sources?6 Some U.S. experts beli eve that Iran already may have produced biological weapons in the form of toxins or anthrax. But the Wests chief worry is Irans effort to develop nuclear weapons, which has been mak ing steady progress under the cover of Irans civilian nuclear power progra m. The CIA esti mates that Iran is eight to ten years away from building nuclear weapons, but may be able to shorten that timetable if it gets critical foreign assistance?* Israeli experts believe Tehran could shave up tofive years off that projection if i t can leapfrog the normal development process by obtaining key nuclear assets from the former Soviet Union? American intelligence analysts re port that Iranian acquisition teams are shopping for weapons-related nuclear equipment and nu clear scientists in the former Soviet Union, concentrating on Azerbaijan, Kazakhstan, Turk menistan, and Ukraine. CIA Director Woolsey testified before the House Foreign Affairs Subcommittee on Interna tional Security on July 28, 1993, that the CIA had not detected any sales or transfers of nuclear weapons to Iran, despite persistent press reports to the Iran, however, may have re ceived enriched uranium from Kazakh scientists who worked in the Soviet nuclear program?2 Russia, China, India, and Pakistan are assisting Irans c i vilian nuclear program by providing technical assistance, research facilities, or equipment. In 1992, Russia and China each agreed to sell Iran two nuclear power plants. But the most likely source of foreign assistance for Irans nuclear weapons program ma y be North Korea. The CIA suspects that Iran is funding North Ko reas nuclear program and may be repaid with North Korean nuclear assistance, technology and enriched uranium.33 The two pariah states already. have developed close military ties and Iran prov i des for roughly 40 percent of North Koreas oil needs 27 30 IRANIAN THREATS TO PERSIAN GULF OIL With Iraqs military power weakened by its 1991 Gulf War defeat and subsequent isolation Iran looms large as the dominant Gulf power. By the late 1990s, when it is well on its way to ward rebuilding and modernizing its armed forces, Iran may be increasingly tempted to exploit its newfound military muscle. President Rafsanjani, who has staked his political future on reviving Irans limping economy may seek to intimi date Saudi Arabia and the smaller Gulf states to drive up the price of oil. Iran is dependent on oil exports for 85 percent of its foreign currency exchange income, and has been hurt economically by a 30 percent fall in oil prices in 19 93. Although official government 25 26 27 28 29 30 31 32 33 Katzman, op. cit. p. 4. The New YorkTimes, June 10,1993, p. A5. Katzman, op. cit p. 5. Ibid p. 6. Leonard Spector, Islamic Bomb: Wests Long Term Nightmare, The Washington Times, January 19, 1994, p. A19. The Wall Street Journal, May 11, 1993. The New York Times, July 29, 1993. Unnamed Middle East intelligence sources confirmed the transfer. US. News and World Report, October 25, 1993 26. The Economist, Foreign Report, April 22,1993, p. 2 8 projections call for Ira nian oil revenues of 17 billion in 1994, Irans oil revenues may not top 14 billion, given that the price of Iranian oil has fallen to less than 12 per Unable to satisfy Ira nian expectations of eco nomic prosperity, Rafsan jani may seek to divert the attention of Iranians with stepped up efforts to export the revolution, a war of nerves with the Arab monarchies across the Persian Gulf or heightened tensions with the US Iran is un likely to chal lenge the U.S. in a direct military confrontation. The U.S. Navy success fully rebuffed Iranian na val attacks on Kuwaiti oil tankers in 1987-1988 and, American forces per formed impressively in the 199 1 Gulf war. Tehran may seek to sideste p the U.S., however, and at tempt to intimidate the Arab Gulf states with ter rorist attacks, saber-rat- tling or the incitement of Iranian immigrant com munities in Bahrain Dubai or Kuwait. Iran already has raised hackles on the Arab side of the Gulf by expelling Arab residents in 1992 from three disputed is b-1.34 0 Mashhac AFGHANISTAN 0 Tehran Qum e Arak IRAN Irans Strategic Position on Persian Gulf Shipping Lanes 34 Scheherazade Daneshkhu, Stop Promising Heaven, Rafsanjani Told, Fingnciul Times, Janua r y 26, 1994, p. 4 9 lands at the eastern mouth of the Persian Gulf. These strategic islands, Abu Musa and the two Tunbs, are located astride the vital shipping lanes that carry roughly 20 percent of the .worlds oil through the Strait of Hormuz to Western a nd Asian markets. Iran could use these islands as bases for launching attacks on shipping or as staging areas for aggression against the nearby United Arab Emirates, and other Gulf states. Iran repeatedly has staged provocative naval maneuvers simulating a mphibious assaults and attempts to close the Strait of Hormu Although the Iranian Navy is relatively large com pared to those of its neighbors, with 3 destroyers, 5 frigates, 2 submarines and