Rooyesh

Mahmoud Ahmadi-Nejad, Iran’s president, this week moved to consolidate further his government’s hold over the country’s main sources of revenue when he presented his nominees to take over as the oil and industries ministers to parliament. 

The move follows a recent cabinet reshuffle and the appointment two months ago of a central bank governor seen as more sympathetic to the president’s economic policy. Analysts suggest that, if his ministerial choices are approved, this will increase his influence over the top three organisations that administer the country’s resources.

Parliament will vote in the middle of the month on whether to approve the new candidates, both of whom have served as acting ministers following the resignation of their predecessors over the summer.

Gholam-Hossein Nozari is thought likely to win his vote of confidence as oil minister but there are doubts about the proposed industry minister, Ali-Akbar Mehrabian, an ally of the president, who may be blocked for lack of experience.

The oil ministry generates the lion’s share of Iran’s revenues, providing about 60 per cent of the government’s budget and has been the focus of several power struggles between the president and parliament.

The previous oil minister was imposed on the president after parliament rejected three of his nominees. Mr Nozari is believed to be less hostile to the government’s populist policies.

Analysts say he has been backed by one of the two main interest groups inside the oil ministry – the National Iranian South Oil Company (Nisoc) – which is the biggest subsidiary of the National Iranian Oil Company and deals with onshore projects in southern Iran.

Mr Nozari was head of the Nisoc’s intelligence department during the previous reformist administration and it was under his direction that Nisoc complained about an “oil mafia”, which it said awarded contracts to western oil companies, including Royal Dutch Shell, when it should have been giving them to local entities.

The oil ministry is projected to earn about $70bn (£34bn) by March 20 when this Iranian year ends – far beyond its budgetary needs. Many economists have blamed the government for failing to channel surplus oil revenues towards productive sectors, using them instead for day-to-day spending, which has led to record levels of liquidity.

The ministry of industries and mines oversees Iran’s biggest factories through two holding companies: the Industrial Renovation and Development Organisation, which handles car factories producing more than 1m cars annually, and the Iranian Mines and Mining Industries Renovation and Development Organisation.

The two ministries are set to carry out most of Iran’s privatisation programme, disposing of companies worth hundreds of billions of dollars. “Ahmadi-Nejad is trying to have as much control as possible on financial resources not to let them go to [critical] political groups in times of election,” said one economist.

Source: FT

While the White House dwells on Iran’s nuclear program, senior U.S. diplomats and military officers fear that an incident on the ground in Iraq is a more likely trigger for a possible confrontation with the Islamic Republic. 

In one sign of their concern, U.S. military policymakers are weighing whether to release some of the Iranian personnel they have taken into custody in Iraq. Doing so could reduce the risk that radical Iranian elements might seize U.S. military or diplomatic personnel to retaliate, thus raising the danger of an escalation, a senior Defense official said. The Bush administration has charged that Iran is funding anti-American fighters in Iraq and sending in sophisticated explosives to bleed the U.S. mission, although some of the administration’s charges are disputed by Iraqis as well as the Iranians. Still, the diplomatic and military officials say they fear that the overreaching of a confident Iran, combined with growing U.S. frustrations, could set off a dangerous collision.

An unintended clash over Iraq “is very much on people’s minds,” said an American diplomat, who like others spoke on condition of anonymity because he was not authorized to publicly express his views. A U.S. attack on Iran’s nuclear infrastructure, despite recent heated rhetoric from the White House, today “seems more remote,” he added. An on-the-ground clash could be sparked, say current and former officials, by a confrontation along the 900-mile-long border between Iran and Iraq, or in the waters of the Persian Gulf. Or it could be ignited over one of the periodic U.S. attempts to arrest those the Americans assert are members of the Iranian Revolutionary Guard Corps in Iraq. The U.S. military might also retaliate if a bombing in Iraq killed a large number of U.S. troops and there was clear evidence of Iranian involvement, U.S. officials have warned.

One senior U.S. military official said the risk of war was now ever present in the Persian Gulf region. He described it as a “sleeping dog” that could be all too easily roused. This current of thinking appears to be widely shared among many operational-level U.S. diplomats and military officers. Though these American officials are not among the handful of senior aides with whom President Bush consults in making final policy decisions on Iran, they are nonetheless influential as debate continues between hawks and moderates on how to handle the issue. Many of them judge a U.S. attack on the Iranian nuclear program less likely because of the administration’s stated emphasis on diplomacy, the strained condition of the U.S. military, and worries that an attack could set off Iranian retaliation without halting Tehran’s nuclear program for long.

In the Pentagon, the shift in thinking has occurred in part because many in the department’s leadership — including Defense Secretary Robert M. Gates — have concluded that a strike against suspected Iranian nuclear sites could be counterproductive, senior Defense officials said. Washington charges that Iran is seeking to develop nuclear weapons, whereas Tehran says it is seeking to produce nuclear energy for civilian purposes. Gates believes that bombing the nuclear sites would probably slow but not stop the Iranian nuclear effort while building domestic support for the program in Iran and undermining the international diplomatic effort to pressure Tehran to give up its suspected nuclear ambitions, said the senior Defense Department official.

“The nuclear program is still clearly years down the road,” the official added. “The more immediate threat is Iranian meddling and arms supplies into Iraq.” J. Scott Carpenter, a former top State Department official in the Bush administration now with the Washington Institute for Near East Policy, said that despite warnings from some quarters that the administration was close to launching an attack on the nuclear facilities, “there is a lot of trepidation and circumspection” within the corridors of Washington power. On the other hand, the risk of a collision on the ground in Iraq has been growing since January, when Bush condemned Iran’s activities in Iraq, threatened to destroy Iranian networks he said were providing military gear to anti-U.S. forces, and dispatched additional warships and other military hardware to the region. Suddenly, U.S. officials who had been complaining publicly that Iran was broadly meddling were now accusing Tehran of responsibility for the deaths of hundreds of U.S. troops.

