The new economic sanctions have made Turkey a vital ally, because the Turkish government has told Turkish companies that the government would back them against American financial sanctions if the Turkish firms supplied gasoline (petrol) to Iran. The new sanctions bring the threat of American officials cutting off access to the international banking system for those who trade with Iran. This threat is taken seriously by major firms, who know the extent of American power over the international banking system. But smaller players, like the people running the Turkish government, are willing to take a chance, by calling the bluff of the Americans. That appears to be a bad bet, because the U.S. is fed up with Turkey's Islamic conservative government and its pro-terrorist rhetoric, and actions. The U.S. is threatening to cut weapons sales to Turkey. Actually, the U.S. government is simply pointing out that Israel is more popular in the U.S. than Turkey, and there is enough anti-Turk feelings in Congress to prevent any new arms sales to Turkey. This doesn't really bother the Turks, who can get weapons elsewhere. But if their thriving economy starts having banking problems, the robust relationships with Iran might start to shrivel.
The bank battle is one of the more serious conflicts Iran has faced in some time. Without the ability to pay for legal, and illegal, imports, Iran will see its ramshackle economy continue its decline at an even more rapid rate. Iranians are already feeling the effects, with vehicle fuel costing 25 percent more, and an increasing number of items either not available, or much more expensive. The smugglers are thriving, but their fees mean higher prices, and irregular supply.
The government is coming down harder on popular reform leaders. Seven are now awaiting execution. It's getting to the point where the government is executing more reformers than drug smugglers. The war against drug smugglers have been going on for over a decade, with hundreds of smugglers and police getting killed or wounded on the Afghan border each year, and thousands of people arrested (and several hundred executed). But now the government sees reform minded Iranians as a greater threat than those who are supplying over three million Iranian drug addicts.
Iranian leaders are increasingly quarrelling with each other in public. President Mahmoud Ahmadinejad leads a coalition of economic reformers, and is opposed by more conservative, and corrupt, clerics and officials. Ahmadinejad's opponents are angry at the growing popularity of the president. Ahmadinejad knows how to exploit public opinion, and uses an endless supply of anti-West and anti-corruption quips to do so. Ahmadinejad also knows how to play up Iran's nuclear energy/weapons programs, which are very popular with Iranians. Supreme Leader Ali Khamenei sees Ahmadinejad as a threat to the ultimate control the clergy have over the country (via the Council of Guardians, a self-perpetuating group of clerics who choose the supreme leader and can veto any government decision). The corrupt, and often politically inept clergy, are increasingly hated, and blamed for the sorry state of the economy. While Ahmadinejad has support for his anti-corruption efforts, he is also blamed for a lot of the economic chaos in the country. This is believed to be the cause of the bomb attack against him on August 3rd (although more cynical observers see the attack as the first of many attempts by corrupt clerics to eliminate a pest and potential threat).
August 15, 2010: Azerbaijan has apparently conducted a quiet prisoner swap with Iran, by releasing a dozen or more Iranians (and possibly two Lebanese) jailed for attempting to blow up the Israeli embassy. Iran released an Azeri scientist jailed for espionage and two Azeri diplomats jailed for drug smuggling.
August 14, 2010: Japanese car maker Toyota has halted shipments of vehicle parts to Iran, in response to the new sanctions. Iran can still get parts, but with a smugglers surcharge of 25 percent or more. The new round of sanctions are a bonanza for smugglers in neighboring Turkmenistan, Azerbaijan, Afghanistan, Pakistan, Turkey and Iraq.
August 13, 2010: The U.S. issued new regulation that make it very clear that any firm dealing with Iran, in violation of the new, much stricter, sanctions, would be denied access to any financial services in the United States, or controlled by a U.S. firm. Since the U.S. banks are at the core of the international banking system, this makes dealing with Iran more trouble than it's worth for most firms. The U.S. has also persuaded Gulf countries, especially Kuwait and the UAE, to block Iranian attempts to set up new banks on the west coast of the Gulf in an attempt to get around the banking sanctions. In return, these two nations are being given additional assurances of American assistance in fending off Iranian aggression. Kuwait, for example, recently sought to buy another 209 Patriot anti-aircraft missiles. This request is being expedited.
August 9, 2010: Iran denies any involvement in a spy ring recently busted up by Kuwaiti police. Seven people were arrested, including three Iranians (plus a Kuwaiti, a Syrian and two stateless). The seven were recently indicted, after being arrested three months ago.
August 8, 2010: Iran revealed four more 120 ton, locally made, mini-subs, making eleven of these small subs in service. These were based on a North Korean design, which was, in turn, based on a Yugoslavian design.