11 March 2005 - 13 March 2005

Iran's Future Path

Chair: The Rt Hon the Lord Hurd of Westwell CH CBE PC

Iran is our only single-country subject for a 2005 conference and Ditchley was on its usual form in predicting a topical time for this discussion.  Several official representatives of the Iranian Government had been invited.  But other business, travel difficulties and illness got in the way and in the end we had only one non-government and one diplomatic observer from Tehran, depending otherwise on expatriate Iranians for a detailed understanding of the nature of our subject-matter. 

This Note takes account of the sensitivity of the discussion in some areas, since we went into considerable depth on a variety of questions.  The frankness and directness of the debate was a marked feature of the conference.   We were fortunate in having both a Chairman of distinctive diplomatic and political skill, who helped us draw some interesting practical conclusions, and a range of experienced presenters and rapporteurs. 

The discussion of Iran’s internal scene was suffused with calls for understanding of the nature of Iranian society and its long history.  We did some justice to those, listening to some perceptive interventions about Iranian relationships internally and externally and about the current situation inside the country.  The point was made forcibly that neither the Iranian Government and its institutions, nor the reform movement and the liberal elite, are monoliths or entirely separate from each other.  Enough elements of true democracy exist within the Iranian system to enable the Iranian people to have their say in the longer term, and for it to be necessary for the Government and those who oppose it to come to terms in certain respects over the way forward.  Authoritarian factors undoubtedly arise and repressive behaviour is all too common (a participant recalled the aphorism “Freedom of speech exists, but not always freedom after speech”).  Nevertheless there are deeper currents which have to be accommodated;  and the institutions of Iran are affected not just by nationalism, Islamism and power-broking, but also by globalisation and its effect on the wider population.  The grip on power exercised by the Revolutionary Guards was regarded as on the increase in the current period, in not just the political sphere but also the economic.  But that was accompanied by a sense of pragmatism within the hierarchy in balancing the need for survival, and therefore for acceptance, with revolutionary zealotry.  The clerical leadership was also regarded as fundamentally a cautious one interested in the status quo more than in change. 

This led the majority of participants to conclude that the current regime might well last for quite a while longer in spite of its broad unpopularity.  This judgement was tempered by references to the failure to predict the collapse of the Shah in 1979.  But the conference felt there were few signs of early revolution.  We were influenced by accounts of the weaknesses in the reform movement, stemming mainly from feeble leadership but also from the international environment, which had helped the regime play the nationalist card.  No-one believed that the idea of reform was dead.  But the recent period had not been a good one for progress in democratisation.  The Iranian people were widely frustrated and angry, both with their treatment at home and with attitudes towards Iran from abroad.  But public opinion was quite sophisticated in its patriotism and would undoubtedly exert a long-term influence on the evolution of the country because it was part of the organic system.  Participants also noted a natural reluctance in the public to politicise their disappointment with the lack of progress.  Most individuals, for instance in the younger generation, were intent on making as much of their lives as they could in the circumstances and not inclined to present a challenge to authority.  But this could change quite quickly. 

We examined Iran’s pride in its long history and the self-image which flowed from that.  Iranians thought of their country as more than just a regional power.  They also saw Iran playing a role on the global stage, comparable with, if not quite as weighty as, countries like China, India and Russia.  The instruments at Iran’s disposal for exerting influence around the globe were not as strong as they might believe.  Iran had few friends and important enemies.  Those factors, however, seemed not to dent the confidence of the people that their country would have a great future.  This made them less affected by the evolution of events around them, for instance in Iraq and Afghanistan, than those studying them from outside sometimes imagined.  Such characteristics made it important for outside interaction with Iran, particularly if it involved attempts to influence Iranian Government behaviour, to take account of the strength of Iranian nationalism, to understand the complex nature of Iranian society and to persuade Iran to make a willing rather than a forced contribution to regional and international collectivism. 

