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Thursday
Feb042010

Iran Analysis: The Missing Numbers in the Economy

Seyedmohammadsadegh Alhosseini writes for Persian2English on the latest quarterly report on Iran's economy, covering July-September 2009:

This quarterly report on the economic condition in the country contains some important points. Firstly, the report shows the country’s economic situation and direction in every quarter. Secondly, it moderates the expectations of the readers and economists with respect to real economic changes. That is why the report is considered a credible source for an economic evaluation and analysis. This report, like the World Bank’s report, does not portray a pleasant picture of the country’s economic state and activities.

The analysis presented in the latest edition of the report:

1) Economic growth: Finally, Iran’s rate of growth for 1387 (21 March 2008-20 March 2009) was officially announced. Based on the report, Iran’s Central Bank has announced the gross rate of growth in this period to be 3.2%. The growth rate is calculated by finding the sum of the Gross Domestic Product (GDP) of this year and the previous year, and dividing it by the GDP of the year in question. However, the data for Gross Domestic Product in 2008 is, unexpectedly, absent from the report. Instead, it reads “data is not available” in front of the GDP. If the growth rate is properly calculated, the GDP (the source of the calculations) should also be mentioned in the report, as it was in previous years. If the data for GDP is not available, then how was the rate of growth obtained? If the GDP is known, why is it absent from the report?


In previous years, the economic rate of growth announced by Iran’s Central Bank has not been significantly different from that reported by credible international institutions such as the World Bank. However, the rate of growth announced in this year’s report (i.e. 3.2%) is drastically different from the rate of 1% reported by the World Bank for Iran’s economy in 2009. Of course, minimal differences in these two rates is natural (given the difference between the Iranian and Western calendars: the Iranian solar calendar starts on March 21st, the first day of spring, instead of January 1st), but a difference of such a degree raises concerns when the GDP has not yet been announced.

2) Unfortunately, the statistics and data index for capital, industry (Index of Industrial Production), and stock exchange (Buyer’s Index) is also absent from the report. This report, like the number 56 edition (on 2009’s second quarter), lacks many of the 2008-2009 indicators. This finding has raised many questions among economist and has resulted in a refusal or inability to analyze Iran’s economy. It is unacceptable that an organization responsible for providing economic statistics (such as the Central Bank) is unable to do so because there is a lack of data. The officials have to be warned about the grave economic consequences of not presenting [complete] statistics.

3) In the housing sector, the trend of declining building permits continues. The number of permits issued in the second half of the year is 2,265 in Tehran and 29,449 in the rest of the country. The numbers show a decline of 64.9% and 37.5% in the first two months of the second half of the year. This indicator had shown a 62% decline for Tehran and a 36% decline in the entire country for the first quarter. As mentioned before, the decline in the number of permits issued can result in a shortage in the housing supply in the coming year. This can be very dangerous for the housing market given the age structure of the country (2012 is named the year of the demand for houses, because the amount of new marriages is expected to increase, thus increasing home sales).

4) In a rare occurrence, the data in the industrial sector shows that the number of permits issued for industrial units has declined for the second year in a row. The figures show a decline of 11.3% in 2007 and an unprecedented drop of 45.7% in 2008. This index, like the indicator for the number of building permits issued, is another forecasting indicator which unfortunately does not present an optimistic view of Iran’s future economy.

5) Production and export of oil in 2008 and the second quarter of 2009 has declined. Although the decline in this indicator is small, it can reflect an undesirable situation with respect to investment and development in oil fields.

The collection of the data presented above shows that Iran’s economic situation, based on the Central Bank’s statistics, is bleak. Furthermore, the rate of growth for the country was forecast to be 4.8% in 2008. The reported rate of growth of 3.2% shows that the bell has started to toll for the Iranian economy.
Thursday
Feb042010

Israel-US: Ayalon vs. Livni on Future of the "Special Relationship"

Earlier this week Israel's Deputy Foreign Minister Danny Ayalon declared that Israel's relations with the United States have "never been better", adding that the ties between the allies go well beyond dealing with the Middle East conflict:
What makes the U.S. special is the fact that it has maintained its good relations with Israel over the years. Its support is not based on the financial pockets of the Arab states.

