Ahmadinejad's rough week

by Charles

The Iranian president has had better times, but he's been looking downright beleaguered of late.  Going down the list...

The defecting defense minister.  Although it happened a month ago, Mr. Asghari is tucked away in a secret European location and presumably giving his hosts information that is damaging to the regime.  More here:

AN Iranian general who defected to the West last month had been spying on Iran since 2003 when he was recruited on an overseas business trip, according to Iranian sources.

This weekend Brigadier General Ali Reza Asgari, 63, the former deputy defence minister, is understood to be undergoing debriefing at a Nato base in Germany after he escaped from Iran, followed by his family.

A daring getaway via Damascus was organised by western intelligence agencies after it became clear that his cover was about to be blown. Iran’s notorious secret service, the Vavak, is believed to have suspected that he was a high-level mole.

According to the Iranian sources, the escape took several months to arrange. At least 10 close members of his family had to flee the country. Asgari has two sons, a daughter and several grandchildren and it is believed that all, including his daughters-in-law, are now out of Iran. Their final destination is unknown.

Asgari is said to have carried with him documents disclosing Iran’s links to terrorists in the Middle East. It is not thought that he had details of the country’s nuclear programme.

The Rafsanjani challenge.  The former Iranian president is stepping up his power struggle with Ahmadinejad.  The Guardian:

The bitter rivalry between Iran's president, Mahmoud Ahmadinejad, and the country's leading elder statesman has erupted into a public struggle for control over economic policy.

Hashemi Rafsanjani, the president's most influential opponent, set the scene for a power struggle by telling Iranian journalists that Mr Ahmadinejad's "trial period is over". He said he would use his position as head of the expediency council, a state body empowered to set the Islamic regime's long-term goals, to reshape the government's economic policies.

The comments are the clearest sign yet of Mr Rafsanjani's revived political clout and follow widespread discontent with Mr Ahmadinejad's economic policies, which have resulted in rising inflation and high unemployment.

Assad's outburst.  The Syrian dictator was not pleased when Ahmadinejad, during his visit with the Saudis, called for an international investigation into the assassination of Hariri.  Rick Moran suggests that Iran and Syria have differing priorities on Lebanon and the Iranian-Syrian proxy army, Hezbollah:

Why would Ahmadinejad break with his ally over an issue that Assad feels so strongly about? The fact is, the Iranian president has his own agenda with Hezb’allah and Lebanon. Right now, it will be in Iran’s best interests to help get the best deal possible for Hezb’allah and end the crisis that is threatening the Lebanese economy as well as political stability in the country. Neither Ahmadinejad nor Hezb’allah’s leader Hassan Nasrallah desires a civil war. And if they can get a much larger presence in the cabinet without having to bother with messy democratic details like elections, it is time to pick up their winnings and leave the table a winner.

Hence, the meeting between Berri and Hariri and the start of the endgame for the two sides. King Abdullah of Saudi Arabia has been extremely active in trying to work out a compromise solution that will get Hezb’allah off the streets of Beirut – where they’ve been since December 1, strangling the economy and causing jitters among foreign investors who are waiting to pour more than $7 billion into rebuilding the country so devastated by the war with Israel last summer. Abdullah’s close relationship with Siniora as well as being Lebanon’s number one financier gives him a unique position that enables him to work with both sides while acting as a go between for Siniora to President Assad.

Up to this point, Assad has absolutely refused any compromise that includes the sitting of the tribunal. But he is alone now, having been abandoned in that position by his erstwhile ally Ahmadinejad whose recent visit to Saudi Arabia underscores Assad’s growing isolation. It is not known whether Ahmadinejad gave the go ahead for the tribunal at that meeting but his subsequent phone conversation with Assad would seem to indicate he has at least dropped his objections to it. This could mean a relatively quick end to the crisis if some face saving deal on the tribunal can be worked out that would satisfy Nasrallah. In the past, some ideas for such a deal included a substantial representation of Lebanese judges on the tribunal or limiting the scope of its mandate.

In the meantime, the diplomatic dance continues behind the scenes with King Abdullah and the Arab League in the lead. It should be noted that Abdullah is acting with the full blessing and support of the United States who have quietly urged the Saudis to take a more active and forceful role in combating the influence of Iran in the region. The Saudi King hasn’t shied away from this task, becoming more active in brokering peace in the Palestinian conflict between Hamas and Fatah while also taking a more pro-active role in Iraq with the Sunnis. You can say what you wish about Saudi support for ultra-conservative Wahabbists in the region but the fact is, the King is performing very well in this expanded role.

And Washington has not been idle either. When George Bush took office, aid to Lebanon amounted to around $35 million. This year, in keeping with our pledges made at the recently concluded Paris Roundtable on aid to Lebanon, the President is asking Congress for $770 million which would make Lebanon the third largest recipient of US aid per capita. This is an amount that Iran can’t come close to matching. Clearly, Lebanon has become one of the most important Middle Eastern countries to American interests.