The conference thought that Iran’s economy was not performing to its full potential, suffering from high unemployment, double-digit inflation, lack of business opportunity and, as a result, a tendency for talent, particularly in the younger generation, to move abroad.  It would be difficult for the regime to make changes to maximise economic performance, if that involved reducing state control or adapting revolutionary or Islamic ideology.  Oil was too dominant an economic benefit, supplying 80% of export earnings and 50% of Government revenue.  High oil prices made diversification difficult to encourage.  The fact that oil accounted for only 15% of GDP suggested low dependence on the oil sector;  but the strength of the non-oil economy stood well below its full potential.  We noted Iran’s tendency to look for bilateral deals on trade, particularly with Asian hydrocarbon consumers such as China.  But Iran would be ill-advised to rely too heavily on these, if it affected the way it dealt economically and commercially with the West.  Entry into the World Trade Organisation could have a far-reaching impact on the economy in the longer term, as well as bringing Iran into a more natural position within the world community.  The news of the US Administration’s offer to support Iran’s application to the WTO came through during the course of the conference and was regarded as an interesting and positive move.  Iran’s immediate rejection of it surprised some less than others. 

There was a very good debate, particularly in the relevant working group, about Iran’s external policy and relationships.  The country occupied an important geostrategic position;  and its policies were bound to have a marked effect on its neighbours, on the Middle East peace process, on the global oil market, on the Islamic world and, in certain areas, on Islamic militantism.  Over the past decade the country had improved its relationships with Saudi Arabia and other Gulf countries, with Syria and with China.  But it was still looking short of friends and allies for its longer-term ambitions.  Innate caution was a characteristic in the external field as well.  Taken with a lack of dynamism in its current evolution and its obsession with history and status, it remained a difficult country to relate to.  Given also its hostility to Israel, its feeding of international terrorism in certain quarters and its overall deep distaste for the United States, which was mutual, Iran was failing to realise its external as well as its internal potential.  It was also failing to come to terms with the fact that the United States was now a Middle East power itself, with a military presence in Iraq, Afghanistan and residually in the Gulf, which made it by far the most powerful regional security player.  The conference realised that Iran could affect the situations in Iraq and Afghanistan to the detriment of US interests.  But it was also observed that Iran would not want either too strong or too weak an Iraq, either of which could generate a threat;  and its nuisance value did not necessarily amount to a controlling influence.  Similar factors applied to Afghanistan.  Tehran might have to wait for the long-term evolution in both its neighbours. 

As we moved towards a detailed look at the nuclear fuel issue, the conference also had a good discussion of possible regional security arrangements.  These would have to cover certain essential needs stemming from current circumstances.  They should involve mutual security measures with neighbours;  a guarantee, perhaps with P5 involvement, against the use of nuclear weapons (on condition that Iran itself avoided the nuclear weapon route);  other steps being taken by outside parties, to avoid the singularisation of Iran (eg implementation of the CCBT and/or steps by others in reducing nuclear weapon holdings);  and perhaps also a clearer understanding in the US/Iranian bilateral sphere covering the Middle East peace process, terrorism and Iraq/Afghanistan.  This was recognised as an area of huge difficulty, but most of the menu above would need to be addressed if the current problems were to be solved.  Most were anyway out on the table for discussion.  Serious debate in itself would be a useful step forward.  As part of this discussion, it was pointedly observed that there was a fundamental inconsistency between talk of promoting regime change and discussion of regional security arrangements.  It had to be recognised that Iran possessed legitimate security interests.  Was it unthinkable for Iran to receive a guarantee against unprovoked attack if North Korea already had one? 

Many of these issues came into the discussion as a result of our examination of the United States’ approach to Iran, alone or in tandem with their European allies.  There were strong and pointed pleas for the factors affecting American policy to be just as fully understood.  The interconnection between Iran and a whole host of important geopolitical issues was nevertheless strong enough for a broad-based approach to be examined.  The potential link with progress in the Middle East Peace Process was particularly noted. 

