MIDDLE EAST TECHNICAL UNIVERSITY

Current and Future Policies towards Iran and the Possible Impact of Those Policies on Iran and Turkey
Tue Ylmaz
1427350

METU MIDDLE EAST STUDIES MES-503 TERM-PAPER

Current and Future Policies towards Iran and the Possible Impact of Those Policies on Iran and Turkey USs calls for sanctions on Iran and its possible effects both on Iran and other countries are the most debated topics recently. In this paper I will try to argue this topic with its historical background because the fact that in order to understand todays politics it is very important to know the historical background of the topic. Therefore in the first part I will give brief information about the political changes which was mostly shaped by the U.S intervention and next I will try to analyze the causes behind competition between the U.S and Iran. The third part will be a summary of the U.S-Iranian relations after the 1979 Islamic Revolution. Then, I will give some information about the effects of the U.S sanctions on the economy of Iran. The next part will be Turkish-Iranian relations to see the historical process of current policies. Finally I will give brief information about nuclear debate and Turkeys position in the imposition of the sanctions. Of course it is not possible to reflect all the dimensions of the issue in this paper; however I will try to summary the topic and estimate possible Turkish reaction or policy towards the issue. General Information about Iran Iran has experienced two massive revolutions in the 20th century. In 1925 Reza Shah overthrew Qajar dynasty and he proclaimed himself Shah rather than establishing a republic. During the reign of Reza Shah Pahlavi, Iranian Prime Minister, Mohammad Mossadeq nationalized the Anglo-Iranian Oil Company in 1951.Because of the earlier threat to the Iranian territory by the Soviets. The US feared that Iran could turn to the communist direction. The U.S organized a coup dtat via CIA in 1953, restored the power of the shah and dismissed the Mossadeq from his office. In 1955, Iran became one of the most important allies of the U.S. and received millions in military aid. From now on, the shah used his power

as a dictator and introduced secret police force, SAVAK, to enforce his policies. He started a revolution, called White Revolution, in 1963 to modernize and increase the prestige of his country. He made many social and economic reforms however Shia clergy and bazaar merchants opposed his reforms and autocracy of the shah. The most important criticism came from Ruhollah Khomeyni and he was sent to exile. While the state was getting rich because of oil revenues, people could not benefit from this prosperity. People felt that their country was governed by the United States.1 Riots began in early 1978 and the shah understand that despotic government was not efficient and appointed a reform-oriented prime minister, Shapur Bakhtiar, but it was too late. The shah could not control strikes and revolts, and finally he fled and never returned. The following month Khomeini filled the power vacuum by returning from Paris. On 1 April 1979, Iran was proclaimed an Islamic Republic. He introduced a constitution to stabilize the new situation. The new constitution indicated his ambition. One the one hand, the constitution was liberal with its emphasis on separation of powers but on the other hand the constitution contained references to religious institutions and personnel. Khomeini declared the United States as the Great Satan.2 On September 1980 Saddam Hussein launched war against Iran and the West supported Saddam.In 1989, Khomeini died and Ayatollah Ali Khameini became president and he succeeded Khomeini as a Supreme Leader. Mohammad Khatami was elected president in 1997 elections and reformist activity increased sharply. In this period there was more freedom of expression, higher regard for human rights, less cultural pressure on women and certain amount of normalization in regional and foreign relations. However, in 2005 elections Ahmadinejad, who was close to the radical fundamentalist, was elected and reformist trends were reversed. 3 Oil sector provides the majority of government revenues. Private sector was very limited with small-scale
1

Christopher Catherwood, A Brief History of The Middle East (New York: Carrol and Graf Publishers, 2006), 212-213 2 Roger Owen, State, Power and Politics in the Making of the Modern Middle East ( New York: Routledge Press, 1992), 94-95 3 Ibid., 113

workshops, farming and services. Price controls, subsidies and other restrictions effects economy and prevents the potential of private sector-led growth. The rise in world oil prices in 2010 increased Irans oil export revenue. However Iran still suffers from high rate unemployment and underemployment.4 With 10 percent of the worlds oil (about 130 barrels of proved reserves) and 14 percent of its gas reserves (about 169 billion oil equivalent barrels) Irans hydrocarbon reserves are the second largest reserves after Saudi Arabia. The U.S and Iran Competition The three main goals of the U.S and Iran competition are having influence in the military, political, and economic realms in the region. The U.S interests are concentrated on energy security, sustaining strategic partnership with regional allies and supporting stability in the region. On the other hand, Iran tries to expand its influence over the Gulf region and to prevent U.S military actions to reduce U.S influence in order to make itself dominant power in the region. In order to achieve this goal, Iran tries to build up its nuclear capabilities and make direct contacts with its Southern Gulf neighbors. In order to limit Irans influence in the region, the U.S has been working on strengthening relations with each Arab Gulf state and cooperating with allies like France and Britain.5 Iran-U.S Relations after the 1979 Revolution Before the Iranian Revolution of 1979, Iran and the U.S were good allies and they have trade relations .In 1978, the U.S was the second largest exporter to Iran which dominated 16 percent of share of Irans imports. After the revolution, relations between these two countries were declined because of Hostage Crisis of 1979 which continued for 444 days. The U.S began to take various economic measures and apply sanctions against Iran to free the
4 5

