iran-u snuclear standoff: a game me theory approach (2010)_-_iran_us nuclear standoff.pdflukewarm...

Iran-US

Mohammad Ali Mousavi

Assistant Professor, Faculty of World Studies, University of Tehran, Iran

Yasser Norouzi

PhD in Chemistry, Sharif Technology University, currently an MA student of North American Studies, University of Tehran

Vol. 1 �

SNuclear Standoff: A Game Theory Approach

d Ali Mousavi

or, Faculty of World Studies, University of Tehran, Iran

rouzi

y, Sharif Technology University, currently an MA student of Studies, University of Tehran

No. 1 � Spring 20101

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Iran-US Nuclear Standoff

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Abstract For almost three decades since the Iranian Revolution of there has consistently been a conflict between Iran and the UnitedStates over a host of issues. The relations between the two countries became more challenging since light that Iran had been developing its nuclear program. Since then some US officials have even gone so far as to announce repeat - the possibility of a military strike against Iranian facilities to end the nuclear program. In reality, up to now no such drastic action has taken place. Rather instead, in a milder reaction, the US, aided by its European allies and enjoying Russian alukewarm acquiescence, has imposed several rounds of sanctions against Iran through the adoption of obligatory resolutions by the United Nations Security Council. But, these actions have failed to force the Iranians to end their program. As a reargue that a new policy should be pursued toward Iran visnuclear dossier.predict when and how this conflict will come to an end. In this paper, different game theory models arcurrent situation of the crisis. It is shown that while may be more favorable for each partoverall result of this approach may not be so favorable for all. As a result, both parties shodecisions. It is also shown that the absence of mutual trust could be the main factor that has forced both sides to reach the current point of crisis. Therefore, any attempt towards retrust between the two governments might be a major step leading to a lasting solution. Furthermore, different possible choices for the US government and the long term effects of each choice will be analyzed. The analysis will also address economic aspects of tconflict, and the longpossible choices for both governments will be presented.

Keywords:NPT

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ree decades since the Iranian Revolution of 1979istently been a conflict between Iran and the United

host of issues. The relations between the two me more challenging since 2003 after it came to had been developing its nuclear program. Since then cials have even gone so far as to announce -ssibility of a military strike against Iranian facilities lear program. In reality, up to now no such drastic n place. Rather instead, in a milder reaction, the US,

European allies and enjoying Russian and Chinese uiescence, has imposed several rounds of sanctions rough the adoption of obligatory resolutions by the s Security Council. But, these actions have failed to ans to end their program. As a result, many experts w policy should be pursued toward Iran vis-à-vis its r.(1) So the main challenge which poses itself is to and how this conflict will come to an end. In this nt game theory models are used to interpret the on of the crisis. It is shown that while at each step it favorable for each party to insist on its claims, the f this approach may not be so favorable for all. As a

rties should think about the long term effects of their also shown that the absence of mutual trust could be

r that has forced both sides to reach the current point refore, any attempt towards re-establishing mutual the two governments might be a major step leading ution. Furthermore, different possible choices for the nt and the long term effects of each choice will be analysis will also address economic aspects of the long-term effects of any decision and the best es for both governments will be presented.

ds: Iran, US, Nuclear, Game Theory, IAEA,

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IntroductionGame theory is a branch of in a wide range of disciplines; engineering,philosophy, and artificial intelligencemathematically capture behavior in strategic situations, in which an individual's success in making choices depends on the choices of others. Whiledeveloped to analyze competitions in which one individual does better at another's expense (games), it has been expanded to treat a wide classinteractions, which are classified according to several criteria. Today, "game theory is a sort of umbrella or 'unified field' theory for the rational side of sociascience, where 'social' is interpreted broadly, to include human as well as nonanimals, plants)".political sciencefair division,political theory

Iranian Review of Foreign A

ony is a branch of applied mathematics used range of disciplines; economics, biology

political science, international relationsand computer science - mainly for

ntelligence. Game theory attempts to ally capture behavior in strategic situations, n individual's success in making choices n the choices of others. While initially to analyze competitions in which one oes better at another's expense (zero sum as been expanded to treat a wide classwhich are classified according to several

day, "game theory is a sort of umbrella or d' theory for the rational side of sociaere 'social' is interpreted broadly, to include well as non-human players (computers, nts)".(2) The application of game theory to ence is focused in the overlapping areas of , political economy, public choice, positive ory, and social choice theory. In each of

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these areas, researchers have developed game theoretic models in which the players are often voters, states, special interest groups, and politicians (for instance see Downs(3) and Myerson

Since 2003has a program with the aim of developing nuclear weapons. Iran has maintained that its nuclear program is peaceful aUnited States' official position on Iran has been that a nuclear-armed Iran is not acceptable and that ‘all options’ - including the unilateral use of force and first-strike nuclear weapons However, they have denied on various occasions that the United States is preparing for an imminent strike. The tough US policy and posture came while three European cFrance and intensive negotiations with Iran on the cessation of its nuclear enrichment activities. Due to the confrontational policy of the Bush Administration on Iran, the UEpressures, which also led to a gradual toughening of the approach and position of the International Atomic Energy Agency Iran’s non-cUnited Nations. The IAEA stated that Iran had been

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researchers have developed game theoretic which the players are often voters, states, est groups, and politicians (for instance see d Myerson(4)). 003, the United States has alleged that Iran ram with the aim of developing nuclear an has maintained that its nuclear program and aims only at generating electricity. The es' official position on Iran has been that a ed Iran is not acceptable and that ‘all ncluding the unilateral use of force and nuclear weapons - are on the table.

hey have denied on various occasions that States is preparing for an imminent strike. US policy and posture came while three countries, the United Kingdom (UK), Germany (the "EU-3"), were engaged in gotiations with Iran on the cessation of its nrichment activities. Due to the onal policy of the Bush Administration on E-Iran talks were subjected to increasing

which also led to a gradual toughening of h and position of the International Atomic ncy (IAEA). In early 2006 IAEA reported compliance to the Security Council of the ons. The IAEA stated that Iran had been

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in violation of the Safeguards Agreement relating to the NPT, due to insufficient reporting of nuclear material, its processing and its use, despite the fact that under Article IV, Iran had the right to develop its civilian nuclear energy programalready fraught relations between the US and Iran constantly worsened as a result of the ontension over the nuclear issue, notwithstanding Iran’s continued cooperation with IAEA, including regular inspections of sensitive nuclear facilities and sites in Iran - in line with the provisions of the Additional Protocol to NPT which Iran voluntarily and later unilaterally withdrew from.

