Beliefs Take a Back Seat to Business as Iran Raises Its Regional Profile : Asia: Islamic ideology is not forgotten, but Tehran keeps an eye on the bottom line as it forges new alliances in area.

After years of isolation and feisty regional rivalries, Iran is seeking to regain a prominent role in Asia through a new array of alliances with its southern Arab neighbors and Muslim nations to the north.

And in stark contrast to the virulent, often violent past campaign to export its Islamic revolution, Iran’s priority is now increasingly economic--sometimes even at the expense of its earlier ideological goals.

“They’re consciously and wisely putting the religious aspect of the revolution in second place and trying to promote trade relations first,” said the ambassador of a Mideast country with which Iran has not always had good relations. “It’s as much out of need as of choice.”

Iran’s Islamic regime has already begun to build a multibillion-dollar rail and road network to link the Persian Gulf with former Soviet republics and tie Iran into routes extending all the way to China. It will also create new trade routes linking the Mediterranean to the Indian Ocean, from Turkey to Pakistan.

“We now see a predominant tendency worldwide toward regionalism,” said Mohammed Javad Zarif, Iran’s Berkeley-educated deputy foreign minister. “And this is now very much present in Iran.”

Western diplomats view Iran’s emergence as healthy in the long term, despite the potential for mischief in the short term. The economic links could reduce Iran’s support of extremism, they say, because some deals remain valid only so long as Iran behaves as a responsible member of the world community.

Iran’s heightened interest in regional cooperation has already led Western diplomats here to predict that Iran will eventually, if reluctantly, accept the U.S.-brokered peace plan between Israel and its neighbors.

The centerpiece of the various alliances is the Economic Cooperation Organization, nicknamed the Islamic Common Market. Iran initiated ECO’s revival and expansion two years ago, and Tehran is now its headquarters. It groups Iran, Turkey, Pakistan, Afghanistan, Azerbaijan and the former Soviet Central Asian republics of Uzbekistan, Kazakhstan, Kyrgyzstan, Turkmenistan and Tajikistan.

“A major thrust of our foreign policy now is Central Asia,” Zarif said. “This region is undergoing a transformation as these countries engage in state-building and economic development as independent actors. We believe there’s great potential for cooperation.”

Iran regarded that part of the world as hostile territory for about 150 years when it was under Moscow’s thumb, first under the czars and then the Communists. Now, in the wake of the Soviet Union’s disintegration, Iran has found that its interests in the region are more than just economic.

“We also have cultural and humanitarian interests,” said an official of the Institute for Political and International Studies, an Iranian Foreign Ministry think tank.

“And it’s a security issue,” this official said, “since the area is potentially dangerous due to ethnic and border disputes that could spill over into Iran.”

The growing regional links reflect a broader trend in Central and South Asia.

Although virtually all of these countries would prefer to turn to the West for trade, they have found little interest there and looked to the East instead. Kazakhstan’s major port, for example, is all the way across China in Shanghai. With the completion of Iran’s new transportation links to Central Asia, its facilities will offer a closer alternative.

The three links now planned or under construction within Iran are:

* From the Persian Gulf port of Bandar Abbas to Sirjan, which will link the port to Iran’s railway.

* From the eastern Iranian city of Mashad to Sarakhs on the Turkmenistan border, which will hook Iran into the old Soviet railway system as well as China’s.

* From Iran’s western province of Azerbaijan to the border of the nation of Azerbaijan.

“It’s a good blueprint,” a Western commercial attache here said. “But it’s a huge financial commitment to make unless you have real confidence that it’s going to pay off.”

In 1993, Iran exported more than $30 million in natural gas, vehicles, textiles and foodstuffs to Central Asian republics, triple the 1992 figure.

And use of the routes is not limited to regional players. Australia has already transported food-processing equipment to Turkmenistan via Iran’s ports and roads. “ECO was a major policy initiative that will end up benefiting others,” an Australian official said.

Turkmenistan also signed an agreement in 1994 to build a gas pipeline via Iran to Europe. The seriousness of the new ties was reflected in the recent publication of a Persian-Kazakh dictionary.

Iran has also joined a new Caspian Sea bloc to deal with trade and environmental issues. And it held talks recently in Tokyo with Japan, China, Russia and the new Central Asian states to promote a revival of the ancient Silk Road--a legendary trade route that snaked across Asia. The next such summit will be in Tehran.

