Historically, in contrast to trade relations, political relations between Western Europe and Iran were predominated with inconsistency and controversy. The Critical Dialogue was the first official European uniform approach towards Iran after the 1979 Islamic Revolution and it was conducted in line with the Common Foreign and Security Policy (CFSP) enshrined in the Maastricht Treaty in 1992. The framework was based on two contradictory trends: the perception of Iran as an important economic partner and the growing importance of human rights in relations with third countries. Iranian failure to adhere to international norms in the area of human rights represented an obstacle to its recognition as a fully legitimate economic and political partner. The Critical Dialogue contrasted with the United States (US) ‘active containment’ policy of economic boycotts and was referred by critics as an ‘immoral cover for maintaining lucrative commercial relations with Iran’. Chapter 2 examines developments of the political and economic relations between EU-3 and Iran after the 1979 Iranian Revolution. It seeks to answer the question: ‘Which are the circumstances leading to the positive expectations of relations between Iran and Western Europe at the time of the 1979 Revolution?’. Chapter 3 identifies the factors leading to the establishment of the Critical Dialogue, namely Iranian domestic human rights abuses; the fatwa against Salman Rushdie; assassination of Iranian dissidents in Europe; Iranian opposition to the Arab-Israeli peace process and the support for Hamas; and allegations of attempting to construct nuclear weapons. Chapter 4 highlights the selected methods for implementation of the Critical Dialogue and analyses its underlying principles: the conviction of the prospect of strengthening moderate political forces in Iran; the promotion of human rights under the newly established CFSP; and the use of the means of communication (dialogue). Chapter 5 poses the question: ‘What are the achievements of the Critical Dialogue framework?’, in terms of its impact on Iran’s domestic human rights and the Euro-Iranian trade relations. The final chapter identifies causes for transatlantic divergence of stances towards Iran.
2. Developments of the Political and Economic Relations between EU-3 and Iran after the 1979 Iranian Revolution
After the overthrow of the Shah, Iran and Western Europe have experienced not only economically beneficial, but also turbulent and intermittent political relations. Following the Islamic Revolution, Iran emerged on the international scene as an independent, proactively religious, and nonaligned power. A theocratic Islamist government was seen as a precedent and a political phenomenon. Tarock argues that the ideological foundation of Iran’s foreign policy was at that time unknown to Western Europe and European states could not differentiate the depth of transformation of the new system: ‘French intellectuals, journalists, and socialists initially welcomed the developments in Iran and interpreted them as encouraging signs towards Western style liberal democracy, more religiously oriented but otherwise similar to the nationalist, liberal government of Mohammad Mossadeq.’ At the time of the 1979 Revolution several circumstances led to the expectation that political relations between Iran and Western Europe would be enhanced in comparison to those of the ‘twin Satans’ the United States and the Soviet Union. Primarily, three factors facilitated the expectation of warming relations with Western Europe.
Iran’s perception of Europe can be determined as one factor. Western European states were not deeply involved in Iranian internal affairs and had historically positive relationship with Iran, especially in the economic sphere. Furthermore, the anti-Western wave and rhetoric, following the overthrow of the Prime Minister Mossadeq and the Shah’s White Revolution, was directed at the US and not Europe.
The second reason for the expectation of improving relations between Western Europe and Iran was a mutual economic interest. From the European perspective, Iran was seen as an attractive export market and a source of financial investment. After the Second World War, Germany and Iran signed various bilateral economic and trade agreements, such as the Accord on Economic and Technical Collaboration signed on 4 November 1954. Following the rise in oil prices in 1973, Iran concluded a number of loan and trade deals with European countries. A German-Iranian Chamber of Industry and Commerce was established in Tehran in 1975 accommodating the interests of about 100 German companies. From Iranian viewpoint, after pursuing the policy “Neither East, nor West”, Europe represented ‘a shield to its sovereignty and national interests from foreign adversaries’. Especially after commercial relations with US were deteriorating, it was expected that the Islamic Republic would seek to expand trade relations with Europe and Japan.
Third, the developments of the bilateral ties between EU-3 and Iran led to the prospect of improving relations with the newly established Islamic Republic after relations with US were aggravating. With the exception of Britain, called in a Khomeini’s speech ‘the aged wolf of capitalism’, which was associated alongside with Tsarist Russia with the external domination in Iran in the nineteenth century, Germany and France expected positive connections with Iran due to some particular developments. While France relations with the Middle East have been mostly with the Arab states, Germany had enjoyed privileged place in Iranian relations, particularly in the economic domain, being by the time of the revolution the largest European exporter of goods and services to Iran. However, France was the European country with the biggest prospect of warming relations with the Islamic Republic since it had given refuge to the Ayatollah Khomeini from October 1978 to February 1989 prior to his triumphant return to Iran and even in his honour named the street, on which Khomeini was residing, Tehran street.
