Argument for engaging Iran makes good sense

Iran bids fair to be the next big confrontational international issue after Iraq. WorldView: And because it is a bigger and richer state, it will probably have an even greater impact on world politics.

This week the United States agreed to go along with the three European states which have been negotiating with Iran on its nuclear power programme in an effort to reach agreement that it should cease enriching uranium and plutonium, which can be used to make nuclear weapons.

It is a significant gesture following George Bush's fence-mending trip to Europe. But it is hedged with ambiguity about how far Washington is prepared to go in providing economic carrots for good behaviour and eventual security guarantees to convince Iran it does not need to develop nuclear weapons as a deterrent against a US or Israeli attack.

Talks next week will determine whether it is possible to make progress along these lines by the summer. The Iranians deny they intend to make nuclear weapons and say enrichment is to provide them with more resources for nuclear fuel.

Their nuclear power programme goes back to the 1970s, when it was initiated by the shah's regime as a means of escaping dependence on oil and other fossil fuels on which the country's wealth depends. It has been developed enormously in the last 10 years, helped by technology transfers from Russia, Germany, Pakistan, China and North Korea, some of which is military or proto-military.

The Iranians insist they have the right under existing nuclear agreements to develop this form of energy - including the Nuclear Non-Proliferation Treaty sponsored by Ireland in the 1960s.

Despite an uneven record of compliance with International Atomic Energy Agency inspections and several demonstrably misleading or incomplete responses to demands for information, they have co-operated with the agency and agreed to freeze enrichment while it conducts investigations. But they have refused any long-term commitments to abandon enrichment.

The Iranian nuclear programme has widespread popular support as an alternative to oil and a symbol of national sovereignty and independence.

The highly fragmented Iranian leadership, split several ways between hardline Islamic clerics, more pragmatic ones and a steadily growing secular reformist constituency, badly needs to develop the country's economy to maintain its legitimacy with a young population.

Student movements have come out in support of the nuclear programme, which they see as coming under attack from Israeli and US interests who want to see a regime change in the country.

This strain of nationalism cannot be underestimated in Washington by those who contemplate a military strike. They also need to understand Iran's sense of strategic encirclement, which might encourage it to take the lurch towards nuclear weapons.

After neighbouring Afghanistan and Iraq were invaded, it was clear that Saddam Hussein's lack of weapons of mass destruction did not deter US attack, while North Korea's claim to have them is seen as avoiding a US attack there. Pakistan and India have both got the weapons now.

There is certainly a debate among the leadership on whether to go for nuclear weapons as the best way to defend sovereignty. The argument about engaging with Iran hinges on whether this has a higher priority than developing a healthy economy.

Those who defend a conditional engagement say the country must be presented with a stark choice between having nuclear weapons or a strong economy, but not both.

The major economic costs associated with a nuclear defended autarky would undermine the nationalistic legitimacy gained from resisting intrusive inspections or fulfilling onerous conditions from the IAEA.

Each year a million young Iranians come on to the jobs market, but there is employment for fewer than half of them. After the shah's regime was overthrown in 1979 much of the economy was taken over by state-funded Islamic foundations set up to channel social services to the urban and rural poor, which have since become monopolies in charge of large sectors, with little competition, regulation or taxation.

The pragmatists realise external investment and technology transfer are needed to modernise the economy and are anxious to gain access to international markets and expertise.

Despite its economic problems, vicious factionalism and rooted political conflict between contending social forces, the regime has a solid record of social achievement. Rates for literacy and education have come on strongly, including for women.

There is a deep-rooted record of reformist struggle by trade unions, non-governmental organisations, women, students and intellectuals. In recent years there have been dramatic conflicts over clerical control, the interpretation of Islamic law, censorship and political reform, and the arrest of dissenters.

Much of this was expressed through parliamentary and presidential elections, including those forthcoming this summer. A notable feature has been a general disillusionment with the record of the elected reformist leaderships, which have failed to deliver on expectations.

This complex social reality is obscured by loose talk of rule by the mullahs and the related quasi-racist assumptions of social backwardness rooted in Islamic reaction.

Those who know Iran say it is a vibrant society with a lively culture which resists absorption by the West but is open to influence from abroad on its own terms. Only a small minority would welcome regime change or democracy imposed externally by the Americans. Those who advocate such change have little understanding of how deeply unpopular the US is in the region, where it seen as an agent of Israel.

It is much too soon to say this will change radically, even if there is a wave of democracy and progress towards an Israeli-Palestinian settlement.

The argument for conditionally engaging Iran makes good sense, given these cleavages over economic and social policy. There are real incentives for Iranian leaders to comply with inspections and to restrain enrichment - but they would have to be large and credible, according to knowledgeable commentators. The same applies to strategic security guarantees.