An interview with Ian Bremmer.

• Position: THE U.S.-IRAN RELATIONSHIP - Interview

POLITICAL SCIENTIST IAN BREMMER, author of The J-Curve: A New Way to Understand Why Nations Rise and Fall, has built his career on the theory that geopolitical risk can be tracked, analyzed and integrated into the decisiomaking processes of today's global investors. In a candid and colorful conversation with the Journal of International Affairs, Dr. Bremmer highlights crucial facets of the U.S.-Iran relationship. He offers sobering predictions about the likelihood and drivers of conflict between the two nations and about the inner-workings of Iran itself. The Journal met with Dr. Bremmer at the New York offices of Eurasia Group, the political risk advisory and consulting firm he founded. (1)

Journal: Eurasia Group has recently released its political risk predictions for 2007. Iran tops the list as the source of most risk in the coming year. You've also ranked its president, Mahmoud Ahmadinejad, as the second most influential leader in the world (second to China's Hu Jintao) for the coming year. Why?

Bremmer: When we say that Iran reflects the largest risk for markets this year, "large" has three dimensions: the likelihood the risk will occur, the impact on global markets if it hits and the immediacy of that risk. In all three of those dimensions, Iran is head and shoulders above everything else.

In part, the Iran risk is so great because it is not just about military strikes--about confrontation leading to conflagration. We were certain when we published the risk rankings in January 2007 that the conflict would escalate. And, frankly, it already has. Look at oil prices--developments in Iran have been a very big piece of recent price fluctuations. Iran is such a large risk because the risk is not limited to a worst-case scenario. Most of the scenarios that play out in Iran are extremely problematic.

Is that calculation separate from Ahmadinejad as an individual? Is he ranked as the second most influential person in the world in the coming year just because he's at the head of a potentially very destabilizing country, or is there something about him in particular?

Iran is not North Korea. The Iranian political environment remains considerably more diverse than those in strongly authoritarian and totalitarian governments around the world. Ahmadinejad was elected. At the same time, Iran's foreign policy is really controlled by the state's supreme leader, Ayatollah Khamenei.

If Iran had the same policies, the same momentum toward nuclear capacity, even the same domestic support for [Lebanese militant group] Hezbollah without Ahmadinejad, we would have nowhere near the same level of international support for the U.S. position condemning Iran. With the degradation of political capital that President Bush has experienced over the war in Iraq and other things, the notion that the U.S. could have as much international support on Iran as it does today reveals that the Iranian president is not only seen as a firebrand, but also as someone who benefits domestically by actively provoking a broader conflict in the region.

If we had Ahmadinejad in the office right now and we were to ask him, "Is it in your interest for the international community to pass sanctions against you via the United Nations Security Council?" The honest answer is clearly yes.

If we were to ask him "Is it in your interest for the U.S. Treasury Department to levy sanctions against your banks?" The real answer is yes.

If we were to ask him, "Is it in your interest for Israel to engage in surgical strikes against your nuclear facilities?" I'm not sure his answer would be yes, but I think he'd have to think about it.

He clearly benefits domestically from painting a picture of confrontation over issues that Iranians consider questions of their national rights--nuclear policy, their tough line on Israel, support for Hamas and Hezbollah. It shifts the domestic focus from Iran's tough economic situation.

With Iran posing such a grave risk to global markets, what are the options For the United States and the international community in dealing with it?

If we looked over the last two years, I would say that we've really only started seeing meaningful external pressure on Iran in the last couple of months. Pressure is a dangerous thing. If you're going to put U.S. carrier groups in the Persian Gulf, there's the possibility that they will be used, intentionally or unintentionally.

The good news is that there is opposition within Iran. The U.S. can try to apply internal pressure that might help to create problems for the president--and perhaps start to open a divide between Ahmadinejad and Supreme Leader Ayatollah Khamenei. That is the U.S.'s best shot for peaceful deescalation of the confrontation.

One way to apply that pressure is to try to move oil prices lower. No matter what the Iranians say with regard to their budget, they will have problems with an oil price of $45 or $50 per barrel: Inflation is up, they import about 70 percent of their refined products, and the Iranian people aren't going to indefinitely accept tougher economic circumstances.

Over the last couple of months, we have seen the Iranian parliament--which doesn't have much power--start to rebuke the Iranian president for focusing so much on the nuclear issue and not on the economy We've seen some student protests. We've seen some newspaper...