Bush's and Blair's rants against the Iranian regime have featured high in their public rhetoric over the past years, whether it be to explain away the bloody chaos created by their own invasion of Iraq or to justify their support for Israel's aggression against Lebanon. And of course, there has been the on-going stand-off over the issue of Iran's development of uranium enrichment.

As a result, speculation has been rife among commentators as to the likelihood of Western imperialism adopting a more aggressive stance towards Iran, to the extent of resorting to military means. Of course, such a possibility cannot be dismissed out of hand, if only because there are factions in both the US and British political and military establishments, which would favour such a course of action, no matter how dangerous it may be, in order to tighten even further the grip of imperialism over this part of the world. But at the same time, imperialism has left all its options open, including the possibility of a normalisation of its relations with the Iranian regime and its full reintegration into the imperialist world order.

The article we reproduce below examines the moves which have already been made in this direction by the Bush administration, behind the cover of its anti-Iranian rhetoric. It is reproduced from the US quarterly 'Class Struggle' (#52, August 2006) published in the US by the Trotskyist group, The Spark.

On 31 May this year, US Secretary of State Condoleezza Rice announced that the her government was willing to engage in direct negotiations with the Iranian government. She repeated twice that the US recognised the Iranian government's right to nuclear technology. Secret documents that were later leaked to the press indicated that the US was offering to lift - and not just suspend - long standing sanctions against Iran. The US was ready to sell commercial jets, agricultural equipment, telecommunications technology. The US was also ending its opposition to Iran's membership in the WTO, as well as to loans from the World Bank and other big institutions.

Finally, the US said it was ready to transfer nuclear technology to Iran, including the building of a light water reactor.

Formerly, the Bush administration had labelled the Iranian regime an original member of the "axis of evil". Bush officials claimed that Iran was one of the most dangerous threats to the US and "world peace". The US consistently maintained that Iran could not be trusted with nuclear technology, because it was bent on developing nuclear weapons, weapons of mass destruction (WMD). It accused Iran of supporting "terrorist" organisations like Hizbollah and Hamas, and terrorist bombings, such as the destruction of the Khobar Towers in Saudi Arabia.

The Bush administration's offer of nuclear technology to Iran showed what these charges against Iran were: pure propaganda.

Of course, the Bush administration disguised its offer in all the usual bluster and bombast, which was duly hyped by the US news media. It made a big deal about the US setting a pre-condition to negotiations that Iran suspend all of its uranium enrichment. In fact, as a Los Angeles Times editorial noted a couple days later, this demand is little more than a face saving measure for Bush, to make it seem as if the US were reining in the supposedly big nuclear threat. In reality, the US had already assured the Iranians that this freeze would be temporary. Besides that, the Iranian government had already agreed to similar conditions during previous negotiations.

The US government, along with its European partners and China, also made a big deal about threatening to punish Iran for "missing" a deadline for a formal response to the initial offer six weeks after the offer was made. Yet, a day after condemning Iran for missing the deadline, Bush publicly stated that the negotiations were going ahead. And reports in the Financial Times of London revealed that the Bush administration had assured the Iranians that they had more time. The deadline was always a fake, as was the threat.

Not even the Middle East crisis and the beginning of the war that Israel launched against Hamas and Hizbollah, that is, against the populations of Gaza and Lebanon, derailed the US negotiations with Iran. While the US condemned Iran for its support of Hamas and Hizbollah, it did not abruptly cut off negotiations, nor did it propose to punish Iran further with harsher sanctions.

No, behind the constant barrage of bombast and bluster, the preparations for a shift in relations between the US and Iran were moving ahead.

The policy shift

Commentators might have described the Bush proposals to Iran as "sudden" or even "seismic", but they had not at all come out of the blue.

The Bush administration had initiated this diplomatic process more than 18 months ago. In February 2005 Bush announced that his administration was dropping its official opposition to negotiations between the "EU-3" (France, Germany, and the United Kingdom) and Iran over Iran's nuclear enrichment program. Previously, the US had claimed that it didn't want to have anything to do with these negotiations because it didn't want to "reward Iran's bad behaviour". But in February 2005, Bush returned from a trip to Europe saying that not only did the US support the negotiations, but it wanted to broaden them to include such issues as supplying Iran with airplane spare parts and support for Iran's membership in the WTO. For those who watch such things, this shift in the US stance toward Iran could be seen in Bush's 2006 "State of the Union" address. Certainly, Bush still played the tough guy, declaring that the US would "continue to rally the world to confront the supposed Iranian threat. But this was already a far cry from earlier threats that the US made toward Iran, a "founder" member of "the axis of evil".