However, these expectations of positive development of European- Iranian relations were short-lived. The gradual revealing of the manifold aspects of Iran’s foreign policy under the theocratic regime antagonized not only the United States, but also its Western European allies. Even before the Iran-Iraq war, ties between Britain and Iran ceased when British missionaries were killed and as a result the British embassy was closed down in August 1980. The United Kingdom was represented at ambassadorial level under the Swedish flag for eight consecutive years. In particular, relations between Iran and France severed, after the French favouring secular Baath socialists over clerical Islamists, supported Iraq with supply of armaments. Tension further intensified when France granted political asylum to the first elected and impeached Iranian president Bani-Sadr and Mojahedin e-Khalq’s leader Rajavi in July 1981. Among other various reasons for the contention were $ 14 billion that the Shah had loaned to France for the construction of Eurodif nuclear power programme and a series of bomb attacks occurred in Paris in September 1986 associated with the Iranian diplomat Vahid Gorji.
3. Factors Leading to the Critical Dialogue
Two antagonistic trends led to the endorsement of the Critical Dialogue framework by the European Council in Edinburgh on December 1992, namely promising trade relations with Iran as well as a set of internal dynamics of the revolutionary regime, which represented an obstacle to accept Iran as a fully legitimate political and economic partner. In particular, several developments at international, European, bilateral and domestic level led to the establishment of the Critical Dialogue: domestic human rights abuses continued as Rafsanjani was unable to impose control on the radicals; the fatwa against Salman Rushdie; assassination of Iranian dissidents in Europe; Iranian opposition to the Arab-Israeli peace process and the support for Hamas; and allegations emerged that Iran was attempting to construct nuclear weapons.
By the time the Critical Dialogue was initiated, Iran had established significant trade relations with Europe, which also indicated potential for further economic development. Bilateral economic transactions between Iran and Europe in 1991 had reached a high point, essentially in terms of Iranian oil exports to Europe and European non-oil exports to Iran. Germany was the primary domain for Iranian non-oil exports – 34.4 percent and in 1992 bilateral volume of German-Iranian trade amounted to $6.8 billion. Furthermore, with the launching of the first five-year economic development plan, Iran indicated its intentions to reconstruct its economy after the Iran-Iraq war by using foreign borrowing. ’The five-year plan (1989/90–1993/94) authorized up to $27 billion in foreign borrowing. It aimed to increase productivity in key industrial and economic sectors and to promote the non-oil export sector.’
Conversely, despite the image of positive windfall of Iranian domestic politics, following the Rafsanjani’s election and growing trade with Western Europe, some particular developments hindered political normalization with European states. First, with internal fragmentation of power in the Majlis (Iranian parliament) and the bureaucracy, Iranian government emerged not as pragmatic as perceived. While radicals dominated the Majlis in the 1980s, after 1989 Rafsanjani tried to curb political activity in a centrist direction by engineering measures that led to the exclusion of the radical wing from 1992 Majlis. The new parliament majority was moqallid (supporters of the revolution, but not radicals). The ruling clerics were organized in two factions – the Combat clerics of Tehran, which were social conservatives and Society of militant clerics, which were more liberal on social issues, but left leaning. In 1990 Rafsanjani made a coalition with the Combat Clerics in order to marginalize the radical factions. Despite the image of stability, which stemmed from a more centrist government, Rafsanjani was unable to undertake significant policy initiatives due to the struggle to secure political stability through compromises between the different ruling factions. As a result, domestic human rights abuses continued as a means to suppress the liberal movement, such as the murders of intellectuals, the persecution of Baha’i minority, and harassment of women and students.
Second, in February 1989 Ayatollah Khomeini issued a fatwa against the British novelist Salman Rushdie for his novel ‘The Satanic Verses’, who was accused of blasphemy. A reward of $1 million for Rushdie’s murder was promised by the private organization Bonyad-e Panzdeh Khordad, which was reconfirmed by Ayatollah Khamenei in February 1992. The novelist internationalized the affair by contacting Western countries and institutions, such as a meeting with German foreign minister Klaus Kinkel in October 1992 and with the European Commissioner Hans van den Broek in December 1993. The fatwa was heavily politicized as a violation of human rights. As a result, British Foreign Office refused to normalize relations with Iran and the Germany’s Bundestag passed a motion calling on the government to hold the Iranian leadership directly responsible for any harm inflicted on Rushdie. Third, during Rafsanjani’s first term, Iranian dissidents and members of opposition movements were assassinated in Paris, Berlin and Geneva. Beginning in May 1991, ‘the campaign to eliminate the Iranian opposition living abroad’ was resumed with the murder of the ex-prime minister Shapour Bakhtiar in Paris. In September 1992 the murder of three Iranian-Kurdish opposition leaders, among them the head of the Kurdish Democratic Party of Iran, in the Mykonos Restaurant in Berlin was blamed on the Iranian secret service. Fourth, Iranian opposition to the Arab-Israeli peace process and support for the ‘Palestinian resistance’ was a further precondition for the setting-up of the Critical Dialogue framework. Parallel to the Madrid Conference of October 1991, the Islamic Republic convened a conference in Tehran to gather radical organizations opposing negotiations with Israel. Additionally, Hamas opened an office in Tehran in 1992, which further antagonized Western Europe. ‘Support of the rejectionist and radical Palestinians is one of the few issues where Iran's ideological-revolutionary and national-pragmatic interests coincide ‘ with Iran pursuing Islamic leadership.
