Iranian Alert -- September 24, 2003 -- IRAN LIVE THREAD PING LIST

The Iranian Student Movement Up To The Minute Reports ^ | 9.24.2003 | DoctorZin

[DoctorZIn]

The regime is working hard to keep the news about the protest movment in Iran from being reported.

From jamming satellite broadcasts, to prohibiting news reporters from covering any demonstrations to shutting down all cell phones and even hiring foreign security to control the population, the regime is doing everything in its power to keep the popular movement from expressing its demand for an end of the regime.

These efforts by the regime, while successful in the short term, do not resolve the fundamental reasons why this regime is crumbling from within.

Iran is a country ready for a regime change. If you follow this thread you will witness, I believe, the transformation of a nation. This daily thread provides a central place where those interested in the events in Iran can find the best news and commentary.

Please continue to join us here, post your news stories and comments to this thread.

Thanks for all the help.

DoctorZin

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Iran Unveils 6 Shahab-3 Missiles

September 24, 2003
Middle East Newsline
MENL

NICOSIA -- Iran has unveiled the largest number of its Shihab-3 intermediate-range missiles.

Six Shihab-3 missiles were displayed at a military parade in Teheran on Monday amid what officials said was Iran's effort to warn against any threat to its nuclear program. The Shihab-3 was displayed for the first time since Iran announced on July 20 that the missile was deployed in the Iranian Revolutionary Guard Corps.

"The new security situation in the Persian Gulf created by the U.S. and British forces as well as pressures exerted on Iran over the Nuclear Non-Proliferation Treaty issue have caused the Iranian military to show its readiness to defend national sovereignty with more vigor and sensitivity," IRGC commander Brig. Gen. Yayha Rahim Safavi said.

Iranian officials said the six missiles included both the Shihab-3 and Shihab-4 missiles, termed the extended-range Shihab-3. The Iranian announcer at the parade, which began "Sacred Defense Week," said the missiles had a range of 1,700 kilometers. Later, a Defense Ministry spokesman said the announcer was wrong.

http://www.menewsline.com/stories/2003/september/09_24_1.html

[DoctorZIn]

Amir Taheri: Using international precedents to find a system that suits Iraq

Special to Gulf News | 24-09-2003

When first announced a couple of months ago, Iraq's Governing Council was shunned by several Arab states as "non-representative". France, Germany and a few other nostalgics of Saddam Hussain, complained about the council's "non-democratic nature".

The United Nations, where fudging matters is a refined art, invited the Iraq Governing Council to address the Security Council, but refused to let it occupy Iraq's seat.

Emboldened by these positions, all those opposed to change in Iraq rushed to attack the council as a "club of quislings". A number of self-styled religious leaders in Egypt and Lebanon even issued "fatwas" forbidding contact with the council which was supposed to be "unclean".

Even some of those who had supported the liberation of Iraq, complained about the council's failure to pick a single chairman and its failure to curtail debate and take quick decisions. (Actually these are positive points. The council has adopted a system of rotating presidency, in contrast to the Iraqi tradition of rule by a strongman. The council's insistence that all issues should be debated for as long as necessary is also a welcome break with a tradition of one man, or a handful of men, taking quick decisions based on illusions.)

Wheel of fortune

Now, however, the wheel of fortune has turned for the council. In Baghdad a string of foreign dignitaries wait in line to meet the members of the council or the ministers appointed by them. In some 60 countries, notably including Russia, Iran and Turkey, Iraqi embassies, consulates and legations have already been handed over to people named by the council.

And last week, ignoring some huffing and puffing by one or two members, the Arab League formally welcomed Iraq's new interim Foreign Minister Hoshyar Zebari. Next week Iraq will also regain its seats in the Organisation of Islamic Conference, OIC, and the Organisation of Petroleum Exporting Countries, Opec.

On the "fatwa" front, the Sheikh of Al Azhar, Muhammad Sayyed Tantawi, has expressed support for the council. Tantawi, Egypt's senior theologian, has described as "fools" the mullahs and muftis who call for boycotting the Iraqi Governing Council. And that's not all. The Governing Council has suddenly emerged as the central piece in a strategy that France and Germany are proposing for Iraq under the auspices of the United Nations.

"We want an immediate transfer of power from the Americans to the Governing Council," a spokesman for the German foreign ministry said yesterday.

The French media, reflecting President Jacques Chirac's thinking, are also campaigning for an end to rule by the American interim administrator L. Paul Bremer III, and its replacement by the Governing Council.

What is the reason for these dramatic changes in attitudes towards the Governing Council?
The most obvious reason is that all those who opposed the liberation of Iraq are now convinced that, despite current problems, there is no possibility either of a return of the Baathist regime or of a disintegration of the country.

Iraq may have a couple of hard years ahead. But it has all that is needed to become a success story in the medium and longer term. No power interested in the Middle East could afford to stay out of Iraq and sulk.

To enter Iraq right now, however, it is necessary to acknowledge the leading role of the United States. And this is precisely what many opponents of the war wish to avoid. They believe they can circumvent the problem by drawing a wedge between the US and the Governing Council.

Three models for the transition period in Iraq are under study. The first is the East Timor model under which the UN will declare a mandate on Iraq and run the country until the emergence of a freely elected government in Baghdad.

That model, supported by UN Secretary General Kofi Annan, initially enjoyed some support from several members of the Iraqi Governing Council, notably Adnan Pachachi, himself a former foreign minister of Iraq.

Now, however, there is virtually no support for that model within the council. Russia and China have indicated some support for it but appear to be open to other options.

The second model is that of Cambodia where the UN worked alongside an existing government in Phnom Penh. This model is supported by France and Germany. Roughly, the Franco-German scenario would run as follows: The UN will recognise the Governing Council as the sole representative of Iraqi sovereignty. The Bremer administration will then be transformed into a US aid project in Iraq.

The UN will then assume control of Iraq in a period of transition. The UN representative in Iraq will then fix a timetable for writing a new constitution and holding elections to create a new state and government. (France's candidate for the post is Francois Leotard, the former French Defence Minister).

The third model is that of Afghanistan where the US remains in a leadership position alongside the government of Hamid Karzai in Kabul. The idea is to increase the authority of the Governing Council and let the newly created Council of Ministers assume genuine executive powers. Bremer would then act as an upper chamber of a parliament, retaining an effective veto on key questions until an elected government is in place.

Diplomatic rivalry

The question that the Bush administration must ask is whether it is worth it to expose Iraq to international diplomatic rivalry in exchange for what is bound to be minimal material and military support from the UN.

The only justification for involving the UN may have to do with American domestic politics. Bush may want to be in a position to tell his electorate that the UN is now on board in Iraq.

And this is precisely why France, Germany and a few others, who do not wish to see Bush re-elected, are determined to push the price so high as to make it impossible for Washington to accept without losing control of the situation in Iraq. The message that Paris and Berlin wish to convey is this: Bush and his "neo-cons" created a mess, now we enter to save Iraq from destruction!