https://www.cia.gov/library/publications/the-world-factbook/geos/ir.html Marissa Alison, U.S and Iranian Strategic Competition: Saudi Arabia and Gulf States, Center for International and Strategic Studies (2010):3

American hostages. These sanctions can be summarized as; the U.S embargo on oil import from Iran, prohibition of aid and military assistance to Iran, freezing 12 billion dollar Iranian deposits in the U.S banks, embargo on the exports of food and medicine to Iran. In 1992, the U.S interested in Irans development of military means which could danger American interests in the Persian Gulf. Again, the U.S sought to find a way to prevent Iran from producing conventional arms, ballistic missiles, and nuclear bombs, chemical and biological weapons. As a result, the U.S began to fallow the dual containment policy towards Iran and Iraq via economic sanctions in order to protect the U.S interests in the Gulf region. Some of these sanctions are prohibition of dual-use items exportation to Iran, punishment of any foreign company that invests more than 20 billion dollar in Irans oil sector. The U.S blamed people or companies who reject these sanctions with the sponsoring terrorism. The U.S allies reacted against the sanctions and other European countries did not participated in these sanctions.6 Other U.S sanctions of this period were prohibition of all commerce and travel between Iran and United States (1980), ban of any foreign assistance (both economic and military) to Iran (1984), prohibition of Iranian origin goods exportation to the U.S (1987).7 Of course it is not possible to cover all the U.S sanctions in this paper, it is necessary to mention some of them to see the full picture of relations between Iran and the U.S. In 1997 elections, Mohammed Khatami was elected and promised to implement political and economic reforms in Iran. The Clinton administration eased economic sanctions to support Khatami in his reforms and ended sanctions on food and medicine to Iran, Libya and Sudan. Effects of the U.S Sanctions on Iranian Economy

Akbar E. Torbat, Impacts of the US Trade and Financial Sanctions on Iran ( Oxford: Blackwell Publising, 2005), 409 7 Sasan Fayazmanesh, The Politics of the U.S Economic Sanctions against Iran Review of Radical Political Economics 35( 2003): 222

In order to understand the effects of the U.S sanctions on Iran it may be beneficial to look at the table;

Irans main import from the U.S was machineries and electronics. The good quality of American products is well known so; the sanctions forced Iran to import equivalent products of lower quality at higher prices from other countries. Another important import of Iran from the U.S was foodstuffs which can be purchased from other countries. Other imports were mostly industrial goods such as oil drilling and oil field equipment. It took time to find U.S supplies in the world market. In 1996, the import volume of Iran from the U.S reduced to zero and caused Iran to lose 82.25 million dollars.8 Before the revolution, the U.S was the main importer of Iranian oil and the U.S continued to import Iranian oil until 1987 with fluctuations. However after the prohibition of Iranian oil importation by the United States after 1987, U.S companies purchased about 20 percent of Iranian oil for export to other countries. The most important non-oil U.S import was Persian rugs. After the sanctions price of non-oil products of Iran decreased because of decrease in demand and this caused to rise of

Torbat, Impacts of the US Trade and Financial Sanctions on Iran, 415 6

unemployment rate in Iran. The situation was different in oil exports. In 1994, U.S companies were buying 600,000 barrels per day (valued at about 3.5 to 4.0 billion dollar per year). However, the U.S imposed extensive sanctions on Iran and purchases of Iranian oil by American companies were ended. They said that they could not purchase Iranian oil even if it was not to be imported into the U.S. In the short run, Iran had some difficulty in transporting some of its oil for storage to far distant places such as the coast of South Africa. However, in a short period, Iran found new buyers because of the good quality of its oil. These were problems could be tackled by Iran. However trade and financial sanctions damaged the Iranian economy. On the contrary, the political effects of the sanctions in terms of achieving their objectives were minimal. The reason behind this is that although Iran had difficult in the short run, it was very successful to find alternative sources for the U.S-made products in the long run.9 The other important result of sanctions and Irans search for new trading partner was that Iran became more depended on China. There was a regular increase in trade volume between Iran and China from 2001 to 2010 as show below in the table.

Ibid., 427

Source: From the Report: Iran Turns to China, Barter to Survive Sanctions, Barbara Slavin, Atlantic Council, November 2011.