In March publicly stated that Iran had enough unuranium hexafluoridebombs if it were to be highly enriched, and further added that it was "time for the Security Council to act". Up to now the US has consistently insisted that Iran should halt its program, and Iran has in turn resisted this pressure program, insisting on its peaceful nature. Security Council resolutions December 2March 2008)successively widened


of the Safeguards Agreement relating to due to insufficient reporting of nuclear processing and its use, despite the fact that le IV, Iran had the right to develop its

clear energy program. From 2003, tught relations between the US and Iran worsened as a result of the on-goingr the nuclear issue, notwithstanding Iran’s ooperation with IAEA, including regular of sensitive nuclear facilities and sites in

ne with the provisions of the Additional NPT which Iran voluntarily adhered to

ilaterally withdrew from.rch 2006 US and EU-3 representatives ted that Iran had enough un-enriched xafluoride gas to make up to ten atomic were to be highly enriched, and further

it was "time for the Security Council to now the US has consistently insisted that halt its program, and Iran has in turn

s pressure and has continued its nuclear nsisting on its peaceful nature. Security olutions 1696 (31 July 2006), 1737 (

2006), 1747 (24 March 2007) and 1803) imposed a series of sanctions on Iran and widened the scope of these sanctions. In

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December 2it clear that his policy toward Iran would be different from Bush’s policy of confrontation and woul"ratchet up tough but direct diplomacy with Iran".Later as President he pointed out that "if countries like Iran are willing to unclench their fist, they will find an extended hand from us.”

However, it was not initially clear whether such an approach meant that the US would accept Iran’s pursuit of its peaceful nuclear activities or it would still continue its policy of pressuring Iran towards terminating its program package of incentivespromises, Obama’s policy of unconditional negotiation with Iran ran into serious difficulty due to the growing pressure of conservative political quarters and lobbies. Simultaneously, Iran continued ton its peaceful nuclear program and standstill policy of continued enrichment activities. The disclosure in late September 2at the Fordou facility once again pushed Iran’s nuclear case to the center stage odevelopment led to a highconference in Pittsburg, Pennsylvania, by President Obama, President Sarkozy and Prime Minister Brown. Iran, in defiance, stated that the NPT regulations had

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2008, President-Elect Barack Obama made his policy toward Iran would be different

s policy of confrontation and would be to tough but direct diplomacy with Iran".

sident he pointed out that "if countries like ing to unclench their fist, they will find an nd from us.”(6) er, it was not initially clear whether such h meant that the US would accept Iran’s s peaceful nuclear activities or it would still ts policy of pressuring Iran towards its program – even if through offeringincentives. In 2009, contrary to initial Obama’s policy of unconditional

with Iran ran into serious difficulty due to pressure of conservative political quarters

. Simultaneously, Iran continued to insist ful nuclear program and standstill policy of nrichment activities. The disclosure in late 2009 of unannounced enrichment activities ou facility once again pushed Iran’s nuclear center stage of international attention. This nt led to a high-profile joint press

in Pittsburg, Pennsylvania, by President sident Sarkozy and Prime Minister Brown. ance, stated that the NPT regulations had

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been followed in infFurthermore, the ensuing ambiguity over Iran’s surprise proposal in the course of the Geneva meeting on 1 October bulk of its stock of low enriched uranium with the higher enriched funuclear facility led to the worsening situation. The subsequent politicalIran and the as the venue for the swap. Apparently disappointed by the Iranian respvolume than previously indicated and an Iranian venue for the swapadoption of a strongGoverning Council in November. The passage of the new resolution hand has pushed the Uinitial policy of dialogue. Instead, there has been much talk of new sanctions against Iran, which has been met with further defiance from the Iranian side threatening with the Agency.

A Simple two player gameIn Figure 1,struggle of Iran and US is presented. The game begins


ed in informing in time on the Fordou site. e, the ensuing ambiguity over Iran’s posal in the course of the Geneva meeting er 2009 to the 5+1 group on swapping the stock of low enriched uranium with the ched fuel needed for Tehran’s medical lity led to the worsening situation. The political-diplomatic wrangling between

e 5+1 revolved around the volume as well e for the swap. Apparently disappointed by response and insistence on a much smaller n previously indicated and an Iranian venue p, the 5+1 turned to IAEA and pushed the of a strong-worded resolution by its Council in November. The passage of the ion has further muddied the atmosphere hed the US to take distance from Obama’s of dialogue. Instead, there has been much

sanctions against Iran, which has been met er defiance from the Iranian side to downgrade the level of its cooperation ency.

wo player game, a single step of the game modeling the ran and US is presented. The game begins

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with a decision by the US of whether to accept a nuclear Iran or nbut costs 'a' units for the US. On the other hand, if the US decides to impose more sanctions on Iran, in response Iran may accept the suspension of its nuclear program (with a probability equal to p), again the game terminates and the total cost to the US will be 'c' units. However, if Iran insists on continuing its program, then we are on the middle branch of the model to this time the game costs 'b' units for US, but also the game continues on to the next step.model we want to analyze the best decisions for the two parties. The answer is explained in different situations as follows:

Figure 1: Step one of the game, with probabilities of Iran’s gain & US loss

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sion by the US of whether to accept a or not. If it accepts, the game terminates

units for the US. On the other hand, if the to impose more sanctions on Iran, in

an may accept the suspension of its nuclear ith a probability equal to p), again the game nd the total cost to the US will be 'c' units. f Iran insists on continuing its program, on the middle branch of the model –the game costs 'b' units for US, but also

ntinues on to the next step. Regarding this want to analyze the best decisions for the . The answer is explained in different follows:

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1. Single Step of the GameAssuming a game with a single step follows thus: if the US accepts a nuclear Iran, then the game terminates and this choice the other hand, if the US denies a nuclear Iran, and decides upon more sanctionIran in response may insist on further progress in its nuclear program with a probability equal to may accept to leave its programs with a probability equal to p. If the US costs for either of these decisions are c and b US is equal to:

pCD ×=No doubt the best decision for the United States

is the one which minimizes its cost. So we have the following decision strategy:

Deny

Accept

DC<>

So we have:

pDeny

Accept

<>

Hence, if the probability of Iran's acceptance is less than the difference between the US acceptance and Iran’s denial compared to the difference of the cost of Iran’s acceptance and US denial, then it is


p of the Gamegame with a single step follows thus: if the a nuclear Iran, then the game terminates

oice costs a units for the US (CA = a). On and, if the US denies a nuclear Iran, and

on more sanctions or other actions, then onse may insist on further progress in its gram with a probability equal to 1-p or it to leave its programs with a probability

f the US costs for either of these decisions respectively, then the average cost for the to:

bpc ×−+× )1( (1)ubt the best decision for the United States which minimizes its cost. So we have the ecision strategy:

A

ny

ept

C<> (2)

have:

bcba

−− (3)

if the probability of Iran's acceptance is he difference between the US acceptance denial compared to the difference of the n’s acceptance and US denial, then it is

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wiser for the US to accecan press on for further sanctions. The above inequality can also be interpreted differently If acceptance of a nuclear Iran is considered highly costly for the US, it should in any case go for further sanctions. However, ifthe US then accepting a nuclear Iran is a wiser choice.

2. Repeated gameIf we assume that the game is repeated up to ni.e. for n times, and the US has denied a nuclear Iran and Iran has insisted on the further progress of its program, what is the wisest decision for US?

Up to nbn× . In the next step if the U

then its cost reaches:nCA ×=

On the other hand, if it presses on for further sanction then the average cost reaches:

nCD ×=Once again we should use the following decision

strategy:

Deny

Accept

DC<>

Also it results in:

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e US to accept a nuclear Iran, otherwise it on for further sanctions. The above

can also be interpreted differently If of a nuclear Iran is considered highly costly , it should in any case go for further

However, if Iran’s denial is highly costly for accepting a nuclear Iran is a wiser choice.

gameme that the game is repeated up to nth step, mes, and the US has denied a nuclear Iran as insisted on the further progress of its hat is the wisest decision for US?nth step, the net cost for the US reachesnext step if the US accepts a nuclear Iran reaches:

ab +× (4)e other hand, if it presses on for further n the average cost reaches:

apcpb ×−+×+× )1( (5)gain we should use the following decision

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The outcome of this game is interesting. If the first step is beneficial to the US, then the US will be interested to continue the game forever, otherwise wiser choice would be to terminate first step. This fact explains why many international crises continue for a protracted period of time in the same manner. In this case, the cost function is additive at each step, so if a single step of the game is beneficial for one playerindefinitely. However, as is explained in the next section, this is not the whole story.

3. Repeated game considering final resultIf the US insists that under any and all conditions Iran should terminate its progruntil Iran accepts to suspend its program. The average cost of this decision for the US is:

cCD +=

So the decision is as follows:

ppc −+ 1

Surprisingly, the condition is different from


bcba

−− (7)

utcome of this game is interesting. If the beneficial to the US, then the US will be o continue the game forever, otherwise e would be to terminate the game at the

This fact explains why many international nue for a protracted period of time in the er. In this case, the cost function is additive

so if a single step of the game is beneficial yer then it will prefer to continue the game

However, as is explained in the next is not the whole story.

game considering final resultsists that under any and all conditions Iran inate its program, then the game continues cepts to suspend its program. The average decision for the US is:

bp

p−+ 1 (8)

decision is as follows:

abDeny

Accept

<>

(9)ingly, the condition is different from

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previous situations. So maybe a single step of the game is beneficial for one or both parties. However, regarding the final result it may be wiser to accept the conditions. This means that if either party, let’s say, US, looks at the momentary cost of its seems that it is more beneficial to continue the game on to the next step, however such a decision can cause the game to continue for an extended period and the total costs of the whole game may not turn out to be favorable for that party (US)long term prediction of any decision by any party.

4. Cost-benefit analysis of the gameWithin the game, there are costs and gains for the two players, associated with the decision of each of them. For Iran, continuing its current means the continuation and possibility of even harsher unilateral US sanctions and also further biting UN sanctions. Although a distant reality to some extent, it has been claimed that the absence of US sanctions will enable Iran to increas30% (61 billion USD according to There is some truth to this. There has not been any independent study on the real cost of sanctions on the Iranian economy, however its direct and indirect costs are clearly evidblack market, an insecure investment environment, the

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tuations. So maybe a single step of the neficial for one or both parties. However, e final result it may be wiser to accept the This means that if either party, let’s say,

at the momentary cost of its decision, it it is more beneficial to continue the game xt step, however such a decision can cause continue for an extended period and the

of the whole game may not turn out to be or that party (US). This fact claims for a rediction of any decision by any party.

fit analysis of the gamegame, there are costs and gains for the two ociated with the decision of each of them. continuing its current nuclear program ontinuation and possibility of even harsher S sanctions and also further biting UN

Although a distant reality to some extent, it imed that the absence of US sanctions will to increase its current GDP by around

illion USD according to 2005 pricesme truth to this. There has not been any t study on the real cost of sanctions on the nomy, however its direct and indirect costs evident. Expensive commodities on the t, an insecure investment environment, the

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retardation of the growth of various industries, are some more obvious consequences. However, one should also add to the economic cost the political and psychological rFurthermore, there has been a risk, though a minor probability, of military strikes against Iranian nuclear facilities. But its psychological impact adds to the political costs just mentioned. President Bush insisted on 31 August for Iran's defiance of demands that it stop enriching uranium.(8)

On the other hand, if Iran accepts to terminate its nuclear program, it should dismantle some of the facilities and suspend many others and relievscientists working in these facilities. In the longer term, Iran should invest in the development of fossil fuel power plants to make up for the loss of nuclear ones currently under development. Such a replacement would make the currently built or under construction nuclear facilities redundant; the country would also become more dependent on fossil fuels and it would force the government to spend more on environmental issues. In addition, withdrawing from a nationally perceived strategic and prestigious such as the nuclear energy industry would be very disconcerting for many Iranians. For many of them


of the growth of various industries, are obvious consequences. However, one

add to the economic cost the political and al risks resulting from sanctions. e, there has been a risk, though a minor of military strikes against Iranian nuclear

ut its psychological impact adds to the ts just mentioned. President Bush insisted st 2006 that "there must be consequencesefiance of demands that it stop enriching

other hand, if Iran accepts to terminate its gram, it should dismantle some of the

nd suspend many others and relievorking in these facilities. In the longer hould invest in the development of fossil plants to make up for the loss of nuclear ently under development. Such a t would make the currently built or under n nuclear facilities redundant; the country become more dependent on fossil fuels

d force the government to spend more on tal issues. In addition, withdrawing from a erceived strategic and prestigious project

e nuclear energy industry would be very ng for many Iranians. For many of them

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such a decision would be seen as undermining their independence. Such social and emotional costs should never be ignored in any decision and the weiof the various costs involved.

