U.S. Moves Seen as Fatal to Any Opening by Iran : Sanctions: Western, Asian envoys doubt Washington’s nuclear fears, call punitive measures unnecessary.

The Clinton Administration’s escalating campaign against Iran, symbolized by U.S. economic sanctions that took effect Tuesday, is certain to end any chance of major advances in Iran’s foreign or domestic policies in the final two years of President Hashemi Rafsanjani’s term in office, ranking envoys from several allied nations here say.

“The Rafsanjani window has closed because the United States provided no face-saving way out,” a leading European envoy said. “Washington should have learned a long time ago that you can’t dictate behavior to the Iranians without encountering backlash.”

Many envoys from Europe and Asia also challenged the U.S. claim that Iran is trying to develop nuclear weapons--a key reason for the U.S. effort to punish Iran economically.

Allied anger over the political impact of unilateral sanctions and skepticism about U.S. intelligence assertions reflect a growing credibility gap between the United States and its closest allies.

The two factors have now produced an open split on policy toward Iran 16 years after the Islamic revolution that toppled the late Shah Mohammed Reza Pahlavi.

“Iran is exhausted, and most everybody here is ready for change,” one of the longest-serving senior diplomats in Tehran said. “But undoing a revolution takes time. And the danger now is that no one will be willing to act.”

Rafsanjani, now in his second and, according to Iran’s constitution, final four-year term, has long represented the prospect of gradual change.

As Speaker of Parliament, he was widely believed to have been the central figure behind the secret arms-for-hostages swap in 1985 and 1986. Although that episode widened the gap between Tehran and Washington, officials and political analysts here have contended for years that Rafsanjani’s interest in rapprochement was genuine.

In the 1991 Persian Gulf War, for example, Iran cooperated openly and behind the scenes with the U.S-led coalition that drove Iraqi forces from Kuwait.

Rafsanjani then manipulated the electoral purge of many of Iran’s hard-liners from Parliament in 1992, another move widely interpreted as a signal to the West.

Despite Rafsanjani’s decade-long record, the United States is still locked in a dated mind-set shaped by the 1979-81 hostage ordeal after the U.S. Embassy seizure, envoys here contend.

“Iran in 1995 is not the same place it was in 1979. This is still a dangerous state in some respects, but not in all. And the Americans can’t seem to see beyond their initial encounter with this regime,” a ranking European envoy said.

Despite the new sanctions, one Iranian official hinted that the door might not be fully closed.

“President Rafsanjani is still in office two more years. The United States does have time to re-evaluate Iran-U.S. relations,” Rejaie Khorasani, former U.N. ambassador and now a member of Parliament’s foreign affairs committee, said in an interview.

But most diplomats here say they believe that any Iranian move now would require some overture or concession that Washington would be unlikely to extend.

“We’ve lost Rafsanjani. He has to think of his career and what he’ll do next. To save his skin, he’ll join the others even though most of the diplomatic corps here believes he still wants relations with the United States,” said a diplomat from a powerful Asian country.

On several counts, many envoys from Europe and Asia also challenge U.S. claims about Iran’s ability to develop nuclear weapons. They contend that U.S. intelligence reports lack proof.

Iran would no doubt like to have the bomb, given the proliferation of nuclear weapons programs in nearby Pakistan, India and Israel. But it has neither the means nor the access, diplomats say.

“If there was cause for concern, we would be on board,” the Asian envoy said. “But we think both the controls in place and the realities of Iran’s problems will prevent Iran from making bombs. Washington is overreacting.”

Iran’s economy, diplomatic sources say, cannot generate the money to complete a major nuclear weapons program in the eight to 10 years suggested by U.S. intelligence agencies.

Iran labors under a total external debt of at least $30 billion, about half of which is owed to foreign governments. Iran uses at least 20% of its oil income to pay foreign debt.

Its oil industry cannot afford a badly needed modernization, diplomats say--and a vibrant oil industry is essential to generate the funds for a nuclear weapons program.

“It’s never been more difficult,” an Asian envoy said.

A second issue is the requisite technology.

The Russian plan to complete the Bushehr nuclear reactor started by the Germans before the 1979 revolution is far more difficult than anticipated, a Western envoy said.

After the deal was signed in October, the Russians allocated at least a year for technical studies of the facility to see how to convert it.

Russian and Western nuclear technologies are vastly different, a problem exacerbated by the 20-year-old technology left behind in Bushehr, a Persian Gulf port.

“Bushehr could end up an enormous con job,” the Western diplomat said. “Most experts think the power plant there can’t be completed. And even if the Russians figure out a way to do it, it can’t be done for a billion dollars, even if the Russians are cheap these days.

“The reactor project could easily drift well into the 21st Century. So if you did believe Iran had nuclear weapons ambitions, you’re still talking a very, very long time away.”

A third issue is the credibility of U.S. intelligence claims, about which many envoys from allied countries are skeptical.

“If the shah had lasted another 10 years, maybe Iran would have a weapons program by now,” one diplomat said. “But not this regime, which is maybe 15 to 20 years behind where the shah’s government was before the revolution on many fronts.”

In contrast, Europe and Japan favor constructive engagement--the use of trade and diplomacy as carrots to balance the sticks of public criticism and a ban on arms and sensitive technologies.