They focused especially on the activities of the Quds Force, an elite and ideologically motivated unit of the Revolutionary Guard Corps that the U.S. believes has sent hundreds of members across the porous border with Iraq to help train and provide weaponry to anti-American militias. U.S. intelligence officials continue to track the flow of weapons they say come from Iran, and believe that in addition to much-publicized explosively formed projectiles — roadside bombs that can penetrate armored vehicles — Iran is supplying rocket-propelled grenades, shoulder-fired antiaircraft missiles and large rocket launchers, according to a senior military official in Baghdad. However, U.S. military officials have provided limited evidence of these charges, and some outside analysts and foreign officials remain dubious of the extent of Tehran’s involvement. Military officials said U.S. concern about Iranian motives increased after members of the Revolutionary Guard Corps seized 15 British sailors and marines at gunpoint March 23 on disputed charges that they were in Iranian coastal waters. Although the British personnel were released after 13 days, the incident convinced the U.S. military that Tehran was willing to break international rules, the senior officer said. U.S. military commanders have since reviewed many of their procedures in an attempt to prevent American military personnel from falling into a similar situation.

The senior U.S. military official said that any American forces threatened with capture would be under orders to fight back, because capture would put their lives at risk. U.S. Navy officials worry in particular about the Quds Force, which they say is expanding a fleet of more than 1,000 small attack boats, and which is separate from the normal chain of command of the Iranian navy. They say the force, which is not believed to be under the full control of the Iranian leadership, could mount small-scale but provocative attacks. U.S. forces are themselves involved in high-risk operations considered provocative by Iranians and critics of the U.S. In January, when U.S. forces seized five Iranians from Iran’s northern consular office in Irbil, Iraq, their real goal was to pick up a senior official of the Revolutionary Guard Corps who they believed was with the group, according to two former U.S. officials.

If they had captured a senior official of the guard, “it would have raised the ante pretty high with the Iranians,” said Bruce Riedel, a longtime CIA analyst and a former White House National Security Council aide now with the Brookings Institution’s Saban Center for Middle East Policy. “The risk is that events on the ground can get out of the control of policy planners in Washington or Tehran and can create explosive situations that may go further than anyone on either side wanted,” Riedel said. Former officials say one goal of U.S. operations in Iraq is to provide convincing proof to an outside world that is often skeptical of American warnings about Tehran. But such an operation entails risks, analysts say. The Pentagon has insisted on keeping the five Iranians in jail all year, despite the protests of Iranian and Iraqi officials, and over the urgings of some State Department officials and U.S. allies. U.S. officials maintain that the five Iranians taken captive in Irbil were members of Iran’s Quds Force, but Iraqi and Iranian officials insist they were credentialed diplomats. The American military arrested a sixth Iranian in northern Iraq in September, saying he also was a Quds Force member who had supplied weapons and money to insurgents; Iraqis and Iranians said he was part of a business delegation traveling with the knowledge of the Iraqi government. Iraqi President Jalal Talabani has demanded his release. The Irbil operation was revealed because of a leak to the news media from an Iraqi source, and U.S. officials have hinted that more such operations are going on out of public view.

But U.S. officials appear to be coming to the conclusion that it is not worth holding some of the less valuable captives if it risks retaliation. “It might be useful to cut them loose so [the Iranians] don’t have an excuse to pick up someone as a bargaining chip,” said the senior Defense official. The senior military leadership also seems focused on the risks of retaliation in other ways. Although some lawmakers and conservative commentators have been proposing attacks on Iranian armament supply lines and training camps within Iran, some senior Pentagon leaders are cool to the suggestions.

The new chairman of the Joint Chiefs of Staff, Navy Adm. Michael G. Mullen, who has privately weighed in against an attack on Iranian nuclear sites, also in his first weeks has voiced opposition to striking supply lines inside Iran, saying interdiction efforts within Iraq are sufficient. “I just don’t think there’s any stomach for it, and there’s no need for it right now,” said one official familiar with Mullen’s thinking. Pentagon officials are hoping for a continuation of a recent gradual decline in attacks from Iranian-backed groups, notably the Shiite militia loyal to anti-American cleric Muqtada Sadr. Officials aren’t sure why there has been a falloff, but they hope it means that Iran has heard their warnings. Nevertheless, American officials say they remain keenly aware of the vulnerability of their 160,000 troops in Iraq and the 27,000 U.S. personnel in Afghanistan. “The military is going to be cautious about going after Iranians in Iraq, operations on the border or training camps in Iran itself,” said Suzanne Maloney, a former State Department Iran analyst now at the Saban Center. “I think they realize this could escalate; it’s the kind of war the military itself doesn’t want.”

Source: The Los Angeles Times

Iran’s new central bank governor has warned the government of President Mahmoud Ahmadinejad over money supply growth, urging measures to prevent a further rise in inflation, the press reported Thursday.

“The government, the private sector and anyone who cares about the nation’s economy should prevent the increase of liquidity,” said Tahmasb Mazaheri, quoted by most moderate Iranian newspapers. “It has an inflationary impact and it will lead to higher prices,” said Mazaheri, who was appointed in September as part of a wide-ranging economic reshuffle by Ahmadinejad.