As far as US policy is concerned, if the Obama administration continues to insist on its current claims against Iran, it should maintain its policy of sanctions against Iran. There is no accurate estimate for the cosof such sanctions on the US economy. However, the CIA has estimated that these sanctions have led to a 10% increase in crude oil prices which costs annually between $38$76 billion Furthermore, many US companies have lost the lucrative market of Iran’s major oil and gas contracts which totals billions of dollars, clearing the market for their Chinese, Russian and European competitors. In addition, the Ugovernment needs to spend more money and exert greater political and diplomatic efforts to encourage other courtiers to impose and maintain such sanctions against Iran. Undoubtedly there are extra costs and benefits for other countries who cooperate withof the players, or even if they maintain a neutral position.

On the other hand, if the US accepts a nuclear

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sion would be seen as undermining their ce. Such social and emotional costs should nored in any decision and the weighing up us costs involved.as US policy is concerned, if the Obama on continues to insist on its current claims , it should maintain its policy of sanctions There is no accurate estimate for the cos

ctions on the US economy. However, the timated that these sanctions have led to a e in crude oil prices which costs annually 8 billion (at 2005 prices of $50/bbl) a

(at average 2008 prices of $100/bbe, many US companies have lost the arket of Iran’s 70 million population and nd gas contracts which totals billions of ring the market for their Chinese, Russian ean competitors. In addition, the Uneeds to spend more money and exert

tical and diplomatic efforts to encourage ers to impose and maintain such sanctions . Undoubtedly there are extra costs and other countries who cooperate with either ers, or even if they maintain a neutral

other hand, if the US accepts a nuclear

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Iran, it is argued that the balance of power in the region - in the Greater Middle East and especially in the Persian Gulf area But here arises a question: is it not possible (or even less costly) for Iran to change the regional condition in its favor without nuclear missiles?

For Iran, while pursuing peaceful nuclear technology seems a national imperative any dto a hypothetical nuclear arsenal would be extremely costly. A dangerous regional race for nuclear arsenal would turn the region into an even more dangerous and unstable neighborhood. Iran, given its size, population, and also its huge and everterm development needs, would suffer the most in an unstable neighborhood. Its longinterests, including longdevelopment, lie in a stable region free from unnecessary tension and conflict. For those whobelieve that the current threats against Iran have forced it to seek acquiring nuclear military capability, it will suffice to mention that the country’s current overall military prowess, inclusive of the missile stock, is generally considered sufficient and level of current threat posed to it in the Middle East. In addition, the teachings of Islam prohibit the usage of WMD. Iran has manifested in action its sense


argued that the balance of power in the the Greater Middle East and especially in Gulf area - will change in favor of Iran. ises a question: is it not possible (or even for Iran to change the regional condition in hout nuclear missiles?ran, while pursuing peaceful nuclear seems a national imperative any diversion etical nuclear arsenal would be extremely

angerous regional race for nuclear arsenal the region into an even more dangerous le neighborhood. Iran, given its size, and also its huge and ever-growing longpment needs, would suffer the most in an ghborhood. Its long-term national security including long-term comprehensive

nt, lie in a stable region free from tension and conflict. For those who

t the current threats against Iran have seek acquiring nuclear military capability, it

to mention that the country’s current ary prowess, inclusive of the missile stock, considered sufficient to address the kind

f current threat posed to it in the Middle dition, the teachings of Islam prohibit the MD. Iran has manifested in action its sense

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of restraint in this regard the widespread Iraq during the teachings and oftprobably have significant sociogovernment. Apart from the stated policy that nuclear military technology plays no role in Iran’s defense doctrine, there exists internationallywell-established monitoring procedures and mechanisms; that is, the IAEA Safeguards system, which Iran has cooperated with in the past and continues to reiterat

Needless to say, accepting a nuclear Iran will bear some cost for the US. Such a recognition would imply that the US should also accept the development of nuclear industries in other countries, whether developed or developing. However, bugoverning nuclear industries will be in some measure beneficial for US companies if it were to impose some form of oligopoly. Simultaneously, it would also imply a net loss for US allies in the Middle East, most notably Israel, and also some Aracould be reasonably argued that this consideration, along with the still existing “wall of mistrust” between the two countries in his interview with CNN back in

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in this regard - most notably in response to ead use of banned chemical weapons by the 8-Year War. Any diversion from such nd oft-stated official policy will most

ave significant socio-cultural costs for the . Apart from the stated policy that nuclear hnology plays no role in Iran’s defense

here exists internationally-sanctioned and hed monitoring procedures and ; that is, the IAEA Safeguards system, has cooperated with in the past and

o reiterate its commitment. ss to say, accepting a nuclear Iran will bear or the US. Such a recognition would imply S should also accept the development of dustries in other countries, whether or developing. However, building and uclear industries will be in some measure

or US companies if it were to impose some gopoly. Simultaneously, it would also imply for US allies in the Middle East, most

ael, and also some Arab governments. It easonably argued that this consideration, he still existing “wall of mistrust” between ntries - as alluded to by President Khatami iew with CNN back in 1977 - and perhaps

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some idealistic assumall colluded to cause the US insistence so far on the imperative of a total halt to the Iranian nuclear program.

As has been mentioned in the case of the simple model, if a single step of the game is favorable for either party, then this party would prefer to continue the game indefinitely. This can explain the current state of the conflict. In each step both Iran and US have found it more favorable to insist on their claims/positions. However, regarding the final result of the game it seems that these momentary decisions and gains are not the best long term solutions for either party. So both parties should think about the overall result and make their best possible decision.

