DTIC ADA493440: Understanding Iran

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Understanding Iran
Jerrold D. Green, Frederic Wehrey, Charles Wolf, Jr.
Prepared for the Smith Richardson Foundation
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The research described in this report was sponsored by the Smith
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Library of Congress Cataloging-in-Publication Data
Green, Jerrold D.
Understanding Iran / Jerrold D. Green, Frederic Wehrey, Charles Wolf, Jr.
p. cm.
ISBN 978-0-8330-4558-4 (pbk. : alk. paper)
1. Iran—Politics and government—1997– 2. Iran—Economic conditions—1997–
3. Iran—Foreign relations—1997– I. Wehrey, Frederic M. II. Wolf, Charles, 1924–
III. Rand Corporation. IV. Title.
JQ1785.G74 2009
320.955—dc22
2008035190
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Preface
Th e United States has been working predominantly in the dark with
respect to the Islamic Republic of Iran. All interested players, regard-
less of their political leanings or underlying motivations, suff er from
America’s collective ignorance about this uniquely complex country.
Th is ignorance stems from Iran’s denial of sustained physical access
to American visitors, but it also stems from America’s lack of access to
and insight into the workings of the Iranian system itself, especially its
economic system.
Th is gap is what the project reported on in this monograph
addresses. Th e project’s architects recognized that U.S. policymakers
of all perspectives need to understand what motivates Iran and how it
works. Fully aware of the analytic challenges that Iran off ers, the proj-

ect organizers turned to the Smith Richardson Foundation for assis-
tance, with an eye to constructing a user-friendly and readable hand-
book that could enable U.S. policymakers to get up to speed on Iran
in an effi cient fashion.
Th is research was conducted within the International Security and
Defense Policy Center (ISDP) of the RAND Corporation’s National
Security Research Division (NSRD). NSRD conducts research and
analysis for the Offi ce of the Secretary of Defense, the Joint Staff , the
Unifi ed Combatant Commands, the defense agencies, the Department
of the Navy, the Marine Corps, the U.S. Coast Guard, the U.S. Intel-
ligence Community, allied foreign governments, and foundations.
For more information on RAND’s International Security and
Defense Policy Center, contact the Director, James Dobbins. He can be
iii
iv Understanding Iran
reached by email at [email protected]; by phone at 703-413-
1100, extension 5134; or by mail at the RAND Corporation, 1200 S.
Hayes Street, Arlington, VA 22202. More information about RAND
is available at www.rand.org.
Contents
Preface ............................................................................. iii
Figures and Tables ...............................................................vii
Summary .......................................................................... ix
Acknowledgments ............................................................. xvii
Abbreviations .................................................................... xix
CHAPTER ONE
Introduction ....................................................................... 1
Birth of the Project ................................................................. 1
Background ......................................................................... 2
Contents of Th is Document ...................................................... 3
CHAPTER TWO
Features of the Iranian System ................................................. 5
Iran’s Political Landscape: Individuals and Institutions ....................... 6
Th e Supreme Leader: Infl uence and Worldview .............................. 7
Th e National Security Establishment and the Rise of the
Revolutionary Guards .....................................................10
Th e Iranian Economy: Oil Dependency, Key Actors, and Policies .........15
Oil Export Dependency and Its Pathologies .................................16
Economic Policies and Institutions: Complexity and Redundancy .......21
Disarray and Dysfunction in Economic Policy Execution ................ 23
Th e Elite’s Political Culture: Factionalism and Informality..................25
Factional Dynamics at Work: Th e Nuclear Case Study ................... 28
Iran’s Approach to Its Arab Neighbors: Implications for Iranian
Behavior and U.S. Policy ....................................................33
v
vi Understanding Iran
Iran’s Outreach to Arab Publics .............................................. 34
Iran and Anti-Shiism .......................................................... 36
Iran’s Negotiating Style ...........................................................39
CHAPTER THREE
Conclusion: Iran Is Unlike Other Countries but Hardly Beyond
Understanding ..............................................................47
APPENDIX A
Workshop Agenda ...............................................................49
APPENDIX B
Workshop Papers ................................................................51
Decisionmaking for National Security: Th e Nuclear Case, Shahram
Chubin .........................................................................52
Negotiating with Iran: A Case Study, James Dobbins ........................ 66
Iran’s Defense Establishment, Anoush Ehteshami ..............................71
Negotiating with Iran, Jerrold D. Green ........................................79
Understanding Ayatollah Khamenei: Th e Leader’s Th oughts on Israel,
the U.S., and the Nuclear Program, Karim Sadjadpour ................ 87
Th e Politics of Factionalism in Iran, Amin Saikal ............................ 96
Economic Decisionmaking in Iran, Koichiro Tanaka ....................... 105
Iran in the Arab Sphere: Debating Legitimacy, Sovereignty, and
Regional Order, Fred Wehrey ............................................. 113
Iran’s Oil Sector: Questions, Puzzles, Explanations, Charles Wolf, Jr. .... 123
APPENDIX C
Biographies of Workshop Participants .................................... 129
References ....................................................................... 141
Figures and Tables
Figures
2.1. Major Institutions of the Iranian Defense Establishment ........11
2.2. Flow of Funds: Iranian National Budget, 2007 ...................18
2.3. Flow of Funds: Projected Government Revenue, 2007 ...........19
2.4. Flow of Funds: Projected Government Spending, 2007 ..........19
Tables
2.1. Budgetary Funds: Ministry Sources and Recipients ............. 20
vii