about 30 patrol boats, it would have little chance of completel y closing Gulf sea lanes if opposed by the U.S Navy. But Iran has greatly improved its ability to harass shipping since its 1987-1988 campaign against Kuwaiti oil tankers. Since then it has purchased two modem Kilo-class submarines from Russia (with at lea st one on order The Kilos are advanced non-nuclear submarines that pose a major threat to international shippin not only because of their torpedoes, but because of their ability to sow mines while submerged In addition, Iran has at least 3 midget submarin es that are less capable, but harder to detect. Iran also has bolstered its sea-denial capabilities by buying 12 TU-22m Bac re maritime strike bombers and SU-24 Fencer fighter-bombers, both equipped with anti-ship missiles.37 Scattered along the Iranian co ast near the Strait of Hormuz and on Abu Musa island are up to 100 Chinese-made HY-2 Silkworm surface-to-surface mis sile launchers and at least 8 sophisticated Soviet-made SS-N-22 Sunburn surface-to-surface missiles. If Tehran cannot persuade the Organiz ation of Petroleum-Exporting Countries (OPEC) to raise oil prices, it may try to force an oil price hike either through milit intimidation or by provoking a crisis. For example, Iran could sabotage Gulf oil facilities, escalate tensions with neighboring Q a tar over a disputed offshore natural gas field, or covertly mine oil-shipping routes in the Persian Gulf or, with Sudans help, the Red Sea. Each of these actions could drive up oil prices as the world oil market adjusted to an anticipated future shortfall in oil supplies 56 38 Y As the worlds largest oil consumer and oil importer, the U.S. has a vested interest in prevent ing Iran from ratcheting up world oil prices or lunging Saddam-like at its neighbors oil re serves. While the latter course is unlikely, given Irans limited amphibious warfare capabilities and the continuing presence of the U.S. Navy, the U.S. must prepare for the unexpected, given Irans past record of unpredictability 35 Michael Collins Dunn, Irans Amphibious Maneuvers Add to Neighbors Ji t ters, Armed Forces Journal International July 1992, p. 23 36 Iran also bought 1800 Russian mines that can be layed through torpedo tubes. Janes Inrelfigence Review, July 1993, p 312 37 Naval Intelligence Chief Warns of Iranian MaritimeThreat, Defense Dail y , June 3, 1993, p. 355 38 The Sunburn missiles, supplied by Ukraine, are particularly dangerous to U.S. naval vessels because of their high speed low flight trajectory, and ability to defeat U.S. electronic countermeasures. The Washington Posr, June 13, 1 9 93, p. H4 39 Tehran has flaunted its ability to launch underwater commando strikes against offshore and coastal targets. See: FBIS Daily Report: Near East and South Asia, December 21, 1993, p. 72 10 CONTAINING IRAN: IMPLICATIONS FOR U.S. POLICY Iran is we l l-positioned to exploit the Soviet Unions disintegration, Iraqs isolation, the col lapse of Arab socialism, and the rising tide of Muslim fundamentalism. But recent geopolitical trends also have strengthened American influence in the Middle East and bolst e red its potential leverage over Iran. The first among these is the collapse of the Soviet threat. This has increased U.S. freedom of action in responding to regional crises and made it easier to gain the support in a crisis of states formerly preoccupied w ith the likely Soviet reaction, such asTurkey. More over, Iran no longer is important to the U.S. as a barrier to Soviet expansion, a fact that frees Washington to focus more intensely on the Iranian threat without worrying about driving Te hran into MOSC O WS arms ing Saddam Hussein in the 1991 Gulf war has generated great respect in the Middle East for American military power and enhanced the credibility of U.S. security commitments. This should make Tehran less likely to risk a direct confrontation with t he U.S and encourage re gional states that are fearful of Iran, such as Saudi Arabia and the other Arab monarchies in the Persian Gulf, to stand firm against Iranian intimidation, terrorism and subversion. Finally, the weak international oil market and fal tering Iranian economy have undermined the Rafsanjani regime and left Tehran increasingly dependent on foreign loans. Irans urban poor, the core support group of Khomeinis revolution, have become increasingly disgruntled with the regimes corruption, syste m atic human rights violations, and economic mismanage ment. Growing discontent with Irans high rates of unemployment and inflation, plus shortages of housing and food, precipitated riots and protests in the cities of Arak, Mashhad, Shiraz, and Tabriz in 19 92. After harshly suppressing the riots,-the Rafsanjani regime borrowed money from abroad to purchase imported food and appliances to quell the discontent. The regime now finds itself unable to pay for this import binge, and it has increasingly become dep endent on foreign creditors, which Iran owes more than $30 billion. Tehrans