insideIRAN

Basij Forces Plan 7,000 New Bases

insideiran — Thu, 29 Jul 2010 20:59:20 +0000

Arash Aramesh

Brig Gen Mohammad-Reza Naghdi, the commander of Basij forces, said July 28 that his organization was going to build 7,000 new Basij bases throughout Iran. Naghdi said this was going to be an “unprecedented” expansion of the Basij and that the Iranian parliament had already appropriated sufficient funds for this massive expansion.

According to Fars news, a semi-official news agency with close ties to the Islamic Revolutionary Guards Corps, Naghdi said that the province of Zanjan, for instance, would receive an additional one hundred new bases. Zanjan is a relatively small province with about one million residents, most of whom live in rural areas.

Naghdi admitted that Basij forces have played an instrumental role in exposing problems and “reducing social cleavages.” He asserted, “With new Basij bases, the activities of Basij forces will also be elevated.”

The massive expansion of Basij now has a number of reasons. Little over a year ago, the Islamic Republic faced mass demonstrations in major cities. The IRGC and the Basij played a crucial role in quenching the demonstrators. Members of the Basij were accused of opening fire at demonstrators, resulting in the death and injury of many protestors.

The central government in Tehran would also like to increase the Basij’s involvement in rural areas, especially those provinces with major security problem such as Sistan and Baluchestan. This southeastern province has been a real security challenge for the Islamic Republic and the government has been unable to stop kidnappings, car and suicide bombings, and drug trafficking.

A few months ago, for instance, the IRGC Commander of all ground forces was killed by a suicide bomber while visiting the province. Less than two weeks ago, two suicide bombers carried out an attack at a mosque in Zahedan, the capital of the province, and killed a number of people. The IRGC increased its formal troops presence in the region in the past two years, but its failure to adequately address security problems have lead to an open invitation to the Basij forces to come and infiltrate the region.

As a militia, the Basij is not a full-time military organization. Most members of the Basij are recruited to serve in their neighborhoods, thus making it a powerful arm of the government which present in every city, neighborhood, and street.

Kadivar Writes Letter to Assembly of Experts: ‘Impeach Khamenei’

insideiran — Thu, 29 Jul 2010 20:28:00 +0000

Mahour S.

Mohsen Kadivar, the exiled cleric, professor and activist, has written a forty-three page letter to the head of the Assembly of Experts, former President Hashemi Rafsanjani, citing the reasons why Supreme Leader Ayatollah Khamenei should be impeached.

By law, the Assembly of Experts can vote to question, impeach and replace the Supreme Leader, although it has never carried out these responsibilities in its 30-year history.

Kadivar begins by writing: “As an Iranian citizen, I accuse the Supreme Leader of Iran, Ayatollah Khamenei, of despotism, tyranny, cruelty, breaking the law, attempting to overthrow the Islamic Republic of Iran and insulting Islam.” He writes the letter in six parts, highlighting instances of each of these accusations and citing articles of the constitution, which the leader has undermined in each case.

In the letter, Kadivar also highlights the history of the Assembly of Experts, and the “vicious cycle” which has been in practice since the laws changed regarding the Assembly in 1990. In that year, after the death of Ayatollah Khomeini, the founder of the Islamic Republic, the Guardian Council – now filled with Khamenei appointees who are loyal to him – was given the authority to disqualify candidates running for the Assembly of Experts. This gives the leader total control of the Assembly, whose primary function is to oversee the conduct and selection of the Leader.

Kadivar once again highlighted the need for a council of leaders to replace the Supreme Leader. Presently, the Supreme Leader remains in power for life. He writes that at present Iran’s leadership is only a “monarchy disguised in Islamic clothing” and calls Ayatollah Khamenei, “the greatest obstacle to the rule of law, democracy, justice and freedom in Iran.”

Kadivar discusses at length the political deaths that have occurred under Khamenei, the partisan tactics of IRIB (Islamic Republic of Iran Broadcasting), the treatment of protesters after the June 2009 election, the imprisonment and persecution of journalists and dissidents and Khamenei’s recurring interference in the day to day affairs of the country. He also highlights official statements from the government, which indicate the law can be ignored under instructions by the Supreme Leader. Kadivar also notes the lack of independence of the judiciary.