Finally, allegations emerged that Iran was attempting to construct nuclear weapons. The CIA estimated that Iran would be able to construct nuclear weapons until the year 2000. Iran argued that its nuclear programme was subject to regular inspections by the International Atomic Energy Agency (IAEA) who had found no evidence for the report. These developments contradicted the European principles of respect for human rights and international security enshrined in the newly established CFSP. The convergence of EU-3 views on the choice of policy instruments toward Iran led to the establishment of the Critical Dialogue at the European Council in Edinburgh in December 1992. Brussels insisted on Iran’s improvements in four areas: human rights, Rushdie affair, constructive approach on the Arab-Israeli peace process and military procurement. The initiative is seen to develop under the influence of Germany. Due to historically shaped strategic preferences, such as its neutral position during the Iran-Iraq war, and economic interest, Germany preferred to pursue a cooperative approach in its relations with Iran. The view that some sort of engagement with Iran is necessary was shared also at domestic level, particularly in Germany’s Bundestag.
4. Implementation and Principles of the Critical Dialogue
4.1. Implementation of the Critical Dialogue
The Critical Dialogue framework was a policy of constructive but critical engagement with Iran. The adaptation of the Critical Dialogue led to biannual talks at the state secretarial level. It was implemented on European level through confidential démarches, public declarations, and meetings of the EU- Troika with Iranian officials. European Parliament played an important role through a critique of human rights by issuing resolutions. Public declarations were used as a way to address concerns on human right abuses. The Critical Dialogue involved both measures on the European and on the Member State level. On a bilateral basis Germany initiated four German-Iranian Human Rights Seminars 1988-1984, which brought together international human rights experts. Also, the European Union (EU) attempted to exert pressure on the Iranian regime to allow visits of the United Nations Special Representative (UNSR). Thus, the focus of the multilateral effort of the Critical Dialogue was public critique in the domain of human rights. The controversy around the Salman Rushdie case continued, who met EU-Troika in 1994. Initiatives were undertaken to negotiate a written Iranian guarantee that fatwa would not be carried out.
4.2. Determinants Shaping the European Perspective towards Iran
The EU-3’s motivation for setting up the Critical Dialogue Framework can be viewed from three angles: the conviction of the prospect of strengthening moderate political forces in Iran; the promotion of human rights under the newly established CFSP; and the use of the means of communication (dialogue).
 Reissner (2000), p.34
 Britain, Germany and France (EU-3) are considered the leading players in relation to Iran.
 Ehteshami (2001), p.283
 Tarock (1999), p.46
 Tarock (1999), p.44
 Parsons (1989), p.219
 Mousavian (2008), p.15
 German-Iranian Chamber of Industry and CommerceAvailable at: http://ahk-training.de/partners/ahk-tehran.htm
 Tarock (1999), p.41
 Hooglund (2002), p.151
 Tarock (1999), p.54
 Halliday (1994), p.313
 Hooglund (2002), p.154
 Hooglund (2002), p.151
 Tarock (1999), p.46
 Halliday (1994), p.313
 Reissner (200), p. 36
 Iran - Economic development, Encyclopaedia of the Nations, Available at: http://www.nationsencyclopedia.com/Asia-and-Oceania/Iran-ECONOMIC-DEVELOPMENT.html
 Bakhash (2002), p.39
 Bakhash (2002), p.42
 Struwe (1998), p.17
 Struwe (1998), p.17
 Rudolf (1999), p.74
 Bakhash (2002), p.41
 Karmon (1998)
 Struwe (1998), p. 18
 Karmon (1998)
 Struwe (1998), p. 27
 European Council 1992
 Struwe (1998), p.19; Rudolf (1999), p.74
 Rudolf (1999), p.81
 Struwe (1998), p.4
 The "Troïka" represents the European Union in external relations that fall within the scope of the common foreign and security policy (CFSP). Since the Treaty of Amsterdam, the Troïka consists of: the Foreign Affairs Minister of the Member State holding the Presidency of the Council; the Secretary-General/High Representative for the CFSP; and the European Commissioner in charge of external relations and European neighbourhood policy.
 Struwe (1998), p.20;Rudolf (1999), p.74
 Rudolf (1999), p.74
 Rudolf (1999), p.76
 Struwe (1998), p.28