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Why the U.S. Blew a Chance to Reconcile with Iran

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In the late 1980s the U.S. government had an opportunity to change its relationship with Iran from hostile to nonadversarial. It had been hostile since 1979, when the Islamic revolution overthrew the brutal U.S.-backed Shah Mohammad Reza Pahlavi and Iranians held 52 Americans hostage for more than a year.

The relationship deteriorated further when the Reagan administration helped Iraq after it attacked Iran and as the Iraqi forces used chemical weapons on the Iranians. During the war, the U.S. Navy shot down an Iranian civilian airliner, killing the more than 200 people aboard. (On the other side, the Reagan administration sold arms to Iranians in an attempt to free American hostages in Lebanon and to finance aid to the Contras in Central America.)

Despite all this, reports Gareth Porter in his important new book Manufactured Crisis: The Untold Story of the Iran Nuclear Scare, change was in the air in 1989.

Iran’s Supreme Leader, Ayatollah Ruhollah Khomeini, died and was succeeded by the president, Ayatollah Ali Khamenei. Then Akbar Hashemi Rafsanjani, speaker of the parliament, was elected president. His “victory brought to power a pragmatic conservative who was openly committed to integrating Iran into the global economic system,” Porter writes.

Meanwhile in the United States, George H.W. Bush had become president. Bush, Porter writes, “recognized the opportunity [for a new relationship] and pledged in his inaugural address … that Iran’s ‘assistance’ in the liberation of US hostages being held by a militant group in Lebanon would be ‘long remembered,’ adding, ‘Goodwill begets goodwill.’”

The Bush administration took steps toward normalization, and Iran went to work on freeing the hostages. On Dec. 4, 1991, the last American was freed.

“Reciprocal gestures” from the Americans, such as lifting some economic sanctions and removing Iran from the terrorist list, got a close look.

Then suddenly, in April 1992, the administration changed course.

Why? According to Porter, people in the administration have since said that intelligence reports indicated Iran was planning to engage in terrorism, rearm, and procure nuclear weapons. The source for this information was Bush’s national security adviser, Brent Scowcroft. “But,” Porter writes, “Scowcroft cited no intelligence of an actual terrorist attack by Iran, except for the claim of an Iranian assassination of someone who was not identified somewhere in Connecticut. And that claim was apparently either a mistake or a deliberate ruse by someone seeking to justify the refusal to make any reciprocal gesture to Iran, because no such assassination was ever registered in the FBI’s central database of incidents relevant to its work.”

This would foreshadow a pattern of attributing, without evidence, violence almost anywhere in the world to Iran or an Iran-backed group. As for the claim about nuclear weapons, Porter’s book demonstrates that while Iran wanted a civilian nuclear industry, including the ability to enrich uranium, it never sought a nuclear weapon — and the U.S. government knew it.

What, then, accounts for the change from conciliation to continued antagonism? Porter partly implicates Robert Gates, who became CIA director just as interest in a new relationship was vanishing. “One explanation for his hostility to Iran,” Porter writes, “was that he blamed then president Rafsanjani for having revealed the 1986 secret visit of NSC [National Security Council] staff to Iran in connection with the Iran-Contra plan — an episode that almost cost Gates his career.… Gates was nominated for CIA director in 1987, but he withdrew his name after it became clear that he would not be confirmed because of questions raised by other witnesses about his veracity.”

But Porter also provides ample evidence that the main reason for the about-face was fear at the CIA and Pentagon that their budgets and staffs would be slashed with the end of the Cold War. The “CIA had a very large institutional interest at stake in treating Iran as a new, high-priority threat to US interests…,” Porter writes. “The CIA leadership had begun the search for substitutes for the Soviet threat as early as 1988.”

Would these government agencies really manufacture a threat merely to protect themselves from budget cutters in the wake of the Cold War? Anyone who knows anything about bureaucracies knows the answer to that question.

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    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.