While many of these claims, arguments and accusations have been directed in the past at the leadership of the Islamic Republic, what makes this letter significant is that it is one of the first fully documented resources, which outlines Ayatollah Khamenei’s conduct in the 20-year span of his leadership. Given that Kadivar himself is also a cleric with vast knowledge of both legal and religious law, the letter is deemed even more credible.

Jannati: The U.S. Paid Opposition Leaders $1 billion

insideiran — Wed, 28 Jul 2010 19:26:05 +0000

Arash Aramesh

Ayatollah Ahmad Jannati, the secretary of the Council of Guardians, said July 27 that he had evidence the United States offered $50 billion to leaders of the opposition in Iran, if they manage to topple the Islamic Republic. He claimed that the U.S. already paid $1 billion to opposition leaders.

Jannati, who was speaking in the holy city of Qom, said, “The Saudis, who were speaking on behalf of Americans, said if you [opposition leaders] manage to topple the government, we will pay you fifty billion dollars.”

Jannati did not explain what sort of evidence he possessed and why has he not provided this evidence to Iran’s judiciary for prosecuting the accused. Nor did he say to whom the money was paid.

Hardliners in Iran have been trying to link the opposition to foreign powers and convince the Iranian people that last year’s unrests were planned by Westerners in Washington and London and implemented by their servants in Tehran.

Members of the opposition reacted to Jannati’s comments and called them “irresponsible.” Ali Shakuri-Rad, a former member of the Iranian parliament, told BBC Persian that, “Either Mr. Jannati does not know how much $50 billion is or he does not know other things,” implying that Jannati made a comment without knowing what he was talking about.

These remarks are troubling because Ahmad Jannati is one of Iran’s most influential hardliners. As Secretary of the Guardian Council, he plays an important role in monitoring elections in Iran and decides who has the right to run for office in the Islamic Republic.

Jannati has very close ties to Supreme Leader Ayatollah Ali Khamenei, who just appointed him to another five-year term as the Secretary of the Guardian Council. The Council is composed of six jurists and six laymen.

Jannati also has close ties to President Mahmoud Ahmadinejad. Last year, Jannati and the Guardian Council were accused of being biased and helping the Ministry of Interior rig the election results. Jannati denied such allegations, but said he has always loved President Ahmadinejad, only adding to concerns that he and the Guardian Council did not act as honest watchdogs.

Sanctions: The Unexpected Losers and Beneficiaries

insideiran — Tue, 27 Jul 2010 20:59:02 +0000

Shayan Ghajar

The European Union approved the most hard-hitting sanctions against Iran to date July 26, in an attempt to compel Iran to accede to Western demands to halt its nuclear enrichment. The sanctions, more damaging than those passed by the United States as a result of Europe’s greater economic involvement with Iran, specifically target Iran’s two sectors most vulnerable to European nations: banking, and oil.

Of the two, measures against Iran’s oil industry will prove to be the most damaging for the Iranian government, as it derives over half its revenue from oil exports. Until recent months, during which the mere mention of future European sanctions drove many companies to seek their business elsewhere, much of Iran’s foreign direct investment, especially in energy projects such as refinement facilities and oil drilling projects, came from European companies such as Dutch Royal Shell and OMV.

What makes Iran’s oil industry a particularly inviting target for European sanctions is Iran’s lack of refinement equipment—ironically, though Iran has some of the largest oil and natural gas reserves on earth, it is unable to refine enough for its own domestic supply and relies on imported refined gasoline to meet the nation’s needs.

How will the newest European sanctions affect Iran, how will they fall short, and what strategies will Iran pursue to circumvent sanctions or minimize their impact?

What the E.U. Sanctions Will Accomplish

The European Union’s sanctions will undoubtedly have an immediate impact on Iran’s oil industry.

The language in the E.U. resolutions forbids European involvement in almost any sector of Iran’s oil industry, banning investment, shareholding, joint ventures, equipment sales, and loans, as well as merely the use of equipment owned by individuals or corporations subject to European Union authority.

