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Entries in Iran (94)

Monday
Mar222010

Iran Analysis: Politics and Subsidy Reform (Harris)

Kevan Harris writes in Middle East Report:

Although most Iranians forget it today, Mahmoud Ahmadinejad was elected in 2005 on a platform of technocratic competence. The clique surrounding his rise to mayor of Tehran and beyond once called themselves Abadgaran, “the Developers.” In a column four months after Ahmadinejad’s election to the Iranian presidency, commentator Saeed Laylaz reminded readers of the sage advice of Deng Xiaoping, arguing that a hard-line conservative government could push through economic reforms where the reformist administration had failed. “The cat is finally catching mice,” Laylaz wrote, “and its color no longer matters.” After the exhaustion of the reform movement’s momentum, Ahmadinejad presented himself to the people as the intrepid engineering professor, the humble, principled and no-nonsense expert who could get things done. “Expert,” in fact, is one of the good doctor’s favorite words.

What occurred was instead second-rate. The network of clients enveloping the new president set its sights on capturing the money and resources controlled by the ossifying bureaucracy of the Islamic Republic. Abadgaran men and assorted hangers-on replaced the aging first generation of post-revolutionary technocratic cadres. No sweet plum remained unpicked in the state agencies and ministries, not even in provincial offices and the development projects they oversaw. The rebellious tone with which this turnover was presented—“throw the bums out”—resonated with the lower social strata, who have rarely benefited from state largesse.


In 2007, the president stuck a pitchfork of his own in the 60-year old Planning and Budget Organization, taking away its independent auditing power. But overall the Ahmadinejad administration has not exactly been distinguished by fiscal discipline and managerial efficiency. Ahmadinejad, for instance, has paid three rounds of highly publicized visits to the oft-neglected provinces. On his tours, he has been met with hundreds of thousands of handwritten letters asking for small favors—resolving a quarrel with a local official, helping a son lacking sufficient connections for a state post, defraying the cost of an upcoming wedding or paying an overdue bill. The supplicants received personalized replies, and a few dozen thousand-toman notes (1,000 tomans equal $1) were stuffed into the envelopes for good measure. Ahmadinejad’s political vehicle was nothing less than a new patronage machine. It is an administration charismatic in appearance, but inconsistent in policy and practice.

In the spring of 2010, with the country still in political tumult over the dubious election of the previous June, and in economic pain due to global recession, the reinstalled engineer-president announced a plan that drew out critics of his competence in droves. The government proposed to enact the most sweeping economic policy change in over a decade: a phasing out of price subsidies for nearly all staple commodities—bread, electricity, water and gasoline—starting in March and continuing until 2015, when they would cease entirely. The plan provoked immediate protest and predictions of chaos, prompting parliamentarians to chop half of the cuts out of the budget bill they passed on March 9

Easy Money No More

Ahmadinejad’s political opponents within the Islamic Republic, from reformists to pragmatic conservatives, and irrespective of their feelings about the Green Movement arising after the June election, were pleased to see the president on the economic hot seat at last. After 15 years of attempting to construct their own versions of a modernization project, they were aghast that this upstart had labeled them as the backward, out-of-touch cronies of an old elite. Whether they had sought to do so through a glasnost-style opening, like former President Mohammad Khatami, or through a top-down economic restructuring, like Khatami’s predecessor Akbar Hashemi-Rafsanjani, they had been equally disparaged. Infuriating them more was that Ahmadinejad liberally stole from their policy playbook, just as President Bill Clinton was etched into the pages of US history though the use of softened Republican Party talking points. Politically, the Islamic Republic’s bêtes noires in the Bush administration gave the Iranian regime easy targets with which to justify their position: a region in conflagration and blatant enforcement of double standards in nuclear geopolitics.

