Solana: Tehran’s cooperation with the IAEA will remove ambiguities and hasten to assuage the prevailing political atmosphere

Iran and the European Union have been discussing and exchanging views over the trend of their cooperation as well as regional and international issues for quite some time, which delegations going back and forth in generosity. The world’s biggest trade bloc is Iran’s most significant trade partner and accounts for up to 40% of Iran’s import-export. The two sides have examined the grounds for mutual cooperation in such areas as energy, the campaign against narcotic drugs, asylum seekers, trade and investment. They have also explored fresh avenues for cooperation in other areas such as agriculture, fishery, transportation, environment and scientific research. Both agree on the need for the meeting of working groups and for speeding up the process of implementation of agreements already reached between them, and ultimately the establishment of an Iran-EU Trade and Cooperation Agreement.

Kharrazi has attributed human rights disagreements between the EU and Iran to what he called "cultural differences."

During his two-day stay in Iran the EU Foreign Policy Chief urged Iran to fully cooperate with the International Atomic Energy Agency (IAEA). "Tehran’s cooperation with the IAEA will remove ambiguities and hasten to assuage the prevailing political atmosphere," he said. In a meeting with Head of Iran Atomic Energy Organization (IAEO) Gholamreza Aqazadeh, Solana acknowledged "a heightened world atmosphere over Iran’s nuclear energy program" and urged Iran to embark on a confidence building process with the aim of assuring the world community and to calm the international atmosphere on Iran nuclear program. This is to everybody’s benefit.

Aqazadeh described Iran’s nuclear program and said Iran is fully cooperating with the nuclear watchdog. He lamented what he said some countries’ claims on "Iran’s insufficient cooperation with IAEA." Some countries think that Iran should stop its nuclear program, but "we have decided to continue to build 7,000 megawatts of electricity by 2020. Iran has cooperated more than any other nation with IAEA during the course of the year and "assertions by some other nations is purely political." He further recommended that IAEA should be allowed to conduct its duties in a tranquil atmosphere and "we expect our European friends to help in calming the situation."

Upon arrival, Solana told reporters that the visit aims to review the two sides` views in order to reach consensus on regional and international issues as well as the latest developments in Iraq. "I had constructive talks with senior Iranian officials during my last visit to Iran and I will hold meetings with Iranian officials at various levels to expand mutual relations between Iran and the European Union," he said.

Javier Solana has been visiting Iran with, as he put it, the determined aim of improving ties with the Islamic Republic. This is part of the EU’s policy of "constructive engagement" with Iran, which is in contrast to the U.S. policy of isolating the country.

Cooperation between Iran and the EU remains limited, with drugs control and refugee assistance as the main priorities in EU assistance to Iran

A key question that arises is: What is the European Union trying to achieve with its nuanced approach? An EU official in Brussels, who is close to the policy making on Iran and preferred to remain anonymous, says the aim is to "keep a door open" for the Iranians, encouraging them to continue their reforms. The official described Iran as "quite an important country" and a "key player" that is halfway through a reform process. He acknowledged that the path chosen by Brussels is a "difficult and delicate" one, but he said the EU believes it must not close itself off from Iran.

He said the policy of engagement is only beginning, and that if there is no sign of willingness from Tehran to make progress, then the dialogue will not last very long. The official also said that in addition to concluding the trade-and-cooperation pact, the EU plans to issue a joint declaration with Iran on their political dialogue—probably including references to human rights—and also to exchange letters on cooperation in the fight against terrorism. All these documents are set to be finished in about a year, though no firm date has been set.

It seems that the EU aims is to talk to the Iranians and offer them a trade deal to improve their deeply sagging economy in hopes of supporting reformist elements and gradually bringing Iran around to international norms of behavior.

The next question is will this tactic work?