A great deal of Iran’s foreign investments aimed at expanding current oil fields, such as the major South Pars projects currently underway, come from European corporations. However, European sanctions discussions slowed investments in expanding oil field capabilities, and now, such investments are halted altogether. This, in turn, has halted or slowed development in many of Iran’s nascent expansion programs, such as several phases of the South Pars, Iran’s largest oil and natural gas field.

Iran’s oil industry has, until now, relied on the use of European equipment for a wide range of projects aimed at increasing oil output and refining capabilities. Drilling rigs, for example, have often been purchased or contracted out from European companies. Refining technologies for the processing of unrefined petroleum will also fall under these restrictions, a significant blow to Iran’s hopes to reduce its gasoline imports from their current level at 40%.

Sanctions pose an additional obstacle to Iran’s gasoline imports, as maritime insurance companies such as Lloyds of London refuse to insure any ships heading to Iran. Reuters reports that only three gasoline shipments have arrived in Iran in July, enough to supplement only 7 or 8 days of domestic consumption. China’s Sinopec and Turkey’s Tüpraş continue to send shipments, though insurance issues have interfered with Turkish shipments. Venezuela, too, ships gasoline to Iran, but the costs for Iran are significantly higher due to the distance.

How the E.U. Sanctions May be Ineffectual

As InsideIRAN reported last week, many of the voids left by European pullouts are being filled by Chinese and Russian firms, as well as an increasing number of Turkish companies.

Russia denounced the European Union’s new sanctions July 27, saying they devalue the United Nations and go too far in restricting trade with Iran. Russia recently announced its intent to greatly expand contracts in exploiting hydrocarbon projects with Iran, and indicated it may ignore American and European sanctions when convenient or profitable. Gazprom and a number of other Russian companies have signed or renewed multi-billion dollar contracts with Iran in recent months. Russian Energy Minister Sergei Shmatko declared, “No sanctions will hinder our cooperation in hydrocarbons. It does not contradict either the U.N. Security Council sanctions or international law.”

China, too, has much to gain by ignoring European sanctions—though, as many Chinese energy corporations do not do business in Europe, they would not be subject to E.U. sanctions to begin with. Iran has typically been China’s third largest source of energy imports, though aforementioned difficulties for Iran in expanding and maintaining production due to sanctions have decreased its export to China. China, too, is a major source of energy for Iran, comprising the bulk of its gasoline imports. Sinopec, China’s largest oil company, is also increasingly involved in investments and contracts abandoned by European companies in Iran, as is Malaysia’s SKS, which already has several multi-billion dollar contracts in Iran.

Turkey continues to support continued negotiations and opposes sanctions, attempting to pick up the pieces of its hard-won Tehran Declaration. Turkish Finance Minister Mehmet Şimşek declared Turkey will not abide by European sanctions: “We will fully implement U.N. resolutions, but when it comes to individual countries’ demands for extra sanctions, we do not have to [follow suit].” Turkey’s Tüpraş, second only to China’s Sinopec in supplying Iran’s gasoline imports, stepped in after pullouts by European companies.

Iran’s Adjustments to Circumvent Sanctions

Meanwhile, Iran continues to utilize a number of tactics honed over decades of American sanctions to evade the more stringent measures taken by the European Union. These range from smuggling gasoline through Iraqi Kurdistan to meet domestic needs, to considering using a different currency for oil-related transactions, such as the Chinese Yuan or Emirati Dirham.

In the meantime, however, as more European companies pull out of Iran’s energy sector, Iran’s most significant stopgap measure has been to shore up its own industries with the government’s own oil money, investing over $46 billion in refining facilities to jumpstart the nation’s bid for energy independence. PressTV quotes a report from the Energy Market Consultants firm saying that Iran will, if its planned upgrades are successful, be a net exporter of refined gasoline by 2015. While this leaves a five year gap in which Iran will need to scramble to keep its gasoline supply steady, Iran appears to be already compensating—as mentioned above—by importing additional Chinese, Turkish, and Venezuelan gasoline.