During February and March, there were all the scare stories about how Iran was defying the United Nations by continuing to insist on its right to enrich uranium, along with the Bush administration's threats that it was getting ready to bomb suspected Iranian nuclear sites - perhaps even with nuclear "bunker busters"! But when push came to shove, the US did not force the issue. On the contrary, when the matter of Iran's supposed defiance was taken to the UN Security Council in March 2006, the US stood back and allowed Russia and China to block the sanctions, settling for only a non-binding "presidential statement", a mere slap on the wrist. At the same time, the Bush administration also announced that it had offered to open up a dialogue with Iran about Iraq.

Right after its May 31 announcement of its shift in policy, the Bush administration's old neo-conservative allies - like Richard Perle, Bill Kristol and various other luminaries of the American Enterprise Institute - made some noise about the Bush administration caving in to international pressure. In fact, there is little indication of real disagreement in US official circles over this initiative. In the months preceding it, practically every single important official who had served in the most responsible foreign policy capacity in earlier administrations, Democratic and Republican alike, had publicly called for this shift, including Kissinger, Brzyznski, Scowcroft, Albright, Perry, Armitage to name just a few.

The most telling indication of this support came on June 14 when the Republican-controlled US Senate overwhelmingly endorsed Bush's initiative to negotiate with Iran and turned back a move that could have repudiated Bush's initiative. When Rick Santorum, a Pennsylvania Republican, who is linked to the far-right religious fundamentalists and is in the middle of a difficult re-election campaign, introduced a harsh new sanctions bill barring any US investment and trade with Iran, the Senate defeated it by a vote of 54 to 45. Once Santorum and other Republicans got a chance to make their point, the whole Senate passed a resolution in support of the Bush administration's initiative with Iran 99 to 0. Unanimous! This time around, even the most conservative right-wingers, including Rick Santorum, went on record in support of the Bush administration's initiative - despite their empty talk about new sanctions against Iran, which was only meant to placate their right-wing, reactionary base.

The US punishes Iran

For 27 years, since the overthrow of the US-sponsored dictator of Iran, Shah Reza Pahlavi, the US government had not had any official face-to-face meetings with officials from the Iranian government.

The break took place in 1979 after an enormous mass uprising overthrew the Shah, a revolution that threatened to spread to other countries in the region against other US-sponsored dictators. The US was further humiliated when Iranian students took over the US embassy in Tehran and took 52 employees hostage. The mullahs, led by the Ayatollah Khomeini, hijacked the revolution. They imposed their rule with brutal repression against the masses who had actually chased out the Shah. In so doing, the mullahs did imperialism's dirty work. On January 21, 1981, as Ronald Reagan was inaugurated as the new US president, Khomeini freed the hostages, and Reagan loosened trade sanctions.

But for US imperialism, the Iranian revolution represented an enormous set-back. The Shah's regime was one of the main pillars, along with Israel, of US control over the vital Middle East region. The Shah's enormous army, equipped with some of the best US technology, was supposed to keep order in the Persian Gulf. With the revolution, that pillar of support for US imperialism had crumbled. What followed next in that region's history, the barbaric wars and mass slaughter, is really a history of US imperialism trying to overcome that loss and solidify its hold over the region.

For US imperialism, the number one order of the day was to isolate and punish Iran - above all, to make an example of how hard the US comes down on any country and people that dare do anything similar. President Carter started the ball rolling by breaking diplomatic relations with Iran and imposing trade sanctions. The US government under Carter encouraged Saddam Hussein to attack Iran. Obviously, Saddam Hussein had his own reasons for doing it: he wanted to become the new regional strongman. But in effect, the Iran-Iraq War of 1980-88 completed the work of drowning the revolution in a bloodbath.