The writer, Iranian author and journalist, is based in Europe. He can be contacted at his e-mail at amirtaheri@benadorassociates.com

http://www.gulf-news.com/Articles/Opinion.asp?ArticleID=98424

[Pan_Yans Wife]

September 23, 2003
Iran Assures Canada on Photographer Trial
TORONTO (AP) -

Canada's foreign minister said Tuesday his Iranian counterpart assured him that an open trial will be held for the suspect in the murder of photojournalist Zahra Kazemi.

Bill Graham met with Iranian Foreign Minister Kamal Kharazzi at the United Nations, where both were attending the opening of the General Assembly.

Kazemi, 54, a Canadian of Iranian origin, died while in custody in Tehran. An Iranian Judge issued an indictment Monday that charged an unnamed Intelligence Ministry interrogator with "semi-premeditated murder."

Graham said Kharazzi told him that Canadian officials and Kazemi's family could take part in the trial.

"I am assured there will be a trial, an open trial, and we will be able to participate," he said, adding that no date for the trial has been set.

Kazemi was detained in June after taking photos outside a Tehran prison during student-led protests. After 77 hours of interrogation, she was rushed to a hospital's intensive care unit, where she died 14 days later.

Her case has become part of the power struggle in Iran between hard-liners and reformists.

Hard-line Tehran prosecutor, Saeed Mortazavi, initially said Kazemi died of a stroke. But a presidential-appointed committee discredited this version and concluded she died of head injuries sustained while in custody.

Intelligence Ministry officials have denied their officials were responsible, claiming a judicial official assaulted Kazemi.

Canada threatened sanctions and withdrew its ambassador after the photojournalist's body was buried in Iran against the wishes of Canadian authorities and her son, who lives in Montreal.

In a separate case, Graham said Tuesday that Saudi Arabia has rejected Canada's request for an investigation of allegations that a Canadian man was tortured while in Saudi custody for more than two years.

William Sampson says he was beaten, deprived of sleep and suspended upside down to force him to make a false confession for a car bombing in Riyadh that killed one person. Sampson was sentenced to death in the case, then set free last month along with five Britons and a Belgian also implicated.

A diplomatic note from the Saudi government, received Monday by Canada, rejected the request for an investigation but said Sampson could lodge a complaint, Graham said.

The note said Sampson was pardoned, despite his guilt, to maintain good relations with Canada. Sampson denies any role in the bombing.

http://www.lasvegassun.com/sunbin/stories/w-na/2003/sep/23/092306179.html

[DoctorZIn]

Indonesia Says Iran Wants to Build Oil Refinery

September 24, 2003
Reuters
CNN

JAKARTA -- Indonesia said on Wednesday that fellow OPEC member Iran wanted to build a refinery in the archipelago, which would help Southeast Asia's biggest crude producer reduce its reliance on imports to meet domestic demand.

Indonesian oil product imports meet around 25 percent of the country's growing consumption and its domestic crude production is on the decline.

"Both Iran and Indonesia are members of OPEC. Iran has sent me a letter for energy cooperation. One of their intentions is to build an oil refinery in Indonesia," the director general of oil and gas, Iin Arifin Takhyan, told Reuters.

"Iran says they will guarantee crude oil for that refinery. We will do a feasibility study. I will ask state-oil company Pertamina to follow this offer," Iin said, adding the processing capacity of the proposed plant had not been decided yet.

Iin said Indonesia was expected to consume 61 million kilolitres, or 383 million barrels, of oil products in 2003, up 4.4 percent from 58.4 million kilolitres, 367 million barrels, in 2002.

Indonesia has nine refineries scattered around the archipelago with a combined production capacity of about one million barrels per day (bpd).

It was not clear whether Tehran's proposal was linked to Pertamina's plans to build a 125,000-150,000 bpd refinery in East Java, for which it is seeking loans to fund the $1.5-$1.6 billion project.

A Pertamina official said on September 15 that oil from Indonesia's Cepu block would feed the new refinery, which is slated for start up in 2008.

Apart from ties within the Organisation of the Petroleum Exporting Countries, Iran and Indonesia have few trade links although Jakarta exports commodities worth about $128.5 million a year to the Middle East country.

Pertamina is currently using about 30,000 bpd of Iranian Light crude under a processing deal with Singapore Petroleum Co Ltd (SPCS.SI) while its 125,000 bpd Balongan refinery is shut for 70-days' maintenance.

Iin said Tehran has offered Indonesia the opportunity to explore for oil and gas in Iran, but gave no details.

Indonesia is currently producing around one million bpd of crude oil and 130,000 bpd of condensate.

(1 kilolitre - 6.289 barrels)

http://cnn.netscape.cnn.com/ns/news/story.jsp?id=200309240201000294298&dt=20030924020100&w=RTR&coview=

[DoctorZIn]

Purge Engineered by Iran Sparks Crisis for Islamic Jihad

September 23, 2003
World Tribune
worldtribune.com

GAZA CITY — The Iranian-backed Islamic Jihad has been wracked by the worst crisis in its 25-year history.

Palestinian sources said the crisis stems from a leadership reshuffle ordered by Iran. The sources said the resulting infighting has been exacerbated by a shortage of money for operatives and supporters.

The crisis has led to the resignation of the spiritual leader of Jihad, Sheik Abdullah Shami, Middle East Newsline reported. Shami, 50, resigned from the group's consultative council in protest of a decision to usurp his authority.

"I have decided to resign quietly from the movement in bitterness and pain within hope that the movement will overcome its internal failure," Shami said in an Aug. 2 letter.

Jihad is the smallest of the major Palestinian insurgency groups in the West Bank and Gaza Strip. Jihad has been sponsored by Iran throughout its history and sources said the Islamic republic has tightened its grip on the group over the last year.

Unlike Hamas and Fatah, the Jihad movement does not have a significant political wing. The group is largely composed of operatives and has supplied a large portion of the suicide bombers in attacks in Israeli cities. Many of the attacks were coordinated with Fatah and Hamas.

In June, the sources said, Iran began to purge members of the Jihad movement in the Gaza Strip. Shami, regarded as one of the few independent members of Jihad, was marginalized and Iran appointed Ahmed Batash as spokesman of the movement. The appointment resulted in Iranian funds being directed to Batash rather than Shami.

In 2003, Iran appointed Mohammed Hindi, Nafez Azzam and Batash as the leaders of the group. The three Jihad members were said to have opposed Shami's appeals to widen the organization.

In the mid-1990s, Jihad underwent a major crisis that stemmed from a lack of funding. In 1995, the sources said, Jihad sought a $500,000 loan from Hamas to wean itself from dependence on Iran. The loan was not issued but Hamas paid Jihad for its recruitment of suicide bombers for attacks against Israel.

http://www.worldtribune.com/worldtribune/

[DoctorZIn]

Bush, Chirac Pledge to Try to Work Together, Official Says

September 24, 2003
Scoop Media
Scoop

U.S. briefer on Bush meetings at U.N. with Chirac, Aznar

President Bush and President Jacques Chirac of France discussed "the differences they have" on Iraq in a meeting at the U.S. Mission to the United Nations September 23, a senior Bush administration official told reporters following the meeting.

The two leaders pledged to try to work together, and Chirac said he would try not to stand in the way, the official said.