The Wall Street Journal opines that pressure on gasoline imports, and greater demand than supply, “could raise the domestic political pressure on the Tehran government.” However, InsideIRAN’s analysis indicates otherwise, with a significant number of Iranians blaming the sanctions only on foreign governments rather than their own. Hardships caused by pressures on basic necessities are very unlikely to lead to a popular uprising, as even prominent Green Movement figures such as Mir Hossein Moussavi decry sanctions of any kind as needlessly harmful to the average Iranian.

Iran has also begun engaging in a drive to get more investors, shareholders, and bond buyers involved in the oil program. As the Washington Post story linked earlier mentions, an Islamic Revolutionary Guard Corps company previously involved in critical phases of the South Pars field pulled out amidst fears its military affiliation could scare away investors, due to sanctions on Iran’s military. Despite this, Iran claims that investment has risen 120% since the Iranian New Year (which started March 21) and the government has also issued $3 billion in participation bonds to help make up the shortfall left by European and IRGC pullouts.

Sanctions, it seems, will have an immediate effect on Iran’s oil production capabilities, though time will tell if the gaps left by European flight are to be filled by superpowers such as Russia and China, and it is impossible to tell if Iran’s adaptations to sanctions will successfully minimize the damage.

Iran Warns of Plans by the United States and Israel to Attack Middle East

insideiran — Tue, 27 Jul 2010 18:03:59 +0000

Arash Aramesh

Iranian President Mahmoud Ahmadinejad told Press TV July 26 that the United States and Israel were planning to start new wars in the region and predicted an attack on “at least two countries in the region within the next three months.”

President Ahmadinejad criticized the new round of sanctions imposed by the European Union and said the United States and the EU were only after saving Israel by levying such sanctions. He added, “First of all, they want to hamper Iran’s progress and development since they are opposed to our growth, and secondly they want to save the Zionist regime because it has reached a dead-end and the Zionists believe they can be saved through a military confrontation.”

Ahmadinejad may have also been reacting to a recent proposal put forth by Republicans in the US House of Representatives, HR 1553, allowing Israel to take any action to protect itself from threats.

Senior Islamic Revolutionary Guards Corps commanders, however, seemed to be less alarmist. Brig Gen Hossein Salami, deputy commander of IRGC forces, told Sepah News, IRGC’s official website, that the Guards were fully aware of the enemy’s strategies. He downplayed the strength of the US military and said, “The US military was created as a response to a single threat, and that was the USSR. That is why in the new era, and due to lack of flexibility, we can see signs of US military defeat.”

Elaborating on the issue of military strikes or crippling sanctions against the IRGC, Gen Salami added, “We always thought [predicted and made plans accordingly] that all doors would one day be closed to us. We planned for the worst case scenario. The IRGC planned on the fact that there may not be a reliable ally for the Islamic Republic in the world. Thanks to the Almighty, our country is not small and we do not need to necessarily rely on others.”

In addition to Brig Gen Salami, another high-ranking IRGC commander discounted the possibility of a US attack. Brig Gen Masoud Jazaeri, deputy chairman of the Joint Chiefs of Staff for culture and propaganda, told Sepah News that “Recent moves made by the US are nothing but political bluffs.”

Gen Jazaeri added, “Recent military moves by the US, Israel, and a number of European countries is (sic) nothing new in the waters of the region and we have seen this many times in the past.” He asserted, “Iran is not worried about declining powers.”

The facts on the ground, however, tell a different story. Iran is preparing for a week-long air defense exercise in the fall. Senior air force commanders have announced that this exercise would take place in Iran’s western provinces, the closest to Israel. In the past two years, Iran has conducted a large number of military exercises, most of which have been air defense or naval combat preparedness in the Persian Gulf.

Iran Shows Signs of Willingness to Negotiate

insideiran — Mon, 26 Jul 2010 21:08:13 +0000

Arash Aramesh

Ali-Asghar Soltanieh, Iran’s representative at the International Atomic Energy Agency, told reporters July 26 that Iran has informed the Vienna group, which is comprised of the United States, Russia, France, and the IAEA, that it is willing to sit down with the European Union at the “very first opportunity” to discuss fuel for Tehran’s nuclear reactor.

