IRAN/P5+1 OFFER: LOCAL EXPERTS PESSIMISTIC,

C O N F I D E N T I A L ISTANBUL 000361

SIPDIS

LONDON FOR GAYLE; BERLIN FOR PAETZOLD; BAKU FOR MCRENSKY;
DUBAI FOR IRPO

E.O. 12958: DECL: 07/02/2018
TAGS: PREL PGOV PINS KNNP EU IR TU
SUBJECT: IRAN/P5+1 OFFER: LOCAL EXPERTS PESSIMISTIC,
PREDICT IRANIAN STALLING

REF: DUBAI 39

Classified By: Deputy principal officer Sandra Oudkirk; Reason 1.5 (d)


1. (C) Summary: In discussions with several well-informed
contacts over the past two weeks regarding the updated P5 1
offer to Iran and the regime's likely response, Consulate
Istanbul "Iran Watcher" was told that the regime would most
likely claim to be responding to the offer in good faith --
by agreeing to a temporary "freeze-for-freeze" period -- as
it stalls for time. Although several elements of the new
package got the regime's attention, one expert claimed, the
incentives still do not address Iran's real economic need --
helping its hydrocarbon sector -- and are not enough to
persuade the Supreme Leader to abandon the most fundamental
aspect of Iran's nuclear policy since 2003 -- preserving the
enrichment program. Only the advent of new "political
realities on the ground" (possibly some combination of new
administrations in the U.S. and Iran, or a truly debilitating
turn to the Iranian economy) could compel this
"strait-jacketed" regime to come to the table on the P5 1's
terms, according to well-informed contacts. End Summary.


2. (C) Following Javier Solana's presentation to Iranian
officials on June 14, 2008 of the P5 1's updated package of
incentives as part of a proposed negotiation to resolve
international concerns over Iran's nuclear program, Consulate
Istanbul's "Iran Watcher" probed a range of Iranian and local
contacts for their assessment the likely Iranian government
response.

"They will keep stalling for time, nothing more."
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3. (C) According to a western correspondent (protect) who
travels to Iran frequently and who spoke recently about the
P5 1 offer with outgoing SNSC Deputy Javad Vaeedi, three
recent personnel moves within the top echelons of the regime
will impact the regime's response to the P5 1 offer, and
indeed already signal the likely reply: Javad Vaeedi's
replacement on June 29 by former MFA DG Ali Bagheri as Deputy
for international affairs at Iran's Supreme National Security
Council (SNSC) and the announcement by Supreme Leader
Khamenei on June 28 of the appointment of SNSC Secretary
Saeed Jalili as his personal representative to the SNSC
(replacing current Majles speaker Ali Larijani) "strengthen
the already-dominant hand of the Supreme Leader" in guiding
the SNSC's discussion of a response. In his new capacity,
Jalili will report directly to Khamenei, and the SNSC will
correspondingly reflect Khamenei's personal views even more
precisely. Khamenei's additional decision on June 28 to
appoint outgoing Majles speaker Haddad-Adel as a senior
advisor "locks in another top so-called hard-liner under
Khamenei's direct supervision."


4. (C) According to the correspondent, who has been covering
Iran's politics for over fifteen years, these moves reinforce
the Supreme Leader's office as "the center of gravity in
deciding how to act and react on the nuclear file" even as
incoming Majles Speaker Larijani maneuvers to give the Majles
more of a role on that key issue. Asked to predict what that
response would be, he suggested the most likely response, in
keeping with Khamenei's personal and political style, will be
to buy as much time as possible in "reviewing the offer",
while ruling out in strong rhetorical terms (largely for
domestic consumption) any suspension of the enrichment
program. "Ultimately", he predicted, "Khamenei will not
commit Iran to a new approach on the nuclear file, at least
until after U.S. presidential elections in November."
Moreover, he also suggested that the June 30 New Yorker
article asserting that the USG is pursuing a USD 400 million
covert action program against Iran, which has received
widespread media coverage in Iran, pre-empts Khamenei from
even the appearance of giving in to western pressure. "They
will keep stalling for time, nothing more."

