June 11, 2012: Iran continues to defy the increasingly restrictive international economic sanctions placed on it. The sanctions have prevented Iran from getting some specialized or particularly large equipment, which has made it impossible to keep its oil production facilities up-to-date. But for most gear, the sanctions just increase the price and time required to obtain items. But as the sanctions keep piling on, especially those that limit access to the international banking system, the economic damage becomes more severe.

Despite most of its major customers cutting oil orders 50 percent or more, other oil producers (especially Saudi Arabia and Russia) have been able to make up the slack and keep oil prices down. This means Iran sells less oil and has to offer discounts from already low prices. If this keeps up Iran will be suffering severe cash shortages by the end of the year.

In a long term effort to find other ways to sell its oil, the government has made arrangements to export electricity to Iraq, Syria, and Lebanon. All three nations have power shortages and Iran can use oil it cannot export to produce more electricity. But exports to Syria and Lebanon are dependent on Syria suppressing the year-long uprising against the pro-Iranian dictatorship. Iran has been helping the Assad family, which has controlled Syria since the 1960s, but this aid (armed advisors, weapons, equipment, and suggestions on how to suppress unrest) has not, so far, managed to put down the rebellion. Iran is determined to keep its ally Syria loyal but that is proving difficult as most Syrians are Sunni Arabs and are very angry at their Shia rulers and non-Arab Iran.

In addition to sanctions, Iran now finds itself under widespread attack by major Cyber War weapons. The latest one is Flame, and it apparently grabbed large quantities of secrets in Iran and is apparently still at work. In response to this, last year Iran established a special military unit (containing a lot of civilian experts) to defend the country against Cyber War attacks. At the same time the Iranians are combing the world seeking skilled, and mercenary, hackers willing to work for them. Iran sees the Cyber War threat from the U.S. and Israel as extremely serious and is recruiting as many hired guns as they can. This is risky, as most of these guys will not be working in Iran and this makes it possible for American or Israeli agents to infiltrate this mercenary Cyber War militia. This could all get very interesting.

Before Flame there was Stuxnet, Duqu, and several other Internet based weapons unleashed on Iran in the last few years. These are only the ones Iran knows about. It gets worse, as the U.S. and Israel have admitted they are behind this Cyber War effort, the first such operation to be undertaken. These programs are true Cyber War weapons, not the much simpler and less capable stuff criminal hackers use to plunder or take over PCs.

Iran is now accused of smuggling weapons to Syria using passenger planes. All of Syria's neighbors have banned Iranian arms shipments, via ground or air, to Syria. Iran denied the accusations and no one has blocked Iranian passenger aircraft from passing through. Shipments by sea are subject to interception by NATO warships, and this has already intercepted several arms smuggling efforts.

One area where Iran has been very helpful to Syria is in offering practical ways to get around sanctions. Iran has been dealing with sanctions for decades, Syria has not, so Iran has lots of useful tips and connections to help Syria cope with barriers to importing whatever it wants.

This assistance to the Syrian dictatorship has further poisoned Iranian relations with the Arab world by adding yet another dispute. Aside from the ancient theological disputes (which have Shia and Sunni Moslems calling each other heretics), there are some more practical items. For example, the United Arab Emirates (UAE) persists in disputing possession of three islands (Greater Tunb, Lesser Tunb, and Abu Musa) in the Persian Gulf, which Iran seized by force in 1971, and refuses to give back. Iran ignores the fact that Arabs live on the islands and would rather be ruled by Arabs. A few percent of Iranians are Arabs and they are not treated well. This annoys Arabs in general, but also makes it clear that Iran does not fear Arabs and continues to strive for domination of the Moslem world. This, most Arabs see as blasphemous because Iran is run by Shia, a Moslem sect considered heretical by many Sunni clerics. Some 80 percent of Moslems are Sunni, and the Arabs running Saudi Arabia are extremely Sunni. Thu,s by making some provocative statements about the disputed islands, a media storm is generated in the Arab world, blocking out discussion of anything else Iran is doing, for a while anyway. 

Many Iranian clericals have long talked, quite openly, about how Iran should be running the Islamic holy places, not Saudi Arabia. This sort of talk does not go down well with the Saudis, who see an Iranian government conspiracy to cause trouble during the Haj (the pilgrimage to Mecca), to make the Saudis look bad.

Arabs do not trust and, more importantly, are afraid of Iran. The number of disputes between Iran and the Arab world has been increasing, which accounts for the huge increase in Arab Gulf states arms purchases, secret cooperation with Israel, and closer military ties with the United States and the West in general. Although Arabs consider Iran scary, they do not see the Iranians as invincible. Three decades of religious dictatorship has weakened Iran economically and militarily. Iran has always been hostile towards its Arab neighbors but current Iranian threats are seen as hollow, although not entirely harmless. The threat would become far more credible if Iran had nuclear weapons. The Iranians have had their way with the Arabs for thousands of years, in only a few instances have the Arabs gained the upper hand. Thus wise Arab leaders deal with Iran very carefully.

An example of Iranian effectiveness can be seen in their relationships with Iraq and Afghanistan. Before September 11, 2001, both nations were run by governments very hostile to Iran. Iraq, then ruled by Saddam Hussein, had invaded Iran in 1980, and that war ended in a bloody draw eight years later. The hatred and hostility remained. Afghanistan was controlled by Sunni fanatics (the Taliban) who were murdering thousands of Shia Afghans and allowing the export of opium and heroin to Iran.  By 2003, the U.S. had deposed the Taliban and Saddam, allowing Iran to develop friendlier relations with Iraq and Afghanistan. Iran used bribery, trade deals, and economic investment, plus its spies and rabble rousers (the terrorist friendly Quds Force) to heavily influence how Iraq and Afghanistan are run. This irritates the U.S. and many other neighboring states (especially the Arabs and Pakistan). But this is how Iran has, for thousands of years, dominated its neighbors. Old habits, and skills, do not disappear easily.

Iran continues to stonewall UN (and world) efforts to halt the Iranian nuclear weapons program. Officially, Iran denies such a program exists. But inside Iran, and according to many foreign intelligence agencies, the program is real. The evidence keeps building.