According to Fars news, a semi-official news agency with close ties to the Islamic Revolutionary Guards Corps, Iran wrote a letter to the Vienna group to answer a number of questions posed by IAEA Director General Yukiya Amano. Fars did not explain what Amano had asked about or what the Iranian response entailed.

In another sign that Iran is softening its position on whether it will resume negotiations over its nuclear program, Iranian officials met in Istanbul July 26 with officials from Brazil and Turkey to seek assurances that they will continue to press the EU to resume talks regarding the Tehran Nuclear Reactor.

Iran is apparently concerned that Western government have dismissed the Tehran Declaration, which was an agreement brokered with Iran by Turkey and Brazil on May 16. Western governments have said the declaration fails to address key concerns about Iran’s nuclear program. Fars news, which has been very supportive of President Mahmoud Ahmadinejad’s nuclear policy, has portrayed the Tehran Declaration as a great victory for Iran’s diplomatic machine. Fars and other state-owned news outlets have made strenuous efforts to show Turkey and Brazil as Iran’s allies and portray the United States as an ever-increasing isolated world power on the global stage.

Fars also announced Iran’s willingness to start negotiations without preconditions about fuel for the Tehran reactor. According to Fars, Soltanieh said Iran was willing to participate in the first meeting in Vienna to resume talks about providing fuel for the Tehran reactor.

Despite Iran’s claims that the Tehran Declaration would have guaranteed enough enriched fuel for the Tehran reactor, it seems that they are going back to the negotiating table to bargain for fuel. The Tehran reactor, built by Americans before the Islamic Revolution of 1979, is used for research and medical purposes.

It seems the Islamic Republic is eager to resume negotiations. Some analysts argue that mounting pressure on Iran, via economic sanctions and threat of military strikes, have forced Iran to submit to the will of the international community. Others, on the other hand, argue that Iran is simply buying more time and has no intention of halting its nuclear program.

New EU Sanctions Receive Frenzied Response From Iranian State News Services

insideiran — Mon, 26 Jul 2010 19:12:28 +0000

Shayan Ghajar

The European Union implemented new sanctions July 26 against Iran in response to its nuclear program. The sanctions include measures freezing the assets of forty Iranian companies in Europe, as well as halting investments in Iran’s energy sector and banning the sale of certain kinds of scientific equipment relating to nuclear or petrochemical energy to Iran.

Additionally, sanctions will require that any European company engaging in a transaction with Iran of over $52,000 must first get the deal approved by the treasury ministry of their host nation in the EU. The EU will no longer allow new Iranian banks to be formed in Europe, and bans cargo flights from Iran to the EU.

The reaction in Iranian news services has been prodigious. A wide range of state officials, from President Ahmadinejad to various ministers and parliamentarians, have spoken out against the newest sanctions against Iran on every state-owned or affiliated news agency in the country. This reaction from Iranian officials is even stronger than their response to sanctions imposed by the UN and the US Congress over the last several weeks.

Ahmadinejad himself decried the latest sanctions in the strongest terms in a speech published on PressTV: “Should you make any decisions against Iran, including ship inspections, you will see the Iranian nation’s immediate response. Everybody knows that the Iranian nation’s response will cause [the enemy to] rule the day.”

Other statements by Iranian officials took a less confrontational tone and centered on the lack of effect sanctions will have on Iran. Iranian Foreign Ministry spokesman Ramin Mehmanparast said the European Union’s sanctions will not have a major effect on Iran’s energy sector, but may affect Iran’s willingness to engage in negotiations over its controversial nuclear program. “Sanctions… will only complicate matters and move away [the parties] from mutual understanding,” Mehmanparast stated on the Islamic Republic News Agency.

Even Iran’s Oil Minister, Massoud Mir-Kazemi, issued a lengthy statement regarding sanctions on PressTV. The Oil Minister said Iran’s oil production will not be impacted at all by the sanctions because “one hundred percent” of Iran’s oil fields are “being exploited by Iranian companies.” The oil minister neglected to mention that significant foreign investments in these Iranian companies may be affected by sanctions, which would impair the companies’ operations.

