- The Washington Times - Wednesday, July 11, 2001

LONDON — Iran, bastion of Islamic militancy and fierce opponent of the United States as the "Great Satan" dominating global trade flows, is poised to throw in its hand with the devil.

On July 18, the Islamic clerics who rule Iran will learn at an international summit in Qatar whether they have made progress on their application to join the World Trade Organization.

Membership in the trade body would have a huge impact on Iran's economy and its relations with its neighbors, most of which have already applied to join the WTO.

But diplomats say Iran will have to surmount a number of hurdles before its application is accepted.

Iran's centrally-planned economy lumbers under the weight of a cumbersome state sector protected by high import tariffs. The government subsidizes fuel and food, controls prices, and retains a complex multitiered exchange rate, all of which could run afoul of WTO free-trade rules.

Most such protections would have to go, but the regime's revolutionary rhetoric makes it reluctant to accede to international institutions.

Even if the WTO accepts Iran as a candidate for membership, it will likely take years before the reformist government of President Mohammad Khatami could overcome entrenched domestic business interests — and their clerical patrons — to achieve full membership.

China first applied to the WTO's predecessor 14 years ago and is just now nearing full membership.

To cap it all, the United States has long opposed Iran's membership, and the U.S. government has a big say in who's on the invitation list.

Washington accuses Iran of sponsoring terrorism and maintains trade sanctions against the country.

Since the Islamic republic quietly submitted an application for WTO membership in 1996, U.S. objections have limited Iran to observer status at the trade body's sessions. The WTO General Council has not even been able to discuss Iran's application for membership.

Earlier this year, however, a group of developing countries led by Egypt agreed to sponsor Iran's application, ensuring that it won a preliminary hearing in May. To no one's surprise, the United States again opposed the bid, but Egypt's persistence has ensured the issue will be back on the WTO agenda July 18.

This time, the United States may be willing to listen.

President Bush is planning a major review of U.S. sanctions policy and has hinted that he would like to see American oil firms more heavily engaged throughout the Middle East.

In May, his ambassador to the WTO, Rita Hayes, said the Bush team was reviewing its position on Iran's application.

Even if Iran's candidacy is accepted, WTO rules allow the United States to declare that it doesn't consider the agreement to apply to U.S.-Iranian trade, a reservation the United States already employs against Fidel Castro's Cuba.

Diplomats say that Iran's attempt to join the international trade group is not as outlandish as it seems. In May, its parliament passed a long-awaited foreign investment law and ratified a bill to enforce international arbitration awards, both basic requirements for WTO membership.

Iran has also modified its regulation of copyright and trademark law to meet international standards.

WTO supporters in Tehran are opposed by a coalition of leftists who favor a state-run economy, conservative merchants and hard-line isolationists, as well as by managers in Iran's state-owned enterprises who fear foreign competition.

In May, Mahdi Tabatabei, a member of Iran's parliamentary budget committee, issued an outspoken attack on the country's membership bid.

"Since Iran can neither quantitatively nor qualitatively compete with other industrial countries in the production sector, it cannot afford to join the WTO," he said.

Behind the economic thinking lies a deeper, political fear. Iran's reformist leaders, like China's, see the WTO bid as a lever to accelerate domestic reforms and, more important, break the continued hold of unelected clerics and officials on Iranian policy-making.

In particular, they are keen to loosen the grip on the economy of the "bazaaris," Iran's traditional import-export merchants who exert considerable influence on the conservative clergy, and the "bonyad," the vast Islamic charities whose aggressive business practices have extinguished competition in almost every sector of Iran's economy.

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