Everyone is waiting for the Palestinians to come to the negotiating table.

Palestine Special: All Along Israel’s West Bank Watchtower


Not so fast, replied opposition leader Tzipi Livni. She warned the Israeli leadership that the US support should not be taken as granted and then launched into criticism of the Netanyahu Government:
Israel is a state that is threatened in its very neighborhood. Every blow to our relationship with the U.S. can create wide-ranging strategic problems.

The Israeli leadership doesn't understand Israeli interests. We cannot expect the U.S. to defend our interests where this lack of understanding exists. Israel can't request help from the U.S. without giving it the proper tools to do this while facing the international community.
Thursday
Feb042010

Iran Analysis: How Turkey Can Break the Nuclear Stalemate

Colette Mazzucelli and Sebnem Udum write for Politics3.com:

The proliferation of nuclear weapons among failing states and fundamentalist non-state actors is the immediate challenge of the decade in national and international security. In Iran, however, the elections of June 12, 2009 illustrate to the world the increasing futility of a narrow focus on proliferation at the expense of the larger picture—the evolution of what Ali Ansari identifies as “a particular idea of power” in the regime.

The threats to the Non-Proliferation Treaty (NPT) are much broader than Iran’s nuclear ambitions. Those who argue that Iranian goals are limited to a civilian nuclear program designed to address urgent domestic needs must increasingly confront Iran’s complicated internal power struggle, which is more fragmented each day. Indeed, domestic cleavages and elite factionalization have characterized Iranian politics since the 1979 Revolution. What has emerged more recently, however, as the contestation since the summer makes clearer, is that divisions within the Revolutionary Guards—the element of Iran’s military established after the Revolution of 1979—complicate internal policy making.

This development is particularly dangerous on the nuclear issue and further delimits the ability of other states, even those with strong regional and Muslim ties like Turkey, to mediate on a range of policies. And mediation is essential if Iran is to play a constructive role commensurate with its growing influence in the Middle East.


Domestic Cleavages and a Fragmental Elite

Ansari explains how the changes internal to the Islamic Revolutionary Guard Corps made their co-optation by conservative elements within the Iranian government possible given the rise of the second generation Right in the 1990s. Over time, these changes strengthened the hand of a conservative leadership threatened by the reformers led by Khatami, who was elected president in 1997. Both the Revolutionary Guard and the Basij, a volunteer militia founded by the order of the Supreme Leader Ayatollah Khomeini in 1979, gradually became, in [Ali] Ansari’s words, “guardians, not so much of the revolution, but of a particularly hard-line interpretation of that revolution personified by the supreme leader.”

Of significance for those who must deal with elite leadership in Iran is the way in which the Guards were increasingly dominated by men loyal, above all, to the doctrine of velayat-e faqih. In the Shia Muslim religion Iranians practice, this doctrine asserts the population’s submission in all matters to the authority of one man, the Supreme Jurist, Ayatollah Khamenei. Velayat-e faqih, or the guardianship of the jurist, is the legal foundation of the Constitution of 1979, and the source of the supreme leader’s authority. İt is this foundation that places the current supreme leader, Ayatollah Ali Khamenei, in a relatively strong institutional position, despite his open, and contested, support of Ahmadinejad as president.

Iran’s domestic crisis is so intricate as to defy scholars’ ability to explain recent events. We may well ask if this is a crisis of an elite increasingly fractured, as Ansari explains, by its blatant pursuit of materialism. The tipping point is that the wealth acquired by the few can only be gained at the expense of the many, who suffer daily the loss of security, the loss of ideals for which the 1979 Revolution was fought and the loss of a future for the country’s youth. Machiavelli’s realism, which the scholar Michael Doyle explains as integral to fundamentalism, is only a starting point for interpreting the complex nature of individual and fragmented elite leadership within the Guards, its pervasive ambitions within the structure of government and society, and the many ways its influence is felt in an oppressive and dangerous regime decades after a revolution that, in Ansari’s reading, is open to “mercantilization".

