The United Arab Emirates (UAE) is escalating its dispute with Iran over possession of three islands (Greater Tunb, Lesser Tunb and Abu Musa) in the Persian Gulf. Iran seized them from the UAE in 1971, and refuses to give them back. Despite this dispute, one of the Emirates, Dubai, has no oil, and has long depended on trade with Iran for much of its income. As sanctions against Iran piled up, more and more of this trade was illegal. But officials in Dubai tend to look the other way. No more, and that's partly because, four years ago, the U.S. State Department established a "listening station" in Dubai. Iranian (Farsi) speaking American officials established relationships with the many Iranian businessmen who worked out of Dubai, or visited frequently. This sort of intelligence gathering operation is common when you have a country that does not allow your officials to move freely about (or, in the case of Iran, even enter). In Iran, the secret police keep close watch on foreigners, and any Iranians who they talk to. But in Dubai, the Iranian secret police are much less effective (but they are there, discretely) and it's easier for foreigners to mix with the Iranian business community. The CIA has had similar Iranian listening post operations operating for years, but those operations were more clandestine. Armed with better knowledge of how the Iran trade works, the U.S. has convinced the UAE to help persuade Dubai to crack down on trade that aids Iranian military or secret police forces. This is not a critical blow to Iranian smuggling efforts, but it does make it more difficult, costly and time consuming to get some military supplies.
Iranian propaganda, both internal and external, is not all lies. The Iranians like to point out that they are surrounded by American forces. Thus while Americans feel Iran should be grateful that U.S. forces destroyed two of Iran's enemies (the Taliban-run Afghanistan and Saddam's rule in Iraq), Iran sees that switch as a larger enemy replacing smaller ones. Now the "Great Satan" (U.S.) is in just about every country bordering Iran. If you depend on paranoia to stay in power, this is a great situation to be in, and the Iranian clerical dictatorship makes the most of it.
Russia is no longer much of an ally for Iran. This should not be surprising, as Russia is a neighbor, and Iran is the kind of aggressive, overbearing country that tends to have bad relations with nations that border it. Been this way for thousands of years, and Russia was no exception (although the two nations only came into direct contact in the 19th century.) It was hate at first sight for both of them, and the seeming coziness of the last two decades was unnatural behavior, especially for the Russians. Now Russia has sobered up, and seen the Iranians for what they usually are; a threat.
Over the last year, the inflation rate has been reduced from 20 percent to 9.4 percent. This reduces a major source of popular discontent. But inflation, and popular anger, are likely to increase in two months, when subsidies on food and fuel are sharply reduced. This move is necessary to balance the budget. The government cannot afford to run a deficit, because there are few sources of loans to cover subsidies.
The government has successfully adopted a population control method developed by Nazi Germany and Soviet Russia; adolescent auxiliaries for the secret police. Since the late 1990s, the Basij (the reservist organization of the Revolutionary Guard, the separate armed forces of the clerics running the government) has been establishing units in schools, for children of all ages. Using games, toys and popular children's activities, the kids are indoctrinated into Basij ideology (radical Islam, including the joys of being a suicide bomber). The Basij recruiters have found that their best prospects are from poor or broken families (including orphans.) This was the Nazi and Soviet experience. The Romanian communist government did best at this, with their secret police (the Securitati) forming much feared units of these orphans. Recruits were selected young, and raised to be remorseless and savage operatives. Iran is looking for plain clothes agents, who can terrorize reform-minded students, and civilians in general. In the last few years, more and more of these Basij operatives, now adults, have been leading the fight against Iranians who oppose the religious dictatorship.
The reformers, who filled the streets with crowds last year, to protest a rigged election, have been driven underground by the secret police. The government has used a growing network of informers and a nasty collection of street thugs in civilian clothes, to terrorize the opposition, and make opponents unsure of who they can trust. Many leaders are in jail, and some have been executed.
July 2, 2010: Israel revealed that last year, Iran supplied Syria with a more powerful radar system for detecting air traffic over Syria, Lebanon and northern Israel. Iran apparently did this to provide some early warning of an Israeli air attack. Israel refused to provide more details, lest they reveal what the know of the new Syrian radar (and how Israel will neutralize it.)
July 1, 2010: The U.S. enacted new sanctions against Iran. Most are inconsequential (banning export of petroleum products to Iran), but the new restrictions on Iranian access to the international banking system will have an impact. The economic sanctions are sending more Iranian business to China, which does not always have the best tech to supply what Iran needs (like oil refineries.) But Iran is content with second best, as long as it gets the job done.
June 25, 2010: In northern Iraq, Kurdish villagers, who saw three American hikers seized by Iranian border guards a year ago, came forward with eyewitness accounts of the incident. The villagers testified that the three Americans were on the Iraqi side of the border, when the Iranian border patrol troops, who frequently cross the border, showed up. The Iranians decided to grab the Americans, and quickly took their captives across the nearby border. Iran is trying the three hikers as spies, and trying to get the U.S. to offer ransom (freed Iranian terrorists, cash, tech, whatever) for them.
June 24, 2010: Iran cancelled plans to send ships to try and break the Israeli blockade of Gaza. Iran blamed "Israeli threats" (which were real enough), but the real show stopper was the Egyptian refusal to let the Iranian blockade runners through the Suez Canal.
Iran and Oman have signed an agreement that increases cooperation in fighting drug smugglers (and halts the practice of arresting each other's fishermen who stray across the water border.)
June 21, 2010: The government announced that two IAEA inspectors headed its way, would be barred from the country. Iran has basically told the world to go take a hike, and forget about trying to halt Iranian nuclear research.
June 20, 2010: The government executed (by hanging), Baluchi separatist leader Abdolmalek Rigi. Several weeks ago, Rigi's brother was also executed for terrorism. Both Rigis belonged to Jundallah, a terrorist group composed of Sunni Baluchi tribesmen fighting against Iranian oppression (both religious and ethnic). While the Baluchi tribes (most of them live in southwest Pakistan) are ethnic cousins of the Iranians, the two groups are divided by religion (most Iranians are Shia) and long term animosity. Abdolmalek Rigi was accused to leading Jundallah during a time when the group killed 153 Iranians. Jundallah has selected a new leader, and promises to keep attacking Iran.