However, Oil Minister Mir-Kazemi also pointed out that Russian investment and participation in Iran’s energy sector would continue unabated, highlighting the conundrum facing Western nations as more sanctions are levied against Iran: companies in nations such as China and Russia have little incentive to abide by American or European sanctions, and have already begun to fill the void left by the pullout of European corporations.

Meanwhile, the fact that Iran’s official English-language news agency has published well over a dozen stories pertaining to sanctions in the past 24 hours indicates that, despite the tough rhetoric, the Iranian government is apprehensive about yet another set of sanctions hampering their international trade.

Iran Considers Replacing Dollar and Euro with Chinese Yuan

insideiran — Sun, 25 Jul 2010 21:10:24 +0000

Arash Aramesh

Mohammad-Reza Rahimi, Iran’s first vice president, said July 23 that his country was considering replacing the Euro and the US dollar with the Chinese Yuan for future oil transactions. Rahimi did not specify when such a transition would take place, nor did he say whether the Iranian parliament has approved the measure.

According to Fars news, a pro-government news agency with intimate ties to the Islamic Revolutionary Guards Corps, Rahimi told reporters: “Iran has the right to use any currency and we will do what serves our country’s interests. We have different agreements with different countries. What is important to us is getting rid of the Euro and the dollar.”

Recently, there were rumors that Iran was going to use the Dirham, the currency of the United Arab Emirates, instead of the Euro. After weeks of deliberations, Iranian officials decided not to use the Dirham given, according to their calculations, the limited size of the UAE’s economy and its lack of financial stability relative to the European Union and the United States.

Three years earlier, Iran converted its dollars to Euros when President Mahmoud Ahmadinejad predicted the death of the US economy. At the time, the American dollar was at one of its weakest points. Since then, the US dollar has gradually gained strength while the Euro has come under tremendous pressure by the global financial crisis. President Ahmadinejad has been criticized by a number of conservatives in the Iranian parliament for converting most of Iran’s reserves in dollars to Euros so quickly.

Following the global financial crisis, there are doubts whether the Euro is as stable a currency as it was once believed. The Iranian government’s decision to move away from the Euro is probably a bid to safeguard itself against another financial plunge which could be devastating to its holdings.

Iran’s move to abandon the Euro and the US dollar is not entirely motivated by economic calculations. According to BBC Persian service, Iran is seeking revenge for recent UN, US, and now EU sanctions. By converting billions of dollars worth of Euros and dollars to Yuan, the Islamic Republic aims to cause some damage to the two largest economies in the world, especially at a time when the US and the EU are struggling to recover from the greatest recession in recent history.

Sanctions Open Iran to Russian, Chinese Firms

insideiran — Wed, 21 Jul 2010 21:04:08 +0000

Shayan Ghajar

As Western nations wait to see if sanctions are having the desired effects on Iran’s economy and foreign policy, India’s Petroleum Secretary S. Sundareshan announced that recent U.S. sanctions would hamper state-controlled Indian firms’ attempts to invest in Iranian energy projects.

Sanctions, thus far, have complicated the economic dealings of many U.S. allies or friendly nations, even some of those which voted against Iran in the U.N. Security Council. Many nations in Asia and elsewhere are beginning efforts to circumvent sanctions to invest in Iran’s energy sector–especially three of the four members of BRIC, namely India, China, and Russia.

Mr. Sundareshan told the Wall Stree Journal that India has much to gain with investing in Iran, and much to lose should it fail: “There are unexplored frontiers in gas, which provide immense opportunities for [India]. We would certainly like to utilize these opportunities without sanctions.” India’s Foreign Minister has also complained about American sanctions publicly, saying they would endanger India’s “energy security and our attempts to meet the development needs of our people.”