Ahmadinejad’s election victory in 2005 may be situated in the context of various segments of the Iranian society, particularly among those Hamid Dabashi identifies in his volume, Iran A People Interrupted, as “the most disappointed, the most disenfranchised and the most impoverished” whose hopes were invested in the Revolution of 1979. His opponent, Ali Akbar Hashemi Rafsanjani, was one of the founders of the Islamic Republican Party, which was established to advocate an unrestricted theocracy. Rafsanjani, like numerous contemporary leaders within the protest movement, supports the regime created by the Revolution, starting with the doctrine of velayat-e faqih.

Further, the protest movement continues to illustrate Iran’s evolving demographics in which those under thirty years of age constitute almost 70 percent of the population. It is from that segment of educated and technologically savvy youth, and the experiences of the current protests, that new leadership is likely to emerge. Indeed, leaders are made from the crises of their time. And while the brutality of a narrow elite may succeed in suppressing most of the leadership that could emerge in the present context, it will not stop generational change, which includes the most disenfranchised in the Iranian society. This generation has the authority, borne of its own disillusionment with the failed promises of revolution, to create an obstacle from within, thereby countering the popular dictatorship, which President Ahmadinejad and the genuine power behind his incumbent position—the Ayatollah—increasingly embody for a growing number of protesters.

Nevertheless, attempts from outside Iran to alter the pace or course of change are likely to fail, given the dated narratives that have already created too much history, particularly between Iran and the United States—more specifically during the overthrow of Mossadeq in 1953 and the taking of hostages at the American Embassy in Iran during the 1979 Revolution. Along those lines, Ansari reveals that the Guards are “empowered by a war mythology, reinforced by a largely constructed fear of foreign subversion and given free reign by the Ahmadinejad administration” to indulge in an “extensive extortion racket,” which he defines as one of the realities of the “mafia state” Iran has become.

So what do these developments portend for a people who must develop in their own time and space within an increasingly complex regional and global environment? For now, only time will tell whether a national collective will remains united behind Ahmadinejad’s nuclear rhetoric and more specifically, a regime that persists in shifting the blame for economic stagnation and human rights abuses to those who foment a “velvet revolution” from beyond its borders.

In this context, direct engagement by the United States, Turkey or the P5 + 1 is difficult at best. If the deepening crisis of the regime perpetuates elite paranoia as economic stagnation worsens, the government’s traditional recourse to foreign policy and a nationalist rallying point, such as a nuclear crisis, is destined to confront an Iranian society less inclined to listen to the elite message. It is the timing of engagement by the Obama administration that is critical. Even though the road to sanctions complicates the broader U.S.-Iran relationship, we must consider the current government’s ability and inclination to deliver credibly on an international nuclear agreement. The brutality of the regime against its own, and the uncertainty about Iran’s capacity at present to negotiate in good faith, suggests a waiting game. So while the Obama administration has shown its willingness to engage, the ball is in Iran’s court.

Moreover, to be successful, sanctions must directly target the vast financial assets of the Revolutionary Guards and require the continual assent of China and Russia. Sanctions must also be perceived by the Iranian protesters as denying the Guards the resources to stifle all opposition to the regime in education and media, as well as politics.

Admittedly, however, it is unclear if sanctions that persistently target the Revolutionary Guards’ material wealth may buy time, as the nuclear clock keeps ticking, given the Guards’ dominance in nuclear thinking, the more blatant factional struggles on questions of nuclear policy and the problems Iranians are encountering to accomplish a “covert breakout” option. On the other hand, military strikes are less credible, particularly for Israel, given Iran’s vast network of tunnels which hide the various uranium enrichment facilities around the country.

What is emerging as a more plausible scenario is that Ahmadinejad will not be able consistently to play a card on the international stage, which he can no longer sell to a domestic audience. Popular contestation is a response in part to the leadership divisions within the Guards, whose older generation does not sanction force against the people.14 This divisiveness has led to a broadening of those segments in Iranian society, which focus more since June 12 on abuses of state and society in their struggle for voice.