Bush "was very clear in stating again that the premature transfer of sovereignty (to the Iraqi Governing Council), which has been the French proposal, is just not in the cards," the senior administration official said.

Bush and Chirac also "talked about Afghanistan, a little bit about Syria -- the need to try to get the Syrians to be more responsive, particularly on Hezbollah, and blockages to Middle East peace," the official told reporters.

The two leaders also discussed non-proliferation and the need to make certain that the International Atomic Energy Agency (IAEA) holds Iran to its obligations, the official said.

Prior to the Bush-Chirac meeting, Bush met with President Jose Maria Aznar of Spain. The two talked about "the full range of issues," including reconstruction in Iraq and Afghanistan, and the Middle East , the official said.

Bush "made clear that he thought it very important that the Palestinians find some way to create leadership that's actually going to be strong enough to fight terror. The Spanish offered to try to help with that. They have good contacts with the Palestinians and so -- I would say the Middle East was the sort of dominant part of that discussion, although they touched, obviously, on other issues, as well," the official said.

Following is a transcript of the official's briefing:

THE WHITE HOUSE
Office of the Press Secretary (New York, New York)
September 23, 2003

REMARKS BY A SENIOR ADMINISTRATION OFFICIAL IN BRIEFING TO THE TRAVEL POOL

United States Mission New York, New York
12:54 P.M. EDT

SENIOR ADMINISTRATION OFFICIAL: After the speech, we went over -- we had two meetings. The President had a meeting with President Jose Maria Aznar of Spain. They talked about the full range of issues, as you might imagine -- talked about reconstruction in Iraq and Afghanistan; fairly long discussion on the Middle East, and the President made clear that he thought it very important that the Palestinians find some way to create leadership that's actually going to be strong enough to fight terror. The Spanish offered to try to help with that. They have good contacts with the Palestinians and so -- I would say the Middle East was the sort of dominant part of that discussion, although they touched, obviously, on other issues, as well.

He then met with President Chirac. They talked at length about proliferation -- the conversation started with proliferation, with President Chirac talking about the importance of what the President had said in his speech on proliferation, offering French help. In fact, the French have been very active in the proliferation security initiative and in the work with Russia. So there was quite a bit of talk about that.

They talked about Iran and the need to make certain that the IAEA holds Iran to its obligations.

They did talk about Iraq. They talked about the differences they have. The President made a very clear and strong point that the United States, which has a hundred and almost forty thousand troops on the ground and is asking the American people to spend $20 billion on reconstruction of Iraq, is determined that when there is a sovereignty transfer, that it's going to be done in an orderly fashion. And so they talked about the difference there, but they pledged to try to work together. The French President said that he wouldn't stand in the way, but he would like -- obviously, France would like to try to help.

They talked about Afghanistan; a little bit about Syria, the need to try to get the Syrians to be more responsive, particularly on Hezbollah and blockages to Middle East peace.

So that was the core of it.

Q: -- say that President Chirac pledged he wouldn't stand in the way. Did you take that as a --

SENIOR ADMINISTRATION OFFICIAL: He said that in the newspaper, if you remember. I mean, he said that publicly, that they will try not to stand in the way --

Q: Does that mean no veto?

SENIOR ADMINISTRATION OFFICIAL: I can't interpret; he just said he would try not to stand in the way.

Q: Was there any narrowing of differences in that session?

SENIOR ADMINISTRATION OFFICIAL: I think we're going to have to keep working on it. The President was very clear in stating again that the premature transfer of sovereignty, which has been the French proposal, is just not in the cards. We just are -- it would be the wrong thing for the Iraqis. It would be the wrong thing for the -- difficult thing for the Coalition Provisional Authority is trying to do there. And I know that the French don't agree, but I think they listened to the rationale for why this would be very difficult.

Q: Ahmed Chalabi is now asking for a faster transition, as well. Any response to that? What -- how do you deal with that?

SENIOR ADMINISTRATION OFFICIAL: The Iraqi Governing Council, as important a step as it is for Iraq, is not an elected representative body. And the President and Ambassador Bremer and the entire administration is committed to a process that is orderly; a process that affirms for the Iraqi people that this is a different day, not with appointed leaders or leaders who come to power through other means, but a democratic process. And a democratic process starts with a constitution which establishes institutions that do things like protect minority rights. You need an institutional framework in which then hold elections and then transfer of sovereignty makes sense.

But I can guarantee you that the American people, the President of the United States, most of the allies who are on the ground with us are not prepared to transfer sovereignty to 25 unelected people. It's just not going to happen.

Q: But Bush in his speech today said that that was a representative body, though, for the first time in their history.

SENIOR ADMINISTRATION OFFICIAL: I said, a very important first step. And they're representative in the sense that the 25 looks like Iraq, to use a phrase that we sometimes use in America. But this is a country that has not had a national dialogue in almost -- in, well, more than 30 years, but certainly not under Saddam Hussein; that has undergone tremendous trauma under this terrible regime; that needs now to establish institutions that can mitigate against differences among ethnic groups, that can establish the rightful place of women in this society, that can do all of the things that constitutions do.

You just think about how important the constitution is to the United States, and how it's allowed the evolution of democracy over time. You cannot short-circuit that process. And I can also be very clear that the President is not going to ask the Congress to transfer $20 billion of American taxpayer's money to an unelected body of people.

What we are -- the resolution that we're working on with the U.N. has to maintain two very clear principles. One is that there will be an orderly transfer to sovereignty, and we're ready to do that. The Iraqi people need a political horizon, they need to know that there is a process to get to sovereignty. Jerry Bremer has laid out that process in his seven-point plan. And that is -- that has to be preserved in any resolution.

The second point is that, just like we have unity of command on the military side, we're going to have to maintain unity of direction on the reconstruction side. There is an important role for the U.N. to play, but the Coalition Provisional Authority has to get the job done. And so, the U.N. resolution will also acknowledge what really are facts on the ground.

Q: Regarding the doctrine of preemption, both President Chirac and Kofi Annan targeted that doctrine in their speeches and said that it would lead to a unilateral and lawless use of force, and Chirac said it would lead to anarchy. How do you bridge those big gaps?

SENIOR ADMINISTRATION OFFICIAL: Well, I'll tell you something. First of all, I think we can have a discussion about whether war against Iraq was preemptive or not, given that we've been in a low-level war with Iraq for 12 years -- with them shooting at our aircraft, with 17 different resolutions, with the last one passed just in November. I think it's a little hard to just say that somehow this was unilateral action.

Be that as it may, what the President has said is that you cannot allow threats to gather, and somebody has to act. You can't sweep problems under the rug. What was very interesting to me in Kofi Annan's speech was that, while he said he was worried about unilateral action or about preemption, he said, however, you cannot just criticize unilateralism, you have other find a way to address the problems that those who may act unilaterally are actually bringing about.

I think it was, in fact, an admission that the -- that if the U.N. cannot act, if you cannot reform the U.N., if the Security Council cannot act, then you leave no choice but for people to protect themselves. And I think what the President said when he was there last year was, if the Security Council can't act, then the United States will. And I heard a lot about how the Security Council and the U.N. have got to reform themselves so that they can act.

