1998 Congressional Hearings
Special Weapons
Nuclear, Chemical, Biological and Missile


Iran Under Khatami: Weapons of Mass Destruction,
Terrorism, and the Arab-Israeli Conflict
Statement before the United States Senate Foreign Relations Committee,
Subcommittee on Near East and South Asian Affairs
May 14, 1998


by Michael Eisenstadt1

The May 1997 election of Mohammad Khatami as president of Iran raised hopes and expectations of change in Iranian policy. In the foreign policy arena, it is possible to discern a new vocabulary (emphasizing "detente," "stability," and the "dialogue of civilizations"), while the new government has launched a diplomatic "charm offensive" to mend fences with its Arab Gulf neighbors most notably manifested by its recent rapprochement with Saudi Arabia (which in fact antedated Khatanri's election and traces its origins to the aftermath of the June 1996 Khobar Tower bombing).

However, other aspects of Iran's foreign and defense policy show more continuity than change. With regard to weapons of mass destruction, Iranian policy has essentially been characterized by continuity. Iran continues to expand its arsenal of missiles and its civilian nuclear program -- which most analysts believe is intended to serve as the foundation for a nuclear weapons program. Iran, likewise, continues to support groups that engage in terrorism and it continues its attacks on oppositionists, though it is more careflil than in the past about selecting the venue for such operations. Finally, while Iran remains unremittingly hostile toward Israel, it is possible to discern perhaps the first faint signs of change with regard to Iran~s approach to the Arab~Israeli conflict.

Weapons of Mass Destruction (WMD)

Iran continues to devote significant resources to its WMD programs.2 Most notably, it has continued with efforts to build up its strategic missile forces, and it continues efforts to expand its civilian nuclear infrastructure, which it probably intends to use as a stepping stone to a nuclear weapons program.

Iran has been trying since the mid-i 980s to acquire a missile production capability, in order to end its reliance on external sources of supply. This effort was plagued by various bottlenecks, including a shortage of skilled personnel, special materials, technological expertise, and adequate financing. As a result, until recently, Iran had little success in creating an indigenous missile production capability.3

This may be changing, however, thanks to aid provided by Russia, China, and North Korea during the past 3-4 years. This assistance includes equipment, machinery, components (including guidance systems), and special materials required to produce missiles. At present, Iran can produce Scud missiles domestically,4 and it is reportedly building two hybrid liquid-fliel systems with substantial help from Russia: the Shehab-3, based on the North Korean Nodong-1, is expected to have a range of 1,300km, while the Shehab-4, based on the Soviet SS-4, is expected to have a range of 2,000km. In 1997, Iran conducted 6-8 static ground tests of the motor for the Shehab-3, indicating that work has gone well beyond the design stage. According to leaked intelligence estimates, the Shehab-3 is likely to make its first test flight within 1-2 years, and the Shehab-4 its maiden flight within about 34 years.5 Iran is also believed to be building a short-range solid-fliel missile known as the NP-i 10 (with a range of about 150km) with Chinese help.6

The introduction of these missiles will not transform the strategic landscape of the Persian Gulf region, since Iran's Arab neighbors already live under the shadow of its Scud-B and -C missiles. Their deployment will affect the security of other U.S. allies, as the capitals of Turkey and Egypt, and all of Israel, will now be in range of Iranian missiles, and could constrain US military options in a fitture crisis in the Gulf, if Tehran is able to deny the United States use of St aging areas or bases in Egypt or Turkey through its ability to directly threaten these key allies.

Iran's known nuclear technology base is at present rather rudimentary, although it is building an extensive civilian nuclear infrastructure that could serve as a stepping stone to a weapons program. In particular, its efforts to acquire nuclear research reactors, power plants, and fuel cycle-related facilities, its apparent investigation of various enrichment techniques (gas centriflige enrichment in particular), and reports of Iranian efforts to obtain fissile material in the former Soviet Union have raised questions about Iran's intentions.

Iran's strategy seems to be to build up its civilian nuclear infrastructure while avoiding activities that would clearly violate its NPT commitments, using its new contacts in Russia and China to gain experience, expertise, and dual-use technology that could assist in creating a military program. Tehran could probably acquire a nuclear capability within a few years if it were to obtain fissile material and help from abroad; without such help, it could take Iran 5 or 10 years, and perhaps longer. There is no doubt though, that the acquisition of research reactors, power plants, and nuclear technology from Russia and China will ultimately aid this effort. Without such outside help, Iran will probably face formidable obstacles to realizing its nuclear ambitions.7

Developments during the past year show that Iran~s civilian nuclear program faces a number of formidable obstacles, but that it is continuing efforts to acquire nuclear fitel cycle related technologies from Russia and China.