At the end of May 2007, the central bank said money supply had grown by a colossal year-on-year rate of 39.4 percent. Mazaheri said money supply in Iran is currently running at the equivalent of 140 billion dollars, double the average for the year 2005-2006 which was 70 billion dollars. He complained that the central bank in the past had dipped into its reserves to offer credit lines to Iranian banks — causing liquidity to rocket higher — and in future would be stricter with allocating loans. “The banks should not rely on the central bank when it comes to handing out credits since last year it caused the increase in the liquidity.” Mazaheri also cautioned: “The decrease in the liquidity will not happen overnight.”

The huge growth in money supply has added to fears over prices in the Islamic republic which have surged in recent weeks, especially for basic foodstuffs and services, hitting the poor hardest. Iran’s year-on-year inflation is currently 15.8 percent, according to the central bank. However, many economists dispute this and Iranian parliamentary research has estimated that inflation this year will be 22.4 percent. Many economists in Iran have accused Ahmadinejad of stoking inflation problems by ploughing windfall revenues from high oil prices into local infrastructure projects promised on provincial visits. But the government insists it is merely fulfilling Ahmadinejad’s election promises of making ordinary people feel the benefits of oil wealth and has inflation under control.

Source: AFP

The United States said on Thursday Russia and China had been blocking tough U.N. sanctions against Iran for months and pledged a drive to impose them if Iran did not halt nuclear activity within two weeks. Iran’s president said he was “not worried at all” about broader economic sanctions, dismissing them as ineffective.

Nicholas Burns, U.S. Undersecretary of State for Political Affairs, said China and Russia had been stalling a new United Nations Security Council resolution since late March. The five permanent powers on the Security Council plus Germany will meet in London on Friday to weigh the scope for more sanctions. Increased U.S.-Iranian saber-rattling has raised fear of wider Middle East war if diplomatic pressure fails.

Burns, in Vienna for consultations with the U.N. nuclear watchdog director, said Iran had been given a grace period since the last U.N. resolution on March 24. “Russia and China have been effectively blocking a third resolution since then,” he told reporters. Moscow and Beijing, two of the five veto-holders on the Council and both with big trade ties to Iran, have insisted on more time for diplomacy. Western powers agreed in September to delay seeking harsher sanctions after Iran agreed a deal with the watchdog International Atomic Energy Agency (IAEA) to answer questions about past secrets of its nuclear work within several months.

The Vienna-based IAEA will issue a report in mid-November. Burns said a clean bill of health from the IAEA alone would not spare Iran from exposure to stiffer U.N. penalties. “Our judgment is that if Iran has not suspended in the next couple of weeks, that’s not sufficient, it will remain a refusal to meet Security Council requirements. That will be a highly relevant factor for us,” he said. “Our hope is the following: first, a third sanctions resolution will be passed as soon as possible. Second, we’d very much support seeing the EU go forward with (its own) sanctions. Third, major trading partners of Iran should reduce trade to show Iran that this is not business as usual.”

LAVROV-RICE CONSULTATIONS

Russia said Foreign Minister Sergei Lavrov spoke by phone with U.S. Secretary of State Condoleezza Rice on Wednesday about diplomacy “aimed at resolving the Iranian nuclear problem.” The Kremlin, which argues harsher sanctions would push Iran into a dangerous corner, has tried to persuade Tehran with recent top-level visits to heed the international community and give a full account of its nuclear program. China on Thursday again urged a diplomatic solution to the issue, recognizing it had become difficult. Iran has defied three Council resolutions, two with modest sanctions attached, since last year demanding it stop enriching uranium. Iran says it wants nuclear-generated electricity, but Western powers suspect a disguised bid to build atom bombs. Tension over Iran’s nuclear activities has helped catapult oil prices to record highs of over $90 a barrels in recent days.

Iran’s Revolutionary Guards commander warned the United States on Wednesday that it would find itself in a “quagmire deeper than Iraq” if it attacked the Islamic Republic. President Mahmoud Ahmadinejad suggested new bilateral U.S. sanctions would mainly hurt European Union countries doing business with Iran, which has vast oil and gas reserves. “The weapon of sanctions does not work,” Ahmadinejad said in a speech inaugurating a petrochemical plant on Iran’s Gulf coast on Thursday. “We are not worried at all … American companies don’t have any business in Iran,” he said.

Source: The Reuters

There has been a lot of misunderstanding as to why Iranian pro- democracy forces oppose the $75 million the U.S. government provides to aid civil society in their country [" A Lever of Change in Iran," op-ed, Oct. 19].

Allow me, as someone who spent six years in Tehran’s Evin Prison on a bogus charge of endangering national security, to clarify what we oppose and what we favor.

The threat of war looms over us. But Iran and the West need to have friendly and peaceful relations.

Peace is a product of democracy. Despotic states are furtive and untrustworthy. The Iranian people want a secular, democratic state that is committed to respecting human rights. The West would not need to fear a democratic Iran.

As a fundamentalist state, Iran is dangerous, but it is dangerous for its own people, not the United States. The Iranian people, myself included, need freedom, democracy and peace — not war conditions and constant worries about a potential barrage of U.S. missiles.

The seeds of democracy need fertile soil to take root and grow. In Iraq, Egypt and Saudi Arabia, the soil is fertile for fostering fundamentalism. If fair elections were held in those countries, fundamentalists would win. Iran is the only country in the Middle East in which modern, democratic forces would win any free and fair elections. A peaceful transition to democracy is our goal. But the Iranian regime suppresses civil society on the pretext of a coming war and describes its opponents as U.S. stooges and mercenaries.