So I think, once again, the President has led in causing an extremely important debate about whether the Security Council and the U.N. can make themselves capable of dealing with the threats of the 21st century.

And that's the debate that they're having out there. And that's why so many heads of state have showed up here, because this is really, I think, since the end of the Cold War, the first time that the United Nations is confronting the question of whether the United Nations will really be able to act with the threats of today. And that's a very important debate to have.

Q: There was some anticipation that Iran would be mentioned specifically in the speech today, and that --

SENIOR ADMINISTRATION OFFICIAL: No, the President wasn't talking about specific cases, but he's talking about Iran in all of the meetings that he's having.

Q: Do the Chalabi comments complicate your task, and what are you telling them?

SENIOR ADMINISTRATION OFFICIAL: I think that the Governing Council -- first of all, there's 25 people on the Governing Council. But the people just have to recognize that the United States, the Coalition Provisional Authority, and the coalition are determined that this is going to be an orderly transfer of power. And that's what's best for Iraq. That's what's -- what the United States committed to, and that is the only way that this is going to work.

Q: Thank you.

http://www.scoop.co.nz/mason/stories/WO0309/S00291.htm

[DoctorZIn]

Bush, Chirac Pledge to Try to Work Together, Official Says

September 24, 2003
Scoop Media
Scoop

U.S. briefer on Bush meetings at U.N. with Chirac, Aznar

http://www.freerepublic.com/focus/news/988266/posts?page=8#8

[DoctorZIn]

MP: Policy of Engagement with Iran 'Does Not Appear to be Working'

September 24, 2003
Hendon and Finchley Times
Tom Spender

Britain's policy of engagement with Iran 'does not appear to be working', according to the founder of a committee aiming to free Barnet refugees Abrahim Khodabandeh and Jamil Bassam, currently languishing in an Iranian jail.

Win Griffiths, the Labour MP for Bridgend, Wales, who set up the Ad Hoc International Campaign Committee to free the ‘Barnet Two’, said that if Iran was serious about changing its attitude to human rights, it would allow representatives of Mr Khodabandeh and Mr Bassam to visit them.

He contrasted their plight to the treatment in this country of the Iranian former ambassador to Argentina, Hadi Soleimanpour, who has appeared in court in London after Argentina requested he be extradited to face charges of being involved in a bomb attack there in the 1990s, which he denies.

Mr Griffiths said: "The policy of engagement does not appear to be working. There is a total contrast between what happens in a democratic country with an independent judiciary and what happens in an undemocratic country.

"Mr Soleimanpour has been in open court, proceedings were reported on and he has been granted bail.

"In Iran, apart from being told about six weeks after they arrived that they were in Iran, we don't know officially where they are or what they have been charged with."

Mr Khodabandeh, who has been living in Barnet for 30 years, and Mr Bassam, who has been living in Hendon for 30 years, are Iranians who have been granted refugee status in the UK.

They were arrested while travelling on valid visas to Syria in April and flown to Iran — a flagrant breach of the United Nations convention on refugees.

Although the two are supporters of the National Council of Resistance of Iran (NCRI), which opposes the government in Tehran, Mr Griffiths said it was still unclear why Iran had gone to such lengths to get their hands on Mr Khodabandeh and Mr Bassam.

"Both of them were in Britain at the time of the revolution in 1979 [when the current regime came to power].

"Apart from the fact that they are both members of the NCRI, it's difficult to imagine why the Iranian government should have felt they were such important people. I know Abrahim pretty well. He's a pleasant, quietly-spoken sort of person. It's very odd," he said.

Mr Griffiths said his committee was aiming to persuade the United Nations High Commissioner for Refugees (UNHCR) to do more to try to help the Barnet Two. Last Thursday, Iranians demonstrated outside the Foreign Office and the UNHCR to ask them to do more to help.

http://www.hendontimes.co.uk/news/localnews/display.var.416070.0.mp_iran_must_let_pair_go_free.php

[DoctorZIn]

Iran's Underground Economy

September 08, 2003
Middle East Economic Survey
By Jahangir Amuzegar

In the following article for MEES, Jahangir Amuzegar, a distinguished economist and former member of the IMF Executive Board, analyzes Iran's underground economy.

A highly distinctive feature of Iran's Islamic Republic is the relatively large size of its underground economy. Alternately called informal, parallel, unofficial, unregistered, gray, and a host of other labels, the underground economy refers to activities - both lawful and unlawful - that elude taxation or escape registration in the country's gross domestic product (GDP). The size of any country's underground economy normally depends on the burden and complexity of its tax system, the severity of its penal code, the enforceability of its financial regulations, and its society's tolerance for official corruption.

Iran is not alone in this dualism. But what sets the Iranian case apart from most others is that its underground economy is not an aberration, but a natural offshoot of its "Islamic" ideology and its unique political structure. It reflects a symbiotic relationship between the ruling theocratic oligarchs and their business supporters in the bazaar. Unlike the case in advanced liberal democracies where such unregistered activities are closely watched and the unlawful segment diligently dealt with, Iran's politico-judicial authorities knowingly or otherwise spawn and nurture them by either tolerating or only selectively punishing some of their glaring indiscretions. And, while often widely reported in the press, and publicly deplored by all political factions, these activities have rarely been seriously scrutinized or sufficiently exposed due to the power and influence of their principal beneficiaries.

Scope And Coverage

To get a clearer picture, Iran's underground economy should be examined in terms of its status before the law, and the character of its participants. In judicial terminology, this segment of the total economy should be divided into two parts: legal or extra-legal, and illegal. The legal part consists of the unrecorded and inestimable economic activities that are common to almost all developing countries, and excluded in GDP estimates even in some developed nations. They include the value of in-house services performed by unpaid family members; value-added by small businesses conducted out of homes; unregistered and unreported cash transactions; barter exchanges among skilled service providers; the real value of government perks enjoyed by high officials; and, capital transactions not recorded in the balance-of-payment statistics.

The extra-legal portion emanates from state-sanctioned private monopolies in foreign trade, exclusive franchises in domestic distribution, the bazaar credit network outside the state banking system, influence peddling within the bureaucracy; and a raft of "rent-based" transactions involving access to privileged information and arbitrage opportunities. Some activities in this extra-legal category are of a hybrid nature, and may fall somewhere in between legal and illegal due to the unclear reading of the law: their categorization, therefore, should be considered somewhat arbitrary.

The illicit part covers a range of operations conducted by criminal elements and underworld figures in solo practice or in conjunction with some mafia-type organizations involving narcotic traffic, smuggling, counterfeit reproduction of patented articles; violations of intellectual property rights; money-laundering; organized prostitution; white-slave operations; trades in transplantable body organs and unborn babies; kidnapping and ransom demands; dealing in protected antiquities; and bribes routinely paid and received in transactions involving state agencies.

Key Participants

Iran's underground economy resembles a vast arena stage where not only the performing actors but also some of the spectators all play a part - legally or otherwise.