When it came to discussion of the nuclear fuel issue, the conference recognised that it was looking at a situation on the edge of a precipice.  We quickly came to the conclusion that there were no good options:  the objective had to be to avoid the worst.  While some participants questioned whether Iran’s development of nuclear weapons was an outcome which must be prevented at all costs, few disputed that this was the position currently taken by the United States, was unlikely to change and therefore had to be dealt with.  No-one argued that Iran’s contention that they were not pursuing a nuclear bomb could be taken at face value. 

We warmly welcomed the signs that US-EU cohesion was growing, even if there remained strong differences of emphasis, as well as in ultimate willingness to use military force.  Iraq had been a huge setback in EU-US relations.  There was now a more hopeful pattern in Iran, not yet amounting to a hard-cop/soft-cop strategy, but involving good consultation.   The assumption that the use of force could not be dismissed as a possibility had its usefulness, even if the conference was clear about the huge downsides of its actual use.  The important thing was to be serious in the search for alternatives.

This led to a discussion of either a graduated or a package approach.  The conference spent more effort on studying the elements to go into either than on the timing.  But we generated a collective warning that there was not much time available and that, since knowledge of what exactly was happening could not be complete, political leaders would have to take decisions with unknowns still in the air.  There was no Grand Bargain to be had because the principal parties were not ready for an equal deal.  But several factors would have to be brought into the equation involving, as our Chairman clearly pointed out, the exercising of both caution and imagination.  Any comprehensive approach would also rely on the Iranian and American Governments deciding on a stopping point before the precipice was reached, at which both would be persuaded that there was an alternative.  Otherwise the situation would be much too likely to lead to the use of force and this had implications much more widely across the geopolitical arena. 

In looking at the elements of a linked approach, many felt that it was not completely illogical for Iran to pursue a civil nuclear fuel programme.  They had the right, if they could be trusted to conform to the conditions which went with it.  The principal problem, that 100% clarity on this last point could not be guaranteed, meant that strong opposition to an Iranian nuclear bomb meant strong opposition to the opportunity for one.  No participant argued directly against this conclusion.  We therefore examined whether it might be possible to draw up an internationally approved and firmly backed strategy to maximise the advantages for Iran in giving up its enrichment and reprocessing ambitions and to maximise the downside for Iran in not doing so.  It was essential in this process to take account of what was at stake for the two main protagonists:  for Iran, their national security, their prestige and self-image, their energy interests and their international rights;  for the US, the threat which Iran represented to Israel and to the MEPP, the need to stop Iran’s support for terrorism, the requirements of global counter-proliferation and the need to uphold international order (including respect for the superpower). 

Maximising the upside for Iran, if it gave up its fuel programme, might include a setting aside of regime change as an explicit policy objective (which in itself increased Tehran’s motivation for wanting nuclear weapons);  guaranteeing the supply of externally produced nuclear energy fuel, which would then be removed under a carefully monitored process, perhaps also involving extensive inspections;  supporting regional security arrangements which enhanced Iran’s long-term security interests as well as those of others;  encouraging broader trade arrangements for Iran’s economic development;  and promoting direct business development and investment.  Within these elements there might be a need for the P5 to play a particular role and for other confidence building measures, drawing on precedents as appropriate from the Helsinki process or other previous experience.  Maximising the downside for Iran if it pursued its enrichment and reprocessing ambitions would involve keeping all options on the table, implicity or explicity;  drawing up a programme of graduated sanctions, beginning with embargoes on nuclear-related goods, arms supplies, investment in the hydrocarbons industry and, perhaps well down the road, a full embargo on Iranian oil sales;  and otherwise raising the cost in the eyes of the Iranian people of their government’s pursuing an option which, if regarded as cost-free, they might have widely supported.  Where in this process the nuclear issue should move from the IAEA to the Security Council was not covered in detail :  the majority felt that a package would have to be designed without this step being taken.