Turkish-Iranian Relations Turkeys relations with Iran have not been stable from the beginning. During the Pahlavi era, Iran and Turkey had good relations. They had common objective which was containment of the Soviets. During the Cold War, they become regional allies as members of the Baghdad Pact, Central Treaty Organization (CENTO), and Regional Cooperation for Development (RCD). However Turkey suspected from Iran in the 1970s because of its ambitious militarization program and assertive foreign policy. In the 1990s relations were deteriorated because of Turkeys accusation of Iran for supporting PKK and Islamic radicalism in Turkey. In the 2000s mainly two factors changed Turkish-Iranian relations. First, after the invasion of Iraq in 2003, created common threat perceptions and contributed to a rapprochement on security issues. Second factor was because of the change in Turkish foreign policy towards the Middle East under the AKP government.10 AKP government used the rhetoric of historical and cultural ties rather than its military capabilities and saw itself as the peacekeeper in the Middle East. Therefore as it tried to have connections all the countries in the Middle East, Iran was one of them. In 2004, Iranian branch of PKK (PJAK) was established and this branch was more restless. As a response to these developments, Iran and Turkey cooperated against PKK and PJAK. Another issue was energy cooperation which began to deepening early 2000s. Tabriz- Ankara natural gas pipeline had been already operational since 2001. As a result, Iran has become Turkeys biggest supplier of natural gas after Russia, 20 percent of Turkeys gas imports come from Iran. In August 2007, the Turkish Energy Minister visited Iran and concluded a Memorandum of Understanding (MoU) for the establishment of joint

10

Meliha Benli Altunk, Turkeys Changing Middle East Policy UNISCI Discussion Papers (2010): 154-155.

company to carry up to 35 cubic meters of Iranian gas to Turkey and the construction of three thermal plants by a Turkish company in Iran. 11 These policies and developments might bring economic and political benefits to Turkey however they increase dependence of Turkey on Iranian gas. For example, Iran cut off gas supplies twice in 2008. Nuclear crisis is another problem for Turkey. Nuclear Debate Iran has had a nuclear program almost for 50 years which began with a research reactor purchased from the United States in 1959 as a part the Atoms for Peace program. The Shahs plan to build 23 nuclear power reactors by the 1990s but his plan was not viewed as an attempt to produce nuclear weapons. There were certain signs of nuclear weapon program but these attempts interrupted by the Iranian Revolution and the Iran-Iraq War. Iran claims that nuclear power is essential for rising domestic energy consumption while oil and gas are necessary to generate foreign currency. Iran always claimed that its nuclear program was peaceful and Iranian government spokesman, Gholam Hussein Elham, stated that Iran will never produce weapons of mass destruction in 2006. However, Supreme Leader Ali Khamanei had said that Iran would not quit its uranium enrichment in 2004. Uranium enrichment has dual purpose; it can be used to produce nuclear fuel and nuclear weapons. 12 There is a wide support for imposing economic sanctions on Iran to stop its nuclear program or make it to use its nuclear program for peaceful purposes. The United States and its allies try to put pressure on Irans economy, weaken its energy sector which provides nearly 70 percent of the state revenues and isolate it from the international financial system. International Atomic Energy Agency (IAEA) announced that suspicions about Irans nuclear program were escalated. IAEA gathered a meeting in Vienna and called Tehran to answer questions about its nuclear program. The resolution was presented by permanent members of
11 12

Ibid., 156 Sharon Squassoni, Irans Nuclear Program: Recent Developments CRS Report for Congress ,2006, http://www.fas.org/sgp/crs/nuke/RS21592.pdf, retrieved on 13 January 2012.

UN Security Council, the U.S, France, Britain, Russia, Germany and Republic of China and they stated their suspicions about military dimension of Irans nuclear program. Moreover they called Iran to make transparent cooperation with IAEA to repair relations. However, Iranian representative in the IAEA, Ali Asgar Sultaniye stated that Tehran will not suspend its nuclear activities and insisted that their nuclear activities are for peaceful purposes. Russia and China advocate that Iranian nuclear crisis cannot be solved by sanctions. 13French Foreign Minister Alain Juppe stated that they have no suspicion that Irans attempts to produce nuclear weapons and called EU countries to call to freeze Iranian bank assets and to put embargo on Irans petrol exports.14 England announced that they would stop all the financial relations with Iran. Finance Minister George Osborne stated that including Iranian Central Bank, they will not conduct business with any Iranian banks.
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Japan supported the U.Ss

attempts to put pressure on Iran and announced that it will decrease it petrol imports from Iran. Iran is the second largest exporter of Irans petroleum. In order to prevent energy crisis as a result of this action, Gulf States were asked to increase their exports.16 Western countries are very decided to include Turkey in this program and they think that Turkeys involvement in the imposition of sanctions is significant. On 11 January 2012, French Foreign Minister Alain Juppe visited Ankara and stated that cooperation of Turkey is vital to achieve the goals of the sanctions. However, Ankara is reluctant to fallow special sanctions suggested by EU or the U.S. and advocated that it only supports sanctions UN. Prime Minister Erdoan stated that sanctions effects people more than countries. However experts say that Turkey has financial