Governments provide foreign aid — indeed, form their foreign policies — based on their national interests; those who receive aid naturally have to align themselves with the donor’s policies. We understand this with regard to Iranian support for Hezbollah in Lebanon and various Afghan groups. Not surprisingly, the Iranian people do not want their democratic movement to be dependent on or subservient to any foreign government.

Consider, also, that U.S. foreign policy in Asia and Africa is dictated by American political and economic interests, not by concern for democracy. Turkmenistan, Kazakhstan, Kyrgyzstan, Tajikistan and many other countries with friendly relations with the United States are major violators of human rights and have despotic regimes. In none of these cases has the U.S. administration attached much importance to human rights violations, nor does it prioritize funds to help make those governments democratic.

Over the past two centuries, many Iranian politicians were paid or influenced by foreign powers. As a result, most Iranian intellectuals and democratic forces are deeply critical of external support. Iranians are viewed as discredited when they receive money from foreign governments. The Bush administration may be striving to help Iranian democrats, but any Iranian who seeks American dollars will not be recognized as a democrat by his or her fellow citizens.

The Iranian regime uses American funding as an excuse to persecute opponents. Although its accusations are false, this has proved effective in poisoning the public against the regime’s opponents. Fear of foreign meddling is one reason for the regime’s staying power.

Of course, Iran’s democratic movement and civil institutions need funding. But this must come from independent Iranian sources. Iranians themselves must support the transition to democracy; it cannot be presented like a gift. Expatriate Iranians can assist the transition. Many of the social prerequisites of democracy exist in Iran today, but dollars cannot produce the bravery or love of freedom that individuals need to make the transition possible.

So here is our request to Congress: To do away with any misunderstanding, we hope lawmakers will approve a bill that bans payment to individuals or groups opposing the Iranian government. Iran’s democratic movement does not need foreign handouts; it needs the moral support of the international community and condemnation of the Iranian regime for its systematic violation of human rights.

What else does the pro-democracy movement in Iran want?

The Iranian government is using technology it has purchased from Western companies to block Web sites and otherwise keep Iranians from using the Internet. The West has profited at the Iranian people’s expense by selling these technologies to Tehran. The regime’s extensive censorship and media hegemony must be ended. We want the Iranian people to have access to the Internet and free television to be able to hear criticism of the regime’s policies and learn about alternative models of government.

The support we need at this point has nothing to do with funding the regime’s opposition but with aiding Iranians in the quest for independent media and accurate information.

Akbar Ganji, an Iranian journalist and dissident, was in Evin Prison from 2000 to 2006. He received the 2007 John Humphrey Freedom Award, a Canadian human rights and pro-democracy prize. This column was translated from Farsi by Nilou Mobasser.

The prospect of war with Iran is beginning to look real. The hardening of positions in both Tehran and Washington over the past week has brought relations to their lowest point since the Iran hostage crisis that began in 1979.

Both sides insist that they seek no military conflict, but tensions on issues ranging from Iran’s nuclear program to influence in Iraq and the Arab-Israeli peace process is turning their differences into all-out regional power struggle. Last week, Secretary of State Condeleezza Rice criticized Iran’s “emboldened foreign policy” and “hegemonic aspirations,” while asserting that the U.S. will continue to be engaged on economic, political and security issues in the Middle East. “We are there to stay,” she declared.

On the critical issue of Iran’s uranium-enrichment program, Tehran and Washington are now engaged in a game of geopolitical chicken, which favors hard-liners on both sides, making compromise more difficult, escalation more likely and war - by accident, if not by design - a greater possibility than before. President Mahmoud Ahmadinejad, after stepping up defiance of U.S.-led efforts to compel Iran to halt enrichment, this week appeared to gain greater domestic influence over the issue with the replacement of Iran’s pragmatic top nuclear negotiator by a key Ahmadinejad ally.

After President Bush invoked the specter of World War III to press the urgency of stopping Iran, the Administration followed up with another round of punitive measures. “It looks like a slow-motion train wreck,” said Barbara Slavin, author of a new book, Bitter Friends, Bosom Enemies: Iran, the U.S. and the Twisted Path to Confrontation. “Neither side is willing to back down and the chances for conflict are growing over the nuclear program and Iran’s support for U.S. adversaries in the Middle East.” The showdown has elements of a perfect storm. The decline of U.S. fortunes in Iraq has been accompanied by a rise in Iranian assertiveness, which has intensified with Ahmadinejad’s recent tough talk.

Trumpeting Iran’s nuclear ambitions as a nationalist cause, Ahmadinejad rejected the agreement by his moderate predecessor, Mohammed Khatami, to voluntarily suspend uranium-enrichment during three years of negotiations with European powers. Ahmadinejad abandoned Khatami’s “dialogue of civilizations” for more confrontational rhetoric, calling for Israel to be “wiped off the map” and goading the West by denying the Holocaust. Iran enthusiastically backed Hizballah and Hamas in their confrontations with Israel, and denounced the U.S. occupation of Iraq.

Ahmadinejad has repeatedly pooh-poohed the idea that the U.S. might take military action against Iran, to the anger and alarm of others in the Iranian leadership structure, who accuse him of downplaying a real danger. Ahmadinejad says that he considers the U.N.’s case against Iran’s nuclear program closed, and dismisses U.N. sanctions as “piles of paper.” Bragging that Iran’s uranium-enrichment efforts have succeeded in achieving “the capacity for industrial-scale fuel cycle production,” he also recently withdrew a compromise Iranian proposal that would base its enrichment activities in an international consortium that would allow Western countries to participate in and monitor Iran’s activities. “The proposal was based on the situation last year,” Ahmadinejad explained.

