Iran: A Humiliating Defeat


December 23, 2014: According to Iranian media, and the talk on the street, Iran is winning the conflict with the rest of the world over their nuclear program. The sanctions are being reduced and the next round of talks on the Iranian nuclear program are seven months away. The countries (China, France, Germany, Russia, the Great Britain and the United States) handling the anti-nuclear negotiations with Iran cannot agree on a strategy and are unable to get stronger sanctions imposed. But all this is an empty victory for Iran because what hurts Iran the most is the plunging price of oil. It’s down by half (from $110 to $55 a barrel) since 2013. Iran had long depended on $100 a barrel oil for their budget planning. That was recently cut to $70 and some officials admit that planners are now looking at what will happen if it gets down to $40. Such an event would be disastrous and every Iranian would feel the loss personally. Nearly half the government income comes from oil (which normally accounts for 25 percent of GDP). Iran is looking at serious (over ten percent) GDP shrinkage if low oil prices continue. Naturally the government accuses the Israel, the U.S. and the West in general of orchestrating the falling oil price. The Western economies benefit from cheaper oil and if anyone is “responsible” for the falling oil price it is the major OPEC (the producer cartel) producers who have not cut production. The main player here is Saudi Arabia, who produces a third of OPEC oil (the Arab Gulf oil states account for over half). Despite their temporary alliance against ISIL, Iran still considers itself at war with Saudi Arabia over who should be the leader of the Islamic world and the custodian of the most holy sites (Mecca and Medina) for all Moslems. Many Iranian leaders see Saudi Arabia as the major force behind the plunging oil price, but have moderated criticism of the Arabs and more loudly blamed Israel and the West. The Saudis are not officially using their ability to manipulate the price of oil, but unofficially the Saudis are quite pleased with how their success at keeping the price of oil low is causing much pain to their long-time rival across the Gulf. It’s rare for the Iranians to suffer a defeat at the hands of Arabs and Arabs in general are enjoying it while they can.

Despite the oil victory Sunni Arabs throughout the region remain concerned about the threat from Iran. For example over the last few years Iranian politicians have increasingly mentioned in public statements that Iran considers Bahrain the 14th province of Iran. That's because, well, it isn't called the "Persian" Gulf for nothing (although since all the oil money showed up the Arabs have been trying to popularize the term "Arabian Gulf," with mixed success). There have been ethnic Iranian communities in Bahrain for centuries, along with a Shia Arab majority, and Iran had a formal claim on the island until 1969 when the claim was dropped, in order to improve relations with Arab neighbors. Iran has always been an empire and still is (only half the population is ethnic Iranian). The way this works you always have a sense of "Greater Iran" which includes, at the least, claims on any nearby areas containing ethnic Iranians or people of similar religion. Hitler used this concept to guide his strategy during World War II. Bahrainis (both Sunni and Shia) get very upset when these claims are periodically revived. The local Shia want an independent Bahrain run by the Shia majority. The Iranian government officially denounces such claims on Bahrain but apparently many Iranians have not forgotten. Arabs are not very happy about that and have responded by pointing out that Iran was Sunni until 500 years ago and were forced to convert, on pain of death, by a Shia emperor (who killed about a million of his subjects in the process). Saudi Arabia is trying, with some success, to organize Arab resistance to Iranian expansionist moves. Iran has responded by encouraging the Shia minorities on the west side of the Gulf to demonstrate their unhappiness with their minority status. Thus appearance of Saudi and UAE troops in Bahrain. The Iranian claim is based on Iranian control of Bahrain for a few years during the 18th century. After that incident, Bahrain, and most of the other Arab Gulf States, sought protection from Britain. During World War II the U.S. joined with Britain in offering the Arab states of the Persian Gulf protection from Iranian aggression. Iran has always resented this, believing themselves to be the regional superpower and the final arbiter of who is sovereign and who is not. Arabs see Iran continuing to throw its traditional weight around, despite the defeat in the current oil war. A current example of the Iranian threat can be seen in Yemen, where a Shia tribal rebellion in north finally succeeded in 2014 to take control of the national government. Although a minority in Yemen, the Shia are more aggressive and face a divided Sunni community. Iran has always helped the Yemeni Shia, but never in a big way. This annoys Arabs a lot because admitting that the Yemeni Shia are simply tougher, better organized and more aggressive than the Sunni majority in Yemen is difficult to accept. Traditional thinking among Sunnis is that Shia are scum and a bunch of unreliable losers.

