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Economist: Special Report on Iran

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Dec 14, 2004, 11:56:12 AM12/14/04
This is not to the usual high standards of the Economist magazine, but
still worth a read.




Still failing, still defiant

Dec 9th 2004 | TEHRAN
From The Economist print edition

In the short run, Iran is getting grimmer. One day the ruling ayatollahs
will lose their deadening grip on power. But not soon

“THE firing of a bullet into his damned and blasphemous head is an
absolute necessity—and how cherished would that bullet's emissary be.”
Those were the gentle words recently directed by one of Iran's leading
editors, Hossein Shariatmadari, at an exiled Iranian television
presenter, Manouchehr Fouladvand, who has had the cheek to mock aspects
of Islam: shades of the fatwa that cast a death sentence on a British
writer, Salman Rushdie, cursed for blasphemy in 1989 by the late
Ayatollah Ruhallah Khomeini, Iran's supreme leader. A return, then, to
the intolerance of the revolution's early days?
Perhaps not. Though Mr Shariatmadari is the influential boss of a
state-owned newspaper group, Keyhan, which faithfully echoes the
thoughts of Iran's conservative clerical leaders, his exhortation is
unlikely to be acted on. Since the kindlier Muhammad Khatami became
president in 1997, his governments have managed to dampen Iran's
fundamentalist ardour, especially on social matters. Women who flout the
Islamic dress-code, which still requires their heads (and the rest of
their bodies) to be covered in public, are more rarely threatened with a
flogging. The law providing for adulteresses to be stoned to death,
though still on the statute book, is suspended. A blind eye is still
turned to the many thousands of Iranians who tune in to satellite
television, though that is still technically illegal.

Nonetheless, Iran's liberals and reformers feel increasingly
beleaguered, and voices such as Mr Shariatmadari's are louder and more
menacing than they were even six months ago. In that period, says one of
Tehran's longer-serving foreign diplomats, “there has been a dramatic
change in mood”. Bullying militias are again trying—so far without much
success—to enforce the old morality. Last month a female MP from the
conservative camp suggested that if ten “street-walkers” were executed,
“We will have dealt with the problem [of prostitution] once and for

More worrying from the liberals' point of view, the reform-minded but
disappointingly dithery Mr Khatami has been the lamest of ducks since
the ruling clergy and the country's supreme leader, Ayatollah Ali
Khamenei, who succeeded Mr Khomeini in 1989, presided over a rigged
general election in February when the candicacy of 2,000-plus reformers
was blocked. As a result, the new parliament is distinctly more
xenophobic and illiberal than its predecessor. Of its 290 members, more
than a quarter share the sort of rabid views expressed by Mr
Shariatmadari, and they seem to be mocking Mr Khatami with impunity in
his last months in office.

The sole remaining liberal daily newspaper of any weight, Shargh, feels
obliged to censor itself more rigorously than before for fear of being
closed down, as so many of its like-minded counterparts have been. The
so-called “red lines” that fence off sensitive issues from discussion
are being drawn more tightly. Freedom of expression is diminishing

The media have never been allowed to criticise the supreme leader. “But
now we cannot attack the judiciary or the Council of Guardians either,”
says one of Shargh's editors, referring to Iran's 12-strong body, the
most powerful in the land, composed of six clergy appointed by the
supreme leader and six others picked by the head of the judiciary,
himself picked by the leader. It is they who blocked reform-minded
candidates from standing for parliament and refused to ratify virtually
all the more enlightened bills—nearly half the total—passed by the
previous parliament.

Not that mass repression is needed to keep the media, or the Iranian
people in general, in line. According to a respected human-rights
campaigner, between 2,000 and 4,000 Iranians, including about 30
journalists, are behind bars for political reasons. The reason for the
overall figure's vagueness is that many of those incarcerated are in
“unofficial” prisons: even their relatives are not told they are there.

In the past few months detentions have swelled of “bloggers” who have
set up internet sites, which the state has taken great trouble to block.
A number of well-known campaigners for human rights have been prevented
from going abroad or arrested on their return. Human Rights Watch, an
independent lobby group, said this week that “secret squads operating
under the authority of the Iranian judiciary have used torture to force
internet journalists and civil-society activists to write
self-incriminatory confession letters”.

Downcast in Tehran
The clampdown seems to be working. Many of the liberal and sophisticated
professionals of northern Tehran, downcast by Mr Khatami's failure, seem
to have withdrawn into a private life behind the walls of their villas.
Many are emigrating, at an estimated rate of 200,000 a year, especially
to the United States (where there may be 800,000 Iranians), Canada
(perhaps the most popular destination), Britain, France and Australia.

Mr Khamenei seems, on the face of things, more dominant than ever. But
power in Iran is by no means monolithic. Even the conservatives divide
into various strands, from rigid puritans to cautious pragmatists. Some,
for economic and strategic reasons, would like Iran to accommodate with
the West, even with the United States. Others, loth to stain the
revolution's purity, are prepared to accept Iran's isolation, protecting
the country from the “westoxification” that has, in their view,
corrupted so many Muslim countries. Yet others think they can defend the
old morality and the political dominance of the clergy while, at the
same time, opening the economy to the West; they invoke a “Chinese
model”. Policy may, in the course of the next few years, shift back in a
more liberal direction. Or it may not. The future is highly

The one thing everyone knows is that Iran is in a jam. Above all,
plainly, there is a crisis of legitimacy. Only half of Iranians bothered
to vote in February's election; not much more than a quarter of those in
Tehran, which embraces at least 8m people, turned out. Western diplomats
reckon that barely 15% of Iranians still support the ruling order. The
low turnout reflected not just apathy and fatalism, which are indeed
strong. Many sour and embittered Iranians consciously decided not to go
to the polls as a gesture of protest.