During the war, the US funnelled most of its aid to Saddam Hussein, while reimposing trade sanctions against Iran and pressuring allies not to sell arms or spare parts to Tehran. But in fact, the Reagan administration was playing a double game. It was also secretly supplying Iran with weapons, including thousands of anti-tank and anti-aircraft missiles, as well as spare parts for Iran's fleet of American-made F-4, F-5 and F-14 warplanes, left over from the time of the Shah. This dirty deal was exposed by the Iran-Contra scandal that broke out in November 1986.

In reality, US imperialism was trying to weaken both sides, ruined by one million dead with their countries in ashes. In 1990-91, barely two years after the Iran-Iraq war ended, US imperialism attacked Iraq, the first Gulf War.

In this war, the US and Iran found themselves on the same side. While the Iranian regime denounced the US war, the Iranian rulers were also perfectly happy to see their old nemesis, Saddam Hussein, defeated and weakened. Iran provided refuge for fleeing Iraqi airplanes, but then never returned them to Iraq, during or after the Gulf War. After the war, Iran went along with the US and UN sanctions on Iraq. In return, for a few years, the US government relaxed its trade embargo against Iran, and trade between the two countries increased substantially. In fact, in the early 1990s, the US became Iran's largest trading partner.

However, the continuing US campaign against Iraq after the war, the punishing trade embargo and air strikes, posed a problem for US relations with Iran. For with Iraq increasingly on the defensive, US policymakers did not want to see Iran try to fill the void and emerge as a regional power. To counter that, the Clinton administration slapped new trade and investment barriers on Iran. As the US pounded Iraq, it also began to squeeze Iran. Clinton called it a dual containment policy.

The US government was continuing to punish Iran for the revolution that had overthrown the Shah in 1979 - just as it had done in the past to the governments of China, Cuba and so many others. To justify this policy, the US government continued to brand Iran as a state supporting terrorism.

US government versus its own capitalists

This continued effort to isolate and squeeze Iran began to pit the US government against the oil and gas companies - which obviously saw Iran as ripe for gushers of profits. And the Iranian government needed them more than ever to get its production going, given the huge destruction that the Iran-Iraq War had caused to its infrastructure.

But when the US majors tried to go in, the US government stopped them. The first big confrontation came in March 1995, when the Clinton administration stopped Conoco from signing a one-billion-dollar contract with the Iranian government to develop and exploit large Iranian fields.

Then in 1996, the new Republican majority in Congress tried to fix the situation for the US oil companies. Citing Israeli reports that Iran had secretly embarked on a program to develop nuclear weapons (the tried and trusted excuse), they pushed through the Iran-Libya Sanctions Act (ILSA), that not only barred all US trade and investment in those two countries, but also imposed penalties on any corporation from other countries doing business with Iran. In other words, the US government was going to make sure that if US majors couldn't go into Iran and Libya - neither could other majors.

This didn't wash. The oil and gas majors based in other countries were not about to accept it. Not even the mighty US government could pass legislation telling them where they could and couldn't do business and make profits. So they got their governments to make a big stink against ILSA. In the end, the US State Department did not try to enforce ILSA. As a result, Iran granted major contracts to Total (France), Gazprom (Russia), Petronas (Malaysia), ENI (Italy) and Shell (Dutch-UK), without US government retaliation.

The fact that these companies could profit from Iranian resources, while US companies were left out in the cold, did not sit well with the US majors. Even Dick Cheney, who at the time was head of Halliburton, the oil services and construction company, denounced the sanctions as "being counterproductive. Big US oil companies, as well as agricultural exporters, arms merchants, and financial companies organised a new lobbying group, USA*Engage, with the goal of getting US unilateral sanctions lifted all over the world. An early press release by USA*Engage spelled out their position: "Virtually every major US oil company, gas company and oil-service firm belongs to USA*Engage, a broad based coalition formed... to fight unilateral economic sanctions... Such a proactive approach is new for the oil industry, which has traditionally been afraid of angering shareholders by appearing to fight sanctions against so-called rogue states.

When does the US government stop calling Iran a "rogue state"?

This raised the question: how long should the US government continue to try to isolate Iran? How long should the US try to make Iran an example for other people who might try to overthrow their own US-sponsored dictator? When does the oil companies' thirst for profits outweigh the political benefits that come from continuing the sanctions?

In reality, the US government had to weigh its long-term concern for maintaining its domination based on fear, against the short-term economic goals of the businesses that it serves.