Sunni Arabs, especially Saudi Arabia, also believe that the West is backing away from its effort to ensure that Iran does not get nuclear weapons. The Sunni Arabs see their control of the world oil price as their most effective weapon against the Iranian threat.

The government also revealed successful talks with former ally Hamas. Although they control Gaza and recently survived a 50 day war with Israel Hamas continues to have problem with an Iranian supported rival in Gaza. Islamic terrorist group Islamic Jihad is an Iran backed terror group that has long been opposed to Hamas rule in Gaza.  Islamic Jihad has been threatening armed rebellion against Hamas because of perceived Hamas treason against Islam. Islamic Jihad gets away with this because it continues to take aid, and instructions, from Iran. Islamic Jihad takes credit for rocket attacks that violate Hamas ceasefire agreements with Israel. This aggression is believed Iran inspired and meant to goad Israel into attacking Gaza again. Such an attack would force Hamas to try to defend Gaza which would cause heavy Hamas casualties and make it easier for Islamic Jihad to oust Hamas by force. Many in Hamas see this as an effort by Iran to weaken Hamas, because Hamas began openly supporting the Syrian rebels in late 2013 and Iran was not pleased. That cost Hamas over a million dollars a month in Iranian cash and caused a lot of internal dissent. Some Hamas men have gone to Syria to fight against the rebels and Hamas was trying to work out some kind of deal that would allow them to maintain support from both Iran and the Sunni Arab oil states that fund and arm many of the Syrian rebels. Meanwhile Israel became so concerned about the continued activity of Islamic terrorists inside Gaza that senior Israeli military leaders were openly calling for Israel to resume control of Gaza. That would involve a lot of combat and there was never a lot of support for going that far, at least not yet. In the end there was a 50 day war with Hamas in July that caused such heavy damage that Hamas believes it can resume taking aid from Iran without losing the even larger amounts of aid it gets from Gulf oil states.

Iran still getting help from Russia in evading the banking sanctions. For example Russia has agreed to use Russian and Iranian currency for food imports and exports between the two nations. This gets around the banking sanctions and is, in effect barter between the two nations.

Pro-Iran businessmen in Syria and their counterparts in Iran agree (usually off the record) that the plunging oil price threatens the generous and critical Iranian financial support for the beleaguered Assad dictatorship in Syria. Even with continued Iranian military support, Assad really, really depends on the financial support to maintain the loyalty of the few (less than a third) of Syrians that support him. Because of that, and the damage ISIL (Islamic State in Iraq and the Levant has done to the rebel alliance (which has been fighting a civil war with itself for the last year) the war has been going better for the Assads lately.  In southern and central Syria (south and north of Damascus), pro Assad forces have actually been regaining ground. Along the coast the army and pro-government militias have been able to expel rebels and form a continuous Assad controlled area reaching into central Syria and the capital (Damascus). Thanks to Iranian trainers, the pro-government militias are better trained and more effective as are the soldiers. All of these men are paid regularly and most see a better future than do many of the rebel fighters. The army is about half its pre-war strength of 300,000 but the remaining troops are loyal and most have combat experience. The army is expanding back to its pre-war strength. This is thanks to cash from Iran, because the Syrian economy is wrecked. But that Iranian cash has been reduced recently as the plunging price of oil. This has forced Iran to cut its cash support for the Syrian economy. Thus while the Assad forces can provide some security, they are increasingly unable to provide much prosperity and even necessities are not arriving as frequently. What remains of the Syrian economy is in Assad controlled areas where there is an unemployment rate of over 50 percent and the size of government handouts is a matter of life or death. Iran does not want its Syrian ally to be destroyed but subsidizing the Assad controlled population costs more than Iran can afford right now. Unless the price of oil moves sharply north and the economic sanctions on Iran (because of the Iranian nuclear program) are reduced the hard times will be getting harder in Syria for Assad supporters. Despite that living in Assad controlled territory is still a pretty good deal compared to what life is like in ISIL or al Nusra controlled areas.  