Shortly after President Khatami~s inauguration last August, he appointed Oil Minister Gholamreza Aghazadeh to head the Atomic Energy Organization of Iran (AEOI). Aghazadeh's predecessor, Reza Amrollahi, was widely regarded as incompetent, and it was feared that Aghazadeh might revitalize the effort. Upon taking his new job, Aghazadeh announced that he intended to continue Iran's civilian nuclear program, with the purchase of several new reactors upon the completion of the one currently under construction at Bushehr. (This new order reportedly would include two 300 MWe units from China, possibly to be located at Darkhovin, and two 440 MWe units and another IOO0MWe unit from Russia, to be located at Bushehr.)8

Bushehr, however, continues to experience problems. The program is behind schedule, and Russia recently announced that it would take over parts of the project previously overseen by Iran, to prevent the project from falling fitrther behind schedule. Current estimates of the anticipated completion date vary between 2000-2003.~ Bushehr suffered an additional setback when the United States prevailed upon the Ukraine earlier this year to agree not to transfer turbine blades for the reactor. These can be manufactured in Russia, but production facilities there will need to be retooled to do so, imposing additional costs and delays to construction.10

There are also disturbing signs that both China and Russia are prepared to renege on recent commitments to the United States concerning nuclear technology transfers to Iran. In January 1998, the U~S. reportedly obtained intelligence indicating that Iran and China had discussed the transfer of a uranium conversion plant to Iran, despite the fact that China's President Jiang Zemin promised President Bill Clinton last October that China would cease all nuclear cooperation with Iran. China quashed the deal after Washington protested to Beijing.11 Recent press reports likewise indicate that Russia may still be considering selling Iran a 4OMWt research reactor and a gas centriftige enrichment facility included in a January 1995 nuclear cooperation accord with Iran. 12 Russia bad signaled the United States in a May 1995 summit between Presidents Boris Yeltsin and Bill Clinton that it would not go forward with these components of the accord, after the U.S. had pressed Russia on this issue. These transfers would significantly augment Iran's civilian nuclear infrastructure, and could contribute to Iran's efforts to acquire a nuclear weapons capability.

It is also worth noting that in January 1998, Iran formally joined the CWC, which obligates it to declare its inventories of chemical weapons within 30 days and to destroy them within 10 years. Iran has not yet submitted its declaration yet (though, many other countries including the United States -- also have not). It seems unlikely, however, that Iran would give up a potentially important tactical force multiplier and the core component of its strategic deterrent while Iraq may still retain a chemical and biological warfare capability.

Remarks two weeks ago by Iranian Revolutionary Guard Corps (IRGC) commander Yahya Rahim Safavi during a closed meeting with IRGC naval ollicers -- leaked~to the iranian press have raised unsettling questions about the willingness of at least some conservative hard-liners to adhere to Iran's arms control commitments. In his comments, Safavi reportedly asked his audience rhetorically; "Can we withstand American threats and domineering attitude with a policy of detente? Can we foil dangers coming from America through dialogue between civilizations? Will we be able to protect the Islamic Republic from international Zionism by signing conventions to ban proliferation of chemical and nuclear weapons?"13 The fact that is was Safavi who made these disparaging comments about the Chemical Weapons Convention (CWC) and the Nuclear Nonproliferation Treaty (NPT) is particularly important. The IRGC is believed to be in charge of Iran's chemical, biological, and nuclear weapons programs, and its operational chemical and biological weapons inventories and missile forces. His opinions on these matters carry great weight, and Safavi is therefore likely to have some -- perhaps a decisive -- impact on Iranian decisionmaking pertaining to the CWC and NPT. In both cases, it would seem that Safavi's preference would be to clandestinely circumvent these treaties, one way or another. It remains to be seen if he will carry the day.

Terrorism and Opposition to the Arab-Israeli Peace Process

Despite some positive public statements, Iran continues to support groups engaged in terrorism, and to assassinate opponents of the clerical regime. Since President Khatami's election, several senior officials have condemned terrorism. In November 1997, Foreign Minister Kamal Kharazzi condemned a terrorist attack by Egypt's Isianuc Group on tourists; in early January 1998 Foreign Ministry spokesman Mahmud Mohammadi condemned attacks on civilians in Mgeria; and President Khatami condemned attacks on innocent civilians, including Israelis, in his January CNN message to the American people. These are all welcome steps.14

However, Iran still flinds, trains, and arms groups that engage in terrorism; senior Iranian ofticials continue meeting with representatives of terrorist groups such as Islamic Jihad, Hamas, and Hezbollah ~hatami himself met with Hezbollah Secretary General Has san Nasrallah in Tehran one month before Hezbollah tried infiltrating a suicide bomber into Israel); Iranian intelligence continues to stalk American personnel in Bosnia, the Persian Gulf, and Tajikistan, to gain information that would be needed for terrorist attacks on Americans, and perhaps to send a message to the U.S. that they can target American interests should they decide to do so;15 and Tehran continues to attack opponents of the regime.16

In recent years, Iran has generally restricted attacks on oppositionists to northern and central Iraq. This marks a continuation in the gradual evolution in Iranian policy since the early-to-mid 1990s away from high profile terrorist~actions in the heart of Europe toward less conspicuous acts in less politically sensitive locations. It also shows that Iran is sensitive to the political costs of its involvement in terrorism, and that it may be possible to alter Iranian policy in this area.

