Last week marked an important milestone when Iran tentatively accepted significant restrictions on its nuclear program. In return, the United States and the European Union agreed to remove several sanctions against Iran.
The Iran deal will curb the nuclear cascade that emanated during the Cold War. Although nuclear competition was restricted between the United States and Soviet Union, proxy wars had triggered the proliferation of nuclear weapons in hotspots like Pakistan and . Stemming Iran’s nuclear program will deter nuclear expansion in the volatile Middle East.
Despite being a member of OPEC, Iran suffered heavily from crippling sanctions and trade embargos, so easing these economic controls will stimulate oil production and trigger falling oil prices. Thanks to increased investment and rising exports, Iran will enjoy a strong economic growth.
Equally important is the thawing of Iran relations. It helped that Ernest Moniz, the U.S. Secretary of Energy, and Ali Akbar Salehi, head of the Atomic Energy Organization of Iran, shared a common history at the Massachusetts Institute of Technology, despite not having met in person at that time.
Yet, the fact that U.S.-Iran relations have deteriorated in the first place is a tragedy in foreign policy. The culprit behind poor U.S.-Iran relations is paradoxically the driver of Iran’s growth: oil economics.
In 1901, a British millionaire named William Knox D’Arcy negotiated an oil concession with Shah Mozaffar al-Din and his Qajar dynasty in Persia. This concession formed the Anglo-Persian Oil Company, which soon discovered a massive oil field at Masjed Soleyman in southwestern Iran.
In 1925, an Iranian officer named Reza Shah Pahlavi, born Reza Khan, overthrew the Qajars and created the Pahlavi dynasty that would rule until 1979. Reza Shah Pahlavi was a nationalist who attempted to limit British influence on the newly renamed Anglo-Iranian Oil Company. He also sought to establish stronger relations with Nazi Germany.
During World War II, Winston Churchill and Joseph Stalin were worried about Iran’s loyalty to Germany. This led to the Anglo-Soviet invasion of Iran in 1941 that overthrew Reza Shah and replaced him with his son, Mohammed Reza Pahlavi.
As part of a joint agreement, Iran was partitioned by the two nations, with Britain controlling the south, and Soviet Union controlling the north. Opposing the partition, the United States insisted Britain and Soviet Union withdraw from Iran six months after the war ended.
British forces withdrew on schedule, but Stalin wanted access to oil fields in northern Iran. After Harry Truman’s censure and Iran’s consent to maintain oil trade with the Soviets, Stalin withdrew his army in May 1946.
Iranians were initially happy when the United States helped the Pahlavi dynasty plan economic infrastructure. However, Iranians were frustrated by the Anglo-Iranian Oil Company, which hardly gave Iran any profits.
Opposing the Pahlavi dynasty, Mohammed Mossadegh argued that Iran should control its own oil industry and suggested that the Anglo-Iranian Oil Company split profits equally with Iran. Truman supported the plan; the British dismissed it.
Eisenhower believed Mossadegh was a Soviet sympathizer who planned to give the Soviet Union complete access to Iranian oil. Eisenhower decided it was a good idea to overthrow a democratically elected leader and place an autocratic ruler on the throne.
After Mossadegh was overthrown in a 1953 coup, the Shah resolved the oil crisis by allowing three U.S. petroleum firms and Anglo-Iranian Oil Company (now called BP) to distribute oil from refineries that remained under Iranian control. Iran soon joined an anti-Soviet pact and supported Israel.
With the help from CIA, the Shah silenced all opposition. John F. Kennedy was aware of the growing domestic opposition to the Shah’s rule and suggested economic liberalization and political reform. The Shah agreed and soon enacted the White Revolution, which promoted land reform, manufacturing expansion, education and women’s rights.
In 1972, Richard Nixon suggested that if Iran were to remain an American ally and promote political stability in the Persian Gulf, the Shah could purchase any non-nuclear weapons in the U.S. military arsenal. Soon after, oil prices skyrocketed thanks to Arab-Israeli Wars and OPEC embargos.
Aware of the protests, Islamists decided to manipulate the masses. In 1978, an Islamic cleric named Ayatollah Ruhollah Khomeini persuaded an angry mass of college students and merchants that Western reforms were corrupting Iran. The Islamists won, and the Shah was exiled to Egypt in 1979.
American foreign policy became complicated by the Iran-Contra Affair and the Persian Gulf War. Through economic sanctions and military threats, Bill Clinton promoted dual containment to prevent further troubles from Iran and Iraq.
In 1997, weary Iranians elected the moderate Mohammad Khatami as president. The reformist president sought to improve U.S.-Iran relations by condemning terrorism, but Clinton urged the closure of its nuclear program. Khatami also sent condolences to George W. Bush in the aftermath of 9/11 attacks.
Bush responded to Khatami’s kindness by condemning Iran as a terrorist state in his Axis of Evil. Khatami became irritated by Bush’s impertinence and condemned American invasion of Iraq in 2003. In 2005, Khatami was succeeded by the Islamist Mahmoud Ahmadinejad.
Enraged by American hypocrisy, Ahmadinejad reversed Khatami’s reforms, denounced the United States and Israel, and accelerated the nuclear research program. U.S.-Iran relations under Bush and Ahmadinejad could have very well triggered another world war.
Such a global catastrophe was averted when President Barack Obama took office in 2009. Obama insisted on an open-minded outlook on the Middle East and was willing to meet with Ahmadinejad to improve U.S.-Iran relations. Unfortunately, Ahmadinejad, who controversially won the 2009 election, denounced Obama in the similar manner as Bush denounced Khatami.
In fact, the Iran deal was only possible thanks to Hassan Rouhani, a reformist president who won the 2013 election. His visit to New York later that year was considered a significant progress to U.S.-Iran relations.
Consequently, it is better to avoid neoconservative and Islamist leaders, since national fervor will lead to conflicts. Although non-Islamist leadership would be difficult to implement in Iran, it is possible, as indicated by election victories of Khatami and Rouhani. The manageable problem is the neoconservative popularity in the United States and Israel.
Neoconservatism wishes to protect national interest in foreign affairs, often in the disguise of promoting democracy. Neoconservatives, such as George W. Bush and Benjamin Netanyahu, directly clash with the Islamist leaders, reject compromise and foolishly declare Iran as a terrorist state. In particular, reformist leadership in Israel can help restore friendly relations with Iran.
In addition, the United States and European Union must avoid unduly sanctioning Iran just because it is an Islamic theocracy. Despite the 1979 regime change, Iran remains a stable and powerful nation, providing critical assistance to Iraq, Syria and Yemen to fight against the Islamic State and al-Qaida.
Oil trade with Iran must be consistent and fair. The underlying problem is that Iranian oil was monopolized by a British company with negligible profits given to Iran. Nationalizing attempts were scorned, and when Islamists did succeed in controlling Iran’s oil supplies in 1979 revolution, the nation was brutally sanctioned.
Rather than demonizing Iran for rightfully protecting its own interests, the United States and European Union must renew trade relations and reduce sanctions. After all, oil trade is happily maintained with authoritarian regimes like Saudi Arabia, so shunning stable theocracies like Iran is rather shortsighted.
Just as with Egypt, Iran can be a powerful ally in suppressing Islamic insurgency and maintaining regional stability in the Middle East. Stable, equitable and consistent relations must be established with Iran to avert geopolitical disaster in the future.