Principal players and high-stake operators consist of scores of state-sponsored "private" enterprises engaged in money-making activities; a number of large quasi-public "charitable" bonyads and several hundred parastatal entities established since the 1979 revolution; some old private endowments (waqf); a large network of non-transparent credit markets in the bazaar; religious shrines receiving sizeable cash donations from the faithful; several thousand non-bank banks, Qarz al-Hasanah windows, and "not-for-profit" credit unions; and the private fiscal household (bayt) of the major clerics - including that of the Supreme Leader.

Supporting actors are individual traders who evade foreign trade regulations and hide the true value of their cross-border commerce or those originated in the Free-Trade Zones; returning travelers who exceed their tariff-exempt foreign purchases; consumers who sell their ration coupons in the black market; small investors who engage in gold and currency speculations; employers who circumvent the harsh labor law by concealing the number of their employees in order to avoid paying social security and unemployment taxes; shopkeepers who supply price-controlled prescription drugs openly at higher prices to desperate buyers; health providers who charge more than authorized fees in under-the-table cash receipts; petty speculators who pay a deposit toward future delivery of goods in short supply (eg, automobiles, mobile phones, computers, housing) and later sell the vouchers or delivered goods in the open market at higher prices; and a large contingent of middlemen who "facilitate" citizens' transactions with government agencies - from repossessing confiscated private properties by obtaining new rulings from bribed courts or receiving difficult loans from bribed state bank officers, to fixing a traffic ticket or paying due taxes to the municipality or the treasury free from bureaucratic hassles.

Bit players include family members who handle various domestic chores such as cooking, washing, cleaning, baby-sitting and other works without cash compensation; operators of small businesses such as computer programming, consulting, catering, and various telemarketing conducted out of their homes; skilled service providers such as physicians, engineers, accountants and architects who engage in barter exchanges with one another; fulltime workers who take a second or third job to supplement their incomes; and street peddlers of legitimate articles or suppliers of illicit goods.

Roots And Causes

In addition to the universal and familiar reasons for the existence of underground economy, there are at least seven additional factors behind the Islamic Republic's own case. History, the Shi'a traditions, state sponsorship of non-transparent activities, misguided economic policies, government-imposed socio-cultural restrictions on daily life, gender discrimination, and poor governance constitute the seven sustaining pillars.

Iran's patrimonial and non-democratic history is a prime cause. The centuries-old wall of distrust between the government and the governed literally leads the citizenry to hide its identity and activity from the state to the extent possible. The government and the ruling establishment - being regarded by their subjects as greedy, oppressive, and exploitative - give the rank-and-file a "pseudo-legitimate" cause for hiding their assets and incomes from mistrusted authorities. Taxes, too, having been initially levied on individual Iranians by the Arab conquerors of the Persian Empire as a penalty for non-conversion to Islam have been intuitively regarded ever since as unfair, and therefore perfectly justifiable to evade and avoid - even though the original rationale no longer exists, and taxes are now imposed for the use of public services.

The Shi´a traditional edicts have provided the second pretext for concealing economic activity and evading civil taxation. The constitutionally mandated Islamic foundation of Iran's government tacitly allows and even encourages the continuation of an informal economy. Devout Muslims among the bazaaris and other traditional classes tend to justify their camouflage of business transactions and non-payment of taxes to the treasury by claiming to pay their dues in Islamic taxes of zakat and Khoms directly to their religious marja' (sources of emulation) as the so-called Imam's share. Currently, huge donations from wealthy merchants to individual clerics or the religious shrines in Mashad, Qom, Shiraz, Ray, and others are seldom, if ever, documented, acknowledged, or publicized by the donors or the recipients. These donations are a kind of slush funds or cash boxes at the disposal of religious divines to be used for educational, charitable, and religious purposes as they see fit - without any control or supervision by the state. Islamic injunction against usury (reba), and the limits imposed on nationalized banks in regard to interest payments and charges have spawned a thriving informal and somewhat extra-legal credit market in the bazaar which totally escapes taxation and GDP accounting.

The Islamic Republic, under its unique and hybrid nature of governance, provides a third reason for the creation and growth of undocumented economic activity. By the authorities' own admission, the ministries of security, defense, and law enforcement have at various times set up "private" companies to carry out money-making activities which could not be divulged for reasons of state security. Other ministries (eg, oil, energy, industry, commerce, finance and others) also own and operate hundreds of adjunct "private" corporations - ostensibly to assist the parent entities in specific tasks, but mostly to evade budgetary and accounting regulations (e.g., limits on salaries, bonuses, and other perks). The balance sheets of these subsidiaries are seldom fully published. Sales by the Central Bank of Iran petrodollars in the open market frequently result in capital flights without a clear trace in the balance-of-payments statistics. Compensation in the form of free housing, official cars, expense accounts, and various funds available to high elected and appointed officials also often escape budgetary and accounting scrutiny. The rapid establishment after the revolution of parallel government and semi-public "charitable" institutions to rival and overshadow those inherited from the previous regime, has opened up untold venues for the old revolutionaries to engage in shadowy businesses. The close ideological and blood relations between the clerics and the bazaaris have resulted in the birth and growth of a myriad of private monopolies. These monopolies in production, foreign trade, and domestic distribution have all been the sources of pervasive and unrecorded wealth which economists call "economic rent."

The post-revolution adoption of wrong macro-economic policies has provided a further economic incentive for the growth of the shadow economy. As a prime example, inflexibility and inefficiency of the nationalized banking system, combined with inadequacies of a functioning money market, has led to the rise of a large-scale and resilient informal credit network in the bazaar. Reluctance on the part of the state banks to lend to the more risky small borrowers without adequate collaterals and their preference for large and virtually secure loans to state enterprises has driven petty producers and up-start young entrepreneurs to resort to informal credit sources. By one private estimate, some 20-25% of annual agricultural credit is supplied by the bazaar. As a result, while no more than 20% of total annual private sector credit came from these sources in 1978, the corresponding percentage is now privately estimated to have surpassed 40%.

Instability of government regulations, and fear of renewed confiscation of private property reminiscent of the early post-revolution years, has intensified the problem by diverting private investments into hidden activities. Continued slow growth of Iran's formal economy and persistence of unemployment in the open market have also had their share. Insufficiency of investment and relatively slow pace of growth, combined with rising population, have resulted in declining per capita income and increased poverty. Measures to deal with these scourges such as price controls, across-the-board subsidies, rationing of staples, and emergency job creation funds - have, in various measures, contributed to the size of the underground economy. Black markets in price-controlled items, smuggling to neighboring countries of subsidized consumer goods, and ration coupon sales have been the outcome. The absence of wage employment has resulted in increasing hours worked at home. Finally, a host of government levies (inequitable taxes, high tariffs, nuisance fees) as well as burdensome regulations (investment permits, business licenses, bureaucratic procedures) have pushed many legitimate businesses to avoid registration.

Imposed Islamic dress codes, dietary restrictions, harsh and inhumane penalties for alcohol consumption, gambling, dancing, dating, watching foreign TV programs and censored foreign films, or embracing other so-called Western cultural products have been the fifth driving force behind the black market for these items. As a direct response to these unenforceable restrictions, drugs of all varieties, alcoholic beverages of all kinds, playing cards, popular CDs, and other forbidden items are abundantly available on demand through a legion of underground suppliers at higher costs.