Iran continues to arm and train the Lebanese Hezbollah organization, which has engaged in terrorist attacks on Jewish and Israeli targets in the past, including the bombing of the Israeli embassy in Buenos Aires in March 1992, an attempt to infiltrate a terrorist into Israel to plant a bomb on an Israeli airliner in April 1996 (who was critically injured when his bomb exploded prematurely in his hotel room), and most recently, an attempt to infiltrate another bomber into Israel in November 1997 (i.e., following Khatami's inauguration).'7

In the past, Iranian intelligence personnel have been involved directly in terrorist attacks in Israel and on Israeli interests. Iran is believed to have at least had foreknowledge of the Hezbollah bombing of the Israeli embassy in Buenos Aires in March 1992 and the attempt to infiltrate a bomber into Israel in April 1996, and may have been actively involved in both incidents.18 Moreover, Iranian intelligence operatives have been implicated in an attempt to bomb the Israeli embassy in Bangkok in March 1994, the bombing of a Jewish community center in Buenos Aires in July 1994, and attempts to incite Jordanians to attack Israeli tourists in that country in December 1995.19 Iran is not known to have been associated with any such attempts since President Khatami's election.

It is worth noting that some U.S. government intelligence analysts believe that Khatami and his supporters '~wish to change Iranian policy with regard to terrorism... in a direction that would relieve some of the impediments to improved relations between Iran and western countries" but he has been unable to do so because he does not control the relevant levers of power in Tehran.20 Clearly, the United States has to base its policy on the actions of Iran's government, and not the words or the inferred desires of its President or other senior officials, but developments in this area bear careflil watching, as this might be the first area where a change in Iranian policy concerning the three issues of primary concern to the United States (WMD, terror, and opposition to the Arab-Israeli peace process) will become manifest -- if real change does occur.

Iranian leaders from Khatami to Khamen&i continue to show unremitting hostility toward Israel in their public utterances, and there is little difference between them in this regard. However, Iran's approach toward the Arab-Israeli peace process and the possibility of an Israeli withdrawal from Lebanon has changed somewhat since Khatami~s election. In a meeting during the December 1997 Islamic Conference Organization summit in Tehran, Khatami reportedly indicated to Yasser Arafat that while he had little faith that the Madrid process would produce a lasting Arab-Israeli peace, Iran was prepared to accept any terms that the PLO agreed to, and that it would not actively oppose or seek to undermine a peace agreement.21 Khatami repeated this general theme during his CNN interview, stating that "We have declared our opposition to the Middle East peace process [but] we do not intend to impose our views on others or to stand in their way."22 However, given the difficulties that the peace process is currently facing, it seems unlikely that this Iranian commitment will be tested anytime soon. More recently, Foreign Minister Kamal Kharazzi indicated that if Israel withdrew from Lebanon, '~the aims of the resistance would have been achieved in reality."23 In the past, Iranian officials would have welcomed an Israeli withdrawal as a first step on the road to the liberation of Jerusalem. Nonetheless, this statement could be seen as a simple statement of fact, that does not speak to what would follow an Israeli withdrawal -- which anyhow would be determined by Hezbollah.

Implications for U.S. Policy

The most important achievement of U.S. policy toward Tehran, is its success in containing Iran (i.e., curbing its ability to threaten U.S. allies and interests) by denying it access to arms, technology, and the hard currency necessary to flind arms and technology transfers. U.S. pressure, diplomatic den?arches, and interdiction operations have thwarted several major conventional arms deals and countless smaller ones;24 cut Iran off from Western arms and technology sources forcing it to rely on less advanced suppliers such as North Korea, China, and Russia; and hindered procurement of spare parts for its armed forces, thereby making it more difficult for Tehran to maintain its existing force structure. This has made Tehran very carefril to avoid a confrontation with the United States that could lead to losses that it knows it could neither absorb nor afford to replace. Moreover, Iran's economic woes which have been exacerbated by U.S. sanctions have forced it to cut military procurement since 1989 by more than half25 and delayed its efforts to acquire conventional arms and WMD. Lacking the flinds to sustain a major, across-the-board military buildup, Iran has had to content itself with selectively enhancing its military capabilities.