Turkey’s Unique Role

Given the growing complexity of Iran’s nuclear ambitions, American engagement in the P5+1 (China, France, Germany, Russia, the United Kingdom and the United States), as well as the active involvement of Turkey, is the option more likely over the long term to counter proliferation from the inside out. The more immediate action, sanctions against the vested interests of the Guards, would also hurt the Iranian people although this is increasingly a matter of degree. The internal repression of the Guards is worse than the hardship of international sanctions.

Richard Haass argues in Newsweek that working-level negotiations on the nuclear question should continue. In this context, Turkey has genuine interests to play a mediatory role even in the face of resistance from the Republican Guards, as evidenced in the intervention to derail the construction of an international airport in Tehran. Ansari highlights that the airport project, which was being constructed with the involvement of Turkish partners, initially excluded the Guards who promptly acted out of material (not national security) interests and delayed its opening to travellers for months.

In addition, Turkey has other unique characteristics which may provide a lucrative starting point in furthering nuclear negotiations with Iran. First, Turkey pursued a policy of indifference towards the Middle East during the Cold War, and enjoyed stability in its Iranian border since the seventeenth century. Additionally, the rough military and strategic balance between Turkey and Iran has successfully prevented a hot war between the two countries.

Since 2002, when the concerns increased about Iran’s nuclear program and various options were put on the table to deal with it, Turkey has walked a tightrope. Its strategic relations with the United States and the course they went through in the pre-Iraq War period taught Ankara that it would not be alone in responding to security issues in its region. And while Turkey is concerned about the possibility of a nuclear Iran, it also wants to avoid being the target of retaliation should it cooperate with the United States, particularly for military measures against Iran.

In this context, Ankara favors diplomacy over other options. Indeed, Turkey’s geographical and political position between the East and the West is promising for a facilitating role in the negotiation process with Iran. That said, Ankara could play a meaningful role in breaking off the negative perceptions that hinder progress, and in building new ones that would make maintaining the non-nuclear-weapon status the “rational choice.”

Turkey views nuclear proliferation as a consequence rather than a cause of insecurity. It acknowledges the threats and risks of further proliferation in its region and beyond, and has been a committed member of international regimes on non-proliferation of weapons of mass destruction.17 Ankara has plans to harness nuclear technology for electricity generation, and would be adversely affected by proliferation trends in the region. Additionally, its ties with the Middle East (historical and cultural) and the West, particularly its strategic relations with the United States and the accession process to the European Union, grant Turkey with the ability to “speak both languages.” More importantly, it is one of the countries that would incur the negative impact should negotiations with Iran fail and proliferation trends rise in the region. In sum, Turkey is fit to play an active role in negotiations and it is willing to do so.

The Trust Issue

While there have been several proposals to keep Tehran’s capabilities under control, the main issue that prevents effective cooperation is the lack of trust between the international community and Iran, a reality that reveals itself in the demands for more transparency18 and “equality” respectively. The international community, most notably the United States, is concerned about the possibility of a nuclear Iran, and believes that unless its nuclear program is completely transparent, (i.e. when Tehran ratifies the Additional Protocol) Iran could divert its enrichment capability to produce a sufficient amount of highly enriched uranium (HEU), which could be used to manufacture an atomic bomb. Tehran’s advances in ballistic missile capability only increase these concerns.

Hence, ratification of the Additional Protocol also has a symbolic meaning that denotes commitment to non-proliferation norms, and Iran’s reluctance to do so emboldens mistrust regarding its nuclear program. More importantly, the possibility of a nuclear Iran could stimulate proliferation in the region, hence instability. Such a trend would challenge the nuclear non-proliferation regime as other non-nuclear-weapon states would start questioning the effectiveness of the regime and the meaning of their status as a security asset.

Finally, as discussed, Iran does not trust extra-regional powers, particularly the United States. The experiences of 1953 and 1979 taught Iran that sovereignty is non-negotiable, and self-sufficiency is the primary asset for security. Therefore, it argues that it cannot be denied its “indisputable and legitimate right” to have and operate complete nuclear fuel-cycle, and believes that doing so would diminish its power both materially and ideationally.