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http://www.bbc.co.uk/turkce/haberler/2011/11/111118_vienna_iran.shtml (retrieved on 13 January 2012) http://www.bbc.co.uk/turkce/haberler/2012/01/120103_iran_france.shtml (retrieved on 13 January 2012) http://www.bbc.co.uk/turkce/haberler/2011/11/111121_uk_iran.shtml (retrieved on 13 January 2012)

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http://www.bbc.co.uk/turkce/haberler/2012/01/120112_geithner_japan.shtml (retrieved on 13 January 2012)

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fears because it supplies 20 percent of its gas demand and Iran is a trade route to Asia. 17 Turkish Foreign Minister Davutolu had also stated that Turkey would not take place in any action against Iran. He said that the last nine years were the best period of Turkish- Iranian relations and these two countries have more in common rather than dissidence. 18 Turkeys Position in the Imposition of Sanctions When we look at historical consequences of the sanctions on Iran by the US it is seen that although sanctions harmed the economy of Iran, they could not achieve their goals. Again I think Iran will find a way to tackle with these new sanctions by establishing new allies. As it mentioned above, although Russia and China are suspicious about Irans nuclear program, they claim that sanctions cannot be an efficient solution to the problem. Also, Turkey does not support any action against Iran. It is seen that Turkey is again trying to stay out of this problem by finding excuses. Turkey had tried hard to establish economic ties with the Middle East and it is very reluctant to ruin them. However, European countries seem to very decided to put pressure on Iran and Turkey is only searching for new excuses to gain time. If Iran does not something to make Europe and the U.S to believe that its nuclear program is peaceful, Turkey will be obliged to be a side. Although ties with the Middle East is important for Turkey, it is possible that Turkey may not resist the Western pressure and take side in the Western block which supports sanctions against Iran. The other possibility is that Turkey may undertake a role of meditation between Iran and supporters of sanctions. This possibility seems more suitable for the current Turkish policy and its policy towards the Middle East. As it mentioned before, the most persistent discourse of the AKP government is Turkeys strong cultural and religious ties with the Middle East. Therefore, I think AKP government will try to

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http://www.ntvmsnbc.com/id/25298359/ (retrieved on 11 January 2012)

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http://www.ensonhaber.com/irana-mudahale-olursa-turkiye-ne-yapacak-2011-12-24.html (retrieved on 24 December 2011)

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be peacekeeper and mediator as much as possible. If this first option does not work, then Turkey will turn to its inevitable ally, the U.S, and engage in putting pressure on Iran.

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REFERENCES

Alison, Marissa . "U.S and Iranian Strategic Competition: Saudi Arabia and Gulf States." Center for International and Strategic Studies 1 (2010): 1-24. Benli Altunk, Meliha . "Turkeys Changing Middle East Policy." UNISCI Discussion Papers 1 (2010): 149-162. Catherwood, Christoper. A brief history of the Middle East. London: Robinson, 2006. Fayazmanesh, Sasan . "The Politics of the U.S Economic Sanctions against Iran." Review of Radical Political Economics 35 (2003): 221-244. Owen, Roger. State, power, and politics in the making of the modern Middle East. London: Routledge, 1992. Torbat, Akbar E.. , Impacts of the US Trade and Financial Sanctions on Iran . Oxford: Blackwell Publising, 2005. Online Sources
https://www.cia.gov/library/publications/the-world-factbook/geos/ir.html (retrieved on 10 January 2012) http://www.fas.org/sgp/crs/nuke/RS21592.pdf,( retrieved on 13 January 2012) http://www.bbc.co.uk/turkce/haberler/2011/11/111118_vienna_iran.shtml (retrieved on 13 January 2012) http://www.bbc.co.uk/turkce/haberler/2012/01/120103_iran_france.shtml (retrieved on 13 January 2012)

http://www.bbc.co.uk/turkce/haberler/2011/11/111121_uk_iran.shtml (retrieved on 13 January 2012)

http://www.bbc.co.uk/turkce/haberler/2012/01/120112_geithner_japan.shtml (retrieved on 13 January 2012) http://www.ntvmsnbc.com/id/25298359/ (retrieved on 11 January 2012)

http://www.ensonhaber.com/irana-mudahale-olursa-turkiye-ne-yapacak-2011-12-24.html (retrieved on 24 December 2011)

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