IRAN - The OPEC Decision Makers - Part 5.

Iran has played a key role in OPEC since the organisation was founded in 1960. In the post-Khomeini era, Tehran has begun to view its OPEC diplomacy as a part of its overall regional and global policy outlook - apart from being fundamental to its economic stability. Its partners in the organisation are also beginning to look upon Tehran as one of the leaders in OPEC. Iran's input has become an important ingredient in collective OPEC decisions.

The position taken by Iran during the two-day meeting in Vienna on March 28-29, 2000 is an example. Tehran had opposed the decision to raise OPEC production by 6.43%, or 1.45 million b/d, saying that it believed the current production levels were sufficient to meet demand. Yet Iran did not reject the agreement of March 29. It said it would abide by the consensus and raise production levels effective April 1, as agreed. This is despite the fact that such a move was difficult for Tehran to take, as it would have seemed to be buckling under US pressure. Washington had been lobbying strongly for a raise in OPEC production.

Iran's responsible image has been boosted in recent years by the fact that decision making in the country's hydrocarbon sector is controlled by moderates with a very pragmatic approach under the guidance of President Mohammad Khatami. From the president down, the decision makers are promoting foreign investment in Iran and are eager to see Western companies channel both capital and technology into this sector.

The subtleties of factional politics have remain, with the theocracy consisting of three main groups: (1) the traditionalists, linked to Supreme Leader Ayatullah Ali Khamen'i, who control the Majlis (parliament) and oppose any opening to the West but favour free market policies within the Iranian context; (2) the pragmatists of former president Rafsanjani, who back Khatami and appreciate the need for closer links with the West; and (3) a very moderate group of ultra-populists, or "the leftist faction" to which Khatami belongs, who have re-emerged after having been weakened in parliamentary elections in 1992 and 1996. The second and third groups fall, in general terms, into the "reformist" camp although Rafsanjani is seen to be sitting on the fence to maximise political leverage.

The manoeuvrings by these factions has been moving strongly in favour of the liberals at the strategic level, with their candidates winning heavily in presidential, municipal and the recent parliamentary elections. But at the tactical level, the traditionalists still have considerable clout. In other words, they have the power to disrupt the functioning of the government through mob tactics on the streets, by closing down newspapers and curbing other aspects of democratic freedoms, and resorting to violence to provoke a limited confrontation which could reverse the political climate in their favour. For their part, the reformists are determined to avoid such a confrontation.