“New terms must be defined.” Against the backdrop of crucial parliamentary elections in 2008 and his presidential reelection bid in 2009, Ahmadinejad is now seeking a greater leadership role in nuclear decision-making, which is controlled by the regime’s supreme leader, Ayatollah Ali Khamenei. Last week, Ahmadinejad accepted the resignation of Ali Larijani, the pragmatic conservative chief negotiator who is a bitter political rival to the President. Although all Iranian leaders defend their right to uranium-enrichment technology for purposes of producing nuclear energy, Larijani believes it is in Iran’s national interests to reach an understanding with the West. But on at least two occasions, Ahmadinejad has publicly slapped down Larijani’s conciliatory efforts. A similar hardening of positions has been taking place in Washington, with U.S. rhetoric assuming a more confrontational tone in the past two weeks.

On Oct. 17, Bush warned that “if Iran had a nuclear weapon, it would be a dangerous threat to world peace” that risked a third world war. Four days later, Vice President Dick Cheney warned, “The Iranian regime needs to know that if it stays on its present course, the international community is prepared to impose serious consequences… We will not allow Iran to have a nuclear weapon.” Last week, a day after Rice told Congress that the U.S.’s 2006 offer of talks with Iran was “still on the table” if Tehran suspended enrichment activities, the Administration designated Iran’s Revolutionary Guards Corps as a proliferator of weapons of mass destruction, and named the Corps’ Quds division as a supporter of terrorism. The tougher tone suggests that U.S. policy has taken a subtle, yet decisive, turn toward not merely stopping Iran’s nuclear program, but seeking the end of the Islamic regime. Cheney’s objections to Iran went well beyond its uranium-enrichment activities, to include Iran’s policies toward Israel and the U.S., its activities in Iraq, its suppression of domestic opposition and what he called its drive for “hegemonic power” in the region - a term echoed by the less hawkish Rice in her congressional testimony. Cheney, like Bush and Rice, stopped short of advocating a new U.S. policy to aggressively pursue regime change, as in Afghanistan and Iraq. But the Vice President pointed the Administration in that direction.

He castigated “the nature of the regime”; said that Iranians have a “right to be free from oppression, from economic deprivation and tyranny”; and declared that “America looks forward to the day when Iranians reclaim their destiny.” Cheney’s indictment of Iran’s regime as one that deserves to be eliminated could be read as another point of U.S. pressure, designed to entice Iranian leaders to accept the U.S. offer to negotiate a peaceful end to the crisis. But such rhetoric, instead, may prove the point of Iran’s hard-liners, that there is really nothing for the U.S. and Iran to talk about.

Source: Time

Confronted by mounting U.S. and U.N. pressure, Iran has been steadily shifting its trade from West to East and, with the benefit of record high oil prices, is likely to be able to withstand the new U.S. sanctions, according to U.S., European and Iranian analysts.

China, a permanent member of the Security Council that can veto any U.N. resolution, is expected to overtake Germany as Iran’s biggest trading partner this year. Germany and other European countries had consistently been Iran’s largest trading partners for more than a decade, according to the Iran Investment Monthly.

The U.S. Treasury said that more than 40 banks, mostly in Europe, have curbed business with Iran as a result of U.S. pressure, but smaller banks, Islamic financial institutions and Asian banks are likely to step in and replace the Western financial institutions through which Iran has long sold oil on the international market. Oil traders said that Iran does an increasing portion of its petroleum sales in euros and yen, instead of U.S. dollars, and often through third parties, to help its customers circumvent U.S. financial sanctions. “Given particularly the price and demand for oil, Iran clearly has leverage with countries that need Iran’s oil,” said Shaul Bakhash, a George Mason University historian and author of “The Reign of the Ayatollahs.”

In addition, he said, “Iran has a huge cushion of foreign-exchange reserves.” Iran’s oil revenue this year will far exceed the government’s budget forecasts, which had assumed an average oil price of $60 a barrel. On Friday, oil settled above $90. The extra revenue will make it easier for the government to maintain social-services payments designed to bolster its popularity amid economic problems. Iran has also moved to protect what Leo Drollas, chief economist of the Center for Global Energy Studies in London, calls its Achilles’ heel — gasoline imports. Because of its limited refining capacity, Iran last year imported 200,000 barrels a day of gasoline, about a third of its consumption. But the government has trimmed gasoline subsidies, which has curtailed consumption and smuggling, cutting imports of gasoline in half. Nonetheless, U.S. efforts to exert financial pressure on Iran were having some impact, even before the new measures taken last week against firms linked to Iran’s Revolutionary Guard Corps.

Lukoil, a Russian company with an extensive gasoline marketing network in the United States, announced last Monday that its exploration work in Iran’s big Anaran oil field “is currently impeded because of the U.S. sanctions,” which bar investments of more than $20 million in Iran. The U.S. sanctions, announced Thursday, complicate new oil projects by targeting Iran’s main oil-field engineering firms. The firms are controlled by the Revolutionary Guard, which the Bush administration has accused of supporting terrorism and aiding nuclear proliferation. One of the firms sanctioned Thursday, Khatam al-Anbiya, is the rough equivalent of the Army Corps of Engineers, according to Karim Sadjadpour, an associate at the Carnegie Endowment for International Peace. The Treasury Department said the firm had $7 billion of contracts in the oil, natural gas and transportation sectors. European oil companies are holding off on exploration and production deals in Iran. Royal Dutch Shell, Total of France and Italy’s ENI have held talks or reached preliminary agreements for new oil and gas projects in Iran in recent years. But now they say they are unlikely to move ahead, in large part because of the commercial terms Iran is offering. Chinese oil companies have not signed contracts yet for commercial reasons, according to Julia Nanay, a Caspian region expert at PFC Energy, a Washington consulting firm. The picture on the financial front is similar.