The Islamic Republic's extensive restrictions on women's legitimate lines of work have been the sixth reason. Banned from working alongside men in many professions, the female share of employment in the country's official labor force has remained about 12% - or the same percentage as in 1976 - while unofficial employment has been vastly larger. The difference reflects the growth of a very large and lucrative home-based and female-owned urban cottage industry. Workshops of less than five employees headed by women have mushroomed in urban centers and in a variety of products not being included in GDP.

Finally, the administration's inability to enforce its own restrictive laws and regulations has allowed the underground economy to grow and prosper. The prevalence of cash payments in most ordinary transactions, the absence of enforceable laws regarding proper business bookkeeping and accounting, the lack of experienced and honest staff, necessary funds, and expertise to oversee business operations, and institutionalized corruption have all allowed a large segment of the economy to escape registration, inspection, and control. Private estimates point to such staggering figures of $2-4bn in annual imports smuggling; up to $3bn a year of capital flight to foreign safe havens; some $5bn or so in illegal drug trade; over $1bn of embezzlement in state-owned banks; and a similar figure resulting from state corporate fraud. While much of this data is uncorroborated and somewhat anecdotal, there is enough officially reported evidence to confirm the large magnitude and high social costs of illicit operations.

Magnitude And Size

The underground economy has had a long history in Iran both as a legal source of finance within the bazaar as well as a vast arena for both tax dodging and unlawful activities. In the post-1979 revolution, however, a notable decline in fiscal and monetary transparency seems to have increased the scope of this sector. Yet the actual size of this market is still largely a matter of pure conjecture.

A method chosen by one of the country's own Central Bank economists relies on two general indices to figure out its approximate magnitude: the aggregate annual demand for money; and the excess of "average" family expenditures over family incomes. The rise in total liquidity is taken to indicate an expansion in the size of the underground economy on the assumption that nearly all unregistered transactions are customarily conducted in cash. Similarly, when expenditures by households perennially exceed their declared incomes without corresponding increases in their debt, a logical inference would be that the gap is filled by earnings from undeclared sources.

Both of these proxy indicators lead to a similar conclusion. Data published by Iran's Central Bank show that the ratio of liquidity to real GDP which stood at 15.8 in 1979 (when a parallel economy was probably at its lowest level) rose to 244.35 in 1991 and reached 573.3 in 2001. Needless to say, this colossal increase is not all due to the expansion of the underground economy, but probably a good indication of its possible steady rise. Periodic surveys of household budgets, published by Iran's Statistical Center, also show a sizeable gap between annual incomes and expenditures in all household categories since the revolution. The latest survey conducted in 2001 shows that incomes of the average urban household covered only 92% of its total expenditure, and the figure for the average rural household was 87%. The gap - officially shown as filled by "other sources" - indicates the part of the underground economy. Although the figure for urban families seems to have narrowed since 1991, there is some evidence that the cause may have been a forced curtailment of family expenses rather than the shrinkage of the shadow economy.

A third indicator adopted here is the rise in non-wage employment since the 1979 revolution. The last three official decennial censuses show that the shares of wage-related employment for both urban and rural workers have persistently declined between 1976 and 1996, while those of non-wage-related work in both groups have increased. These changes also point to an increase in low-productive occupations requiring little capital. By one private estimate, some 12% of the urban labor force consists of one-man shopkeepers, street peddlers, cabbies, and delivery people. The transformation also indicates a substantial increase in the share of family workers in self-employment, and a decline in the share of wages in the average urban family income.

These three proxy indicators estimate the size of Iran's underground economy to have been in the neighborhood of about 22- 25% in the early 1990s. The steady rise of the demand for money, the continued gaps between family incomes and expenditures, and the increase in non-wage employment in the last decade tend to support the privately estimated figure of 30-35%.

Overall Implications

A flourishing underground economy affects, influences, and even conditions domestic economic performance. On the negative side, in addition to depriving the treasury of its due share of tax revenues and reducing needed public investment, it crowds out private investment by widening the budget deficit— requiring increased public borrowings or deficit financing through the printing press. The larger the size of the undetected economy, the poorer would be the quality and efficiency of public services. Distortions caused by the illicit nature of some economic activities would result in misallocation of resources. Non-transparent and secretive financial transactions allow the formation of private mafias that engage in intimidation, extortion, and terrorist operations at home or abroad. By distorting the size of GDP and particularly its internal distribution, the underground economy also stifles good governance and hampers the adoption of right economic policies. And, since only a small segment of the total population reaps the benefits of unlawful activities, the sector would have an adverse effect on optimum public welfare.

On the possible plus side in Iran's case, the continuity and resilience of the informal sector may add certain flexibility to the operation of the national economy. For example, the financial independence of the bazaar credit network from the state banking system provides a needed measure of stability in the financial field during unexpected monetary crises. Furthermore, the bazaar's credit arrangements, based on interpersonal relationships and trust, may tend to reduce both information and enforcement costs. In the same vein, the informal sector may provide employment for those who cannot find jobs in the formal economy. On the whole, however, the net impact will be negative - reflecting a misuse of resources, low priority investment, a significant drag on economic development, and a strong impediment to the establishment of good governance.

http://iranvajahan.net/cgi-bin/news.pl?l=en&y=2003&m=09&d=24&a=2

[DoctorZIn]

Iran's Underground Economy

September 08, 2003
Middle East Economic Survey
By Jahangir Amuzegar

http://www.freerepublic.com/focus/news/988266/posts?page=11#11

[F14 Pilot]

'Iran's politicians not to bow to foreign pressure'

TEHRAN, Sep 24 (AFP) - Iran's supreme leader Ayatollah Ali Khamenei called on officials Wednesday not to bow to what he described as concerted foreign pressure to undermine his regime, state media reported.

In a speech to mark a national religious holiday, the all-powerful leader asserted that "the oppressors are at the zenith of their emnity to the Islamic Ummah (community), and all their vendettas are focussed on the Iranian nation."

"Today the most important thing is to preserve the Islamic Republic and Islamic identity, and not to be influenced by the enemies' threats and intimidation," he was quoted as telling a gathering of top officials, including President Mohammad Khatami and powerful former president Akbar
Hashemi Rafsanjani.

"World bullies are trying to demolish the role model introduced by the Islamic republic to the world," Khamenei warned, adding that "no power in the world can break the Iranian nation's will."

Iran is under mounting international pressure after the UN's nuclear watchdog, the International Atomic Energy Agency (IAEA), gave it republic until the end of next month to come clean on its suspect nuclear programme.

The IAEA wants Iran to open up to tougher inspections, provoking many hardliners to advocate pulling out of the nuclear Non-Proliferation Treaty (NPT). Khamenei, who has the final say on all matters of state, has yet to state his position on the nuclear stand-off.

http://www.iranmania.com/News/ArticleView/Default.asp?NewsCode=18246&NewsKind=Current%20Affairs

[F14 Pilot]

Iran: OPEC to cut oil production quotas


Oil prices surge on news of OPEC's decision to cut its production quotas as Iraq will remain member of cartel.