Whether all or any of this was negotiable – within the US domestic context, between the US and Europe or eventually with Iran – was beyond the conference to predict.  Perhaps the most pragmatic way to enter such an approach would be to start with a design for a global non-proliferation structure which would encompass but work far more widely than just Iran.  Widening the agenda, both historically and geographically, was felt to be a wise approach.  It would undoubtedly need a change in attitudes, but the issues at stake were great enough to make it worth considering.  If Iran proved impossible to persuade even within these broader and more understanding parameters, then all bets were off as to whether the precipice could be avoided.

Even Ditchley rarely enters such a high-temperature area of policy-relevant discussion.  Every participant present was speaking in their personal capacity and nothing should be read to reflect any government’s stated position.  But the conference believed that such serious and wide-ranging issues were involved that a deeper understanding of everything at stake needed to be encouraged.  Many individual participants went away convinced that they should help this process where they could.  All should be thanked for their open and serious engagement in the debate.

This Note reflects the Director’s personal impressions of the conference.  No participant is in any way committed to its content or expression

ChairmanThe Rt Hon the Lord Hurd of Westwell CH CBE PC

Deputy Chairman, Coutts & Co;  Prison Reform Trust.  Formerly:  Member of Parliament, Conservative, Witney (1983-97);  Mid-Oxon, (1974-83);  Secretary of State for Foreign and Commonwealth Affairs (1989-95).  A Governor, The Ditchley Foundation, Author.



Professor Saeed Rahnema

Professor and Political Science Coordinator, Atkinson Faculty, York University.  Formerly:  Associate Professor, School of Policy Studies, Queen’s University, Canada.

Ambassador Gordon Venner

Ambassador of Canada to Iran.  Formerly:  Director, Department International Economic Relations Division, Canada.


Major General Mohamed Kadry Said PhD

Head of Military Studies Unit, Al-Ahram Centre for Political and Strategic Studies;  Member of the Egyptian Council for Foreign Affairs.


Dr Bernard Hourcade

Senior Research Fellow, Centre National de la Recherche Scientifique, Paris;  Member of Advisory Council, The Qajar Studies Association.  Formerly:  Head, Research Group, Monde Iranien, CNRS (1992-2004).

Monsieur Christophe-Alexandre Paillard

Head, Industrial and Technological Trends, Strategic Affairs Directorate, Ministry of Defence, France.


Mr Jens Gust

Political Department, German Embassy, London.


His Excellency Salman Haidar

Formerly:  High Commissioner to the United Kingdom;  Foreign Secretary to the Indian Government.


Dr Kayhan Barzegar

Assistant Professor and Senior Research Fellow, Centre for Scientific Research and Middle East Strategic Studies, Tehran.


Mr Giandomenico Picco

Chairman, GDP Associates Inc.


Mr Vitaly Fedchenko

Programme Coordinator, Centre for Policy Studies, Moscow.


Lord Butler of Brockwell KG GCB CVO

Master, University College, Oxford.  Formerly:  Secretary of the Cabinet and Head of the Home Civil Service.  A Governor and Member of the Council, The Ditchley Foundation.

Mr Ben Faulks

Senior Editor, Middle East Country Analysis, Economist Intelligence Unit.

Ms Arminka Helic

Chief of Staff and Senior Researcher to the Shadow Secretary of State for Defence.

Sir Kieran Prendergast KCVO CMG

Under Secretary General for Political Affairs, United Nations, New York.  Formerly:  HM Diplomatic Service (1965-1997);  Ambassador to Turkey (1995-97);  High Commissioner to Kenya (1992-95);  to Zimbabwe (1989-1992).

Sir Michael Quinlan GCB

Formerly:  Director, The Ditchley Foundation (1992-99);  Permanent Under Secretary of State, Ministry of Defence (1988-92);  Permanent Secretary, Department of Employment (1983-88).  A Governor, The Ditchley Foundation.

Mr John Sawers CMG

Political Director, Foreign and Commonwealth Office.  HM Diplomatic Service, with postings including Special Representative for Iraq (2003), Cairo (HM Ambassador (2001-03).