The EU policy is useful, but it will take time before it produces any results. The objectives of the Solana trip may be limited and it is not intended to bring results on major areas of disagreement, but it goes to show that unlike the Americans who believe in containment on Iran, the EU believes in engagement. The idea is to tell the Iranians that they should keep a low profile, that despite their internal differences, it’s not the time now to adopt a tough stand on human rights and nuclear energy; it is a message of moderation to all factions in Iran. Reports from Tehran say the EU has asked Iran to use its influence with anti-Israeli militant groups to calm the situation in the Middle East. The reports quote diplomats as characterizing Solana’s talks with Khatami and Foreign Minister Kamal Kharrazi as "tough."

The value of Iran’s exports to the European Union rose by over 50% in the first quarter of 2003 following last year’s fall in the wake of a worldwide downturn

Iran’s current account surplus, low debt and comfortable level of reserves have helped to protect the economy from external shocks, such as the aftermath of September 11. However it faces a difficult challenge in trying to accelerate the pace of reform and to create new jobs for its young population and to further reduce the still high unemployment rate. In order to improve its economic performance in the long term, The EU believes that Iran needs to move towards a market economy and to liberalize and harmonize its investment regime. Iran cannot rely on high price of oil for much longer. To ensure economic stability it must accelerate the pace of reforms and open up to the rest of the world.

The current five-year plan (2000-2004) envisages a range of reforms in the areas of privatization, investments and in the tax system. The objectives are to diversify the oil-driven economy and to create jobs for the rapidly growing population.

The finalization of the Iran-EU Trade and Cooperation Agreement in addition to providing Iran with new facilities would also institutionalize economic and trade relations between the two sides, especially now that Iran-EU trade transactions amount to well over $13 billion, shaping 40% of Iran’s export-import.

Underlining the need for further expansion of relations between Iran and the European Union in different fields, Iran’s Foreign Minister Kamal Kharrazi has said that it is high time that fences were mended in long-term bilateral relations, especially in the economic field. He pointed to the vast economic potentials of both Iran and the European Union and expressed his hope that finalization of agreements would prepare the ground for further consolidation of bilateral relations. Iran’s geographical location and rich natural resources, especially in the field of energy make it a potentially lucrative opportunity, and this may encourage the EU to expand overall cooperation in various economic fields, including the exploitation and transfer of energy.

More than 80% of EU imports from Iran consist of oil products, whereas the exports to Iran are more diversified, with power generation plants, large machinery and electrical and mechanical appliances making-up about 45% of the total exports.

An EU-Iran Working Group on Trade and Investment met for the first time in November 2000 in Tehran, to discuss possibilities to increase and diversify trade and investments. A third meeting was held in October 2002. If the conditions for developing relations with Iran are right, the Working Group could serve as a precursor to the negotiations of a Trade and Cooperation Agreement.

The value of Iran’s exports to the European Union rose by over 50% in the first quarter of 2003 following last year’s fall in the wake of a worldwide downturn. Iranian exports to the world’s biggest trading bloc grew to €1.7 billion ($1.9 billion) in the first three months of 2003, compared with €1.1 billion in the same period in 2002.

The Fifth Tehran International Auto Fair, a five-day event that closed 5 July 2003, drew companies such as Renault SA, PSA Peugeot Citroen, Mazda Motor Corp., DaimlerChrysler AG’s Mercedes-Benz, Fiat SpA and Volkswagen AG. Many foreign companies—including Europeans—continue to invest in Iran even though U.S. President George W. Bush branded the country as part of an "Axis of Evil". Some foreign investors, such as Japan, are delaying projects. Yet most of the about 200 companies present in Iran, such as Ericsson AB, the world’s largest maker of mobile phone equipment, and Alcatel SA, the second-biggest producer of telecommunications gear, are staying put though adopting a low profile.

Closer ties with Iran appear to put the EU on a collision course with the United States, which considers Tehran a key sponsor of international terrorism, a charge Iran vehemently denies. In July, the EU sharply criticized the decision by the U.S. Congress to extend by five years the "Iran and Libya Sanctions Act", which threatens economic reprisals against foreign companies engaged in trade with either country. The EU rejects U.S. jurisdiction on its firms and has allowed its companies to engage Iran in their trade transactions.