For most of Ahmadinejad’s first term, the money poured in, in the form of oil rents inflated due to the same regional crises. The government rode the heady boom in land prices and resplendent construction projects. In 2006–2007, many Iranians with capital jumped into the housing market, seeing dizzy gains of 100 percent every year. The resulting real estate bubble temporarily concealed the lack of a coherent development policy. The benchmarks and proposals of the Fourth Five-Year Plan (2005–2009), passed in Khatami’s era, were discarded in favor of hundreds of bridges to nowhere, and most of these were not even completed. The economy entered a liquidity trap, where over-accumulation of capital and a lack of profitable outlets for investment drove down the rate of return while sending prices into an upward spiral. Finally, Iran’s central bank reined in the easy money in mid-2008, months before the collapse of global financial markets (with much resistance from the president, who forced the two largest state banks to continue to hand out loans, resulting in the large debt burdens of today, as borrowers default). Each block of every middle-class neighborhood in Tehran is now home to three or four real estate offices, all filled with jacketed agents listlessly huddled together.

The economic hangover allowed political competitors to pin the label of ineptitude on the president’s dwindling faction and make it stick. If any theme permeated the televised debates between presidential candidates before the June 2009 election, it was competent governance. The intra-elite bickering was so intense that it arguably burned through the electorate’s apathy and ignited mass participation in the balloting.

Into this environment the President introduced his subsidy reform law, whose provisions were as follows: The government spent around 40 percent of its 2006 budget ($40 billion) on such subsidies and even more during 2008’s oil price peak. Of the revenue gained from the lessening of subsidy levels, the state would keep 20 percent, ostensibly compensating for increased costs in the public sector. Another 30 percent would be allocated to industries that rely heavily on subsidies and development of more energy-efficient infrastructure. The remaining 50 percent would be given back to Iranians in direct cash transfers or indirect welfare benefits, “targeting” the poorest strata of the population. After five years, the prices of the staples were to be close to regional market levels. The parliament wrote into the law that the government should gain no less than $10 billion and no more than $20 billion during the first year, which would have meant increasing prices for subsidized goods on average between 2.5 and 4 times their current levels.

Debate over the law was heated, even a bit melodramatic, with parties for and against seeming to believe equally in the awesome power of unregulated markets. The president identified this single reform as the solution to the country’s many economic, social and perhaps even cultural woes. On March 9, amid reports that Parliament would approve only half of the cuts, state news agencies relayed that Ahmadinejad was praying in the chamber for passage of them all. Critics of the law, including stalwart conservatives in Parliament, predicted hyperinflationary catastrophe and industrial collapse. Green Movement supporters hoped that an intensification of economic grievances would keep middle-class Iranians, some of whom see the plan as a government attack upon their livelihoods, coming into the streets. Labor activists foresaw a new surge of working-class unrest to fuel the Green fire.

The drama of the subsidy debate was all the higher for playing out against the backdrop of the post-election turmoil and the fragmentation of the political elite into so many temporary chiefdoms, with the accompanying fleeting wars and alliances. In this climate, no policy initiative on the scale of subsidy reform would proceed without the express approval of Ahmadinejad’s patrons, Supreme Leader Ayatollah Ali Khamenei and the Revolutionary Guards. Why, given the hubbub, did they permit the president to move forward with the subsidy-cutting plan? Have they gone nuts?

Read rest of article....
Monday
Mar222010

UPDATED Iran Election Video: Nowruz and the Green Movement

Tehran, reportedly during Supreme Leader's speech

[youtube]http://www.youtube.com/watch?v=UuEVC9ddIgo[/youtube]

The Latest from Iran (22 March): The Economic Clash


Chants at tomb of Hafez, Shiraz

[youtube]http://www.youtube.com/watch?v=pJrMrb6ED28[/youtube]



[youtube]http://www.youtube.com/watch?v=DsyaD32Q8eQ&feature=youtu.be[/youtube]

Allahu Akhbars for Nowruz

[youtube]http://www.youtube.com/watch?v=QDYWVYNuA58&feature=player_embedded[/youtube]
Monday
Mar222010

Iran: View from Tehran "Changes within the System are Impossible"

A reliable EA source passes on these insights from a well-placed contact:

Today an Iranian friend called.

According to him, the Government did effectively scare the people by killing and arresting them and relentlessly summoning political activists or journalists to court. It also is promoting itself through intense propaganda.

Oppositional administrative structures are virtually destroyed, which was one of the reasons for the tohubohu [confusion] on 22 Bahman [11 February, the anniversary of the Revolution]. Nevertheless the people resist, and growing rifts are visible within the regime's body. The number of people, even very religious ones, who doubt the Government's pretentions, is growing day by day. Meanwhile many have realised that changes within the system are impossible, and even parts of the clergy favour a separation of state and religion.