Mr Simon Shercliff

HM Diplomatic Service, with postings including Press Office, Foreign and Commonwealth Office;  Private Secretary to the Prime Minister’s Special Representative for Iraq (2003-2004);  British Embassy Tehran (2000-2003).

Ms Kate Smith

Deputy Head of Mission Designate, British Embassy, Tehran.  HM Diplomatic Service, with postings including UKMIS New York, Athens.

Mr Martin Wollacott

Formerly:  Correspondent, The Guardian (1970-2004).

Mr Edward Young

Research Assistant to Lord Hurd.


Dr Katerina Dalacoura

Lecturer, International Relations, London School of Economic.


Dr Ali Ansari

Reader in Modern History, University of St Andrews.  Associate Fellow, Middle East Programme, Royal Institute of International Affairs.  Author.

Dr Mehdi Askarieh

Safety Assessment Manager, Nirex.

Mr Farad Azima

Founder and Chief Executive, Mission Electrons

Professor Reza Sheikholeslami

Professor, Chair of Persian Studies, Oxford University.


Dr Gary Samore

Director of Studies, International Institute for Strategic Studies.


Ambassador Robert Blackwill

President, Barbour, Griffiths and Rogers International.  Formerly:  Presidential Special Envoy to Iraq, Deputy Assistant to the President and Co-ordinator for Strategic Planning to the National Security Adviser (2003-04).

Dr Rose Gottemoeller

Senior Associate, Carnegie Endowment for International Peace.  Formerly:  Assistant Secretary for Nonproliferation and National Security, US Department of Energy (1997-2000).

Mr Stephen Heintz

 President, Rockefeller Brothers Fund.  Formerly:  Founding President and Chief Executive Officer, Renewing American Democracy (1999-2001).

Hon Robert Hunter

Senior Advisor, RAND;  Chairman, Council for a Community of Democracies;  President, Atlantic Treaty Association.  Formerly:  Ambassador to NATO and United States Representative to WEU (1993-98).  A Governor, The Ditchley Foundation.

Dr Shireen Hunter

Director, Islam Programme, Centre for Strategic and International Studies, Washington;  Visiting Senior Fellow, Center for European Policy Studies, Brussels.

Professor Firuz Kazemzadeh

Formerly:  Professor of History, Yale University;  Member, United States Commission for International Religious Freedom;  Member, Governing Board of the American Baha’i Community.

The Hon William Luers

Chairman and President, United Nations Association of the United States of America.  Formerly:  President, Metropolitan Museum of Art, New York (1986-99);  Ambassador to Czechoslovakia (1984-86);  to Venezuela (1978-84).

Mr Mohsen Milani

Professor and Chairman, Department of Government and International Affairs, University of Southern Florida.

Dr Abbas Milani

Research Fellow, Iran Democracy Project, Hoover Institution, Stanford University.

Mr Andrew Parasiliti

Vice President, Barbour Griffith & Rogers International.  Formerly:  Policy Advisor, Speechwriter and Personal Representative to the Senate Foreign Relations Committee for Senator, Chuck Hagel.

Ambassador Thomas Pickering

Senior Vice-President International Relations, The Boeing Company.  Formerly:  Under Secretary of State for Political Affairs, State Department (1997-2000);  President, Eurasia Foundation (1996-97);  Ambassador, Russian Federation (1993-96);  to India (1992-93).

Dr Gary Sick

 Senior Research Scholar and Adjunct Professor of International Affairs, Columbia University;  Chairman, Advisory Committee, Human Rights Watch Middle East;  Executive Director, Gulf 2000 Project.  Member, Advisory Council, The American Ditchley Foundation.

Mr Steven Simon

Senior Associate, RAND.  Formerly:  Assistant and Senior Fellow for United States Security Studies, International Institute for Strategic Studies.

Dr Ray Takeyh

Senior Fellow, Middle East Studies, Council on Foreign Relations.


Professor Ali Banuazizi

Professor of Cultural Psychology, Boston College;  Co-Director, Programme in Middle Eastern and Islamic Studies;  President, Middle East Studies Association, North America.