Hadi Kahalzadeh and John Schiemann
guardian.co.uk, Sunday 1 July 2012 10.00 BST
The latest wave of sanctions against Iran came into effect on Sunday. Such measures are largely predicated on a "rational actor model" in which the west hopes Iran's leaders will eventually find it in their own interests to give up their nuclear programme. The problem with such a strategy is not that Iran's leaders are irrational but that such a game only works if the west knows how Iran evaluates costs and benefits and the options Iran believes it has available.
After the failure of previous sanctions, the west has imposed a new set of much tougher sanctions while Iran has adopted a more assertive stance vis-a-vis the west, stating that it will respond to economic and military threats with its "own threats". Why, then, has Iran failed to respond to international pressure?
According to the basic sanctions model, the target of sanctions will alter its behaviour in the desired direction when the costs of defiance become greater than its perceived costs of compliance. Yet despite Iran's reliance on oil, the structural weakness of its economy, and deep economic costs such as the sharp rise in inflation, negative economic growth and increasing unemployment, it has failed to bend. This should prompt policymakers to ask how Iran evaluates the costs of sanctions and defying the west.
First, for Iran's leaders, ideological and security concerns trump economic ones: the security of the ruling class and being seen as protecting the Islamic Republic's founding myths.
The regime has emphasised three central myths since its creation in 1979 – "Islamic justice", "divine rule" and the "struggle against imperialism" – all of which are essential for maintaining its power and legitimacy. Hence, in the eyes of the Iranian leadership, any damage to these myths is of far more importance than, for example, losing even billions of dollars.
Second, the west and Iran do not share an understanding of what the goals of the sanctions actually are. The goal of the west is to prevent Iran from becoming a nuclear power but that would only succeed if its existing leaders switched policies or were replaced by new, more accommodating, leaders as a result of internal pressure. In the latter case, the economic sanctions would supposedly increase discontent among the middle class and so revive protest activity.
For its part, Iran believes that the goal of sanctions is to prevent the spread of the Iranian model in the region and to demonstrate to the world that the Islamic Republic is a failed model not to be emulated by Arab revolutionaries. Thus, according to the strategic thinking of the west, Iran is being pushed into a corner where it must choose between preservation of the regime and the continuation of its nuclear programme together with its regional ambitions.
Rationally, Iran will choose the preservation of the regime. In the eyes of supreme leader Ali Khamenei, however, continuation of its nuclear programme and pursuance of its regional ambitions constitute that preservation of the regime. He believes that promotion of the Iranian model in the Middle East is the key to the regime's long-term security and so external pressure from sanctions is tolerable in the short term.
Given this view, Tehran believes it must wait patiently for an inter-related set of changes that ultimately favour it. Iran sees an economic crisis that increasingly cripples the west. Also, Iran may believe itself to be close enough to join the nuclear club already – that it will soon reach the point where circumstances radically shift in its favour.
Sanctions also play into Khamenei's efforts to consolidate his power and justify internal suppression. Hence, Iran may actually view sanctions not as a cost, but as a benefit. Iran can – and does – point to sanctions as the suffering it bears in its role as the standard bearer of resistance in the Islamic world against what it regards as US imperialism.
On this view, the Islamic Republic is a model to be emulated by Arab revolutionaries, the successful export of which only further legitimises the three founding myths of the regime. Sanctions are therefore an economic investment with short-term costs that will pay large dividends in the long term.
Iran is not playing chess, no matter how much the US and the EU might wish it to be so. With Iran and the west playing different games, a peaceful resolution in the near future seems very unlikely.
First published in guardian.co.uk