The United Arab Emirates, a key transit point for Iranian imports and a major financial center for Iran, had closed 42 firms doing business with Iran before the new sanctions list, said an official there. He said it remained unclear how the new U.S. measures would affect Iran’s Bank Melli, targeted by Treasury for allegedly facilitating ballistic and nuclear equipment purchases. The bank, Iran’s largest, had nearly $1.4 billion in assets in its U.A.E. branches at the end of 2005, according to its Web site. Bank Melli also has branches in London, Paris and Hamburg. Even if Iran finds ways around U.S. financial sanctions, U.S. pressure could increase the costs of Iran’s international banking transactions. European and Japanese banks have made it more difficult for Iran to arrange letters of credit, Drollas said. “Most of Kuwait’s banks have stopped dealing with Iranian accounts,” said Abdul Majeed al-Shatti, chairman of Commercial Bank of Kuwait. “There are opportunities in Iran. Unfortunately, we need to be part of the international system,” he said. “We have a lot of dealings with the United States.”

He said his bank had not issued any letters of credit for transactions with Iran in more than a year. “It raises the cost of operation for all Iranian banks,” said Jahangir Amuzegar, a former Iranian finance minister and representative to the World Bank before Iran’s Islamic revolution. “But whether sanctions are going to cripple banking operations, I don’t think so. Sanctions are effective only if they are comprehensive and universal.” Germany and France have been slowly reducing banking exposure and government credit guarantees for exports to Iran, thus shrinking potential for losses in the event of a confrontation with Tehran. Germany issued about $2 billion of credit guarantees for trade with Iran in 2005, helping companies do business that might otherwise be too risky. This year, the government said, the guarantees will drop to about $715 million. France’s embassy in Washington said French banks reduced their exposure to Iran from $5.7 billion in December 2005 to $3.8 billion a year by the end of 2006. Both countries still buy oil from Iran. The most important question may be what political and psychological impact the sanctions will have on Iran, especially with parliamentary elections next spring and presidential elections in 2009.

Iranian President Mahmoud Ahmadinejad has faced growing internal rumblings over his erratic economic policies. A few critics of the regime inside Iran have gone public. “Are we to endure the hardship of sanctions and other harsh measures on our nation as a result of our illogical and unreal glorification?” Mohsen Mirdamadi, former chairman of parliament’s foreign relations committee, said at a reformist conference Friday. But other observers said that sanctions had little political effect in places like Cuba, Rhodesia (now Zimbabwe), South Africa and North Korea. “Iranians have a strong sense of themselves,” said J. Robinson West, chairman of PFC Energy. “If these new sanctions create internal problems and cause the people to unify, then they won’t work. But if the sanctions can drive a wedge” between the regime and its constituents, they have a chance to work. Sanctions could even generate greater resistance. “This is a regime that hates to be seen to be backing off under international and U.S. pressure, so it seems unlikely that the threat of international sanctions alone will cause the Iranians to back off on the nuclear issue,” said Bakhash, the George Mason historian. Carnegie’s Sadjadpour said: “These sanctions are not negligible, and they’re not going to be pain-free for Iran. The question is: Will they be substantial and painful enough to change Iranian behavior? No, I don’t think they will be.”

Source: The Washington Post

Axis Of Evil: Parliamentary objections to Iran’s nuclear negotiator being replaced with a flunky of Mahmoud Ahmadinejad are a sign of his regime’s unpopularity.

Could a U.S.-backed coup prevent the need to bomb? Iran’s holocaust-denying, Israel-loathing president was forced to return to Tehran on Tuesday from a two-day visit to Armenia to attend to “unexpected developments” back home. On Monday, some 183 of the 290 members of Iran’s Majlis passed a resolution extolling the performance of Ali Larijani, the regime’s chief nuclear negotiator who unexpectedly resigned over the weekend. Larijani had clashed with Ahmadinejad regarding nuclear talks; the unknown diplomat named as his successor, Saeed Jalili, is a Mahmoud loyalist. So many lawmakers, most of them conservatives, expressing support for Larijani is clearly a snub at Ahmadinejad. One segment of parliament wrote to Ahmadinejad to complain of their not being consulted or even told before Larijani’s replacement. Yet the episode is only a small sample of Iran’s profound internal opposition and dissent almost 28 years after the establishment of its theocratic Islamic Republic.

The resistance comes from Islamic and non-Islamic sources: The Ayatollah Mohammed Kazemeini Boroujerdi is one of many Iran clerics adhering to the traditional Shiite belief that clerical rule by its very nature subjugates religion to the will of the state. After Boroujerdi preached to a large crowd at a Tehran stadium in the summer of 2006, attempts to arrest him failed because of throngs of supporters at his home. When Boroujerdi finally was seized in October 2006, hundreds of the thousands of protesters supporting him were arrested and Iran’s Revolutionary Guards could not clear crowds blocking the roads. In publicly opposing the regime for over a decade, Boroujerdi has spent months in jail. His father, also a cleric, died under suspicious circumstances in 2002; the mosque where his father preached was confiscated and his grave desecrated.