In this context, mutual understanding of key concepts is integral throughout the negotiation process, because they have the power to mitigate the inherent lack of trust from all sides. Some of these concepts are cooperation, transparency, sovereignty and non-proliferation. Along those lines, Iran perceives that if it allows enhanced verification inspections of the IAEA, and halts its uranium enrichment program, it would mean unequal treatment and loss of power because this would compromise self-sufficiency and sovereignty. Iran also argues that the lack of focus on other nuclear states in the region is a double-standard if the real goal is non-proliferation.

The international community, on the other hand, interprets Iran’s reluctance to take steps as a tactic to buy time, and the more they diverge from cooperation, the more Iran becomes a threat to international security. To alleviate these discrepancies, a viable channel must be designed to communicate all of these concepts to both sides, and to overcome the cultural bulwarks that have been underestimated in the negotiation process. Ankara has the potential for such communication, particularly with its new foreign policy perspective that is based on cooperative security.
Thursday
Feb042010

Afghanistan: US-Karzai Conflict Over Taliban Talks?

Gareth Porter of Inter Press Service, who has been following this story closely, reviews recent events and analyses the current situation:

On the surface, it would seem unlikely that Afghan President Hamid Karzai, who presides over a politically feeble government and is highly dependent on the U.S. military presence and economic assistance, would defy the United States on the issue of peace negotiations with the leadership of the Taliban insurgency.

But a long-simmering conflict between Karzai and key officials of the Barack Obama administration over that issue came to a head at last week's London Conference, when the Afghan president refused to heed U.S. signals to back off his proposal to invite the Taliban leaders to participate in a nationwide peace conference.

Afghanistan-Pakistan: Talks with Taliban, Top Insurgent Dead?, Fighting Intensifies


The peace negotiations issue is imbedded in a deeper conflict over U.S. war strategy, which has provoked broad anger and increasing suspicions of U.S. motives among Afghans, including Karzai himself.

The current source of tension is Karzai's proposal, first made last November, to invite Taliban leaders - including Mullah Omar - to a national "Loya Jirga" or "Grand Council" meeting aimed at achieving a peace agreement.


Secretary of State Hillary Clinton responded by pressing Karzai to demand far-reaching concessions from the Taliban in advance of the meeting. Clinton's conditions on Taliban participation included renunciation of al Qaeda and of violence and acceptance of the Afghan constitution, conditions that would make it impossible for leaders of the insurgency to agree if they are interpreted literally.

On Nov. 23, Clinton said the United States had "urged caution and real standards that are expected to be met by anyone who is engaged in these conversations, so that whatever process there is can actually further the stability and peace of Afghanistan, not undermine it."

Instead, Karzai publicly asked the United States to join in talks with the Taliban. Following the issuance of a statement by Mullah Omar on Nov. 25 that implied the Taliban would negotiate if they did not have to give up their demand for withdrawal of foreign troops, Karzai said there was an "urgent need" for negotiations with the Taliban.

In the face of what he knew was U.S. hostility to the idea, Karzai announced on Dec. 3, "Personally, I would definitely talk to Mullah Omar. Whatever it takes to bring peace to Afghanistan I, as Afghan president, will do it."

But he added, "I am also aware that it cannot be done by me alone without the backing of the international community." That is the phrase Karzai uses to refer to the United States and its NATO allies.

A few days later, Karzai appeared to give way to U.S. pressure against unconditional talks. He said he wanted to negotiate with Mullah Omar, "provided he renounces violence, provided all connections to al Qaeda and to terrorist networks are cut off and denounced and renounced."

But Karzai announced at the London Conference that he would invite the leadership of the Taliban to a Loya Jirga without specifying that they would have to meet specific conditions in advance of the meeting.

The Obama administration again reacted with scarcely-disguised disapproval. The State Department spokesman repeated the U.S. line that "anyone who wants to reconcile and play a more constructive role in Afghanistan's future must accept the constitution, renounce violence and publicly break with extremist groups such as al Qaeda."

Clinton pointedly avoided endorsing the invitation and did not use the word "reconciliation", which is the term in U.S. counterinsurgency doctrine reserved for negotiations with insurgent leaders. Those conditions for participation in negotiations would represent demands for concessions by the Taliban on all key issues before negotiations even begin.