In the next section, the paper explains why the crisis has reached a point of impasse, and will also look into the best possible solution for it. Then it will try to explain the longeffects of the on

Prisoners’ dilemma: The best solution with the least cost?Part of the Iranbe explained using prisoner’s dilemma. During the year 2003, s


tic assumptions in US foreign policy, have to cause the US insistence so far on the of a total halt to the Iranian nuclear

been mentioned in the case of the simple single step of the game is favorable for then this party would prefer to continue

ndefinitely. This can explain the current conflict. In each step both Iran and US

d it more favorable to insist on their tions. However, regarding the final result e it seems that these momentary decisions are not the best long term solutions for . So both parties should think about the t and make their best possible decision.next section, the paper explains why the

eached a point of impasse, and will also e best possible solution for it. Then it will

ain the long-term political and economic e on-going crisis.

dilemma: The best solution with the

Iran-US conflict on the nuclear issue may d using prisoner’s dilemma. During the some evidence was found that Iran had a

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secret nuclear program. Being secret, satisfied many opponents that the program was certainly military oriented. This paper has not attempted to prove whether this was in fact the case or not. However referring to the prisoner’s dilemma,find another meaningful interpretation of this event. The conflict is modeled as figure

Figure 2

Iran actually had two choices for its program; the first one was to announce its program at the beginning, and the alternative was to carry out its development secretly. It is pressure, the cost of a secret program was many times more than a nonthe cost of a nonof the alternative is B. The same is true for the opponent party (USA): if Iran’s nuclear program is disclosed, it is not costly for US (as the IAEA will monitor it), but it is more difficult to investigate a secret program.

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ar program. Being secret, satisfied many that the program was certainly military his paper has not attempted to prove s was in fact the case or not. However the prisoner’s dilemma,(9) it is possible to r meaningful interpretation of this event. t is modeled as figure 2, below:

2: The case of Iranian civilian nuclear program

y had two choices for its program; the first announce its program at the beginning, and tive was to carry out its development s clear that if there were no international e cost of a secret program was many times non-secret or public one. We assume that

a non-secret program is A, while the cost rnative is B. The same is true for the arty (USA): if Iran’s nuclear program is

t is not costly for US (as the IAEA will but it is more difficult to investigate a

am.

any ary ove ver to

ent.

first and ent nal

mes hat ost the

m is will e a

For the US there also exists two solutions, the first one is to insist that the progmilitary-oriented, which costs too much for both Iran and the US because the latter should try to end the Iranian program and Iran should try to resist such pressure. On the other hand, the US can accept that the program is civilian orienteinvestigation by IAEA can be done periodically to report any divergence, so the cost is significantly less for the US.

But what happened in reality is quite interesting. Iranians because of their experiences in the aftermath of the revolution have assumed that any program, even a civilianby US. During the Iraqi imposed war on Iran, while it was clear that Iraq was the aggressor and the initiator of the war(1

US never disclosed such a fact and even helped Saddam Hussein in the perpetuation of his aggression. Even though Iraq attacked Iranian cities with scud missiles and used WMD not only at the war front but also against civilians, none of these powers madesignificant attempts to prevent Iraq (while there are now proven facts that these forbidden materials were sent to Iraq by Western firms). As a result, the majority of Iranians took for granted that the Western


e US there also exists two solutions, the to insist that the program is entirely

nted, which costs too much for both Iran because the latter should try to end the

gram and Iran should try to resist such n the other hand, the US can accept that

m is civilian oriented. In this case, a mild n by IAEA can be done periodically to divergence, so the cost is significantly less

at happened in reality is quite interesting. cause of their experiences in the aftermath olution have assumed that any program, an-oriented program, will not be accepted ing the Iraqi imposed war on Iran, while it at Iraq was the aggressor and the initiator 0), many Western countries including tdisclosed such a fact and even helped ssein in the perpetuation of his aggression. gh Iraq attacked Iranian cities with scud

used WMD not only at the war front but civilians, none of these powers made a

attempts to prevent Iraq (while there are n facts that these forbidden materials were q by Western firms). As a result, the Iranians took for granted that the Western

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the rely ran the uch hat

mild to

ess

ng. ath am, ted e it

ator the ped on. cud but any are ere the ern


140

world would do all it could to topple thgovernment. Hence, in their mind, even a civilian nuclear project was not acceptable to the US and the only solution was to build it secretly. This view has been expressed in clear, unambiguous terms and on many occasions by many Iranian offici(former) President Rafsanjani

On the other hand, as a result of three decades of mistrust between the US and Iran and the larger enduring conflict between the Western and Islamic worlds, many Western politicians seem to espouse the assumption that Muslims in general and Muslim/Islamic governments in particular are determined to pursue hostile and injurious antiWestern policies in every and all their actions and endeavors. The course of posthave all but galvanized sucit is not difficult to understand why and how such quarters uncritically assume that Iranians are developing their own nuclear weapons previously undisclosed efforts of the Iranian government are regarded as defiof argument has been frequently repeated by different Western officials and political quarters.

Such presumptions on the part of both players have forced the game toward a point of equilibrium

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d do all it could to topple their popular . Hence, in their mind, even a civilian ect was not acceptable to the US and the n was to build it secretly. This view has

ssed in clear, unambiguous terms and on ions by many Iranian officials, including

esident Rafsanjani.(11) other hand, as a result of three decades of tween the US and Iran and the larger

onflict between the Western and Islamic ny Western politicians seem to espouse the

that Muslims in general and amic governments in particular are

to pursue hostile and injurious antilicies in every and all their actions and The course of post-September 11 events galvanized such a blanket assumption. So,

fficult to understand why and how such ncritically assume that Iranians are their own nuclear weapons – for which the

undisclosed efforts of the Iranian are regarded as definitive proof. This line

t has been frequently repeated by different icials and political quarters.resumptions on the part of both players the game toward a point of equilibrium

ular ian the has on ing

of ger mic the and are nti-and nts So, uch are the ian ine ent

yers um

with B+D cost which is the most costly both parties best solution is A+C, which offers the least cost for both parties! This fact suggests that the major problem is that the two sides do not trust one another, so any attempt for confidence between these two countries and governments will move the game to A+C solution with the least cost for both parties. Although some unofficial and even official meetings have taken place between the two sides during dossier, the move to A+C position does not seem to be a reachable goal in the shortuncertainty lies in the fact that both Iran and the US doubt the sincerity of the intention of the other side for any posit