VIENNA - The OPEC oil cartel plans to cut its production quotas, Iranian Oil Minister Bijan Namdar Zanghaneh said Wednesday after talks with fellow ministers, sending oil prices surging on world markets.

"Yes," he told reporters at OPEC's headquarters when asked whether the grouping was going to change its official output ceiling of 25.4 million barrels per day at a formal conference scheduled for 3:00 pm (13H00 GMT).

When asked whether it would be a cut, he nodded his head.

If confirmed, such a decision would come as a surprise to oil market traders, who had widely expected the grouping to leave output levels unchanged in the fourth quarter of the year.

Oil prices shot higher in London on news of the planned reduction.

Benchmark Brent North Sea crude oil for November delivery rallied 83 cents a barrel to 26.35 dollars within minutes of the news.

Meanwhile, Iraqi interim Oil Minister Ibrahim Bahr al-Ulum said Wednesday Iraq will remain a member of the OPEC oil cartel while at the same time significantly boosting output by the end of this decade.

"Iraq is a founding member of OPEC. It will stay and remain in OPEC," he told reporters through an interpreter at the first meeting of the 11-member cartel attended by Iraq since the US-led war to topple Saddam Hussein.

Iraq also hoped to boost its oil output to six million barrels per day (bpd) by the end of this decade, he added at a press conference at the cartel's headquarters.

"We intend to develop fast our huge resources with the help of the oil industry and other investors."

Iraq was producing up to 2.8 million bpd in February before the US-led war began.

But Iraq was only exporting 900,000 bpd at the end of August, officials in Baghdad said.

OPEC is keen to see Iraq, sitting atop the world's second-biggest known crude oil reserves, remain in the fold of the grouping, which produces about one third of the world's oil.

Bahr al-Ulum arrived Tuesday in Vienna at the invitation of OPEC President Abdallah ben Hamad Al-Attiyah, who is also Qatar's energy minister.

The invitation followed a decision by the 22-member Arab League on September 9 to allow the Governing Council in Baghdad to take the seat of Iraq, boosting efforts by the US-sponsored authorities to win international credibility.

http://www.middle-east-online.com/english/?id=7122

[Ragtime Cowgirl]

Thanks for the daily IRAN LIVE THREAD, DoctorZ. Pan, bump!

Pinging to Doctor Zin's daily thread.

 

From DoctorZ's #4:

 

Amir Taheri: Using international precedents to find a system that suits Iraq

Special to Gulf News | 24-09-2003

 

(Re the new 'legitimacy' of the Iraqi Council:)

...The most obvious reason is that all those who opposed the liberation of Iraq are now convinced that, despite current problems, there is no possibility either of a return of the Baathist regime or of a disintegration of the country.

