Iran Under Khatami

A Political, Economic, and Military Assessment

David Menashri, Eliyahu Kanovsky, Michael Eisenstadt, Patrick Clawson
Release Date: June 30, 1998

Iranian president Muhammad Khatami has generated much interest since taking office in August 1997. On the surface, he seems quite different from the Islamic Republic’s earlier leaders: He talks about dialogue of civilizations, not about death to America, the Great Satan. But at the same time, under his leadership, Iran has test-fired its first missile with a range that includes much of the Middle East, has maintained its unrelenting hostility toward Israel, and has affirmed its position as the region’s leading supporter of terrorism.

The chapters that follow explore the contradictions in Khatami’s Iran as well as their implications for U.S. policy. They build upon three earlier Policy Papers issued in 1996-1997: on by David Menashri on Iranian domestic politics, another by Eliyahu Kanovsky on the economy, and a third by Michael Eisenstadt on the military.

In the arena of foreign policy, Khatami has enjoyed his greatest successes. The Europeans and even the United States are searching for an improvement in relations. At a time when the Arab-Israeli peace process is doing poorly, the coalition containing Iraqi president Saddam Husayn is crumbling, and to many in Washington like one country in the region where the U.S. government could achieve diplomatic “breakthrough.”

In their updates for this volume, Menashri and Kanovsky show that things are not going so well for Khatami at home. The economy has been hit hard by declining oil prices, compounded by the government’s inaction on fixing structural problems. On the political scene, despite Khatami’s continuing strong popularity, his conservative opponents have regained their footing and are vigorously competing with him for control over the levers of power.

Unfortunately, as Eisenstadt and Patrick Clawson explain the reality of Khatami’s actual influence on policymaking and the prospects for real improvement in U.S.-Iranian relations are not hopeful. Aside from the relatively moderate tone of some official rhetoric, little of substance has changed in the three key areas of concern: support for terrorism, pursuit of weapons of mass destruction, and undermining the peace process.

At a time of ferment an change in Iran, the U.S. government needs to consider how to adapt its policies to changing perceptions of Iran, while at the same time holding firm on America’s unswerving goals. We hope that Iran Under Khatami will contribute to a better understanding of how Iran is evolving and how U.S. policy can respond with creativity and ingenuity.