Looking east Iran has a more favorable, but still complicated, situation. In its continuing effort to gain more influence in Afghanistan Iran recently agreed to extend (for six months) the visas of 450,000 Afghan refugees in Iran. There are over two million of these refugees in Iran, some of them from the 1980s war with the Russians. Most Iranians want the refugees gone as the refugee camps are a base (and source) for Afghan drug smugglers and other criminals. Much of the drug problem in Iran is because of Afghan drug smugglers and dealers. Iran has over two million drug addicts as a result. The Afghan refugees complain of persecution and discrimination, but still find it preferable to live in Iran rather than in Afghanistan. Iran takes advantage of this by offering free education in Iran and there are currently over 300,000 Afghans attending Iranian schools. All of the subjects are taught with a very pro-Iran vibe. Despite this goodwill gesture Iran has also banned Afghan refugees from nine provinces (Mazandaran, Gilan, Ardbil, East Azarbaijan, Kurdistan, Sistan and Baloochistan, and Gulistan) and may extend the ban. This is believed related to illegal activities so popular with Afghan refugees.

December 20, 2014: The government announced that it would send troops into Iraq if the Shia holy places in southern Iraq were threatened by ISIL or any other anti-Shia group. This announcement was no surprise to anyone in the region, as the Iranians have always been touchy about the security of those sites. Iran tends to make such threats this time of year because it is when millions (a record 17 million this year) of Shia pilgrims come to these sites to celebrate the 40 day long Arbaeen festival. Over a million Iranians entered Iraq recently to do so. Iraq does not require visas for this, it just lets the pious Iranian Shia in. Iraqi Shia have also proved pretty competent at protecting these sites and the visitors since the Sunni dictatorship was overthrown in 2003. There have been some successful attacks, but fewer and fewer. ISIL has made threats but so far has not been able to deliver any spectacular damage. The recent warning points out that if ISIL gets lucky against the Shia shrines, Iran will come in and make them regret it. As fanatic as ISIL is a threat like that has weight. For thousands of years the worst nightmare for local Arabs was angry Iranian troops showing up.

December 11, 2014: Iranian media reported that recent Israeli air strikes in Syria did indeed destroy some Iranian made items meant for Hezbollah. This included Iranian UAVs and rockets. These items are flown into Damascus and storied in local warehouses until they can be trucked to Hezbollah storage bunkers in southern Lebanon. This has to be done carefully because in the past Israeli warplanes have destroyed these trucks.

December 10, 2014: The government revealed that they had arrested twelve men who had embezzled $4.5 billion between 2009 and 2013. The government said most of this money had been recovered. This was all part of a corruption scheme involving government officials and military contracts. These arrests are in response to the new (since August 2013) governments’ pledge to move against the rampant corruption in the government.  

December 9, 2014: Government officials from Iran, Syria and Iraq men in Iran to coordinate their joint activities against ISIL. The three countries said they would continue joint operations against ISIL. The war against ISIL in Iraq is going well, with Kurdish militia advancing on Mosul from the north while Iranian trained (and sometimes led) Iraqi troops advance from the south. Mosul residents report panic among the ISIL garrison in the city with some ISIL administrators fleeing.

The six oil-rich members of the GCC (Gulf Cooperation Council) have agreed to form a joint naval force (based in Bahrain) to patrol the Gulf and protect Arab states from the Iranian threat. A joint police force is also being formed to help deal with threats like ISIL, smuggling (especially drugs and money laundering) and cyber-crime.

December 7, 2014: Iran admitted that its warplanes had hit ISIL targets near the Iranian border and had done so without consulting the Americans, but at the request of the Iraqi government. The U.S. and Iran do have some “understandings” one of them being that the U.S. will not automatically attack Iranian military aircraft that enter Iraq. The U.S. also stays away from areas near the Iranian border (eastern Diyala province northeast of Baghdad as well as border areas south of Baghdad) where Iranian trainers and advisors are working with Iraqi troops (some soldiers and a lot of Shia militias). These Iranian supported (and often led) troops have played a major role in halting continued ISIL moves to get into Baghdad. The fighting is bitter and prisoners taken by both sides are often executed. The Sunni Islamic terrorists have killed thousands of Shia women and children in the last decade and Shia militiamen are not in a merciful mood. But then ISIL also continues to kill Shia, armed or unarmed. The Iranian led forces in Diyala have been successful in taking back areas ISIL has held for months.

December 3, 2014: In the Yemeni capital an AQAP suicide car bomber attacked the home of the Iranian ambassador (who was not at home) killing three and wounding 17 guards and civilians outside the residence. Many Sunni Yemenis hold Iran responsible for the success of Shia rebels in Yemen. 




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