As if to underscore that point, the canny old Druze warlord Walid Jumblatt paid a visit to Washington a few weeks ago and sat down with President Bush for an extraordinary 35 minute, face to face meeting. In contrast, the President met with Prime Minister Ohlmert for 45 minutes on his recent trip to Washington. There is little doubt the passionate Jumblatt impressed on Mr. Bush the continued support of the United States for the government of Prime Minister Siniora was vital to maintaining Lebanon’s independence.

UN Aid Cuts and Possible Sanctions.  Noted here:

UN nuclear agency governors on Thursday approved cuts in technical aid to Iran to uphold UN sanctions implemented over concern that Tehran may be trying to master the means to build atom bombs.

The move by the 35-nation board of the International Atomic Energy Agency (IAEA) reflected a December resolution by the UN Security Council banning transfers of technology or expertise to Iran that might be applied to producing nuclear fuel.

Only two other states in the IAEA's 50-year history have been stripped of nuclear aid over fear about possible diversions into bombmaking - North Korea and Saddam Hussein's Iraq.

Russia and China are balking when it comes to additional UN Security Council sanctions, but neverthelss, Russia is not making it easy for Ahmadinejad.

Iran's failing economy.  All is not well in the Shiite paradise:

And yet, behind the scenes, it is becoming clear that all is not well inside Iran, even in the middle of an oil price boom. At 3.9 million barrels a day, oil production remains stubbornly below its level at the time of the 1979 revolution.

A complete failure to invest in refining and the hostility to the use of Western technology has ensured that Iran imports much of its refined oil from the United Arab Emirates (UAE). Rather bizarrely, petrol has recently been rationed in some instances and is subject to strict government control - a whopping 86 per cent price increase has been proposed. On current trends, Iran would cease to be a net oil exporter altogether in 2015.

This seems to be extraordinary economic mismanagement. Despite a 20 per cent increase in the national budget last year, Mr Ahmadinejad had to go back to Iran's parliament, the Majlis, six times to ask for more money. Government expenditure is extremely high and rising - a pledge to reduce budgetary dependence on oil supplements by 10 per cent each year has been thrown aside as the government has resorted to using the Oil Reserve Fund as its piggy bank. Commentators speculate that Iran has inadequate foreign currency reserves to negotiate the demands of the coming year.

In fact, the extent of government borrowing from Iranian banks is jeopardising the solidity of the Iranian banking system. The borrowing increased by nearly 50 per cent last year and this swollen government sector carries significant knock-on inflationary implications. The official target for inflation is 9.9 per cent but the current rate is thought to be at least 20 per cent, and rising. In certain foods it is closer to 40 per cent and some fresh vegetables are disappearing in Tehran.

A large part of this economic crisis is home-grown but the tightening of American sanctions must give the economic planners even greater head-aches. The US has become much more adept at using its financial muscle to persuade non-American banks to withdraw financing from its chosen enemies. This is what lay behind the Palestinian Prime Minister, Ismail Haniyeh, being caught bringing $35m across the Egyptian border into Gaza.

Iran does not have enough capacity to refine all of its own oil, eshewing the Great Satan's oil refining technology and choosing to import finished product from the UAE.  These economic missteps are giving Ahmadinejad's domestic opponents (read Rafsanjani) more political leverage.  More from the Financial Times:

Parliament decided on Wednesday to limit annual petrol subsidies to $2.5bn, and Iranian news wires have reported the new rationed price will be 100 tomans (11 cents) a litre, with extra fuel sold at a higher price.

Deputies left the government to decide by April 20 on ration quantity, the price of un-rationed petrol, and the method of rationing, likely to be the use of ‘smart cards’.

The price of petrol has been regarded as politically sensitive, especially as many Iranians run cars as unofficial taxis to supplement low incomes or survive unemployment.

Basic commodities – like bread, electricity, gas and medicines – are subsidised by the government, and with Iran sitting on the world’s second highest oil reserves, many Iranians see cheap petrol as a birth-right.

Mahmoud Abtahi, a deputy, warned a 25 per cent increase would bring a “severe shock because petrol is the life blood of the economy” and urged parliament to support low-income groups.

So not only is Iran politically unfree, its government provides an uncomfortably high level of subsidies, not just on oil but on basic commodities.  According to this index, Iran's economy is freer than the Republic of Congo, Turkmenistan, Burma, Zimbabwe, Libya, Cuba and North Korea.  All of the other nations on the planet have freer economies, or at least counting those which can be measured.  Press freedom is no better.  The Heritage Foundation reported an unemployment rate of 11.2% and annual inflation of 14.8%.  This type of economic malaise is a likely contributor to...

Domestic unrest.  Iranian Sunnis are attacking, and Iranian women are protesting.

How this portends for Ahmadinejad, who knows, but it does appear that economic pressure on the regime is working, and the mullahs are finding it harder for their government to pay the bills and keep their sluggish economy afloat.