Two P5 1 elements got their attention, but not enough
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5. (C) A Tehran-based Iranian-American analyst for an
independent conflict-prevention organization (please
protect),who occasionally travels to Turkey, struck a
similar note, telling Istanbul's "Iran Watcher" that Solana's
presentation did prompt some internal debate, "though it was
largely muted once the EU announced additional sanctions, and
especially with the announcement of Israeli military
preparations for an attack on Iran." He assessed that
President Ahmadinejad is leading the charge internally
against any accommodating response, as he is looking ahead to
June 2009 Presidential elections and believes he stands the
best chance of re-election if he is seen by the Iranian
public as taking the strongest stand within the regime's
constellation of leaders. As a corollary, the analyst felt
that Ahmadinejad was feeling increasing political pressure as
a result of the worsening economy, and has concluded that to
win re-election, he needs to keep public discussion focused
on "external threats" rather than on his own government
team's managerial incompetence.


6. (C) The analyst indicated the two aspects in particular
of the P5 1 offer that have "gotten the Iranian government's
attention": First, language in the proposal stating that
Iran may pursue "R&D in nuclear energy as international
confidence is restored" is being interpreted some in the
regime (comment: presumably wrongly) as a signal that Iran
may eventually resume its centrifuge enrichment program after
a suspension is completed and the Additional Protocol is
implemented. Second, the fact that Secretary Rice had
actually signed the proposal was welcomed as a small but
noteworthy gesture showing the regime that the USG "accepted
its legitimacy as an equal and sovereign counterpart." He
noted, however, that "the offer now gives Iran an additional
lever to buy time": posturing over the "freeze-for-freeze"
idea which itself precedes the "suspension-for-suspension"
idea that would signal the start of real negotiations.
"Expect Iran to react positively to the freeze-for-freeze
aspect of the offer, drawing out discussions on that aspect
of the offer for as long as Iran can get away with that." He
said that SNSC Secretary Jalili was the Iranian official who
was pushing most strongly for a positive response to that
aspect of the offer. On the other hand, his Iranian
government contacts have also pointed out to him that the
updated P5 1 offer still does not include the removal or
suspension of the most damaging US sanctions on Iran -- on
the hydrocarbon industry. Overall, the analyst agreed with
other experts that "while some symbolic progress may develop
from the freeze-for-freeze condition, major movement will
have to wait for future U.S. and Iranian Presidents to
pursue."

Interests Section proposal "threw them on their back heels"
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7. (C) A Turkish professor based in Istanbul (protect) who
maintains close contacts with the Iranian Expediency
Council's think tank, the Center for Strategic Research,
noted that his CSR contacts were guardedly positive about the
revised P5 1 offer, as it showed them that Iran's approach of
holding firm was working. The lesson the CSR's "pragmatic
Rafsanjani-oriented conservatives" are drawing is that,
absent any indication of a much stronger UNSC sanctions
resolution being prepared in New York in coming months, Iran
should continue the enrichment program, continue its
"reinvigorated regional diplomacy", and continue to benefit
from rising oil prices, while not outright rejecting the P5 1
offer. The one wild card that appeared to "throw them on
their back heels" were recent press reports suggesting that
the USG was considering asking Iran for permission to open an
Interests Section in Tehran, staffed by U.S. diplomats. "The
system is quickly coming to consensus on how to respond to
the P5 1 offer, because its contents were predictable and
telegraphed. But the system is unsure about how to respond
to a genuine USG request for a diplomatic presence in Iran."

Comment
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8. (C) Istanbul "Iran Watcher" considers these three sources
to be among our best-informed local contacts regarding
internal political developments in Iran, based on their own
regular contacts with influential Iranian players and power
centers. The consensus view from these experts, which tracks
with further views from other Iranian contacts, is that the
Iranian regime is unlikely to change significantly its
approach to the nuclear file -- i.e., accepting a requirement
to suspend its enrichment program -- even in response to the
updated P5 1 package or the threat of further sanctions. The
Iranian regime, because of its "strait-jacketed
decision-making complexity" in the words of one Iran-based
contact, is locked into a stasis on the nuclear file. Even
if Supreme Leader Khamenei wanted to genuinely accept the
P5 1 offer, these experts agree, he cannot do so until "new
political conditions on the ground" are in place, conditions
that only the advent of new presidencies in the U.S. and Iran
-- or a debilitating turn to the Iranian economy -- could
produce. In the meantime, they cautioned, the USG should not
expect anything but "mixed messaging, parsed rhetoric, and
the same old stalling." End comment.
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