Iraq may have a couple of hard years ahead. But it has all that is needed to become a success story in the medium and longer term. No power interested in the Middle East could afford to stay out of Iraq and sulk.

~~~

 

We won.

 

 

 Thanks, Tonkin!

If you want on or off my Pro-Coalition ping list, please Freepmail me. Warning: it is a high volume ping list on good days. (Most days are good days).

[Vets_Husband_and_Wife]

BUMP!!

[blackie]

We Won ~ Bump!

[Alamo-Girl]

Bump!

[F14 Pilot]

Upgrade or Downgrade? Iran's Options vis-a-vis the Nuclear Deadline

By Kaveh L. Afrasiabi, Ph.D

A clue to the contradictions of Iranian diplomacy; yesterday just as Iran's envoy to the UN atomic agency was informing the world of Iran's intention to reduce its cooperation, at the UN a different cord was being struck by the Foreign Minister assuring the world's leaders that "Iran's cooperation with the IAEA is active, upgrading and transparent." The question is, of course, which side will have the upper hands by the end of October set as the deadline by the IAEA for Iran to prove its nuclear intentions?

For now, at least, the seemingly contradictory reaction by Iran is neither irrational nor counter-productive, given the complex requirements of a fluid response to a "quasi crisis," to quote another foreign minister official, generated by the September 12th resolution of the Governing Board of the IAEA. Yet, this may well degenerate into a full-scale crisis if the combined responses of Iran do not measure up to a prudent policy satisfying the demand levels touching on power, prestige, sovereignty, and other key variables of Iranian foreign policy and if, instead, reflect a schizoid, bifurcated approach devoid of coherence and internal unity.

By all indications, part of the problem stems from Iran's domestic politics featuring divergent nuclear aspirations, with the moderates keen on limiting Iran to peaceful nuclear technology and some of their hard-line opponents seeking to telescope the nuclear buildup to weapons technology, citing regional proliferation and the national security needs of Iran, such as with respect to the value of a nuclear deterrence of the U.S. power breathing monster-like at Iran's neck at all fronts. To his credit, President Khatami has taken a lead in reiterating Iran's peaceful intentions with the nuclear know-how and in disavowing the nuclear weapons as "amoral." The pro-Khatami factions including in the Majlis have similarly called on the government to sign the IAEA's Additional Protocol which calls for more intrusive inspections. They are opposed, however, by an array of hawkish voices who have demanded Iran's withdrawal from the Non-Proliferation Treaty and or significant reduction in cooperation with the IAEA.

While the Iranian hawks' prescription for action has been dismissed by certain pundits as excessive or illogical, it is not without legitimacy however, notwithstanding the importance of standing up to the U.S.'s manipulation of the IAEA and the nuclear double standards that ignores proliferation in other parts of the Middle East and seeks to deprive Iran of even peaceful nuclear reactors. Indeed, what a sad spectacle that while the Bush Administration has aggressively pursued the proliferation of a new generation of nuclear weapons, contrary to the U.S.'s NPT commitments, at the UN today President Bush could self-deludingly call on the UN "to criminalize the proliferation of weapons of mass destruction" through a new Security Council resolution! But, of course, this is not an administration even slightly bothered by its accumulation of distorted facts and "a disgraceful record" to paraphrase a recent blistering criticism by the Massachusetts senator, Ted Kennedy, who called Bush's Iraq policy "adrift" and accused Bush of squandering over one billion dollars a month in bribing other countries to contribute troops to Iraq.

Hence, short of compromising its power and prestige, Iran cannot succumb to the IAEA's pressure, for to do so would set a negative light on Iran as a weak country allowing itself to be subjected to superpower manipulation of a UN agency. A dosage of anti-IAEA reaction is therefore called for and absolutely necessary, in the light of the IAEA's own admission that Iran as of late had increased its cooperation with the Agency. A concerted effort to expose the incoherence of the IAEA's Iran approach and the politics behind it is therefore necessary, which must be in tandem with the carrot approach of continuing negotiations with the IAEA officials and the use of third party intermediaries to reach a compromise.

Doubtless, the danger of not reaching a compromise is that in November the IAEA may follow-up with another resolution declaring Iran to be in material breach of its NPT obligations and turn over the matter to the UN Security Council. Here, it is important to bear in mind that in the case of North Korea and its decision to exit the NPT, the Security Council did not impose any sanctions and limited itself to a regretful rhetoric. It is not far-fetched to think that similarly in Iran's case, the Security Council may fall short of a collective sanctions regime if Russia and France do not follow the U.S.'s lead. Even Great Britain may be hesitant in pushing for an aggressive anti-Iran initiative at the Security Council for a variety of reasons including the following: (a) this may further jeopardize London's carefully-cultivated ties with Iran over the past several years and represent a setback to Tony Blair's embattled government whose Middle East policy is under serious scrutiny at home and abroad; (b) given the absence of weapons of mass destruction in Iraq, the world is unwilling to accommodate Bush-Blair against Iran short of solid evidence of proliferation; and (c) already several British politicians including from within the government are openly accusing Blair of catering to Israel's Sharon.

Consequently, it is far from clear that a mixed, intransigent yet accommodationist reaction by Iran, which falls short of appeasing the IAEA's demands and yet shows signs of greater nuclear transparency, is bound to fail. The political moderates of Iran have adopted a one-dimensional reaction that is far too conciliatory and below the radar of Iran's national interests. They fail to see the shortcomings of their initial reaction, typified by the Majlis Deputy from Tehran, Elaheh Koolaee, a dear friend of this author, who on September 13th implicitly blamed the government for the IAEA resolution by not signing the additional protocol. Conspicuously absent in MP Koolaee's statements were any criticisms of the IAEA and the U.S.'s intense lobbying of its governing board prior to their September meeting.

On the other hand, the problem with the hard-liners' reaction is that they often seem unable to look ahead and calculate the various collateral damage of their hawkish position with respect to, among others, future of Russia-Iran nuclear cooperation, and economic trade with the European Union (EU), notwithstanding the Russian's postponement of export of nuclear fuel for Iran's Bushehr power plant and the EU's explicit linkage of Iran's nuclear transparency with its trade with Iran. A purely hawkish response is anathema, therefore, to Iran's ties to both Russia as well as the EU, and a middle ground must be surveyed which can somehow patch up the difference with the IAEA without introducing serious compromises of Iran's national security interests.

It is noteworthy that the Bush Administration is actively seeking to exploit the nuclear row to its advantage, seeing how in his UN speech Mr. Bush referred to "outlaw states" seeking weapons of mass destruction and the need to keep these weapons "out of the hands of our common enemies." As a prelude to his upcoming summit with Russia's Putin, President Bush is clearly trying to paint (a nuclear) Iran as a potential threat to Russia, just as his aides have recently emphasized the threat of Iran's missiles "reaching Europe."

Defiantly, however, Iran has escalated the "quasi crisis" by displaying its modern weapons including its Shahab long-range missiles, vesting its hope on the role of hard power in softening the emerging tough stance of Europe, Israel, and others vis-a-vis Iran.

This is an apt strategy that is in full correspondence with the dictates of national security interests and likely important as background factors in the current discussions with the European Union and its constituent member states, who need to be reminded of Iran's legitimate grievance that its constructive role in Afghanistan and Iraq has gone under-appreciated and that, as a result, the balance may soon tip in favor of the hard-liners in Iran advising a more belligerent, even bellicose, policy in the region; certainly, so far Iran has behaved cautiously and responsibly which can no longer be taken for granted, as Iran may well revert to a hawkish spoiler role in both Iraq and Afghanistan, namely, to deepen the quagmire for the U.S. one way or another.

The spoiler role of Iran is deeply connected to the question of Iran-U.S. relations currently experiencing one of its darkest chapters since the 1979 revolution. There are serious limitations on the Bush Administration with respect to an aggressive anti-Iran policy by this Administration, which, in turn, provide certain leeway to Iran's foreign policymakers in devising their Iraq, and U.S., policies. Indeed, how far is the Bush Administration willing to go in order to prevent Iran's alleged nuclear proliferation? Is it willing to follow Israel's push for a preemptive strike on Iran at a time when even the U.N. Secretary General has openly questioned the doctrine of "preemption?" And hasn't this Administration undermined the rule of international law more than any other U.S. president in recent memory?

The limits of U.S.'s policy toward Iran cannot be overlooked, some of which are superimposed by Iran's own regional clout, such as its spheres of influence inside Iraq and Afghanistan, nor should even the Russians ever overlook the fact that they have much benefited from Islamic Iran's status quo role in Central Asia and even in Russia's own Islamic enclaves plagued with a growing problem of Islamic insurgency. Surely Iran has no intention of appeasing the U.S.'s wish of persuading Russia that Iran represents a "common enemy," but one cannot be indifferent in Iran to Russia's occasional proclivity to bargain with the U.S. over Iran. Either cooperation with Iran is of strategic value and interest to Russia, as repeatedly admitted to by Putin and his men, or not, and if it is, then Iran has every expectation that Russia fulfills its prior nuclear commitments to Iran, above all, the timely completion of the Bushehr power plant the signing of the accord on the return of spent nuclear fuel to Russia.

What must Iran do then? Here are some suggestions:

1. For now, Iran must pursue the present course of action which is best described as a mixed reaction, ranging from outright defiance to threat of exiting the NPT to signs of conciliation and compromise. Yet, any excessive compromise, such as pledging to sign the additional protocol without forcing the IAEA to backtrack on its deadline is contrary to Iran's national interests. It takes two to tango, as the saying goes, and the EU and the world community should clearly understand Iran's legitimate misgivings about the latest IAEA resolution on Iran.

2. Article 22 of the IAEA-Iran Agreement calls for an "arbitral tribunal" in times of dispute between the two sides, and this avenue should be explored in order to reach a compromised solution.

3. Depending on the degree and scope of Iran's alleged proliferation, i.e., if Iran is indeed in the late stage of nuclear weapons build up as claimed by a recent LA Times report (June 4, 2003), then Iran may have no option but to turn a blind eye to IAEA's pressure, for to do so would be tantamount to squandering untold sum of money, of the nation's wealth, spent on the nuclear technology, perhaps amounting to several billions of dollars. As a result, if the outside world is genuinely interested in steering Iran away from the nuclear buildup, an economic quid pro quo is necessary, perhaps by the easing or lifting of the U.S.'s economic sanctions on Iran and assurances of technical support by the IAEA to Iran's peaceful nuclear program.

4. A more active European policy is needed, and this is where President Khatami can be instrumental by, among others, use of telephone diplomacy and even a trip, e.g., he could take up Switzerland's long-standing invitation and once there reiterate Iran's nuclear policy.

5. Assuming safely that Iran is currently at a critical threshold on the verge of crossing the cross-roads to nuclear weapons or peaceful technology, Iran can still reroute its energy, sign the additional protocol, upgrade its cooperation with the IAEA and show greater nuclear transparency, and thus neutralize or minimize the collateral damage to its foreign policy interests. Yet, as stated above, there are serious side-effects, with respect to the external perception of Iran's power as well as the domestic calculation of the damage to Iran's prestige if perceived as accommodating itself to U.S. and Israel's machinations behind the IAEA's deadline, slowing the bridge to cooperation. For now, that is between now and the October deadline, the two halves of this 'London bridge' better continue moving in contrary directions.

http://www.payvand.com/news/03/sep/1148.html

[blackie]

Bump!