India relies on Iran for about 14% of its crude oil imports, which would not be affected by sanctions, according to the WSJ. However, India also has plans to link itself to Iran via a pipeline through Pakistan. Discussions on pricing and construction will resume soon, the two nations say. Sanctions regarding the pipeline do not seem to concern any of the nations involved, despite the billions of dollars involved in such a project. India’s ever-expanding economy requires increasing energy imports to sustain itself, and Iran, with the world’s second largest natural gas reserves and geographical proximity to India, is the nation’s best option. While sanctions have given Indian companies pause in committing to investments, they have not affected India’s multi-billion dollar future dealings with Iran’s energy sector, as India seems more worried about its energy security than potential friction with the United States over Iran.

China, too, may undercut Western efforts at economically alienating Iran. China only agreed to U.N. sanctions, apparently, when language restricting deals with Iran’s energy sector were excised. Consequently, China has no legal obligations to avoid large-scale investments or cooperation in Iran’s energy industry. Coupled with new restrictions on Western companies resulting from American, European, and a multitude of unilateral sanctions from nations such as Australia and Canada, Iran’s market is invitingly open to Chinese business free of Western competition. The L.A. Times quotes an anonymous American diplomat as saying China “has given no commitment not to take up the slack” when these sanctions-wary companies back out of Iran. Even non-Western nations aligned with the United States and Europe on Iran, such as Japan, have seen the vacuums left by their corporate pullouts filled by Chinese firms.

China may utilize other methods to engage in lucrative business deals with Iran, according to the article, such as laundering petroleum exports to Iran by rerouting them through other nations in the Persian Gulf. At the same time, many Chinese firms have no need to be circumspect in their deals with Iran, as they do no business whatsoever in the United States and would not be subject to American sanctions. Chinese trade with Iran, Tehran estimates, will reach $50 billion within the next few years, a process accelerated, no doubt, by the lack of Western competition.

China’s conditional support for U.N. sanctions indicates their awareness of the economic advantages Iran’s isolation would provide Beijing.

Russia, too, is showing signs of undermining American sanctions efforts. According to the New York Times, Russia’s Energy Minister announced a plan of broad cooperation with Iran’s energy industry. Russia has been vocally opposed to unilateral sanctions beyond the scope of the Security Council’s restrictions on economic involvement in Iran, with its latest invitation to Russian companies to invest in Iran’s oil industry overtly flouting the Obama administration’s recent sanctions bill. Russia has spoken of forming bi-national banks and energy conglomerates with Iran, though the timetable for such projects has yet to be established.

The Times article cites Russia’s opposition to any measures increasing Iran’s internal political turmoil by affecting the population economically as one of its reasons for ignoring American sanctions. If true, Russia would be intentionally shoring up the Iranian government economically to help it withstand the domestic threat posed by the Green Movement–a serious breach with American and E.U. foreign policy efforts.

Iran itself is engaging in a variety of strategies to evade the obstacles posed by recent sanctions. The Wall Street Journal reports that a bank in the European Union, EIH, based in Hamburg, acts as a go-between for the Iranian government in Europe. The bank has done over a billion dollars of business with Iranian companies involved in defense contracts ranging from conventional military purchases to ballistic missile testing programs. The bank evades E.U. sanctions by virtue of its non-inclusion on the list of blacklisted companies.

Iran also uses less conventional methods to evade sanctions. According to the BBC, the Islamic Republic of Iran’s shipping line has registered ships with the Isle of Man, a British dependency, to skirt around potential searches and seizures of Iranian vessels. The ships, under the Isle of Man’s flag, would not be subject to U.N. restrictions on Iranian trade and shipping.

Sanctions, it seems, are making Iran’s economic transactions inconvenient but by no means impossible. While Iran may need to pay higher prices to its BRIC supporters for energy imports, it is clear that sanctions have not driven businesses away from Iran. On the contrary, nations that supported limited sanctions may have done so precisely because it would open greater markets for them in Iran’s energy sector by driving away competitors.

Bazaari Criticism of Ahmadinejad Bursts into the Open

insideiran — Wed, 21 Jul 2010 20:53:36 +0000

Nejat Bahrami

TEHRAN—Recent strikes in Tehran’s bazaar have made the unrest the center of political and economic discussions in Iran. The dispute between the government and the bazaar is more important than other political conflicts because in the eyes of most Iranians, the bazaar is the traditional ally of the Islamic Republic and even played a significant role in the 1979 Islamic revolution.