Continuing these efforts to deny Tehran loans, credit, and hard currency at a time of economic distress caused by low oil prices will compel Iran to continue to spend more on butter than guns in the coming years, so that it can meet its debt service obligations and heightened expectations among Iranians that President Khatami can improve living conditions in that country.

President Khatamits election and his opening to the American people, however, have radically altered the rules of the game and greatly complicated Washington's calculations in a way that will require the United States to rnodtfr its approach toward Iran. Washington will need to muster a degree of sophistication, restraint, and subtlety that has been largely lacking in U.S. policy toward Iran until now if it is to avoid the dangers and grasp the opportunities created by these new circumstances. Past efforts 10 deiiy Jra,i arn~s, tech,iolo~, a,id fii~~ds yielded a ~iuniber of achiei~enie'its, a~id such efforts should retnai~i at (he hear( of US. policy. Howe~'er, the U,iited Sta(es caii 770 louger rely exchisi~'ely oil such nieasure£

In formulating its policy toward Iran, the U.S. needs to consider the implications of its actions on three sets of actors: the Iranian government, the Iranian people, and key third parties -- such as the Arab Gulf states and its Western European allies. Specifically, the United States needs to better understand how its policy toward the Iranian government affects its standing in the eyes of the Iranian people and its relations with the Gulf Arabs and its Western European allies.

Most Iranians like Americans and admire the United States and what it stands for. This reservoir of good will is a precious American asset that must not be squandered and because the Iranian people is the main engine for political change in the country -- a source of leverage over the Iranian government. The potential offered by this leverage was most clearly manifested in President Khatami's CNN address to the American people, which more than anything else was a nod to popular opinion in Iran, which strongly favors more normal relations with the United States.

Moreover, to the degree that the recent Saudi-Iranian rapprochement was motivated by a Saudi desire to distance itself from the U.S. following the Khobar Towers bombing - to avoid being caught in the middle of an Iranian-American clash -- efforts to reduce tensions with Teh ran would reassure some of our Arab Gulf allies that we are in fact 7701 headed toward confrontation with Iran. This is crucial, since ongoing efforts to contain Iran will require the continued cooperation of America's Arab allies in the Gulf.

Finally, demonstrating a willingness to increase contacts with the Iranian people and to explore the possibility of official contacts with Tehran would strengthen America's case with its European allies, since it would demonstrate that U.S. policy toward Iran is not driven by domestic politics, and that the U.S. is eager to test Iranian intentions. This would better enable the U.S. to make the case to its European allies that dialogue and pressure can go hand-in-hand.

On the other hand, it would be a severe setback for U.S. policy if the Iranian government could make a credible case to the Iranian people and to our Arab Gulf and European allies, that the United States has spurned President Khatamits call for a dialogue between peoples and other Iranian gestures.

What does this mean in terms of specific policy recommendations? First, with regard to the Iran-Libya Sanctions Act, the U.S. should avoid issuing a determination of sanctionability regarding the Total deal for as long as possible, to maintain the deterrent value of the legislation vis-a-vis additional investments, avoid a fight with the Europeans, and avoid the appearance of responding to Khatami's opening to the American people with what could be perceived or portrayed as a slap in the face.

Second, in responding to the new circumstances in Iran, the U.S. should be flexible in areas where it can afford to, while continuing to maintain pressure in areas where key interests are concerned (terrorism, the Arab-Israeli peace process, and WMD). There are several "easy" things that Washington can do to indicate its desire to reduce tensions with Tehran and signal its support for the Iranian people that would not cost it a thing, and would in fact advance its interests:

* Streamline visa application procedures to reduce obstacles for Iranians who want to visit the U.S., to the degree that this is consistent with U.S. security concerns. Consider stationing a consular official in Tehran to facilitate this process.

* Remove Iran from the list of major illicit-drug producing or transit countries if the facts nierit such a step, in recognition of Iran's efforts in this area.

* Ensure that Radio Free Iran adheres to the highest professional standards and engages in factual, critical reporting without engaging in gratuitous and provocative bashing of the regime in Tehran.

* Support efforts to intensif~ people-to-people contacts involving, for instance, artists, agricultural and medical specialists, and American policy analysts who are broadly supportive of U.S. policy in the region.

* The President should consider an extended television address to the Iranian people along the lines of Khatami's January CNN interview.

Finally, Russia and China have demonstrated repeatedly a disturbing tendency to violate commitments made to the U.S. by transferring sensitive arms and technology to Iran when they apparently believe that they can get away with it. Therefore, sanctions that punish Russian and Chinese companies that engage in such transfers, and that deny Iran the hard currency required to frind these transactions, will have to remain an essential component of U.S. policy toward Iran for the foreseeable future.