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IRAN: Behind the Scenes Ahead of Kazakhstan Talks

Bottom Line: Against the backdrop of 25 February P5+1 talks in Astana, Kazakhstan, the Obama administration is seeking to lay the foundation for a deal with Tehran once Iran’s June presidential elections are over, but Israel and Saudi Arabia will covertly attempt to hijack any détente.

Analysis: First, two things are happening in Iran that are significant to the backdrop of 25 February nuclear talks in Kazakhstan: 1) the Iranian riyal is on a fast downward spiral against the dollar, plummeting to under 40,000 to the US dollar and counting as Iran goes on a printing binge to finance energy subsidies; 2) there is a great deal of political horse-jockeying going on ahead of 14 June presidential elections and no deal can be made with Iran before these elections are over.

Kazakhstan Talks

Iranian elections pit three factions against each other: the faction President Mahmud Ahmadinejad; and two ultra-conservative factions.

What is keeping Tehran at a distance for now is the fact that while the Obama administration may wish to deal in détente, the US Congress is dominated by conservatives who would attempt to stymie any such progress. What the Obama administration has perhaps recalled is that historically, energy deals with enemies have actually served as the backbone of US energy supplies: Soviet gas and oil during the Cold War, for instance. The goal is direct bilateral talks with Iran.

What is ostensibly on the table - not in Kazakhstan, but in the longer term - is some sort of energy cooperation deal with Iran. Iran’s nuclear program has always been a bit of a red herring in this ongoing debate. Iran does not have nuclear weapons. (Kazakhstan does, however, and is arguably ruled by a dictator - so it is a very interesting choice of venue for these talks and certainly the message is not lost on Iran.) Specifically, what may eventually be on the table (barring Congressional, Israeli and Saudi spoilers) is a Caspian energy deal with Azerbaijan, Iran, Kazakhstan (hence the venue), and Turkmenistan. These countries will all meet in early March.

All deals will go through the Supreme Leader. Our intelligence sources indicate that Ali Larijani--the president of Iran’s parliament, a favorite of Supreme Leader Ayatollah Khamenei and a presidential candidate for June elections - has engaged in secret talks with the US twice already this year. Why are these talks secret? Because Israel and Saudi Arabia won’t accept them or any possible détente that would come as a result. This is the message Israel wished to send when it launched an airstrike in Syrian territory earlier this month. Saudi Arabia would take similar measures by using various theaters to intensify the sectarian nature of Middle East conflict (Sunni-Shi’ite).

Nothing concrete will happen in Kazakhstan; nor will anything concrete happen before Iranian presidential elections, but behind the scenes the Obama administration is making moves towards a détente with Tehran. US Congress will fight this, but the bigger problems will be Israel and Saudi Arabia and we expect one or the other to respond by proxy at the first sign of any mellowing of the situation in Astana in the coming days.

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