growing need to refinance its crushing debt burden leaves it increasingly vulnerable to Western economic pressure. The Clinton Administration should exploit all of the above trends to force Iran to abandon its support of terrorism, export of subversion, and efforts to develop weapons of mass destruction. The Administration got off to a good start when Secretary of State Christopher branded Iran an outlaw state on March 30, 19 93. The Administration followed this up by announcing its dual containment policy toward Iran and Iraq on May 18, 19 93. According to this policy, the U.S. seeks to contain Iran without relaxing pressure on Iraq and vice versa. In practice, how ever, Iran has proven much harder to contain than Iraq because of the lack of support from Americas European and Japanese allies, who view Iran as a lucrative export market. To strengthen Western containment of Iran, the Clinton Administration should The second cha nging geopolitical factor is that the U.S. role in liberating Kuwait and defeat Reject any attempt to normalize relations until Iran clearly has moderated its aggressive foreign policy. The U.S. should not underestimate the revolutionary nature of Irans f oreign policy, as its European and Japanese allies appear to be doing. As long as Tehran clings to Khomeinis vi sion of imposing Irans radical leadership on the Muslim world, restoring diplomatic relations with Iran, which were broken in 1980, entails mor e risks than benefits. First, it would under- mine U.S. efforts to gain greater international cooperation in restricting Irans military buildup and containing Iran. Second, it would encourage the Islamic regime to believe it could enjoy the economic benefi t s of good relations with the West while continuing to export revolution I 11 and terrorism. Third, a premature normalization of relations could backfire by provoking anti American hard-liners to exploit the issue by denouncing it as a sellout of Khomeinis revolu tion. The Clinton Administration should learn from the mistakes of the Carter Administration which eagerly sought to improve relations with Tehran in the aftermath of the 1979 revolution and not give Iran the benefit of the doubt Rule out searching for Iranian moderates Despite the claims of Europeans and Japanese eager to increase trade with Iran, there are no moderates? left in Irans ruling.regime. Such men were discredited and purged long ago. There are pragmatic radicals, such as President Rafsa njani, whose revolutionary militancy has been tempered by a keen desire to stay in power. But Rafsanjanis policy differences with his more radical rivals tend to be tactical in nature; they share the same goals but disagree about the means of implementati on. While Rafsanjani seeks to safeguard Khomeinis revolution by building a strong Iranian state and economy, many radicals such as Ali Akbar Mohtashemi give a higher priority to promoting revolution outside Iran. Both the pragmatists and the radicals threa ten American interests. The pragmatists are the driving force behind Irans military buildup, while the radicals direct Irans activities to export revolution. Washington should seek to block both of their goals, not seek to promote one fac tion over the ot h er, which is beyond Americas power to do anyway to cooperate and sell arms to Iranian moderates in the mid 1980s. Washington should avoid reaching out to Iranian factions, even if they appear to be less hostile than rival factions be cause this only discr e dits them in the Iranian political arena, where an American connection is politically fatal. Instead of seeking a fragile accommodation with Iranian moderates, the U.S should work relentlessly to penalize Iran for policies that threaten American interests Take a hard line against Iranian terrorism The Clinton Administration got off to a good start when Secretary of State Warren Christo pher on March 30 branded Iran as an international outlaw because of its sponsorship of terror ism. But Christopher has don e little to back up his rhetoric Not only did he fail to push through a tougher anti-Iran policy at the G-7 summit in Tokyo in July, but he has failed to keep key al lies from backsliding on the issue of Iranian terrorism. Germany on October 6-7 hosted a v i sit by Irans Minister of Intelligence and Security Ali Fallahiyan, who oversees much of Irans ter rorist operations. France appeased Iran on December 29 by expelling two suspected Iranian ter rorists whose extradition had been sought by Switzerland for th e 1990 assassination of an Ira nian dissident in Geneva. Christopher must turn up the heat on Germany, France, and other states that resist tougher Western collective action against Iranian terrorism. But the Secretary of State is in no position to stiffen European spines against Iranian terrorism, given the State Departments downgrading of its own counterterrorist office and the paring of 40 percent of its staff. If Christopher is to be credible as an advocate of a stronger