There is no doubt that Iran’s best chance to improve its economy’s outlook is a negotiated settlement with Washington. However, the Iranian leadership has been unable to find a consensus on when the negotiations should begin, or what a final agreement should achieve. This weekend’s attack on Saudi Arabia’s oil facilities is poised to kill any momentum toward a negotiated settlement between Iran and the United States.

The unexpected visit of Iranian Foreign Minister Mohammad Javad Zarif during the G7 meeting in Biarritz reignited the debate over the possibility of a peaceful solution to the ongoing crisis between Iran and the United States. Over the past few months, Iranian officials have frequently called for a lifting of all US sanctions as a precondition for Iran to start direct negotiations with the US government.

As economic conditions in Iran are deteriorating under the Trump administration’s maximum pressure strategy, some of the more moderate sections within the Islamic Republic’s leadership have begun to publicly express their openness for direct talks with the US government. In July, Iranian President Hassan Rouhani indicated that his government is ready to have “just, legal, and honest” negotiations with the United States, but will not “surrender under the name of negotiations.” While Iran’s moderate faction has been in favor of finding a peaceful resolutions, the hardliners, particularly senior security and military officials and those with close links to the Supreme Leader Ayatollah Ali Khamenei, have remained sceptical to any diplomatic effort.

The different factions within the Iranian establishment have differing expectations and priorities for a potential new agreement with the United States. This makes the consensus building in Iran’s complex political system rather challenging.

Broadly speaking, the first group is dominated by President Rouhani and his foreign policy team. It also includes various other interest groups such as members of the parliament, and former politicians. The second group is, by and large, dominated by the senior ranks of the military and security apparatus. It also comprises a number of other individuals with strong loyalty to the Supreme Leader such as senior religious figures.

For President Rouhani and his government, the most crucial part of any future deal is its economic impact. Sanctions relief, low inflation, and an increase in foreign investment were the Joint Comprehensive Plan of Action’s (JCPOA) most critical outcomes for the Rouhani government and the key factors for his landslide re-election victory in 2017.

Iran’s ability to export its hydrocarbon products through official channels is perhaps the most important expectation for Rouhani’s team from a future deal. Moreover, success or failure of the Rouhani administration in ending the current economic crisis will have a significant impact on the popularity of the moderate camp in the Iranian political system and its prospect in future Iranian elections. This is why Iran initially welcomed France’s mediation in the hopes of finding a temporary solution for the economic hardship that would highlight the benefit of a diplomatic dialogue with the US.

As a pre-condition for further nuclear negotiations, Iran has reportedly asked France for a financial support package backed by an advance purchase of Iranian crude. France would open up a $15bn credit line for Iran to facilitate trade with Europe that has slowed to a trickle due to the US sanctions. The line of credit has not received official US support, and Iran’s threat for higher enrichment continued. Nevertheless France’s initiative seems to be gaining momentum on Capitol Hill and in the White House. US President Donald Trump reportedly discussed easing Iran sanctions to facilitate a meeting with Rouhani at the upcoming UN General Assembly in late September. Moreover, the removal of John Bolton as the national security adviser to President Trump could indicate the White House’s willingness to talk to the Iranian leaders.

The most important priority for the conservatives is to maintain power and control at the domestic level. Various Islamic Revolutionary Guard Corps (IRGC) senior figures have lately made comments that the country’s defense capabilities are unaffected by US sanctions. Islamic Revoutionary Guard Corps (IRGC) commanders claim that it is impossible for the United States’ military to attack Iran. It appears that events over the past few months, such as the seizing of oil tankers, missile testing, and the downing of a US drone, have boosted confidence in Iran’s military and security apparatus among the IRGC’s ranks.

Moreover, these escalatory actions seem to indicate that limited, but heightened tensions with the United States are a preferred scenario for the IRGC. Iran’s government is denying any involvement in the recent attack on Saudi Arabia’s oil infrastructure. However, the attack fits Iran’s conservatives’ agenda. Iran’s hardliners believe that posing threats to the regional supply of oil will keep Iran relevant to the global energy markets and give the Iranian negotiators more bargaining power. A limited military confrontation with the US and its allies could provide the IRGC with a unique opportunity to play out rally-round-the-flag dynamics in order to take control of Iranian domestic politics as well as any future negotiations.

After Zarif’s trip to the G7 summit in France, Rouhani stated that President Trump is only interested in the publicity that a meeting would generate. Islamic Republic officials have frequently expressed their distrust of the United States and its European allies, claiming that the current US objective is regime change in Tehran. Unsurprisingly, the US government’s list of twelve conditions, outlined by Secretary of State Mike Pompeo, have not been welcomed by Tehran.

With these twelve demands, the US is targeting all key strategic objectives of the Islamic Republic and requesting that Tehran ceases:

• all nuclear activities that have military dimension,
• its support for Hezbollah, Hamas, the Taliban, the Houthis, and Iraq’s Shia militias,
• its global military and political interventions, in particular  those in Syria, Yemen, and Iraq, 4) threatening behavior against Israel, Saudi Arabia, and United Arab Emirates,
• threats to international shipping,
• destructive cyber-attacks,
• and the release of all US citizens and citizens of US allies.

However, Iran’s leadership considers the Islamic Republic’s raison d’être closely linked to its nuclear program, support for Hezbollah, and its regional military and political influence. Hence, Iran’s establishment is likely to remain divided over the terms and timeline of any potential future negotiations. Stakeholders in Iran are expected to work, separately, towards their own expectations for a new deal.

The diplomatic efforts by Rouhani’s team are therefore likely to be disrupted by ad-hoc aggressive IRGC actions in the Persian Gulf and around the wider region. John Bolton resigning as President Trump’s national security advisor might provide some momentum for French-led mediation efforts as Bolton was the architect of the White House’s Iran’s strategy.

Nevertheless, Iran is unlikely to take any serious action in normalizing its relationship with the United States as long as the White House insists that Iran complies with the administration’s twelve points. The recent attack on Saudi Arabia, makes a further escalation more probable than a diplomatic rapprochement between Iran and the United States.

Sara Bazoobandi is a nonresident senior fellow with the Atlantic Council’s Global Business & Economics and Global Energy Center

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Image: Iranian President Hassan Rouhani speaks during the cabinet meeting in Tehran, Iran, September 18, 2019. Official President website/Handout via Reuters