Sta. Ana coordinates Action for Economic Reforms. This is a two-part aricle published in the Yellow Pad column of the Business World. The first part came out on June 22, 2009, pages S1/4 and S1/5; the second part on June 23, 2009, page S1/5.

The popular upheaval in Iran, arising from the alleged fraudulent outcome of the presidential election, has reached a point of no return.  Iran’s supreme leader Ayatollah Ali Khamenei has declared a “religious ultimatum” to the demonstrators to end their protest actions or face the consequences.  In the same vein, he warned the opposition leaders that they “would be responsible for bloodshed and chaos,” arising from the escalation of protests.

The ayatollah has drawn the line in the sand. Iran and the rest of the world will soon know whether that line will be crossed…irreversibly.  Soon after the declaration of the hard-line “religious ultimatum,” thousands still poured out into the streets, resulting in clashes between the demonstrators and the security forces.  Meantime, it has been reported that Mir Hossein Moussavi, the main opposition candidate whom many believe was robbed of victory in the presidential election, has prepared himself for martyrdom.

Our gut reaction is of course to condemn State violence, suppression of democratic rights, and election fraud.  But how we feel is different from how the main actors domestically and internationally have to respond to a complex situation.  How the Iranian domestic crisis is resolved will have profound, strategic consequences not only for Iran, or the Middle East, but also for the rest of the world.  Oil, nuclear weapons, the Palestine state, terrorism, Israeli aggression, Arab elite contradictions—all these hot issues are linked to Iran.

The situation is so complicated that the analysis cannot be reduced to George W. Bush’s framing of good versus evil or to a Filipino columnist’s beguiling commentary about a clash between the “old Iran” and the “new Iran.”

Barack Obama’s cautious, calculating response to the Iranian crisis is arguably the most appropriate response as US president, more so as a global leader. In a CBS News interview, President Obama said, “this is not an issue of the United States or the West versus Iran. This is an issue of the Iranian people. The fact that they are on the streets under pretty severe duress, at great risk to themselves, is a sign that there’s something in that society that wants to open up.

“And, you know, we respect Iran’s sovereignty. And we respect the fact that ultimately the Iranian people have to make these decisions. But I hope that the world understands that this is not something that has to do with the outside world. This has to do with what’s happening in Iran. And, I think ultimately the Iranian people, will obtain justice.”

Asked by CBS to comment that his statement has not been forceful enough in support of those protesting, Obama responded: “To which I say the last thing that I want to do is to have the United States be a foil for those forces inside Iran who would love nothing better than to make this an argument about the United States. That’s what they do. That’s what we’ve already seen. We shouldn’t be playing into that. There should be no distractions from the fact that the Iranian people are seeking to let their voices be heard.”

A strong statement of condemnation from the US president will backfire. The Iranian reactionaries will exploit this to raise the US bogey, claim that the US is meddling in Iranian domestic affairs to destabilize the country, and rally the public behind the Iranian flag.

The US Congress has issued a resolution condemning the violence committed by Iranian authorities.  But the initiative came from the conservative Republicans. Of course the Democrats—to live up to their name and to take what is the popular and politically correct position—have to agree. At any rate, the locus of foreign policy is in the US executive, and the Congress resolution is non-binding.

But the dominant ruling faction in Iran does not wish to antagonize the US either.   That the ayatollah blasted Britain as Iran’s “most evil” adversary was a way of finding a foreign bogey but avoiding an escalation of conflict with the US.  The ayatollah is in effect saying that while he is adopting a mailed-fist policy to deal with the protestors, he is willing to “unclench his fist” and extend his hand to Obama…albeit unwilling to heed Obama’s admonition about “being on the wrong side of history.”

So why do they play these games?  Because it benefits the US and Iran as well as the rest of the world for the two conflicting countries to pursue peaceful engagement—to Israel’s disappointment.

The Obama administration has junked the inflexible, bellicose foreign policy of Bush’s neo-conservatives, which misfired miserably in diplomatic, political, and military terms.  The better strategy is to tame the beast by befriending it.

For Iran, it cannot afford international isolation especially since it has to extricate the economy from oil dependency and restructure the economy, requiring foreign investments and technology.

But what are the intentions and motivations that drive Iran’s unconventional if not unpredictable behavior?  This is the context that led RAND Corporation’s National Security Research Division to come out with a monograph simply titled Understanding Iran (2009).  Prepared by Jerrold D. Green, Frederic Wehrey, and Charles Wolf, Jr., the monograph contains the ideas or insights from a two-day conference of non-American experts who “have uncommon access to Iran, have Persian-language capabilities, and have a depth of experience dealing with Iranians from a broad political and societal spectrum.”  Joining these non-American experts in the conference were a former US ambassador, a long-time consultant to the Central Intelligence Agency, and a former Joint Staff analyst.

The monograph’s preface states: “The United States has been working predominantly in the dark with respect to the Islamic Republic of Iran. All interested players, regardless of their political leanings or underlying motivations, suffer from America’s collective ignorance about this uniquely complex country. This ignorance stems from Iran’s denial of sustained physical access to American visitors, but it also stems from America’s lack of access to and insight into the workings of the Iranian system itself, especially its economic system.”

