Iran's Rowhani sees opportunity for interaction with world

By Aresu Eqbali in Tehran, Margaret McQuaile in London

Iranian President-Elect Hassan Rowhani swept to victory in the country's June 14 election with 50.7% of the vote and a clear mandate for change.

On June 17, addressing his first press conference, Rowhani said his election had created an opportunity for Iran to interact with the world and that his government was ready to be more transparent in its nuclear program as it worked to remove crippling western sanctions.

He also offered direct talks with the United States on condition that Washington acknowledge Tehran's nuclear rights and pledge not to interfere in Iran's domestic affairs.

But while Rowhani talked about "more active" negotiations with Britain, China, France, Germany, Russia and the US - the so-called P5+1, Rowhani appeared to rule out any cessation of uranium enrichment work, saying there were other ways to build confidence.

"We will walk more in the path of transparency. Of course, our nuclear program is completely transparent but we are ready to show more transparency. We will make clear to the world that the Islamic Republic’s moves and actions are completely within the framework of international law," he said.

"Secondly, we will boost mutual trust between Iran and other countries. Wherever trust is distorted we will try to restore it," he said. "The principal is that we will make negotiations with the P5+1 more active. We believe that the nuclear issue will be resolved only by negotiation. Neither threats nor sanctions will be effective."

US and European sanctions directly targeting Iran's oil revenues, its economic lifeline, have been in force since last summer and have already slashed Iran's crude exports by more than half.

A new bill currently being considered by the US Congress aims to reduce Tehran's oil exports further. The Iranian economy relies heavy on its oil revenues.

Rowhani said his government "will try to remove the unfair sanctions step by step" but suggested that there was no room for any deal that would oblige Iran to suspend its nuclear enrichment program.

"That era has passed and now we are under different conditions. I think there are many other ways to build confidence," said Rowhani, who was lead nuclear negotiator for former president Mohammad Khatami when Iran suspended enrichment between 2003 and 2005.

In his wide-ranging press conference, Rowhani also laid out three conditions for direct talks with the US.

"First, the Americans should explicitly say that they will never interfere in Iran's domestic affairs. Second, they should acknowledge all our undeniable rights and nuclear rights. Third, they should set aside unilateral and bullying policies. With these conditions, the ground will be prepared," Rowhani said.

"We do not seek the continuation or increase of tensions. The two countries [Iran and US] should look to the future and restore the path. The issue with the US is a complicated and difficult one, not easy. There is an old wound that should be healed by wisdom."

White House spokesman Jay Carney had already said on Saturday Washington "remains ready to engage the Iranian government directly in order to reach a diplomatic solution that will fully address the international community's concerns about Iran's nuclear program."

President Barack Obama expanded on this in a television interview recorded before his departure for Northern Ireland late Saturday and broadcast late Monday.

"I do think that there's a possibility that that they decide, the Iranians decide, to take us up on our offer to engage in a more serious substantive way. Our bottom lines have been, show the international community that you're abiding by international treaties and obligations, that you're not developing a nuclear weapon. Based on that, there are a whole range of measures that can be taken to try to normalize the relationship between Iran and the world, but we don't know yet if they're going to be willing to take up that offer. They have not during my entire first term when we showed ourselves open to these discussions," Obama said.

But, said Obama, "the most powerful economic sanctions that have ever been applied against Iran will not be lifted in the absence of significant steps in showing the international community that Iran is not pursuing a nuclear weapon. And as long as there's an understanding about the basis of the conversation then I think there's no reason why we can't proceed."

EU foreign policy chief Catherine Ashton, meanwhile, said Sunday that the election results showed that the Iranian people had entrusted Rowhani with "a strong mandate" to govern Iran over the next four years.

"I remain firmly committed to working with the new Iranian leadership towards a swift diplomatic solution of the nuclear issue," she said in a statement.

Winning the election was just the first step for the moderate conservative cleric in whom Iranians have invested their hopes of a brighter future.

Now he must work to rescue an economy battered by western sanctions and this will depend almost entirely on his ability to achieve some kind of rapprochement with the United States and Europe over its nuclear program.

This may not be beyond the realms of possibility, but analysts make the point that any decision on nuclear policy will come from Supreme Leader Ali Khamenei, not from the president.

"The surprise election of the moderate cleric Hassan Rowhani as president of Iran has produced considerable speculation about a possible reset in the country's stormy relations with the West that could lead to the easing of international sanctions and allow Iranian crude to return to the market," analysts at Barclays Capital said in a note.

"However, the election result may yield more of a shift in tone than substance if the country's Supreme Leader remains wedded to the current nuclear and foreign policies, in our view."

Commerzbank analysts had a similar view. "No fundamental shift in policy can be expected...as the political direction in Iran is dictated by the country's spiritual leader Ayatollah Khamenei," they said.

However, they added, "if a more moderate tone is adopted towards the West and Israel under Rowhani, this could nonetheless form the basis for negotiations. At the very least, the election result makes it less likely that Israel will launch a military strike against Iran's nuclear facilities."

Barclays said Rowhani's previous performance did provide some cause for optimism.

"His tenure as lead nuclear negotiator in the Khatami administration coincided with Iran suspending enrichment activities from 2003-2005 and his pragmatic approach and professional demeanor has been praised by a several of his western interlocutors, including the former British Foreign Secretary Jack Straw. The Rowhani victory could therefore reduce some of the acrimony that has accumulated between Iran and the West since Mahmoud Ahmadinejad was sworn in as president in 2005," Barclays said.

The bank said that while the outcome of the election would not have an immediate impact on the oil market it did provide "a channel for this closely watched geopolitical undercurrent to shape sentiment and influence positioning in the market over the course of the year."

http://www.platts.com/news-feature/2013/oil/iran/index