Western response to Iranian ter r orism, then he must re The Clinton Administration should learn from the Reagan Administrations mistake in trying 40 Iranian radicals seized the U.S. Embassy in Tehran on November 4, 1979 in large part to block an Iranian-American rapprochement See: James P hillips, Iran, the U.S and the Hostages, Heritage Foundation Buckgrounder No. 126 August 29, 1980 12 store the status of the State Departments counterterrorism office. And Christopher must raise the priority accorded to counterterrorism efforts within the Clinton Administration, which stum bled badly by allowing Gerry Adams the mouthpiece of the terrorist Irish Republican Army, to enter the U.S. on January 31 for a two-day visit. Given Irans increasingly aggressive support of terrorism, it is probably only a matter of time before the Iranians are caught red-handed in another attack. Washington then must be ready to seize the opportunity to press U.S. allies to expel Iranian diplomats, many of whom are in volved in terrorism; downgrade or break diplomatic r elations; impose economic sanctions on Iran; and consider possible military action. If Iran or its surrogates launch an attack on an American target, the Clinton Administration should consider a strong military reprisal. American retaliation should be targ eted as precisely as possible on those responsible for Irans terrorist war: the Ministry of Intelligence and Secu rity, the Revolutionary Guards, and Irans terrorist training camps. Many Iranian citizens resent the high-handed behavior of the internal sec u rity organizations and would not be as likely to rally to support the regime if such organizations, rather than the Iranian armed forces, were tar geted for reprisal Maintain strong U.S. and allied military forces in the Persian Gulf to deter Iran The Cli n ton Administration must maintain a strong military presence in the Persian Gulf re gion to deter future aggression by Iran or Iraq and safeguard the flow of Persian Gulf oil. The Administration cannot afford to jeopardize the hard-won security of the Gulf oil fields by exces sive cutbacks in the defense budget. The Administrations current plans call for a reduction in defense spending that will make it impossible by 1999 to maintain continuous naval deploy ments to all the key regions where the U.S. has vi tal interests. This drawdown in naval strength must be stopped; further cuts in the defense budget should be found elsewhere. In particular, Pentagon planners should accord a high priority to maintaining strong naval power projection forces, including 12 a ircraft carriers, a strong Marine Corps capable of rap idly deploying to the Persian Gulf, and adequate airlift and sealift assets to quickly deploy a De sert Storm-sized force to the Persian Gulf. To avoid a political backlash against the presence of for e ign military forces, that Iran or local anti-Western forces could exploit, the U.S. should sta tion as few ground troops as necessary in the region. Instead, the U.S. should rely as much as possible on pre-positioned military equipment and supplies to fac ilitate the rapid deployment of U.S. troops in a crisis. The U.S. should increase its training assistance, joint military exercises, and defense coopera tion with its allies in the Gulf Cooperation Council (GCC)-Bahrain, Kuwait, Oman, Qatar Saudi Arabia, a nd the United Arab Emirates. It should encourage GCC members to expand their own defense, intelligence, and internal security cooperation and develop stronger mine sweeping and anti-submarine warfare forces. The U.S. also should help the GCC states to bui ld underwater sensor systems near their ports, offshore oil facilities, and desalination plants to de tect and help defend against Iranian submarines and frogmen. The growing Iranian missile threat also should impel the Clinton Administration to increase i ts commitment to the development of anti-missile defenses, which are threatened by future budget cutbacks. In particular, the U.S. should continue to support the six-year-old joint Israeli American Arrow anti-missile missile program. Further, the Administ r ation should explore addi tional Israeli-American cooperation in fielding a boost-phase anti-missile system. The U.S. also should field anti-missile forces that can be projected into the Middle East, including the ground based Theater High Altitude Area D e fense (THAAD) system and the sea-based Aegis weapons 13 systedstandard missile upgrade program. Until these follow-on missile defense systems are deployed, the U.S. should continue to provide allies that could be the targets of Iranian missile attacks, su c h as Israel and Saudi Arabia, with limited protection against Iranian missiles through deployments of the Patriot missile defense system Thwart and delay Irans military buildup The U.S. already has imposed stiff sanctions on Iran that prohibit sales of Am e rican military equipment and military technology. But over fifty American companies and over 230 