International impact of the crisisAs already mentioned, apart from the outcome of the Iran-US conflict for the two parties directly involved, it is bound to have a considerable impact on other countries, including both developed countries interested in maintaining their superiority and developing countries desiring to acquire the capability. Different scenarios are possible in this regard. The worst scenario for others is if the crisis continues until


cost which is the most costly solution for (Figure 2). This notwithstanding that the

n is A+C, which offers the least cost for ! This fact suggests that the major problem wo sides do not trust one another, so any confidence building and establishing trust ese two countries and governments will ame to A+C solution with the least cost for s. Although some unofficial and even tings have taken place between the two

g 2009, notably on and around the nuclear move to A+C position does not seem to

able goal in the short-term. Part of this lies in the fact that both Iran and the US incerity of the intention of the other side tive move.

nal impact of the crisismentioned, apart from the outcome of the nflict for the two parties directly involved,

to have a considerable impact on other including both developed countries in maintaining their superiority and countries desiring to acquire the capability. cenarios are possible in this regard. The rio for others is if the crisis continues until

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for the for em any rust will for ven wo ear

m to this US ide

the ved, her ries and ity.

The ntil


142

Iran completes its program capability - aoutcome would suggest to many countries that the US had brought to bear a weak and unpersuasive strategy in the Iranian case.is permissible for the US to accpower. Although before such acceptance, the United States enforces continuous pressure on any country who wishes to pursue to acquire a nuclear technology, even a peaceful one. This is what happened in the cases of India and Pakistan anagreements between India and the USindicative of this fact.

However, the case of Iran seems somewhat different from those of India and Pakistan. Since Iran and the US have had some quite serious differences over a wide array of issues, the US acceptance of a nuclear Iran in such a manner might prove that it is possible even for an adversary of the US to develop and maintain nuclear capability at the least cost. This would be the case because a US acceptance of a nuclear Iran would expose discredit - tfuture cases. If such a situation prevail, we could possibly end up with a worldnuclear arms proliferation, which would be the worst

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etes its program – a peaceful nucland the US accepts a nuclear Iran. Such an ould suggest to many countries that the US t to bear a weak and unpersuasive strategy n case.(12) It would be thus perceived that it

ble for the US to accept another nuclear ough before such acceptance, the United

rces continuous pressure on any country to pursue to acquire a nuclear technology,

ceful one. This is what happened in the dia and Pakistan and the recent nuclear between India and the US(13), are especially f this fact.er, the case of Iran seems somewhat

om those of India and Pakistan. Since Iran have had some quite serious differences

e array of issues, the US – ultimate of a nuclear Iran in such a manner might t is possible even for an adversary of the lop and maintain nuclear capability at the This would be the case because a US of a nuclear Iran would expose – athe US strategy towards similar possible . If such a situation –scenario - were to could possibly end up with a world-wide s proliferation, which would be the worst

ear an

US egy at it ear ted

ntry ogy, the ear ally

hat ran ces e -ght the the US and ble to

wide orst

possible solution and the most dire consequences for all.

Another possible scenario is that US ends the Iranian nuclear project through political or even military means. While this might solve the problem in the short term, the longrepercussions should be considered carefully. Such a policy would serve to convince other countries that even a civilian nuclear project would not be acceptable to the United States, which might in turn tend to persuade them to opt foprogram. On the other hand, as the requisite technology is becoming less and less expensive; many countries may become interested in developing their own programs. In this scenario, some countries may finally decide to proceed to develop their nprograms –these countries might fully succeed in their enterprise, and by means of a domino effectend up with their own nuclear because of the secrecy factor the projects/programs tend to evade adequate outside monitoring and control. In this scenario, even non state actors, such as terrorist groups, may gain access to nuclear weapons. This scenario thus addresses and tackles the shor


ution and the most dire consequences for

r possible scenario is that US ends the clear project through political or even ans. While this might solve the problem in term, the long-term consequences and ns should be considered carefully. Such a d serve to convince other countries that an nuclear project -as in the case of Iran be acceptable to the United States, which n tend to persuade them to opt for a secret

On the other hand, as the requisite is becoming less and less expensive; many

may become interested in developing their ms. In this scenario, some countries may de to proceed to develop their nuclear albeit secretly. In the long run, some of

ries might fully succeed in their enterprise, ns of a domino effect(14), some of them will h their own nuclear industries. Howeverhe secrecy factor - at least in initial stages /programs tend to evade adequate outside and control. In this scenario, even non such as terrorist groups, may gain access

weapons. This scenario thus addresses and short-term costs but it transfers the

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for

the ven

m in and h ahat

an -ich

cret site any heir may ear of

ise, will ver,es -ide

non ess

and the


144

problem to the future without any permanent solution, which would in all probability accumulate the costs as well. For example, nations who have experienced pressure from the West in achieving their nuclear rights might, oeven seek compensation for the hardships they have undergone in the course of realizing what they perceive as their legitimate rights. Such a possible course of action would certainly be found worrisome.

Figure 3: Extreme pressure scenario and US limits on control over nations

Figure 3 shows the high global cost for the US in continuing a policy of strict control of the development of nuclear facilities worldwide. If the US continues to fordeveloping their own nuclear technology, over time

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the future without any permanent solution, d in all probability accumulate the costs as example, nations who have experienced om the West in achieving their nuclear t, once having established their capability, ompensation for the hardships they have in the course of realizing what they their legitimate rights. Such a possible

tion would certainly be found worrisome.

me pressure scenario and US limits on control over nations

hows the high global cost for the US in a policy of strict control of the

nt of nuclear facilities worldwide. If the US o forcefully prevent other countries from their own nuclear technology, over time

on, s as ced ear ity, ave hey ble

me.

ions

in the US om me

more and more countries might feel persuaded to opt for secret program in order to avoid and evade effective US control. Moreover, these countries might also as part ofexperiences and help each other towards further undermining effective US, and finally rendering it ineffective. Given the grim prospects of such a scenario, the next wise choice for the US might instead be to accept an Iranprogram, supported simultaneously through IAEA full and effective monitoring of the Iranian facilities and activities. Such an approach and policy by the US would help convince the international community that the US is genuinely engagthe proliferation of nuclear arsenals and toward a more secure world. Many would thus consequently support multilateral efforts geared towards instituting forceful international control programs against those countries found virules and norms result, opting for secret programs would also become quite limited and rare. However, this scenario requires an additional, important step by the major powers, the US and Russia in particular, to progressively reduce their own nuclear arsenals.