But Big Oil's concerns soon had an impact on the Clinton administration, which first raised the possibility of normalising relations with Iran. In June 1998, US Secretary of State Madeleine Albright called for a road map to better relations with Iran. President Clinton also let it be known that he wanted to see a way to take some steps "toward ending the strains between our nations Iran and the US]".

The question of a US turn in policy began to be raised by Republicans, who served in the Reagan and first Bush administrations, as reflected by a think tank report published in 2000 by former president George Bush's national security adviser and confidante, Brent Scowcroft. Scowcroft even blamed some in his own party for the fact that US government policies had remained so belligerent: "Many of the US policies that are found troublesome by Iran can be traced to the Congress that took office in January 1995.

For US imperialism, Iran has great strategic importance. It has the second largest gas reserves in the world after Russia and the third largest proven oil reserves, after Saudi Arabia and Canada. That means that it is a potential source of great profits - but also of great potential power over the rest of the world economy.

But beyond that, it is a very large country. With a population of almost 70 million people, it is the second most populated country in the Middle East after Egypt. And it is located in the middle of the Persian Gulf region that the US has long sought to dominate. Iran borders on both the Persian Gulf and the Caspian Sea, as well as on 15 countries - many of which are energy rich and unstable. So, it is centrally placed both economically and militarily.

Given Iran's size, and its economic and political importance in the vital but explosive Middle East region, the US government could not afford to isolate it forever, as it has done to Cuba or North Korea, for example. Sooner or later, it would have to find a way to normalise relations with the Iranian government.

With the election of two oil men, Bush and Cheney, in 2000, the US oil companies had every reason to feel confident that the US government would soon allow them to do business in Iran, especially since Cheney himself had come out so strongly against unilateral sanctions. This was reaffirmed by Bush's nominee for secretary of state, Colin Powell, during his confirmation hearings in the US Senate: "differences with Iran need not preclude greater interaction, whether in more normal commerce or increased dialogue. Our national security team will be reviewing such possibilities, he said in the obtuse language of diplomacy.

Secret partnership

Notwithstanding the mullahs' "Great Satan" rants against the US meant for domestic consumption, they had consistently demonstrated their good will toward US imperialism and toward the oil companies, whenever they had a chance.

In the period that followed the 9/11 terrorist attacks, US and Iranian interests converged, and the mullahs demonstrated to the US government how responsible a partner they could be.

First, Iran supported the US war in Afghanistan against the Taliban and Al Qaeda. The Iranian Shiite regime had been sparring with the Sunni Taliban and Al Qaeda in Afghanistan for years. It was Iran that had originally backed the Northern Alliance, the main armed opposition in Afghanistan. Once the US announced its intentions of attacking Afghanistan, the US relied on the Northern Alliance to fight the Taliban and Al Qaeda, with Iranian support. Iran also closed its borders to Al Qaeda and Taliban fighters. When the US began to bomb Afghanistan, the Iranian regime offered to help the US in any search and rescue operations if US pilots on their missions over Afghanistan had to land on Iranian territory. Once the US began military operations, State Department and NSC officials met secretly with Iranian diplomats in Paris and Geneva. According to former State Department official Flynt Leverett, these discussions focused on "how to effectively unseat the Taliban and once the Taliban was gone, how to stand up an Afghan government. The Iranian government worked with the US government to broker the support by the Northern Alliance for a coalition government under the leadership of Hamid Karzai, a US puppet. Finally, Iran played a key role in the US-organised donor conference in Bonn Germany in November 2001, and pledged $560m for the reconstruction of Afghanistan.

According to the Washington Post (October 22, 2004), the US policy-making bureaucracy inside the State Department presented a paper in late November 2001 suggesting that the United States establish more formal arrangements for cooperation with Iran in the continuing war in Afghanistan. The paper suggested exchanging intelligence information with Tehran as well as coordinating some military operations. The CIA agreed with the proposal, as did the head of the White House Office for Combating Terrorism, retired General Wayne A Downing.

But in the run-up to the US invasion of Iraq, the Bush administration was not ready to take this step. In its preparation to invade Iraq, the US had to appear strong and dominant. To take steps to normalise relations with Iran at that time could be interpreted as a sign of weakness. Cheney and Rumsfeld were not going to send that kind of signal - especially at a point when US power appeared to be on the ascendency.