Ahmad Batebi had a death sentence reduced to 15 and then 10 years in prison for leading the pro-democracy student movement in Iran in 1999. Released temporarily to marry in 2005, Batebi went on the run to organize opposition preceding Ahmadinejad’s inauguration as president and was caught the next year. He was famously shown holding up the bloodied shirt of a fellow student on the cover of the Economist magazine. In 2007, at the age of 29, he suffered a stroke after years of prison abuse. He remains incarcerated in Tehran’s notorious Evin prison. Batebi’s wife also has been arrested and harassed. Student activists report that unprecedented numbers of college students, in the hundreds, have been disciplined for opposing Tehran’s Islamofascist regime. Akbar Ganji, an original supporter of the Ayatollah Khomeini’s Islamist revolution in 1979, joined the Revolutionary Guards and worked in the government’s ministry of culture. But he was to become disenchanted with the regime and became a journalist and dissident. After participating in a conference in Berlin critiquing Iran’s elections, Ganji was sentenced to 10 years’ imprisonment plus five years’ internal exile, later shortened to six months.

The next year he was given an additional six years in jail for articles he wrote and for possessing copies of foreign newspapers. He was released from Evin last year in poor health. Ganji has called the 2005 elections that gave Ahmadinejad the presidency “make-believe,” and has called for civil disobedience against the regime. In the 1980s, President Reagan, joined by Margaret Thatcher in Britain, led the West in successfully fighting the Cold War. We finally stopped pretending that containment and accommodation were options in dealing with the Soviet threat.

One of the ways we opposed that imperialism was to support the freedom fighters in Russian outposts like Afghanistan and Nicaragua. In his new book, “The Iranian Time Bomb: The Mullah Zealots’ Quest for Destruction,” Michael Ledeen of the American Enterprise Institute argues that “political support for the tens of millions of Iranians who detest their tyrannical leaders is both morally obligatory and strategically sound” as a U.S. policy, and he considers it far preferable to a military attack on Iran’s nuclear facilities. With 40% of Iranians living in poverty, unemployment at 15% (vs. under 3% during the Shah’s rule), and inflation so high that a new banknote featuring the atomic symbol was issued this year for 50,000 rials (worth well under $20), now may be the time to help Iranians themselves get rid of the world’s foremost danger.

Source: Investor’s Business Daily

President Bush isn’t the only one shaking his fist at Iran these days. Getting tough with Tehran is an increasingly popular bipartisan sport in Washington. 

Both the House and Senate have called on the administration to designate Iran’s Revolutionary Guard a terrorist organization. Although those congressional resolutions lack the force of law, critics, including Sen. Barack Obama (D-Ill.), worry that they could be construed by the White House as legal justification for U.S. attacks on Revolutionary Guard targets in Iran.

A terrorist designation by the State Department would allow the United States to levy sanctions against foreign companies and financial institutions that do business with the elite Guard. (American companies are already prevented from doing business with Iran.) But the administration appears to have misgivings about the terrorist designation — and for good reason.

No nation’s armed forces have ever been formally labeled “terrorist,” though Iran has been on the State Department’s list of countries that sponsor terrorism since 1984. Such a designation for the Revolutionary Guard, a 125,000-member military and intelligence force, would be a radical move that could have unforeseen consequences. Former Guard officers hold 14 of the 21 seats in the Iranian Cabinet, 80 of the 290 seats in the parliament and a host of other political and appointed offices. It’s often unclear — at least to the intelligence-challenged United States — who is currently a Guard officer, who is an alumnus and what are the relationships between any current or former Guardsman and the group’s multibillion-dollar business ventures.

Moreover, the terrorist designation would make it even more difficult to find senior Iranian leaders who could negotiate with the United States or Europe. Ali Larijani, Iran’s chief nuclear negotiator, is a former Guardsman, and the U.S. has accused the Iranian ambassador to Iraq of hiding his current membership in the Guard.

Rather than risking over-broad new sanctions, it would be wiser for the Treasury Department to target those Iranian officials known to be involved in terrorist activities or in specific business ventures whose proceeds fund the country’s nuclear program. Or it might focus on specific units of the Guard, such as the notorious Quds Force, which is accused of arming Iraqi insurgents. But far more important than fashioning more U.S. penalties that other countries will ignore is gaining the cooperation of German, Chinese and Russian officials in enforcing existing sanctions. Taking the prospect of a U.S. military strike against Iran off the table, at least for the duration of the Bush administration, could help.

Escalating hostilities will not advance what must be the primary U.S. goal: deterring Iran from acquiring nuclear weapons and thus destabilizing the entire Middle East. Tehran must decide that keeping its nuclear program is not worth the cost in economic and political isolation. And Washington must decide what it is willing to offer Russia and China to induce their cooperation in constraining Iran’s nuclear ambitions.

Meanwhile, Congress should make clear that it will not countenance a disastrous expansion of the Iraq war to Iran. It should start by passing legislation written by Sen. Jim Webb (D-Va.) and co-sponsored by Sen. Hillary Rodham Clinton (D-N.Y.) that prohibits the use of U.S. funds for military operations in Iran, its airspace or waters without specific congressional authorization. The bill carefully leaves exceptions for intelligence, hot pursuit and repelling an Iranian attack. It may not suffice to prevent a deliberate or unwitting clash with Iran — but it is an essential first step.

Source: The Los Angeles Times

The George W. Bush administration’s shift from the military option of a massive strategic attack against Iran to a surgical strike against selected targets associated with the Islamic Revolutionary Guard Corps (IRGC),

reported by Seymour Hersh in the New Yorker earlier this month, appears to have been prompted not by new alarm at Iran’s role in Iraq but by the explicit opposition of the nation’s top military leaders to an unprovoked attack on Iran’s nuclear facilities.