compa nies worldwide have sold Iran technology orsequipment that can be used for the manufacture of chemical, biological, or nuclear weaponsPl The flow of thi s dual-use technology to Iran helped to prompt Congress to pass the 1992 Iran-Iraq Arms Non-Proliferation Act, which pro vides for sanctions against persons and countries that supply Iran or Iraq with any goods or technology that could contribute to the de velopment of weapons of mass destruction or ad vanced conventional weapons. But U.S. allies, particularly Germany and Japan, continue to export dual-use equipment and technologies to Iran. Germany, in fact, approves approximately 80 percent of applications by German companies for export of dual use equipment and technologies to Iran. The allies have resisted repeated US. efforts to embargo such sales to Iran. Washington must step up pressure on its allies to curb such sales, by publicly chastising them for making the same mistake with Iran that they made with Iraq in the 1980s. The West can not afford to put short-term economic gains ahead of its interests in nonproliferation and in the long-term stability of the Persian Gulf. To obtain allied cooperation on restricting dual-use sales to Iran the Clinton Administration must reaffirm the ban on the sale of U.S. airliners to Iran and block the proposed sale of up to twenty American-made Boeing 737 jetliners to Iran worth more tha n $750 million. Selling these airliners, which could have a dual use in transporting Iranian soldiers, would cripple American efforts to persuade reluctant allies to sacrifice their commercial interests for long term Western strategic interests. The Clinto n Administration has delayed final consideration of approving the sale, reluctant to take an action that could cost American jobs. But there is no evi dence that Iran can afford to buy these airliners anyway, given its current difficulties in repay ing its foreign debt. Washington also must step up pressure on Russia and China to restrict their arms sales to Iran. To gain Russian agreement, the Administration should warn Moscow that the U.S. foreign aid program to Russia, already facing rising congressional opposition, may be further jeopard ized by continued Russian arms sales and nuclear cooperation with Iran. The Administration also should remind Moscow that the restrictions on the sale of advanced technologies that it has lifted to assist Russias post-C o ld War economic development might be reimposed if Russia does not break off its military and nuclear cooperation with Iran. The same applies to China which has sold Iran some of the most dangerous weapons, including missiles, chemical warfare materials, a n d nuclear technologies. The Clinton Administration should reverse course and re strict the sale of advanced computers, satellites, and sophisticated machine tools to China. Such economic sanctions would also give the U.S. more credibility in urging the Eu r opeans and Ja pan to place similar restrictions on sales to Iran 41 KennethTimmerman, Caveat Venditor, The New York Times, October 25,1993 14 Deny Iran Western loans and aid Ultimately, the best means of restricting Irans access to arms markets may be to r estrict its access to Western capital markets. Tehran cannot repay about 8 billion of its short term debt It currently is seeking to renegotiate its debt payments to Germany, Japan, and other foreign creditors. Washington should press its allies to deny t h e rescheduling of Irans burgeoning debt on favorable terms. It should insist that the World Bank and other international financial institu tions not give Iran favorable treatment and press them to factor in to their calculations a more realistic assessmen t of the political and economic risks of lending to Iran. Such loans in effect subsidize Iran;sr&itary buildup, terrorism, ihd subversion. Iran is unwilling to accept any conditions for stretching out repayment schedules that might be set by international groups such as the Paris Club of Western creditor nations. Instead, it is seeking to negotiate bilaterally with each of its foreign creditors to maximize its bargaining lev erage in negotiations to restructure its debt. The U.S. should press Irans credito r s to block this gambit by rejecting bilateral negotiations in favor of building a united position through strict ad herence to Paris Club procedures for debt rescheduling. The rescheduling of Irans debt also should be conditioned on its implementation of economic reforms approved by the Interna tional Monetary Fund. Iran already has been forced to cancel some of its arms purchases because of a lack of hard currency, which has constrained it from exceeding 850 million per year in annual outlays for weap0ns. 4~ By denying Tehran new western loans and setting tough conditions for the resched uling of existing debt, Irans Western creditors would put enormous pressure on President Raf sanjani to trim back his ambitious military plans to cover Irans domestic econ omic needs Prohibit