Comments

[CharleyCarp]

Couldn't happen to a nicer guy. Let's just hope no superpower saves his butt by overplaying its hand . . .

[SomeOtherDude]

The United States does not invade and occupy nations that have The Bomb.

Even if that nation is housing the organizers of the mass death of thousands of Americans.

The Persians will get thier Bomb, no matter who is the President of Iran or the United States.

[Hartmut]

'get the bomb' is a bit ambiguous. Japan got it (2 of them) in 1945.

The chance of a superpower (or certain people in a certain regional power) overplaying their hand is unfortunately non-negligible.
From experience I'd expect the worst case scenario not to be the least likely (i.e. not preventing Iran from getting the bomb but making them really mad by unsuccessfully attacking them).

[dmbeaster]

I read this, and think that as a matter of basic geopolitical calculation, taking military action against Iran at this time would be nuts. Existing economic and political forces are all in our favor in terms of moderating Iranian extremism, and military action would only strengthen the Iranian extremists.

Neo-cons read this and think now is the time to strike since military action would allegedly hasten political change against Iranian extremists.

[tequila]

This is what kills me the most about those who believe we are in some sort of fevered existential conflict with the Middle East, Iran, Arabs, etc. Iran is a very weak country with enormous problems. That it has managed to bluff itself into importance on the world stage is testament only to the incompetence of our leaders, the propaganda arm of its ministry, and the remarkable cowardice and capacity for hysterics in some elements of the extreme right wing of this country, which for some reason is seen as "conservative."

[Jackmormon]

Interesting post, Charles. About that general--even with the reports that his family has left Iran, I've got to say that I don't necessarily believe that he's been spying for the US and that he defected. It's possible, I guess, but surely everybody has a compelling reason to lie and spin to the press.

This bit--

A complete failure to invest in refining and the hostility to the use of Western technology

--seems a little strange to me. Iran's hostility to the use of Western technology does not extend, evidently, to centrifuges! No, I think it's that refineries are damned expensive and that the expertise necessary to build an effective one is going to come from the US or Europe---and those engineers can't or won't work in Iran these days. (Russia's refineries still rely on US and European experts in planning stages.) Anyway, I really don't think that Iranians are hostile to Western technology per se.

Just wanted to suggest that you not run away with that idea.

[Gary Farber]

"the use of Western technology"

"Just wanted to suggest that you not run away with that idea."

Charles didn't write that, though; he was quoting Chris Walker, the analyst writing the piece in The Independent.

It's not entirely clear to me that Walker's use of "hostility to the use of Western technology" didn't partially or largely refer to a reluctance of Iranian authorities to be dependent on specifically Western technology, meaning requiring spare parts replaceable only from the West, or run only with the aid of Western experts, rather than any sort of hostility towards the technology itself.

I have no idea if that's what Walker meant, but it seems plausible to me given that Iran has had a great deal of experience with this specific problem -- for instance, with F-14 spare parts. It's not that they have anything against F-14s themselves; it's the dependence/problems with sanctions, that give them a problem.

On the other hand, the first part of Walker's sentence was "a complete failure to invest in refining," and his primary thrust is to criticize Iran for "extraordinary economic mismanagement," so maybe he was primarily focused on criticizing Iran for more irrational behavior, as well, as regards oil refining technology; as I said, it's not entirely clear to me.

[Jackmormon]

I know Charles didn't write the part I quoted. He did, however, riff on it: "Iran does not have enough capacity to refine all of its own oil, eshewing the Great Satan's oil refining technology and choosing to import finished product from the UAE."

I suspect that the truth is more like what you're describing: an unwillingness to depend on parts, expertise, and capital from US and European countries, combined with intermittant sanctions of various sorts, and probably a fair amount of short-term gaming at the expense of long-term economic stability and prosperity.

An ideological resistance to Western technology per se, however, does not seem like a very plausible explanation of Iran's economic troubles. It's a small point.

[freelunch]

It's too bad that the leader of a certain superpower didn't keep his stupid mouth shut during the elections in Iran. I don't trust Bush not to save Ahmadinejad again, even if he doesn't intend to.

[Charles Bird]

Jack,
For the defection, it sounds like he's been cooperating with us (or NATO) for several years.

Re technology, Iran likes Russia's technology just fine, so maybe they don't think of Putin & Co. as "western". If they want the best available for exploration and refining, they must go through the US and Europe. Well, actually Europe. I'm guessing the mullahs are refraining from doing this because they'd rather not give up them the economic and political leverage, choosing instead to get their refined oil from a fellow Muslim nation, and in the end hurting their own economy. They're also hurting themselves defense-wise because their economy would melt down if their ports were blockaded.

[Gary Farber]

"They're also hurting themselves defense-wise because their economy would melt down if their ports were blockaded."

I'm not following: how would that be avoided by getting more oil-drilling/refining equipment from America, again?

[spartikus]

Because European oil-drilling/refining equipment have Deflector Shields?