So, the White House, NSC and the Pentagon blocked the recommendations from the State Department, CIA and White House counter-terrorism office. Instead, the White House included Iran as a key member of the "axis of evil" in Bush's January 2002 State of the Union message. The Iranian regime was being warned not to make trouble for the US as it prepared to attack Iraq.

Once again, the Iranian regime responded with its own denunciations of the US. But behind the scenes, Iran cooperated with the US. After all, Saddam Hussein and the Baath Party were finally going to be pushed out of power. As in Afghanistan, Iran offered to rescue US pilots if they were forced to land in Iran during the air campaign. It allowed Ahmad Chalabi, Washington's favoured Iraqi opposition leader, to set up an office in Tehran, paid by the US government. And when US bombs meant for Iraq "accidentally" hit Iran, Iran did not protest "too hard... They [the Iranians] have behaved rather well, said a senior US official.

After the US occupation of Iraq showed signs of unravelling into a disaster, the Iranian regime approached the Bush administration once again. In a secret memo from April-May 2003 recently leaked to the press, the Iranian regime offered to accept peace with Israel, to cut off material assistance to Palestinian armed groups and pressure them to halt terrorist attacks within Israel's 1967 borders. In other words, the Iranian regime was offering to work with the US to reduce tensions in the rest of the Middle East, while the US military was increasingly tied down in Iraq.

In return, the secret Iranian proposal sought US agreement for diplomatic recognition, the halt of US hostility and the abolition of sanctions.

But the Bush administration turned Iran down again. The Bush administration would not turn toward Iran until the continued deterioration of the situation in Iraq left it with almost no other choice. As Philip H Gordon of the Brookings Institution put it in the current issue of Foreign Affairs, "Bush has gotten the United States bogged down in an unsuccessful war, overstretched the military, and broken the domestic bank. Washington now lacks the reservoir of international legitimacy, resources, and domestic support necessary to pursue other key national interests.

To extricate itself from the war, the US government needs stability in the region. Therefore it must reinforce the existing regimes - starting with Iran, which shares a long border with Iraq. Both the US and Iranian governments have a similar interest: they do not want the raging internal war and power struggle provoked by the US invasion of Iraq to spill over the border, to become a regional war, or to upset the status quo throughout the region.

The war in Iraq is pushing the US to begin to normalise relations with Iran.

What would a "grand bargain" with Iran bring?

Obviously, the negotiations with Iran are far from a done deal. They could still be derailed by new explosions or crises in the Middle East region, a region made more unstable by the US invasions of Afghanistan and Iraq.

However, if the new "grand bargain" between the US and Iran does go through, it will not be to further "peace", as will be trumpeted. It will only mean that Iran will be brought in as an open partner of the US and the lesser imperial powers to help further their grip on the Middle East, its peoples and resources. Obviously the Iranian government is aiming to emerge from these negotiations in a better position, to be a kind of regional power. But even if it does, it would only mean returning to its previous role under the much-hated Shah. But this time, the client state would be run by the mullahs.

Certainly, the Iranian economy has suffered tremendously from the successive blows of the eight years of the Iran-Iraq War, the US economic sanctions, and the low price of oil and gas, practically Iran's only exports, throughout most of the 1980s and 90s. One result is that Iran, an important energy exporter, is suffering from its own energy crunch. It has to import 40 per cent of the gasoline it uses from the rest of the Middle East and even from Venezuela! (This energy crunch is what has pushed the Iranian government to develop nuclear energy to produce electricity, to partially relieve demand on their oil and gas resources.)

The ending of the sanctions would mean a flood of international capital, a gold rush, or black gold rush, for the big international oil companies. Undoubtedly, they would begin to develop Iran's vast, but underdeveloped oil and gas reserves, along with the infrastructure to exploit those resources, such as ports, refineries, pipelines - all of which require enormous investments. This development is likely to follow the pattern seen in other oil exporting countries in the Middle East. The added income will first of all be gobbled up by the oil companies. Much of the rest of the wealth will be recycled back to the US and the other big industrial countries to buy military equipment. Or the wealth will go into the big financial institutions. After they are all done, whatever crumbs are left will enrich a tiny privileged minority of the Iranian population - just as under the Shah.

The economy will be left to rot and decay. And the standard of living of the working class and poor, already extremely low, will continue its long-term decline.

21 July 2006