The broader shift is also reflected in a possible future alliance Iran is considering with Turkey, Syria and longstanding rival Iraq. Iran, Turkey and Syria already hold regular talks on the future of Iraq, and Iranians claim that this ad hoc grouping could easily be formalized.

And Tehran says that Iraq is a candidate for future membership in ECO, which would add a stronger Persian Gulf component and potentially make ECO a rival to the Gulf Cooperation Council of six oil-rich sheikdoms. Iran has long been bitter that, largely because it is a non-Arab nation, it has been left out of the Gulf Cooperation Council even though it has a longer coastline on the gulf than any of the council’s members.

Iraq presents Iran with a special dilemma.

Under Saddam Hussein, Baghdad has twice been the aggressor against Iran--the second time in an eight-year war that resulted in a million casualties before ending in 1988. If the United Nations lifts its economic sanctions against Iraq, Iran fears that it will once again be on the receiving end of Iraqi aggression. Also, the Iraqi majority is Shiite, the predominant Muslim sect in Iran. On those and other counts, Iran would like Hussein, a Sunni Muslim, out.

Yet Iraq without Hussein could lead to stronger U.S.-Iraqi ties--with an anti-Iranian focus. That helps explain Iran’s policy toward Iraq: that it should comply with all U.N. resolutions and that the U.N. Security Council should then lift its economic sanctions against Iraq.

“Sanctions have had the most destructive impact on the Iraqi people, without changing the behavior of the regime,” Zarif said.

The result would be a weakened Hussein in power and pouring significant chunks of his restored oil income into compensation for U.N. and Kuwaiti war costs during the 1991 Persian Gulf War.

Fear is again the motivating force for policy. On the U.S.-brokered Mideast peace process, Iran is in a quandary because of concerns that it will either be ostracized again or even become the target of the Arab world.

“The regime genuinely thinks parts of the deal do not offer the Arabs enough to guarantee peace over time,” said a Mideast diplomat with a vested interest in the peace process. “But it sees that this process is reaching the point of no return.”

And Iran also does not want to be more isolated than it already is--which would be the price of sabotaging the peace process, the diplomat added. Tehran knows how fragile relations are with the Europeans and the Japanese, who have repeatedly told the government here how important they feel peace is.

“Sometimes we have to tolerate things not because we agree but because it’s reasonable. We have an embassy in (the Jordanian capital of) Amman and the king signed the treaty, but we didn’t break relations,” said Rajaie Khorasani, member of Parliament and former U.N. ambassador. But Tehran remains adamant about not dealing with Israel.

In a major split with U.S. views, European and Asian envoys here claim that Iran has also become more “sensitive” to acts of extremism and their costs--sometimes because new strings are attached to aid.

Japan’s loan to help with a dams project is effectively conditioned on Iran’s behavior, envoys claim. Each phase of the project will be reviewed, and “deterioration” could lead to reconsideration of aid.

In 1994, President Clinton called Iran the leading sponsor of state-supported terrorism. And Administration officials claim that the Islamic Republic has further refined its tactics in recent years.

The United States holds Iran partially responsible for the summer bombing at a Jewish community center in Buenos Aires, although key diplomats here who claim to have heard the evidence say they remain unconvinced.

“Underneath it all, Iran realizes more and more that this is damaging its position in the world,” a European envoy said.

Some claim that extremist elements still within the government are now one of its main internal problems. In 1994, the British, French and Russian embassies were all hit by machine-gun attacks or Molotov cocktail bombs, attacks that both diplomats and Iranian analysts tie to extremist elements within the government trying to embarrass it.

“The regime’s greatest weakness is that it has never been able to control its fanatics--either at home or abroad,” an Iranian political scientist said.

Iran’s emerging realism is not, however, expected to lead to any imminent improvement in relations with the United States, Iranian officials contend.

Iran is still simmering over what it charges was a lack of follow-through on U.S. promises after Iran helped arrange the release of the last American hostages in Lebanon.

Ironically, however, the United States has become one of Iran’s top suppliers of foreign goods. In 1993, despite U.S. trade sanctions that prohibit direct imports from Iran, the United States sold $613 million in goods to Iran.