Dr Charles Tannock

Member of the European Parliament for London

An Iranian dreamworld

The Guardian - April 4th 2007

Weeks into the crisis triggered by Iran's illegal capture of 15 British naval personnel, the European Union's irresolute and contradictory approach is making matters worse. Faced with a country whose leader is bent on acquiring nuclear weapons, the EU's leaders are simply dithering, fearing that the fire next door in Iraq could somehow spread.

The latest crisis proves again that Iranian president Mahmoud Ahmadinejad cannot be trusted. Following the ambush of the UK forces, the Iranian authorities dissembled as to their exact location at the time of the abduction, which was subsequently proven by the UK government to have been in Iraqi territorial waters operating under the authority of UN resolutions and with the express consent of the Iraqi government.

What Ahmedinejad appears to want are bargaining chips to secure the release of six Iranians who were aiding the Iraqi insurgency before being captured by the US. The EU's reluctance to match America's robust language on Iran is emboldening him. Ahmedinejad can sense an international community divided, and like his fellow pariah leader, North Korea's Kim Jong-il, he is exploiting that division at every opportunity.

The uniquely dangerous combination of a nuclear Iran, which seeks to inspire the Shia in the Gulf states to rise up against their Sunni masters, coupled with Ahmedinejad's millenarian mysticism, poses an existential threat to Israel. It also threatens to touch off a nuclear arms race in the Middle East. And if Iran succeeds in acquiring long-range ballistic missiles, the security threat will become global.

Indeed, the established concept of nuclear deterrence through "mutual assured destruction" (MAD), which kept the peace between the Soviet Union and Nato, may not apply with a ruler like Ahmadinejad, who believes in the sacred merits of martyrdom. MAD simply won't work for a mad man who is guided by quasi-messianic certitude. Those who believe that Ahmedinejad is a bluffer and a buffoon who would pull back from the brink may be fundamentally misreading his psychology.

It is past time for Europe's leaders to grasp the reality of the situation. The possibility of degrading Iran's nuclear weapons programme through military action cannot be totally discounted although it should, of course, be the last option and would be immensely risky even if militarily possible. Yet there is much more that EU leaders can do to undermine the regime economically.

The EU's trade significance for Iran is huge, accounting for 40% of the country's imports and a quarter of its exports. Economic links are historically strong and growing. Some two-thirds of Iranian industry, most of it state controlled, relies on German engineering exports, 65% of which in 2005 came with export credit insurance guarantees from the German government.

Likewise, the European Investment Bank is providing $1billion to finance the construction of the Nabucco oil pipeline from Iran to Austria. If completed, the Nabucco pipeline will make Iran an indispensable EU energy partner. As an organ of the EU, the EIB should be pursuing an ethical investment policy. This is difficult to reconcile with lending to a country like Iran, which publicly executes individuals for sexual "deviance", imprisons women who protest peacefully, and silences journalists who are critical of the regime.

The EU needs to tell Iran that unless it releases the British hostages and moderates its nuclear ambitions, it will receive no export guarantees. Such a policy would stop trade between Iran and the EU in its tracks, and Ahmadinejad knows it. There are already signs of disquiet among more moderate Iranian policymakers, as Ahmadinejad's economic mismanagement has begun to fuel higher inflation. A cut in export guarantees would put the Iranian economy - and Ahmedinejad - in real jeopardy.

Individual companies, mindful of US sanctions on those who do business with the regime, can also help. For example, British Petroleum (BP), to its credit, has disinvested from Iran on ethical grounds - an example that other European firms should follow.

The Iranian government's contempt for the international community reflects its contempt for human rights and civilised norms. Yet Iranians' hunger for change is clear. Despite repression, Iran's civil society is well developed and sophisticated. The Ahmadinejad government's popularity has plummeted, as evidenced by recent local election results.

Europe's political leaders need to recognise that now is the time to facilitate change in Iran by suspending export credit guarantees, stopping EIB financing, and speaking with a united voice. Wishing the problem away will only make it worse.