American oil companies from buying Iranian oil. American oil companies currently are prohibited from importing Iranian oil into the U.S but are allowed to buy it for resale elsewhere. Six American oil companies buy about one-fourth of I rans oil exports, worth more than $3.5 billion per year, to refine and sell in Europe and Japan. They have replaced Japan as Irans biggest oil customer since 1992. President Clinton should issue an executive order prohibiting such oil purchases, which su g gest that the U.S. cynically is conducting business as usual with Iran while calling on its allies to restrict trade with that country. This would strengthen the U.S. case for collective Western economic pressure against Tehran. Moreover, as long as the international oil market remains weak, Iran may have to shave its oil prices to find alternative buyers for its oil. This could slight1 reduce Iranian oil revenues from their projected level of $14 billion to $15.8 billion in 1994 Support Iranian oppositi o n groups Irans Islamic regime steadily is losing its base of support. It is facing rising discontent be cause of economic mismanagement, corruption, and the inability to prevent the fall of the Ira nian standard of living. According to the governments own statistics, per capita income is 42 Robert Greenberger, Irans Economic Problems Could Spark Friction Between U.S. and Its Allies, The Wall Street Jouml, January 3, 1994, p. 8 43 Eisenstadt, op. cir p. 2 44 The higher estimate comes from: Economist Intelli gence Unit, Iran: Country Report, Fourth Quarter, 1993 15 roughly 50 percent of its pre-revolutionary level. Riots in four cities in 1992 revealed growing frustration with mounting unemployment, high inflation, and shortagesof food and housing. Although Ay atollah Khomeini downplayed the importance of economics within his revolu tion, maintaining that he had not led the revolution in order to lower the price of melons, his successors do not have the luxury of ignoring Irans economic predicament. They know t h at most Iranians of rioting age are too young to remember the reign of the Shah. Moreover, they lack Khomeinis political stature, charisma, and popular legitimacy sulted in an increased number of assassination attempts against exiled opposition leaders, I r a nian air strikes against opposition training camps in Iraq, and redoubled efforts to put Islamic vigilante groups and anti-vice squads back on the nations streets. Despite this, the clerics are building a nation of atheists, according to one Iranian pol itical scientist. Relentless repression has forced most organized opposition groups into exile. Washington should give financial and political support to a small number of Iranian exile groups to pressure Iran to consider reducing its support to opposition groups in other countries. Even a modest aid program could bring disproportionate leverage by allowing Washington to exploit Iranians his toric paranoia about foreign conspiracies. The Administration should furnish covert financial support to various Ira nian democratic, na tionalist, royalist, and Kurdish opposition groups. Such aid should be increased every time that Iran is linked to a terrorist incident. Washington also should provide financial aid to Sudanese opposition groups to raise the price Suda n must pay for its support of terrorism PMO). Although this Marxist group is one of the best organized exile organizations, it has lit tle support in Iran because of its alliance with Iraq during the Iran-Iraq War. Moreover, the PMO originally was an anti- A merican terrorist organization that was responsible for the assassi nations of four American military officers in the 1970s If it did come to power, it could quickly revert to its previous ways The Rafsanjani.regimes hejghtened.nervousness over its slumpi n g political popularity has re But the Administration should rule out supporting the Peoples Mujahideen Organization CONCLUSION Iran and the U.S. are on a collision course, given Irans increasingly aggressive support of ter rorism and radical fundamentalis t groups in recent years. Washington must lead an interna tional coalition capable of containing the expansion of Iranian influence and slowing Irans military buildup. While a containment strategy cannot preclude Iran from obtaining dangerous weapons of ma ss destruction and missiles to deliver them, it can delay their acquisition and buy time to strengthen deterrence against Iranian aggression, deploy anti-missile defenses, and pressure Te hran to reconsider its support of terrorism and revolution. Contain m ent also can buy time for ac quiring the intelligence necessary for targeting Irans weapons of mass destruction in a military strike, if necessary. The U.S. should press its allies to maintain relentless economic pressure on Iran until the Islamic regime either decides to forego its dangerous military plans and stops threatening its neighbors, or until it collapses. James A. Phillips Senior Policy Analyst 16