On May 23, 1997, Iranian democracy worked. In a surprise to both the electorate and the international community, a little-known cleric named Mohammad Khatami resoundingly defeated the heavily-favored conservative candidate for the presidency of the Islamic Republic, Ali Akbar Nateq-Nouri. For the moment, the votes of the people had trumped the will of the Supreme Leader, All Khamenei, who had supported Nateq-Nouri. With 70 percent of the votes in an election with 80 percent turnout, Khatami won a powerful popular mandate for his platform of restoring civil rule, easing social restrictions, liberalizing the economy, and improving Iran's relations with the outside world. To begin his pursuit of this last priority, President Khatami appeared on CNN and called upon the people of the United States to reject cultural conflict and join the people of Iran in a "dialogue of civilizations." Soon, many in the Clinton Administration--including President Clinton himself--came to recognize that Khatami represented the most credible partner for peace with the United States since the Islamic Revolution had ruptured relations.
The years that followed left both sides disappointed. As mutual assurances and gestures of goodwill failed to translate into the grand action needed for a major breakthrough, it seemed that neither side had the will or the political strength needed to deliver a transformational deal. Clinton left office in January 2001, and although Khatami was re-elected later that year, Iran's relations with US President George W. Bush veered from freeze to thaw and back again with no sense of steady progress in any direction. Constitutionally barred from seeking a third consecutive term, Mohammad Khatami's years as President of Iran--and with them what seemed like a rare window for reconciliation with the United States--seemed doomed to dwindle to a quiet close.
Then, on May 4, 2003--days after President Bush delivered his "Mission Accomplished" speech to mark the conclusion of the invasion of Iraq, and with only two years left before the end of Khatami's presidency--a mysterious fax arrived at the US Department of State from the Swiss Embassy in Tehran. In the years since the United States withdrew its diplomats from Iran in the wake of the hostage crisis, the Swiss Embassy there had managed routine transactions between Iran and the US government and its citizens. This fax, however, represented much more than ordinary business. On two pages of plain paper, the document outlined an incredible proposal: a grand bargain to resolve all outstanding tensions between the United States and the Islamic Republic of Iran. The fax laid out an ambitious agenda for negotiations on the most serious issues dividing the two nations: terrorism, the future of Iraq, economic sanctions, mutual demonization, and the Israeli-Palestinian peace process. Even Iran's nuclear program was on the agenda. What's more, according to the cover letter from the Swiss ambassador, the broad terms of the deal outlined in the fax had been devised by President Khatami and had the approval of Iran's enigmatic Supreme Leader. To some in the Bush Administration--including the Middle East Director on the National Security Council (NSC), Flynt Leverett--this appeared to be the moment for the historic rapprochement that Khatami's election had seemed to herald.
Then, the Bush Administration chose to ignore the fax. The proposal--along with any credible consideration of repairing the relationship between the United States and Iran--was dismissed. Khatami left office in 2005, Mahmoud Ahmadinejad took his place, and US relations with Iran have never recovered. Did the Bush Administration rebuff the United States' last, best hope for peace with Iran? Could Mohammad Khatami have delivered on a grand bargain for peace with the United States? If he could not, could anyone?
A Silent Revolution?
The presidential election of 1997 did not seem like it would be a watershed moment for the Islamic Republic. …