The reorientation of the military threat was first signaled by passages on Iran in Bush’s Jan. 10 speech and followed by only a few weeks a decisive rejection by the Joint Chiefs of Staff of a strategic attack on Iran’s nuclear facilities.

Although scarcely mentioned in press reports of the speech, which was devoted almost entirely to announcing the troop “surge” in Iraq, Bush accused both Iran and Syria of “allowing terrorists and insurgents to use their territory to move in and out of Iraq”. Bush also alleged that Iran was “providing material support for attacks on American troops”.

Those passages were intended in part to put pressure on Iran, and were accompanied by an intensification of a campaign begun the previous month to seize Iranian officials inside Iraq. But according to Hillary Mann, who was director for Persian Gulf and Afghanistan Affairs on the National Security Council staff in 2003, they also provided a legal basis for a possible attack on Iran.

“I believe the president chose his words very carefully,” says Mann, “and laid down a legal predicate that could be used to justify later military action against Iran.”

Mann says her interpretation of the language is based on the claim by the White House of a right to attack another country in “anticipatory self-defence” based on Article 51 of the United Nations Charter. That had been the legal basis cited by then National Security Adviser Condoleezza Rice had in September 2002 in making the case for the invasion of Iraq.

The introduction of a new reason for striking Iran, which also implied a much more limited set of targets related to Iraq, followed a meeting between Bush and the Joint Chiefs of Staff on Dec. 13, 2006 in which the uniformed military leaders rejected a strike against Iran’s nuclear programme. Time magazine political columnist Joe Klein, reported last May that military and intelligence sources told him that Bush had asked the Joint Chiefs at the meeting about a possible strike against the Iranian nuclear programme, and that they had unanimously opposed such an attack.

Mann says that she was also told by her own contacts in the Pentagon that the Joint Chiefs had expressed opposition to a strike against Iran.

The Joint Chiefs were soon joined in opposition to a strike on Iran by Admiral William Fallon, who was nominated to become CENTCOM commander in January. Mann says Pentagon contacts have also told her that Fallon made his opposition to war against Iran clear to the White House.

IPS reported last May that Fallon had indicated privately that he was determined to prevent an attack on Iran and even prepared to resign to do so. A source who met with Fallon at the time of his confirmation hearing quoted him as vowing that there would be “no war with Iran” while he was CENTCOM commander and as hinting very strongly that he would quit rather than go along with an attack.

Although he did not specifically refer to the Joint Chiefs, Fallon also suggested that other military leaders were opposing a strike against Iran, saying, “There are several of us who are trying to put the crazies back in the box,” according to the same source.

Fallon’s opposition to a strike against Iranian nuclear, military and economic targets would make it very difficult, if not impossible for the White House to carry out such an operation, according to military experts. As CENTCOM commander, Fallon has complete control over all military access to the region, says retired Air Force Col. Sam Gardiner, an expert on military strategy who has taught at the National War College.

Douglas McGregor, a retired Army Lt. Col. who was a tank commander in the 1991 Gulf War and has taught at the National Defense University, agrees. “I find it hard to imagine that anything can happen in the area without the involvement of the Central Command,” says McGregor.

The possibility that Fallon might object to an unprovoked attack on Iran or even resign over the issue represents a significant deterrent to such an attack.

Former NSC adviser Mann believes the Iraq-focused strategy is now aimed at averting any resignation threat by Fallon or other military leaders by carrying out a very limited strike that would be presented as a response to a specific incident in Iraq in which the deaths of U.S. soldiers could be attributed to Iranian policy. She says she doubts Fallon and other military leaders would “fall on their swords” over such a strike.

Gardiner agrees that Fallon is unlikely to refuse to carry out such a limited strike under those circumstances.

Mann believes the Bush-Cheney purpose in advancing the strategy is to provoke Iranian retaliation. “The concern I have is that it would be just enough so Iranians would retaliation against U.S. allies,” she says.

But the issue of what evidence of Iranian complicity would be adequate to justify such a strike evidently remains a matter of debate within the administration. A story published by McClatchy newspapers Aug. 9 reported that Vice President Dick Cheney had argued some weeks earlier for a strike against camps in Iran allegedly used to train Iraqi Shiite militiamen fighting U.S. troops if “hard new evidence” could be obtained of Iran’s complicity in supporting anti-U.S. forces in Iraq.

But Cheney and his allies have been frustrated in the search for such evidence. Mann notes that British forces in southern Iraq patrolled the border very aggressively for six months last year to find evidence of Iranian involvement in supplying weapons to Iraqi guerrillas but found nothing.

After several months of trying to establish specific links between Iraqis suspected of trafficking in weapons to a specific Iranian Islamic Revolutionary Guard contact, the U.S. command has not claimed a single case of such a link. Maj. Gen. Rick Lynch, the U.S. commander for southern Iraq, where most of the Shiite militias operate, admitted in a Jul. 6 briefing that his troops had not captured “anybody that we can tie to Iran”.

Sen. Joe Lieberman, who is known to be closely allied with Cheney on Iran policy, has betrayed impatience with a policy that depends on obtaining proof of Iranian complicity in attacks. On Jun. 11 he called for “strike over the border into Iran, where we have good evidence that they have a base at which they are training these people coming back into Iraq to kill our soldiers.”

Lieberman repeated that position on Jul. 2, but thus far it has not prevailed.

Source: IPS

*Gareth Porter is an historian and national security policy analyst. His latest book, “Perils of Dominance: Imbalance of Power and the Road to War in Vietnam”, was published in June 2005.