He said "hormat-e hokumat shekast" (the ruler's honour is broken --- just think of people's reaction to the Supreme Leader's attempted fatwa on the ceremonies of Chahrshanbeh Suri). Apparently Ahmadinejad and his mafia possess documents relating to the Supreme Leader, which force Khamenei to abide by their wishes.

He deemed Ayatollah Mahdavi Kani's support for Rafsanjani as essential and favoured a tripartite tactic of oil sanctions, political challenge, and popular resistance to bring down this regime, even though it would be hard for the Iranian people. Without sanctions the govt would have enough income to maintain its pressure on dissidents, i.e., the Iranian majority.

This friend is very religious and has good contacts to the ruling classes. He reported also that Sepah [Revolutionary Guard] is smuggling money out from the country via Dubai.
Monday
Mar222010

Israel-US: Four Palestinians Killed as Netanyahu Goes to Washington

The death toll so far is four Palestinians. On Sunday, two farmers, who allegedly attacked Israeli soldiers with pitchforks near the West Bank city of Nablus, were shot dead. Earlier Sunday, a 19-year-old Palestinian died of wounds after he reportedly opened fire on Israel Defense Forces during a demonstration in the south of Nablus. On Saturday, a 16-year-old died after being hit in the heart by a rubber-coated bullet fired by Israeli troops.

Middle East Inside Line: Gaza is Boiling, Israel-Palestine Negotiations, Netanyahu to Washington


Meanwhile, Prime Minister Benjamin Netanyahu is leaving for Washington on Sunday night. Earlier Sunday, at his weekly Cabinet meeting, Netanyahu said that the policy on building in East Jerusalem has not changed in Israel's history and that he has informed the US administration of that in writing "Construction in Jerusalem is like construction in Tel Aviv and we have clarified that for the American government."



According to The Sunday Times, in return for his "promised gestures" towards Palestinians, Netanyahu will use a visit to Washington this week to press the U.S. to release advanced weapons, including sophisticated "bunker-buster" bombs needed to break through to Iran's nuclear enrichment installations, many of which are buried underground.

So, what are these "gestures?" Let's recall: suspending but not stopping the construction in East Jerusalem, the release of hundreds of Fatah-affiliated prisoners, the easing of the blockade on the Gaza Strip by allowing the UN to import construction materials, and discussing all core issues during the proximity talks, with the condition of reaching final conclusions only in direct talks with the Palestinian Authority. These are the "gestures" Netanyahu thinks that will bring a "stronger political and military relationship" with Washington.

We do not know what awaits Netanyahu in Washington but Edward Djerejian, former Assistant Secretary of State for Near Eastern and South Asian affairs, offered recommendations to the Obama Administration and revived the question: Should Washington consider suspending its economic aid as leverage? He told Haaretz by phone:
When faced with a similar situation concerning Israeli settlement activity in 1991, President George H.W. Bush and secretary James A. Baker III stopped an additional $10 billion in housing loan guarantees to the Israeli government headed by Likud Prime Minister Yitzhak Shamir. The stakes are equally high today.

If the Israeli-Palestinian negotiations are stalemated, the prospects for violence and instability in the region will be enhanced. The Obama administration should urge both the Israelis and the Palestinians to live up to their obligations in facilitating the onset of direct negotiations on the substantive issues. The sooner, the better.
Sunday
Mar212010

The Latest from Iran (21 March): Happy New Year, Mr Ahmadinejad

1750 GMT: It's All About US and Us. A slowish news phase, so the media are focusing on Ayatollah Khamenei's Sunday speech. It's on the lines of the Twitter publicity put out by his office (1330 and 1420 GMT), but this extract is especially provocative:

The enemies wanted to divide the people... and to create a civil war, but the nation was alert. If they were able to do it, the US and Zionist regime would have sent troops to Tehran's streets, but they knew it would hurt them. Thus they spread propaganda and supported the rioters.

