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Economists gather in Davos, eyes on Iran

The world's top economists are gathered in Davos, Switzerland, but much of their focus is global security and in that category Iran figures prominently.

The annual economic forum opened this week with an overview not just of the global economy, but of international security as well. And with the Islamic Republic reeling under international economic sanctions, continuing its nuclear brinkmanship and facing an election that will replace longtime President Mahmoud Ahmadinejad, experts are analyzing what the near future holds for Tehran.

"Iranians have every incentive to rock the boat now."

- Vali Nasr, speaking from Davos

Vali Nasr, dean of the School of Advanced International Studies at Johns Hopkins University and a former senior adviser to the U.S. Special Representative to Afghanistan and Pakistan, said his native country could go in any number of directions as the spring elections approach. Ahmadinejad is playing hardball in order to anoint his own successor, or at least be able to exit from a position of strength, said Nasr. But the supreme leader Ayatollah Ali Khamenei wants one of his loyalists to take over. And given the nation's restive population, a surprise could also be in the offing.

"It could potentially be (former President) Khatami," Nasr said. "He would be weak, and not a threat. But he could energize the deflated Green Movement and there would be a strong opposition to giving an inch to any reformists, especially from the Revolutionary Guard. They will say, 'Look, we went to battle for you, we got a bad name, we've been fighting to put them back in the box, and you're bringing them back again."

No matter who becomes Iran's next president, the foreign policy reins will likely be controlled by Khamenei, said Nasr. Another thing not likely to change is Iran's ultimate reaction to sanctions aimed at forcing it to abandon its suspected pursuit of nuclear weapons, he said. The sanctions have certainly had an impact in the Iranian economy and could help keep Iran negotiating, but Nasr said they will not force Iran to surrender. In fact, the current climate could make Iran more dangerous than ever.

"Iranians have every incentive to rock the boat now," Nasr said. "They will either do something provocative to break the sanctions or there will be serious negotiations that will provide some momentum, or they will make the decision to go nuclear openly because they may consider it's much better to be North Korea than Iraq."

According to Nasr, it's much simpler for both Iran and UN negotiators to prolong the run-up to any real negotiations, because actual concessions will require enormous political capital within the nations involved. But Nasr believes it is the time for serious discussions with Iran and that Western nations must "stay focused and stop trying to read the tea leaves."

"We should begin by understanding that he (the Supreme Leader) doesn't like the process, is opposed to the U.S. and is paranoid, but that doesn't mean that you cannot shift people's position in a process," he said.

The bellicose language often employed by Iran's leaders should not be viewed as a barrier to constructive talks, according to Nasr.

"Toxicity provides political cover," he said. "If they are going to engage you, They need to abuse you in public."

Cutting a deal to get Iran to drop its suspected pursuit of nuclear weapons will involve a serious offer, according to Nasr, with more in it for Iran than previous ones. A public offer that might end Iran's status as an international pariah could expose a rift between the nation's leadership and its people, he said.

"If you went to them and said 'these are the things you are going to get,' you could open up divisions in Iranian society, which could ultimately separate the public from its leadership," he said.

Fox News Senior Foreign Affairs Correspondent Amy Kellogg is monitoring the World Economic Forum

Amy Kellogg currently serves as a Senior Foreign Affairs Correspondent based in the London bureau. She joined Fox News Channel (FNC) in 1999 as a Moscow-based correspondent. Follow her on Twitter: @kellogglondon