Karzai showed no signs of turning back from his intention to meet with the Taliban without conditions. Two days after the London Conference, Karzai announced that he would convene the peace conference in less than six weeks.

And in an implicit response to U.S. demands for conditions on participation in negotiations, Karzai called on the Taliban not to pose the condition that U.S. troops must be removed before negotiations could begin.

In fact, a statement by Mullah Omar on Nov. 25 did not say foreign troops had to be withdrawn before peace talks could begin, but only that the Taliban would not participate in "negotiations which prolongs and legitimises the invader's military presence..."

Significantly, the Taliban spokesman did not dismiss Karzai's invitation out of hand, as might have been expected, but announced that the Taliban would make a decision "soon" on attending the conference.

The growing divergence of U.S. and Karzai's policy toward the Taliban appears to be imbedded in a wider clash over U.S. war policy.

Read rest of article....
Thursday
Feb042010

Iran Spam, Spam, Lovely Spam: Mass E-mails, Polls, and "Analysis"

So, in my inbox yesterday is this proclamation from Program on International Policy Attitudes/WorldPublicOpinion.org at the University of Maryland: "Analysis of Multiple Polls Finds Little Evidence Iranian Public Sees Government as Illegitimate".

[youtube]http://www.youtube.com/watch?v=anwy2MPT5RE[/youtube]

Wow, what a revelation! But then I remember that PIPA/WPO put out a poll last August/September which, with its insistence that more of 80 percent of Iranians thought the June election was legitimate, was roundly thrashed for its methodology --- you know, strangers from a "Western" organisation ringing up Mr. or Mrs. Azadi, amidst the internal tension, and expecting a straight answer to, "You think Mahmoud Ahmadinejad is a Good Guy?"

Latest Iran Video: What Do the Iranian People Really Think? (4 February)
The Latest from Iran (4 February): The Relay of Opposition


Now be fair, I chide myself.  Let's see the new evidence that PIPA/WPO has put together, hopefully by doing something more than cold-calling. And it is....


The analysis...was based on:

• a series of 10 recently-released polls conducted by the University of Tehran; eight conducted in the month before the June 12 election and two conducted in the month after the election, based on telephone interviews conducted within Iran
• a poll by GlobeScan conducted shortly after the election, based on telephone interviews conducted within Iran
• a poll by WorldPublicOpinion.org (managed by PIPA) conducted August 27--September 10, based on telephone interviews made by calling into Iran

OK, so you're recycling this allegation as scientific proof, even though there is absolutely nothing new since your telephone fun five months ago. I wouldn't let one of my students blow the dust off a sub-standard essay from the previous academic year and pass it off as first-class thought and analysis, so why should I cut you some slack because you have a fancy name and know how to mass e-mail?

Yep, mass e-mail. Because I had colleagues forwarding me this shock "study" throughout the day. Some saw through the ruse (I won't repeat the expletive-filled response of one expert Iran analyst), but others thought it was a dramatic revelation that --- not in September 2009 but in February 2010, after all the developments of Qods Day, the demonstrations of 4 November and 7 December, and the catalytic events of Ashura --- more than 80% of Iranians still thought the election (and, by implication, the legitimacy of the Government) was beyond dispute.

Now the punch line. Why did PIPA/WPO/EIEIO launch this spam attack? Hmm, guess what else happened yesterday?
The New America Foundation and WorldPublicOpinion.org are having an invitation-only event “to discuss what the Iranian public really thinks on key issues and its implications for US foreign policy.” WorldPublicOpinion.org (WPO) will present the findings of its polls.

Event Time and Location:

Wednesday, February 3, 2010 – 12:15pm – 2:15pm
New America Foundation
1899 L Street NW Suite 400
Washington, DC, 20036

Now how could a respected think tank big up an old poll, supported by even older polls going back to early 2009, as an event so darn important that you have to beat up someone and grab their invite to get in?

Well, well, let's just check who amongst the leading lights at the New American Foundation might have dressed up analytic mutton as lamb. Ah, yes, a Mr Flynt Leverett.

(Folks, because I'm a nice guy, I'm warning you. Cease and desist. Otherwise, I'll bring back Persian Umpire, and he's a much better satirist than I am.)