1730 GMT: We've posted Iranian New Year videos featuring defiant chants from the opposition.

1440 GMT: Parliament v. President. Islamic Republic News Agency is claiming a fight-back against Parliamentary resistance to Ahmadinejad subsidy reform and spending proposals, quoting Arsalan Fathipour, head of the Parliament's economic commission, "We believe it is not possible to implement the subsidy reform plan at 20,000 billion tomans ($20 billion). So delegates intend to raise the figure to 35-38,000 billion tomans ($35-38 billion)." That would be almost all the $40 billion demanded by the President.

NEW Latest Iran Election Video: Nowruz and the Green Movement
NEW Iran Snap Analysis: A Rights-First Approach in Washington?
NEW Iran Video and Summary: Karroubi’s New Year Message
Latest Iran Video and Transcript: Obama’s Nowruz Message (20 March)
Iran Appeal: Japan’s Deportation of Jamal Saberi
Iran Analysis: Ahmadinejad Fails in Qom? (Verde)
Iran: Inside the Mind of the Interrogator
The Latest from Iran (20 March): Nowruz


1430 GMT: Obama and Iran. Edward Yeranian of the Voice of America claims that there was a "mized" reception amongst "Iranians inside and outside Iran" of President Obama's Nowruz message.


1420 GMT: "Rights" Annoys Khamenei. The emphasis in Barack Obama's Nowruz message on rights for Iran's people has annoyed the Supreme Leader. His office's Twitter barrage continues:
USA President sent letter and message to normalize relations, but his actions was against his words....USA President called distruptives "civil movement" and supported arsonists in recent events....Aren't you ashamed of killing in innocent people in Iraq and Afghanistan while talking about Human Rights?

1340 GMT: Winning on the Internet. The Guardian of London offers an interview with Austin Heap, the creator of the Haystack initiative to assist Iranians with access to the Internet, evading regime blocks and protecting their security.

1330 GMT: Everything Most Excellent Here. Really. The Supreme Leader's Twitter machine is extracting English quotes from his Nowruz message. My favourite so far: "Last Iranian year was the nation's year and their victory; a year of seeming presence in glorious arena."

1005 GMT: Speaking of Rights. Nooshabeh Amiri, writing in Rooz Online, considers "Women’s Movement [As] a Prelude to the Green Movement".

1000 GMT: US, Iran, and Rights. We've put our snap analysis of a possible shift in US policy on Iran into a separate ent

0900 GMT: The Ruling of the Umpire. The Iran-based blogger Persian Umpire is back after an absence with three entries: one on the events of 22 Bahman (11 February), one on waiting outside Evin Prison for a detained friend, and one on last week's Chahrshanbeh Suri (Fire Festival) ceremonies.

The summary of the festival offers one of the classic observations of this post-election crisis: "No one gave a certain rodent’s bottom for the fatwa [of Ayatollah Khamenei]. In fact it solidified people’s resolve to come out and celebrate."

0700 GMT: As Iranians celebrate Nowruz, they have been greeted by messages for the New Year. And there is more than a bit of politics behind the best wishes. The most pointed intervention may have come from Mehdi Karroubi, who derided the regime (a "small barge" not a "galleon") as illegitimate. We have the video and a summary.

President Ahmadinejad offered his own message, but the question is whether it has been overshadowed by events which do not point to 1389 as his happiest year. Consider....

As EA's Mr Verde predicted, the President got both a slap and a warning with the release of Hashemi Rafsanjani's relative and political ally Hossein Marashi from prison. Officially, the freedom is only temporary for Nowruz --- Marashi was jailed on Thursday after an appeals court upheld a one-year sentence for "propaganda against the regime". Beyond the official, the political significance will be whether Marashi goes back to prison; if not, it will be a dent in the authority of the Government.

Rooz Online echoes Mr Verde's assessment of an Ahmadinejad failure in his Thursday mission to Qom to get the support of senior clerics, claiming "the chief authorities refused his presence". (Rooz adds a name to those who did meet with Ahmadinejad: Ayatollah Makarem-Shirazi.)

In Tehran three lawmakers, prominent in economic discussions, criticised Ahmadinejad for his Friday suggestion of a referendum on his subsidy reform and spending plans, saying he is legally obliged to execute the economic reform plan approved by the Parliament. Gholam Reza Mesbahi Moqaddam, Ali Tavakkoli, and Elyas Naderan  said in ajoint statement, "The president does not have the right to disobey a law which has been approved by the Parliament."
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