The next section explains the last scenario and


more countries might feel persuaded to opt program in order to avoid and evade

S control. Moreover, these countries might rt of their pursuit engage in sharing and help each other towards further

g effective US, and finally rendering it Given the grim prospects of such a

he next wise choice for the US might to accept an Iranian civilian nuclear

pported simultaneously through IAEA full e monitoring of the Iranian facilities and uch an approach and policy by the US convince the international community that enuinely engaged in global efforts against ation of nuclear arsenals and toward a e world. Many would thus consequently ltilateral efforts geared towards instituting ernational control programs against those ound violating established international orms – so to speak, the “red lines”. As a g for secret programs would also become

d and rare. However, this scenario requires al, important step by the major powers, the ssia in particular, to progressively reduce uclear arsenals.xt section explains the last scenario and

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opt ade ght ing her

g it h aght ear full and US hat nst

d antly ing ose nal s ame ires the uce

and


146

how such an eventuality is economically preferable as well.

High-tech transfer and its economic probabilityCurrently that Iran is tenrichment industry and heavy water facilities, the relevant technologies and nuclear power plants are categorized as highcontrolled by a limited number of countries and companies –situation on a global scale. For others, the fixed costs needed to acquire such technology or to build a plant are exceedingly high

Figure 4: S

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n eventuality is economically preferable as

transfer and its economic probabilityhat Iran is trying to build its uranium industry and heavy water facilities, the hnologies and nuclear power plants are

as high-tech industries, owned and by a limited number of countries and – a monopoly or at best an oligopoly a global scale. For others, the fixed costs

cquire such technology or to build a plant ngly high, as illustrated in Figure 4 below

Supply and demand curve for a high-tech product

e as

yum the are

and and oly

osts ant

w.

As shown in this Figure, the price for the first product (unit) is much higher than when more products (units) is produced. Hence, the start up costs are too high (Pin this figure) for the newcomer who does not have the technology, , buexperience in this field, the cost is much less (PHowever if the latter suggests to the former a price less than P1,to buy the industry instead of developing its own plant. As amore beneficial for the countries/companies owning the technology.

If a country such as Iran insists own peculiar national reasons technology and plants, it offers potential those who have the technology. However, if they refuse to sell and build the industry, the insisting country may feel that it has no other option but to proceed to produce its own industry at whatever price thought reasonable sanctions would further raise the cost of such a project. But the cost declines substantially once some experience is gained. In other words, in the long run it would be economically more beneficial for a country such as Iran to pay an initial high club of nuclear technology owners. Hence, firstly, the


n this Figure, the price for the first product ch higher than when more products (units)

Hence, the start up costs are too high (Pe) for the newcomer who does not have ogy, , but for the second country with in this field, the cost is much less (Pthe latter suggests to the former a price

, then it is reasonable for the first country industry instead of developing its own result, such an industry turns out to be

icial for the countries/companies owning ogy.untry such as Iran insists – though for its ar national reasons - that it needs such a and plants, it offers potential profits for have the technology. However, if they

ell and build the industry, the insisting y feel that it has no other option but to produce its own industry at whatever price easonable – or expedient. Imposing would further raise the cost of such a

the cost declines substantially once some s gained. In other words, in the long run it conomically more beneficial for a country n to pay an initial high cost and enter the lear technology owners. Hence, firstly, the

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uct its) (P1

ave with P2). rice ntry wn be

ing

its h afor hey ing to

rice ing

h ame n it

ntry the the


148

monopoly over the technology would be reduced and secondly, the pioneering owners of technology would also stand to lose their potential profits on a global scale.

ConclusionsAs the result of a series of events over the past thirty years Iran and the United States have reached a point of crisis – considered by some as insoluble. This paper has attempted, through using different game theory models, to look into the current confltwo countries over the Iranian nuclear program. It has argued that the main problem is the absence of mutual trust between the two countries, which has forced both of them to opt for a decision in their nuclear game with the highest cost fothe impasse, in the authors’ view, establishment of mutual trust between the two parties is a major initial step towards a permanent solution. While at every step of the game it may be favorable for either party to insist on its clasomewhat different. It means that the momentary cost of each step of the game might be quite different from the total cost of the game reaching a reasonable conclusion –Iran willingly accepts to end its program. This calls for

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over the technology would be reduced and e pioneering owners of technology would o lose their potential profits on a global

nslt of a series of events over the past thirty nd the United States have reached a point onsidered by some as insoluble. This paper ted, through using different game theory ook into the current conflict between the es over the Iranian nuclear program. It has the main problem is the absence of mutual en the two countries, which has forced m to opt for a decision in their nuclear

the highest cost for the other side. Given e, in the authors’ view, establishment of t between the two parties is a major initial s a permanent solution. While at every step e it may be favorable for either party to

claims, the long-term resolution may be ifferent. It means that the momentary cost of the game might be quite different from

ost of the game reaching a reasonable – whether the US accepts a nuclear Iran or y accepts to end its program. This calls for

and uld bal

irty oint per ory the has tual ced ear ven

of tial tep to be ost om ble

n or for

a long-term consideration of any decision by either of the parties to the game. This was explored both in terms of the impact on international relations as well as economic cost