Now that the bazaar is at odds with the government of President Mahmoud Ahmadinejad, many observers wonder if the true reason behind these strikes are tax hikes or if there are other political and economic motives behind bazaar’s bold move.

Most bazaaris in Iran come from the more traditional, religious, and very conservative segment of society. They are firm believers in the right to own private property, and they oppose leftist policies limiting ownership and the bazaar’s operations. Members of the bazaar also do not favor political or social liberalization. This was the main reason they supported Ahmadinejad’s bid for reelection, despite their criticism of the populist president in private.

In recent weeks, however, the bazaar’s opposition to Ahmadinejad has moved beyond private discussions and has entered the media. In the past, the bazaaris expressed their opposition to Ahmadinejad’s policies, such as allowing women to go to athletic stadiums, in a discrete manner solely out of fear for a common enemy—the reformists.

Increasing tensions between the government and bazaaris are caused by two main factors. First, street protests and demonstrations in Iran have ended, and the government can no longer accuse its critics of “supporting the rioters.” Ali Motahhari, a prominent conservative, told Mir Hossein Moussavi, the de-facto leader of the opposition, that as soon as Moussavi and Mehdi Karroubi end their protests, other political figures can now criticize and undermine Ahmadinejad without fearing for their political futures. Motahhari explained that conservatives such as himself need to wait until the protests by the Green Movement end so that their grievances will not be dismissed as those being articulated by the opposition.

Second, Ahmadinejad and some of his allies have major differences with senior clerics over a number of issues such as hijab (wearing headscarves) and their view on the role of traditional clergy. Ahmadinejad is a populist and is trying to distance himself from conservative clerics. He believes this would boost his popularity among the masses, given that the clergy has been on the decline in recent years. Ahmadinejad even defended men who chose to shave their beards and wear neckties; a move that was condemned by clerics such as Ayatollah Ahmad Khatami, one of Tehran’s Friday prayer leaders.

It is thus clear why traditional and conservative clerics use the bazaar as a pressure mechanism in order to punish Ahmadinejad and demonstrate their power and influence. However, this is certainly not the only reason behind strikes in the bazaar.

In recent years, a number of reasons, such as economic recession, weak purchasing power of consumers, economic sanctions, smuggling of goods and merchandise, and the flow of cheap Chinese goods in the market have angered the bazaaris. In addition to the factors mentioned above, there has been a new wave of young, new bazaaris who are not as traditional as the old guard and do not ally themselves with traditional bazaari parties such as the Islamic Coalition.

Regardless of the scope of these strikes, and the importance of the bazaar today, these strikes cannot be compared to those of the Shah’s time. Members of the bazaar have always enjoyed special privileges in the Islamic Republic and have maintained very good ties with the ruling elite. Furthermore, religion and religious institutions are deeply rooted in the bazaar and this has created an unbreakable alliance between the clergy and the bazaar.

If the opposition in Iran decides to play a role in the bazaar strikes, or any tensions between the bazaar and the central government, they will face a number of challenges and opportunities. Their opportunity might come from the new class of bazaaris comprised of the younger generation. This new generation is more connected to the rest of the world and understands the needs of its own generation. Their numbers are increasing day by day, and the old guard, although still a solid majority in the bazaar, is shrinking.

But there are challenges for the opposition, too. Secular and liberal tendencies within the Green Movement worry about the conservative, traditional, and even anti-Ahmadinejad wings of the bazaar. Fearing the liberal tendencies of the Green Movement, this sector of bazaaris would run into the arms of the government, which shares some of their ideological concerns. If the leaders of the Green Movement aspire to play a role in bazaar’s protests, they must refrain from ideological and political fights and solely focus on the economic and fiscal problems facing the bazaar.

Another factor that can bring the bazaar and the opposition closer to each other is the role of the government. Mistakes made by the government and their impact should never be underestimated. Continuation of failed economic policies by the Ahmadinejad administration and further pressure on Iran by the international community can further intensify the economic crisis in Iran and alienate some parts of this important, influential group of merchants.

Nejat Bahrami is a commentator in Iran.