In drugs control, the European Commission has been working with the Economic Cooperation Organization (ECO) contributing €190,000 to a drug control co-ordination unit, and €1.7 million to the UNDCP for projects relating to demand reduction, awareness raising and legal assistance. Two expert meetings on drugs have been organized, and a troika meeting with Iran on drugs took place in Brussels 6 June 2002.

Underscoring the European Union’s interest in further consolidating overall relations with Iran, the EU has announced its readiness for holding future talks on trade agreements and cooperation, holding subsequent sessions of the trade and investment, narcotic drugs and asylum seekers working groups in Brussels. The EU appreciates Iran’s costly moral and material efforts in its campaign against drug trafficking as well as in hosting refugees and stressed on the effective cooperation of the European Union with Iran.

Iran has welcomed the European Union’s interested in the further expansion and consolidation of overall relations with the Islamic Republic of Iran and has called for the required facilities for the export of Iranian goods to the European markets.

A Working Group on Energy was established in May 1999. It has identified six major sectors for dialogue and potential co-operation. The Group held its third meeting in Tehran in October 2002, and added energy-related transport issues to its agenda.

Negotiations for an EU-Iran Trade and Cooperation Agreement, linked to negotiations on political dialogue and counter-terrorism, were launched in Brussels in December 2002. Later that same month, the EU and Iran held a troika meeting and an NGO roundtable in Tehran on Human Rights, marking the start of an exploratory, direct, Human Rights dialogue.

After the Iranian parliamentary elections in February 2000, which gave the reform coalition an overwhelming majority, the Council of Ministers asked the European Commission to prepare a proposal for how to develop closer relations with Iran. These proposals were made in the above mentioned Communication. It is hoped that the ties with Iran will develop gradually, but this will be subject to continued monitoring of the Iranian progress in the fields of political, economic and social reform.

Following President Khatami’s re-election in June 2001 by a comfortable margin, expectations were high but the reform pace has so far remained modest. During 2002, reformists increased their efforts via the Parliament to attempt to strengthen the executive powers and accelerate institutional reforms. Contributions to programs for refugee assistance and drugs control are under way. If progress in the reforms continues, the negotiations on the Trade and Cooperation Agreement are likely to start in the near future.

Issues such as disarmament, mechanisms to improve human rights in the world and the fight against terrorism have also been on the agenda of talks between the two sides. Iran has consistently criticized the double standard attitude taken towards the issue of human rights, and has called on the European Union to adopt a clear stance in this regard and take practical steps for a serious campaign against the presence and activities of the terrorist MKO (munafiqeen) group in Europe.

Iran’s Foreign Minister Kamal Kharrazi has attributed human rights disagreements between the EU and Iran to what he called "cultural differences." He said these stem from Iran being an "Islamic democracy," while the West is made up of secular democracies. He said that a non-Western perspective would detect human rights abuses in the West, too, and that human rights issues should not be "politicized." The EU has in the past been inclined to downplay human rights concerns in favor of further engagement with Iran; but at times it uses it as an excuse to stall progress in bilateral relations.

Iran-EU relations must be studied from two aspects—Iran’s relations with the EU as a whole and the country’s ties with every single European country. Iran has good relations with EU member countries due to common interests, and effective steps have been taken in this connection. However, with respect to the European Union the issue is rather more complicated as any movement within the body requires collective consensus of the members. Therefore, given the differences of opinion and interests of the members, forging such a consensus is rather difficult. However, generally speaking it should be admitted that relations have been moving forward.

Despite a political dialogue that has been icy at times, EU’s external affairs commissioner, Chris Patten has stated that the EU is keen to deepen and widen what he called "useful dialogue" with Iran in a number of areas. These include energy cooperation—Iran is a major exporter of oil and gas and is an important transit country—as well as improvements in trade and investment opportunities.