Using gameUS acceptance of a nuclear Iran after the country has acquired the technology despite the US opposition and pressures is one solution, but it is the worst possible option for the US Government. Because it proves that the US opposition has failed detractors as a mere bluff pursuing and gaining nuclear technology, with sufficient resolution, can force the US to accept its newly found status as a nuclear state whether the IAEA Safeguards have been fully complied with or not. The other possible solution is to terminate Iran’s nuclear program through resort to extreme pressures harsh, crippling sanctions or even through a military option. However, this shorttransfer the problem to another future scenario probably a much more complicated situation. This would also serve to accumulate the costs globally. The models discussed in the paper show that the leastcostly - and safest US government to accept a civilian nuclear program


consideration of any decision by either of to the game. This was explored both in e impact on international relations as well c cost-benefit analysis. game theory models, it was shown that the nce of a nuclear Iran after the country has

technology despite the US opposition and one solution, but it is the worst possible

he US Government. Because it proves that position has failed – even scorned by its as a mere bluff - and that any country nd gaining nuclear technology, with

esolution, can force the US to accept its d status as a nuclear state – regardless of he IAEA Safeguards have been fully ith or not. The other possible solution is to ran’s nuclear program through resort to essures – whether through imposition of ling sanctions or even through a military wever, this short-term solution can only problem to another future scenario – mmuch more complicated situation. This

serve to accumulate the costs globally. The cussed in the paper show that the leastsafest - solution for both parties is for the

ment to accept a civilian nuclear program

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r of in

well

the has and ble hat its

ntry with

its of

ully s to

to of

ary nly ost

This The ast-the am


150

inside Iran while ensuring effective international monitoring of the Iranian nuclear facilities. Moreover, such an approach and decision would alreassuring to other countries that while they enjoy the policy space to develop their national peacefuloriented programs, they would be put on notice that any divergence toward a military program will be effectively resisted weight of the international community. This mutual international trust would as well contribute to the promotion of the muchsecurity and help prevent “irrational” ambitions.

Since nuclear technology is a highphenomenon and there exists a monopoly over its ownership and control, exertion of undue limitations on those who seek to acquire it productive and ultimately result in the gradual weakening of this monopolistic situation.

And finally, asas economically, the wisest option in the longthe United States and also IAEA will be to help provide the needed policy space for the countries aspiring to acquire peaceful nuclear technology; by recognizaction of their rights under the NPT, selling them requisite technology and plants, and instituting forceful monitoring and regulatory mechanisms.

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while ensuring effective international of the Iranian nuclear facilities. Moreover, proach and decision would also be found o other countries that while they enjoy the ce to develop their national peacefulograms, they would be put on notice that nce toward a military program will be resisted – and rebuffed - by the entire he international community. This mutual l trust would as well contribute to the of the much-needed support for global help prevent “irrational” ambitions.nuclear technology is a high-tech

n and there exists a monopoly over its and control, exertion of undue limitations ho seek to acquire it might prove counter

and ultimately result in the gradual of this monopolistic situation.ally, as argued in the paper, politically as well ally, the wisest option in the long-term for tates and also IAEA will be to help provide policy space for the countries aspiring to eful nuclear technology; by recognizing in heir rights under the NPT, selling them hnology and plants, and instituting forceful and regulatory mechanisms.

nal ver, und the ful-hat be

tire tual the bal

ech its

ons ter-

dual

well for

vide to in

hem eful

References1. Gary Sick, “Iran did not violate the NPT”,

(http://wwwvi.html)

2. W(http://en.wikipedia.org/wiki/Game_theory)

3. Downs, Anthony, “An Economic York: Harper

4. Myerson, Roger B.,Harvard University Press

5. The White House: Foreign Policy, Whitehouse http://www.whitehouse.gov/agenda/foreign_policy/. Retrieved 2009-09-20

6. "President gives first interview since taking office to Arab TVAlarabiya.net. http://wwwRetrieved 2

7. CIA World Fact Book (https://www.cia.gov/library/publications/thefactbook/geos/ir.html)

8. President Bushhttp://georgewbushwhitehouse1.html. Retrieved

9. Prisoner’s dilemma is a famous example in game theory. In this


“Iran did not violate the NPT”, 22 January 2008ww.iranaffairs.com/iran_affairs/2008/01/iran-did-n

Wikipedia free encyclopedia wikipedia.org/wiki/Game_theory)

thony, “An Economic Theory of Democracy”, Nper, 1957. ger B., Game Theory: Analysis of Conflict, Harvard: niversity Press,1997. e House: Foreign Policy, Whitehouse Archivew.whitehouse.gov/agenda/foreign_policy/. Retrieved

0.ives first interview since taking office to Arab TV

net. w.alarabiya.net/articles/2009/01/27/65087.html. 2009-09-20. IA World Fact Book ww.cia.gov/library/publications/the-world-geos/ir.html)Bush's speech of 8/31/2006, Whitehouse archivesrgewbush-e.archives.gov/news/releases/2006/08/20060831-trieved 2009-09-20 ilemma is a famous example in game theory. In this

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008,not-

edia

New

vard:

iveseved

TV".

ook

ves,

this


152

problem, two prisoners are jailed for the same crime. If both accept that they are guilty, the court will condemn both, say two years of jail for each. But because each one claims the other one is guilty, the court may decidefurther reading, please see M & Orwant, Carol J, “Prisoner's Dilemma: A Study in Conflict and Cooperation”,

10. Abrahamian, Ervand, Cambridge Press

11. Petro Energy News Network (In Persian), “HiNuclear Program, narrated by Ayatollah Hashemi Rafsanjani”, 29 February fa.html)

12. Deutsch, M, “The Resolution of Conflict: ConstruDestructive Processes”, 1974; Weibull, Jörgen W, “Evolutionary Game Theory”, Cambridge

13. Times of India2008).

14. President Eisenhower’s Press Conference of Pentagon Papers1971, pp. 5

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wo prisoners are jailed for the same crime. If both t they are guilty, the court will condemn both, say two l for each. But because each one claims the other one

he court may decide, say 8 years of jail for each.ding, please see Rapoport, Anatol, Chammah, Alb

ant, Carol J, “Prisoner's Dilemma: A Study in Conflict ration”, Michigan: Michigan University Press, 1965n, Ervand, A History of Modern Iran, Cambridge: Press, 2008.

gy News Network (In Persian), “History of Iranian rogram, narrated by Ayatollah Hashemi Rafsanjani”, ary 2009, (http://www.irpetro.com/newsdetail-3209

M, “The Resolution of Conflict: Constructive and e Processes”, New Haven: Yale University Press, ibull, Jörgen W, “Evolutionary Game Theory”, (MA): MIT Press, 1995

India, India, US seal 123 Agreements (11 October

Eisenhower’s Press Conference of 7 April 1954, Papers, Gravel Edition, Vol. 1, Boston: Beacon Press,

597-8.

both two one For bert flict 5.dge:

nian ani”, 209-

and ress, ory”,

ober

The ress,

iran-u snuclear standoff: a game me theory approach (2010)_-_iran_us nuclear standoff.pdflukewarm...

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