Supreme Loser

The United States and Iran are once again set on a collision course — this time over the world’s narrowest choke point, the Strait of Hormuz. With the specter of more draconian sanctions hovering over its oil exports, the Iranian regime threatened in late December to seal off the strait through which 30 percent of the world’s oil supply travels. Iran’s menacing rhetoric was matched by a bellicose rebuff from the U.S. Navy’s 5th Fleet, based in neighboring Bahrain, warning that any disruption of the strait "will not be tolerated."

The exchange was of a piece with Supreme Leader Ali Khamenei’s new foreign-policy doctrine: Iran will "respond to threats with threats." The regime’s inflammatory language certainly got the world’s attention, reminding the West and its local allies that the Persian Gulf is a tinderbox where a single miscalculation could trigger a catastrophic war.

But was threatening to set off a global recession such a smart move? In fact, Khamenei — the ultimate arbiter of Iran’s internal politics and international relations — has proved himself a poor analyst of the West’s red lines toward his country, and this confrontation is just the latest incident to bring the supreme leader’s strategic calculus into question. Although Tehran might benefit from the threat by jacking up oil prices, a blockade of the strait would deprive the Iranian government of half its revenue, sour relations with China and Japan, alienate Oman and Iraq as its remaining regional allies, and escalate conflict with Washington to a level that could easily spiral out of control. It would be an own goal of epic proportions.

Whether these threats are serious or not, Iran is playing a dangerous game of chicken. Just this week, the regime conducted a military drill in the Persian Gulf and announced a new breakthrough in its nuclear program, raising concern in Washington and feeding into hawkish critiques of U.S. President Barack Obama’s sanctions strategy. But is bluster a winning strategy for Iran? The Islamic Republic has a history of boneheaded foreign-policy blunders, and no single case illustrates Khamenei’s strategic ineptitude better than his handling of Iran’s nuclear crisis.

At its onset, nearly a decade ago, the firestorm over Iran’s atomic ambitions was a blessing in disguise for the supreme leader. For the first time since the Iran-Iraq War, the regime had an issue that could potentially revitalize its exhausted esprit de corps, rally the nation around the flag, bolster Iran’s clout across the Islamic world, and fracture the hostile international coalition.

At first, the shock and awe of Saddam Hussein’s 2003 overthrow in Iraq compelled the conservative ayatollah to opt for compromise over conflict. When negotiations with the Europeans failed to win U.S. support, however, Khamenei concluded that "nuclear diplomacy" was little more than regime change in disguise.

The turbaned helmsman laid out his nuclear calculus in a meeting of Iran’s Supreme National Security Council in 2004. Contending that the United States and its allies were unwilling to find a modus vivendi with the Iranian theocracy, Khamenei maintained that nuclear capitulation would only invite more pressure on human rights issues, sponsorship of terrorism, and regional subversion.

The nuclear nonproliferation regime also appeared innately unjust, particularly given Israel’s atomic ambiguity. The regime’s ideological foundations, based on warmed-over Third Worldism and Islamic universalism, also called for resistance. Thus, strategic considerations were melded with ideology to transform the nuclear program into the apotheosis of Iran’s revolutionary defiance.

Initially, Khamenei’s nuclear brinkmanship seemed to have worked. But even a successful policy requires constant recalibration — a skill that the stubborn, geriatric leader lacks.

In 2005, Iranian pragmatists such as Hassan Rowhani, then Iran’s national security advisor, advocated appeasement and forewarned of the perils should Iran be ambushed at the U.N. Security Council. Khamenei rebuffed their proposal, reprimanding them for succumbing to Western intimidation. He believed that divisions in the international community would prevent such a referral. A year later, he got his comeuppance when Iran’s case was indeed referred to the Security Council.

Faced with the threat of international sanctions, Khamenei prescribed his usual steadfastness, counting on Russia and China to stonewall further action. Once again, he miscalculated. The sanctions resolution passed unanimously. The reclusive ayatollah’s misjudgments — compounded with the diplomatic mediocrity of Mahmoud Ahmadinejad’s presidential administration — brought Iran three more rounds of draconian sanctions in the ensuing years.

Flash forward to 2009, when Obama’s tepid overtures received a cold shoulder from Tehran. Once again Khamenei’s intransigence boomeranged back against him: The White House used his "clenched fist" to make the case that the Iranian regime was unwilling to negotiate, turning global public opinion against Iran and paving the way for further coercive measures. U.N. Resolution 1929 passed in June 2010, imposing the toughest international sanctions on Iran to date.

Over the past several months, the U.S. strategy has culminated in several condemnations of Iran on the international stage: the publication by the International Atomic Energy Agency (IAEA) of staggering details concerning the possible military dimension of Iran’s nuclear activities, allegations of an Iranian plot to assassinate the Saudi ambassador in Washington, and denunciation of the clerical regime’s dreadful human rights record, which yielded three U.N. resolutions in a matter of a few days.

Khamenei’s nuclear gamble has been painful for the Iranian people. Corralled by sanctions and plagued with mismanagement, the country’s economy is ruined, its financial sector is paralyzed, and its energy sector is in shambles. This month, an ill-considered threat to halt trade with the United Arab Emirates caused the Iranian rial to go into a free-fall, hitting its lowest-ever mark against the U.S. dollar.

International developments have also not been kind to Tehran’s ruling cabal. After marginalizing the reformists, the conservative factions of the Islamic regime are now engaged in a political fratricide. In the wake of uprisings in the Arab world, Iran’s popularity in the region has plummeted. The Syrian regime, Tehran’s sole regional ally, increasingly appears unable to resist the calls for change shaking the entire region. Even Iran’s former allies in the Non-Aligned Movement have repeatedly voted against Iran at the IAEA and the Security Council, perceiving Tehran’s nuclear quest as too controversial for the country to serve as the developing world’s standard-bearer. Nearly a decade since the advent of the nuclear crisis, Iran is internally divided, regionally diminished, and internationally isolated.

Not only have Khamenei’s strategic goals proved elusive, but his atomic dreams remain unfulfilled. Despite Iran’s bragging that it will eventually install 50,000 centrifuges, the number of machines that it can keep spinning still hovers around 8,000, and their output continues to wane. Development and mass production of the more sophisticated machines has also stagnated.

Notwithstanding these setbacks, Khamenei remains steadfast. Preserving the ideological order of the Islamic Republic is more important for the supreme leader than crossing the nuclear Rubicon. For a leader who, in the words of John Milton, prefers "to reign in hell than serve in heaven," surrender is political suicide. In the eyes of this custodian of political Islam, surrounded by a culture of complacency and mendacity, a Pyrrhic victory is divine providence.

Against this backdrop, Washington’s belief in the ability of sanctions to curtail Tehran’s atomic ambitions proves credulous. Iran’s nuclear defiance is ideological and thus cannot be resolved by coercion. Rather than repeating the failed policy of pushing the supreme leader into a corner, the Obama administration should aim for piecemeal solutions that would allow for a face-saving compromise. The goal should be to decelerate Iran’s perilous nuclear activities and put it under rigorous international monitoring until cooler heads prevail in Tehran.