Negotiating with Iran: “Buy Low, Sell High”

By Greg Thielmann

U.S. policy-makers grappling with the Iranian nuclear challenge require the same psychological insight required for success in playing the stock market. The advice, “buy low, sell high,” may be obvious, but it is difficult to apply in practice, because investors’ emotions lead them in exactly the opposite direction.

When stock prices are rising, one feels good and wants to hold on to stocks in order to maximize the higher returns; when the prices are falling, one feels like selling before any more value is lost. The trick is not to be too greedy or too desperate and let the head control the game.

The current political trend on U.S. Iran policy is to relish news of financial difficulties in Iran brought about by the tightening sanctions, and trust that growing economic pressure and covert action can force Iranian capitulation.

But the economic difficulties Iran is encountering should be a spur to re-energize the diplomatic track, for realists understand that Iranians will not respond positively to threats and violence. The fruits of economic pressure can only be harvested through diplomatic engagement and willingness to compromise.

Another way to process recent developments emotionally is to feel fear about the threat of war and anger at provocative actions. Tensions have significantly increased during the last few weeks over Tehran’s boasts of nuclear program achievements, its threat to close off access to the Persian Gulf, its continuing support of violence in the Levant and abuse of human rights at home.

From Tehran’s perspective, the imposition of unilateral sanctions on Iran’s central bank, assassinations and mysterious explosions, and belligerent rhetoric from Republican presidential candidates in the United States lead to perceptions that a virtual war is already underway and a full-scale military attack may soon be launched.

Historical perspective is urgently required to steady the nerves. The Cold War demonstrated that responses to provocations can be firm without leading to war and common ground between ideological antagonists can be found without resolving all serious differences. Indeed, Iran’s constructive contributions to the December 2001 Bonn Agreement on Afghanistan provide a pertinent reminder that positive diplomatic results from negotiating with the Islamic Republic are not impossible.

However, in order to engage effectively, the United States and its P5+1 partners need to distinguish optimal from essential negotiating goals and offer the Iranian regime a face-saving off-ramp from the defiant and destructive course it is on.  Tehran’s portrayal of U.S. objectives as regime change and subjugation must be explicitly countered by both U.S. declaration and deed.

The debate and on-again-off-again talks on “Iranian nuclear issue” has been going on so long, we often forget where we have been and where we need to go. The road to resolving the nuclear issue needs to start with a reformulation of the issues at hand. The principal U.S. objective in the dispute is not to stop Iranian now well-established uranium enrichment program and cripple Iran’s nuclear energy program or to overthrow the Iranian regime; it is to win Tehran’s agreement to carry out and strengthen its safeguards commitments to the International Atomic Energy Agency to ensure it is not pursuing nuclear weapons.

The ultimate means of resolving the dispute is the exercise of diplomacy, not military force. To be coy on these points and obfuscate core U.S. means and objectives is a dangerous game. The resulting uncertainty does not provide negotiating leverage to the United States; it merely diffuses domestic and international pressure on Iran to cooperate.

For most of the past decade, the United States sought to prevent Iran from enriching any uranium rather than prioritizing mechanisms for ensuring adequate monitoring of Iran’s nuclear program. In the process, it frittered away valuable opportunities to reach agreement.

In 2005, Iran offered to limit the extent of its enrichment program, to immediately convert enriched uranium to reactor fuel rods, to foreswear reprocessing, and to adopt the IAEA’s Additional Protocol. The United States and the EU-3 continued efforts to convince Iran to end its uranium enrichment program altogether.

When the prospect arose in 2010 of reviving the previous year’s offer to provide fuel for the 2009 Tehran Research Reactor, the United States signaled that it would raise the previous bar in terms of the amount of Iranian LEU demanded in the swap. When President Ahmadinejad stated that Iran would halt 20 per cent enrichment of uranium in exchange for the reactor fuel, the United States did not actively pursue the offer.

U.S. national security requires that Washington not react emotionally either to Iranian provocations or setbacks in its nuclear program. The United States needs to keep its eye on achieving an outcome that raises confidence that Iran is not pursuing a nuclear weapons program.

In a better world, no governments like the regime in Iran would have a full nuclear fuel cycle at its disposal. (And in a better world, investors could always buy stocks at their lowest prices and sell them at their highest prices.)  But in the world that exists, the United States needs to consistently and persistently pursue controls on Iran’s nuclear program, which are both adequate and negotiable.

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