Space constraint prevents me from presenting a detailed review of the monograph.  But below I cite the paper’s key findings that are relevant to the conjuncture.

Ayatollah Ali Khamenei is Iran’s most powerful person, the “ultimate political authority.”  Yet, checks and balances prevent the Supreme Leader from becoming an “omnipotent autocrat.”

The paper notes Khamenei’s expanding influence, as he has been able to portray himself as a moderating force in comparison to the unpopular, hard-line president Mahmoud Ahmadinejad, the person accused by the Iranian public of stealing the election from Moussavi.  That Khamenei benefits from the president’s unpopularity can explain why the Supreme Leader prefers Ahmadinejad to Moussavi.

What we witness now is a deep fissure within Iran’s elite, exacerbated by the cheating in the presidential election. Ahmadinejad and Moussavi belong to competing factions—the former symbolizing the hard-liners and the latter representing the coalition of reformists and pragmatists.

But we should not forget either that both are loyal to the Islamic Republic. As the monograph explains:  “Since the mid-1980s, the interplay of these currents has produced three convoluted and overlapping factional coalitions, which we can roughly label conservative, reformist, and pragmatist. All three of these have operated within the Islamic ideological and political framework laid down by Khomeini, and their members have come from similar religious and social backgrounds, cutting across the traditional socioeconomic layers and class barriers that prevailed in Iranian politics and society prior to the Islamic Revolution.”

Despite factionalism or precisely because of it, the Iranian elite acknowledges the need for “consensus in a multi-polar decision-making structure.” This point is best seen in how the elite has managed its nuclear program.

A very crucial point that the world outside Iran must digest is that “Iran’s nuclear ambitions are stoked by factional struggles and bureaucratic interests, making the issue less sensitive to external pressure.” The different factions have used the nuclear program to advance their political agenda.  Both the conservatives and reformers try to win over public opinion—and invoke public opinion—to serve their objectives.  Says the monograph: “While most Iranians agree on Iran’s right to unrestrictedly seek modern technologies, consensus clearly fades over the price Iranians are willing to pay for program continuation in terms of sanctions, loss of confidence in investment, capital flight, and estrangement from the international community.”

An essay, A Different Iranian Revolution, for the New York Times written by an Iranian student named Shane M. (19 June 2009) also presents a complicated puzzle. He wrote that the election presented a paradox: If Mr. Moussavi became president and pursued his platform to seeking better relations with the US, three of ten Iranians would accuse him of “selling out” the country. On the other hand, Ahmadinejad’s campaign focused on “defense of the homeland and national honor in the face of United States aggression. Americans too-long familiar with the boorish antics of the Iranian president will no doubt be surprised to learn that the best chance for improved relations with the United States perhaps lies with Mr. Ahmadinejad.”

Thus, the Iranians face a tradeoff: “a disastrous domestic political situation with Mr. Ahmadinejad but an improved foreign policy, or improved domestic leadership under Mr. Moussavi but near impossible challenges in making relations with the United States better.”

We have barely scratched the surface, but we have at least shown how complex the Iranian situation is.  President Obama’s calibrated response gives him the flexibility to deal with the strategic concerns relating to US interests and the global public good.  The Iranian elite—despite the intensification of the fight between the conservatives and the pragmatists and despite the ayatollah’s ultimatum—has likewise shown flexibility.

Note how Khamanei is re-channeling grievances, using the legal system and ordering a random recounting of ballot boxes to investigate charges of election cheating. Note, too, that he has criticized Ahmadinejad and the militia for hurling false charges against his opponent and using excessive force to disperse a student demonstration, respectively.  And note again how he attempts to mute the conflict with the US by pointing to Britain as Iran’s “most evil” enemy.

Yes, Khamenei views the US with contempt.  But he knows the imperative of engaging the US in negotiations.  He might even think that he has the upper-hand in light of the US’s diminished standing in the region, thanks to the blunders committed by the Bush administration.

And lest we forget, note Khamanei’s message assuring the Iranian public that the protests are from within the establishment and are not part of any coup or revolution.  Compare that stance to how the Chinese authorities treated the student demonstrators 20 years ago.  (Coincidentally, this June marks the 20th year of the Tiananmen massacre.)  The Communist Party labeled the student demonstrations as “pre-meditated and organized turmoil with anti-Party and anti-socialist motives.”  This further inflamed the students, who honestly believed they were being patriotic in their manifestations.

Even Mr. Ahmadinejad is not always the fool that he has often been portrayed.  He wisely withdrew his earlier statement that insulted the protestors, calling them “dust” and comparing them with sour losers in a football game.  That of course enraged the public.  But as the protests swelled, he issued a clarification: “I only addressed those who made riots, set fires and attacked people. Every single Iranian is valuable. The government is at everyone’s service. We like everyone.” Compare that to the arrogance and stubbornness of the Chinese communist leadership who did not listen to the proposal of reformists to withdraw the labeling of student protesters as “anti-Party and anti-socialist.”

So far, the behavior of all players is following a script that economists call game theory.  We can only hope that the players’ decisions will lead to less violent outcomes.  The players have played these games before, but the mass upheaval might mean a new game altogether.  Iran’s upheaval has a life of its own, making it more daunting for the players to choose the appropriate strategies.

We do not wish a Tehran version of Tiananmen to happen.