When Iran Hedges Closer, US Pushes Away

Despite an embargo, the US is Iran's biggest trading partner, and many Iranians see US efforts to isolate Iran as a double standard

HUGE black letters pronounce ''Down with the USA'' in the lobbies of all first-class hotels in Iran's capital. Newspaper editorials and Islamic Friday sermons claim the United States conducts ''arrogant policies against the oppressed.''

At a public level, fervor against what Iran calls ''the Great Satan'' is nearly as high as the days after the 1979 revolution when the overthrow of the US-backed Shah was celebrated and 59 Americans were held hostage for 444 days.

Animosities revived last month when President Clinton prevented a US oil firm, Conoco Inc., from developing an Iranian oil field. And now Mr. Clinton is threatening to ban all US companies from trading with Iran, citing Iran's opposition to the Israeli-Palestinian peace process, its sponsorship of Mideast terrorist groups, its arms buildup in the Gulf, and its apparent drive to develop a nuclear capability by buying reactors from Russia.

Nonetheless, Iran's top leaders are eager to improve ties with Washington to help their country fully reintegrate with the world economy, say Tehran-based diplomats and analysts.

But from Tehran's perspective, every time President Hashemi Rafsanjani tries to set the stage for better relations, the US takes steps that anger hard-line religious leaders who strongly oppose ties with the US. Clinton's latest move on trade is expected to weaken attempts to modify the hard-liners' position.

A US trade ban would strip Tehran from a major source of income at a time when its economy is worsening. Foreign diplomats in Tehran estimate trade between Iran and US companies at $3.5 billion, making the US Iran's biggest trading partner.

The US government reimposed an embargo on the import of Iranian oil in 1987 in response to Iran's sponsorship of international terrorism, and further banned the export of high-technology equipment. But many US companies have found a way to the Iranian market through foreign subsidiaries. ''The US has managed to dominate the Iranian market before and after the revolution,'' notes one West European diplomat.

Until Clinton's attempts to further isolate Iran economically, the US pursued a double-standard policy of allowing US firms a large stake in the Iranian market but containing Iran in other areas. ''How do you explain that the US is persistently pressuring other countries not to deal with Iran, while its companies have the biggest share in the market?'' asks an East European diplomat.

High hopes 'in Clinton'

Moderate Iranians were hopeful for better relations with the US when Clinton became president in 1993, believing that they might be rewarded for not siding with Iraq during the Gulf war. The US, however, took this for granted, not expecting Iran to side with its old enemy, especially after the 1980-88 Iran-Iraq war.

Their hopes were dashed when a Clinton adviser on the Mideast, Martin Indyk, now the ambassador to Israel, announced a ''dual containment'' policy to isolate both Iran and Iraq. ''When Clinton announced his policies, we felt that we were punished and not rewarded for our position during the Gulf war,'' says Hadi Samata, a political science professor at Tehran University.

The US stepped up its campaign to isolate Iran this year after Iran signed an agreement with Russia to develop a nuclear reactor that Iranian leaders insist will be used for peaceful purposes. The US and Israel say that it is part of a nuclear-arms build-up, adding to the threat of Iran's missile buildup in the Persian Gulf.

''Iran has signed the Nuclear Non-Proliferation Treaty, while Israel refuses to do so,'' says Hussein Sheikh al-Islam, deputy foreign minister for Mideast affairs in Tehran. ''The US attitude proves that the aim of the campaign against Iran is to justify the fact that Israel is and will remain the only country that possesses a nuclear arsenal in the region. The US is trying to transform Iran as the major threat in the region to force Arab states and people to accept a peace with Israel.''

The main goals of applying economic pressure, from the US viewpoint, are to force Iran to respect human rights, stop support for terrorist organizations, and prevent it from developing weapons of mass destruction.

But many Iranians view the US pressure differently. They say the US wants to prevent Iran from becoming a regional power and wants to ensure the economic, political, and military supremacy of Israel in the area.

''The pressures and allegations against Iran are produced to divert attention from the Israeli nuclear arsenal,'' argues Saeed Rajai Khorasani, a member of the foreign relations committee in the Majlis, the parliament.

Dr. Khorasani, Iran's former ambassador to the United Nations, incurred the public wrath of spiritual leader Ayatollah Ali Akbar Khamenei by advocating the need to normalize relations with the US. In a lengthy letter he sent to Mr. Khamenei, Khorasani, who is often critcized for his pro-Western views, said that the US was the most dominant power shaping the political system in the Middle East. ''If Iran ignores what is going on, it will lose, but if Iran wants to have a say in shaping the region's future, then it should start a diaogue with the US,'' Khorasani argued, according to an Iranian researcher who read the unpublished letter.

Many older Iranians, and those who took part in the 1979 revolution, have bitter memories of US relations with Iran.

The US view of promoting democracy is often scoffed at by Iranians who remember the Central Intelligence Agency engineered and funded coups to oust the popularly elected Prime Minister Muhammad Mossadeq and reinstall the Shah in 1953. Mossadeq had nationalized Iranian oil fields, irritating Western oil firms.

Some Iranians still argue that the US cannot forgive the Islamic republic for ending its role as policeman in the Gulf for Western security interests, especially in containing the former Soviet Union.

''We will support dialogue with the US, providing the ties are based on equal terms,'' says editor in chief of Tehran's Islamist Salam newspaper, Ibrahim Abedi, who took part in taking over the American Embassy in 1979. ''We oppose going back to the subservience to the US that prevailed before the revolution.''

Who pulls the strings?

Some of the criticism of Rafsanjani's policies, including free- market economic reforms, is borne out of a widely held conviction that the US will initiate dialogue with Iran only if Tehran accepts its terms of a subservient relationship.

US policies toward Iran have reinforced Iranian suspicions that Washington does not accept anything but full compliance with its policies.

But Iranians defend their support of anti-Israeli groups, mainly the Palestinian Islamic Resistance Movement, Hamas, which opposes the Israeli-Palestinian limited self-rule agreement. ''This is an unjust process and not a peace process,'' Mr. Islam says. ''We cannot support a process that legitimizes Israeli occupation.''

''The Palestinian issue is the single most sensitive foreign policy issue in Iran. It is difficult for any politician to appear as not to be supporting Palestinian rights,'' says Mamoud Sarie al-Galam, professor of international relations at Tehran University.

According to Palestinian officials, Tehran has continued to back the Hizbullah, a terrorist group set up and backed by Iran in southern Lebanon to fight Israeli occupation there, as well as Hamas. But the officials say that financial support for the group is tapering off, partly due to Iran's economic crisis.