One of the most common claims about Iran's blatant election fraud is that it stripped the regime of its legitimacy, and therefore badly weakened it. Consequently, the common wisdom is that U.S. engagement with Tehran is now off the table for two main reasons: Washington can't appear to be rewarding Tehran after a brutal crackdown, and a weakened Iranian regime would be less able and willing to compromise, anyway. However, as some foreign policy analysts have realized, the Iranian government under Iran's supreme leader, Ayatollah Ali Khamenei, and President Mahmoud Ahmadinejad is stronger and more consolidated than it has been in years. This is why intensified engagement—not the popular method of imposing additional sanctions—is what Washington needs to pursue in the coming years.
The first thing Washington has to accept is that the reform movement in Iran has been dealt a significant blow over the last three weeks. Instead of seeing the Green Wave crest and wash away the power of Khamenei and Ahmadinejad, the world has watched it break up and recede. U.S. relations with Iran do not necessarily have to wax and wane with the fortunes of Iranian reformers, and it is unfortunately at the time when the Iranian regime feels most confident and secure in its hold on power that it will be most willing to negotiate and follow through on deals with the United States. As President Obama said during the campaign, negotiations are not rewards for the other government, and refusing to enter into talks is not a punishment.
Those perceived to be hard-liners are in a better position to survive the risk of negotiations, and sell the deal as serving national interests rather than betraying national security. In this respect, Khamenei and Ahmadinejad may be better interlocutors than their counterparts in the reform camp, as they do not need to establish a reputation for opposition and hostility to America, Israel, and the West. They have credibility as hawks that more accommodating, ostensibly more "pro-Western" figures might not have.
Authoritarian regimes have taken the leap many times before. In 1979, for example, Egypt was able to make peace with a decades-long enemy—Israel—after faring reasonably well in a war against it. And neither détente with Moscow nor the opening of China in 1972 would ever have happened had Washington refused to deal with repressive and thuggish governments. Though far from perfect, these dealings have worked to the advantage of the United States, and were far preferable to the truly "isolationist" alternative.
The alternative to engagement is the continued souring of relations with Tehran and the imposition of new sanctions. Wisely, the United States is apparently going to block a European-led push for a new round of Iran sanctions at this year’s G-8 summit, but the reason why this is the correct move may not be fully clear. If these sanctions are imposed explicitly for the benefit of the reformers or to punish the government for suppressing the protests, they will have the perverse effect of shifting the blame for the country’s economic woes to the opposition, and away from the government responsible for Iran's disastrous mismanagement. If they are aimed at compelling regime collapse, they will in all likelihood backfire and drive the population into the arms of a regime that is still capable of exploiting foreign hostility to its advantage.
In the meantime, the adverse economic effects from any sanctions strong enough to weaken the government will harm not only the most vulnerable and poorest Iranians, but will work to destroy the economic base of the burgeoning middle class that remains the core of the reform movement. For the brief satisfaction at having "taken a stand," outside powers will have sabotaged the long-term prospects of the movement with which they purport to sympathize. Even if the Iranian government is weakened to some degree, its opposition will be undermined even more.
Furthermore, collective punishment methods that are aimed at discrediting a government in the eyes of its people very rarely work (see Hamas and Gaza), and they are least likely to have the desired political effect on a regime that has just made its disdain for popular opinion abundantly clear. There are no guarantees that direct U.S. engagement with Iran will improve the fortunes of Iranian reformers, but we can be reasonably certain that additional sanctions will suffocate an already struggling movement, and will help the current hard-liners retain power even longer.