“We've come to a dead end,” says Grand Ayatollah Yusef Saanei, one of a
dozen clerics to hold this high rank in Iran but whose liberal views,
especially on women's rights, have put him out of favour with the ruling

According to some reports, disaffection with the regime even among the
clergy is spreading. A cleric from an influential religious family, also
out of favour with the supreme leader, derides the Council of Guardians
for mostly taking “orders and hints from the powers that be”—a euphemism
for Mr Khamenei. Most striking of all, sociologists and educators report
that religious belief and observance, especially among the young, have
slumped since the mullahs took power a quarter of a century ago. Instead
of fortifying the people's devotion, the system seems to have switched
many people off the spiritual side of life, inspiring a shallow
materialism instead.

In a population of around 70m, one-third are reckoned to be under 14 and
two-thirds under 35. Though the economy grew by about 6% last year, it
is not expanding fast enough to keep unemployment down. Around 16% are
officially jobless, though the real figure may be higher. At about 17%,
inflation is rising faster than wages. Though the necessities of life,
such as bread and potatoes, are hugely subsidised, the lot of the urban
poor, whose minimum wage is around $12 a month, is dire.

The mullahs have patently failed to revamp an economy that remains
distorted by subsidies, closed to competition within Iran or from
abroad, locked in the hands either of the state or of state-connected
foundations known as bonyads, and increasingly reliant on the high price
of oil: Iran has about a tenth of the world's known reserves. Barely a
fifth of the economy is in private hands. The conservatives have made it
hard for the timid Mr Khatami to sell off state firms or open up to
foreigners. The merchants of the bazaar, a longstanding pillar of the
mullahs' power, still protect their own cartels. Capital flight
continues apace. Only four private banks exist (three of them linked to
bonyads or to the state), with just 4% of the banking sector's assets.
Corruption in every sphere of business stunts growth and puts off
investors. People mutter about the mullahs' wealth and patronage.

The new parliament has been especially obstructive, preventing, for
instance, a Turkish company (“with Zionist links”, so it was bruited)
from acquiring a mobile-phone franchise to break the current inefficient
monopoly. It has also prevented the opening of Tehran's new airport,
because it would have been operated by a Turkish-led consortium—so, in
the conservatives' view, imperilling national security. Most recently,
parliament has threatened to unpick a big deal with Renault, the French
car-maker, to produce a new car.

Without oil at its present sky-high price, Iran's economy would be in
wretched straits. Oil provides about half the government's revenue and
at least 80% of export earnings. But, once again under the influence of
the zealots in parliament, the oil cash is being spent on boosting
wasteful subsidies rather than on much-needed development and new

Comparisons with neighbouring Turkey are instructive, painfully so to
Iranians who look beyond their own borders. Before Iran's revolution,
Turkey was behindhand on practically every count—foreign direct
investment, income per head, GDP growth. Now the reverse is true. More
noticeably, Turkey's politics have become far more open, its (still
patchy) human-rights record has improved, its media and civil society
are much bouncier than in Iran. Turkey has had a female prime minister;
since the revolution, Iran has not even had a woman minister. Turkey is
moving ahead, and may even join the European Union; Iran is falling

Other regional comparisons further irritate Iranians. The Qataris have
far outstripped them in exploiting the huge gasfield they share. Tiny
Dubai, across the Gulf, now draws in much more foreign investment:
Iranians go there for banking, for trade (and sanctions-busting) and for
fun. Farther along the Caspian shore, Azerbaijan, with American
know-how, is developing its oilfields far more dynamically; Iran's
productivity rate has plummeted.

In the face of such gloomy contrasts, Iran cannot make up its mind
whether to co-operate with the perfidious infidel West to save its
economic skin and strengthen its security, or to keep its Islamist soul
unsullied. That dilemma is at the heart of the present wrangle over
nuclear power.

Why they want nukes
For all its recent sense of failure, Iran still yearns to be
acknowledged as a leading power, even the leading power, in the area. In
some respects, it is not doing badly. Iraq and Afghanistan, neighbours
on either side, have—in Iranian eyes—been humiliated by occupation by
the Great Satan. Iraq, its old foe, is a mess. Turkey apart, Iran is a
giant that looks steadier on its feet than some of its neighbours. And
if ramshackle Pakistan, to the east, can have a nuclear bomb yet remain
a crucial ally of the West, why shouldn't Iran have one too?

Publicly, it says it does not want one. But with vast and cheap supplies
of gas and oil, few observers think Iran really needs nuclear energy.
The International Atomic Energy Agency (IAEA), the UN's nuclear
watchdog, has found no irrefutable evidence that Iran is building a
bomb. Last week, the head of Iran's Atomic Energy Organisation,
Gholamreza Aghazadeh, chirpily told The Economist, “We've never even
thought about it.”

But a mass of circumstantial evidence, along with a tangle of lies,
omissions and evasions in the face of the agency's inquiries, has
convinced just about every independent analyst that Iran has indeed been
trying to build—or at least have the capacity to build—a nuclear bomb,
in violation of the Nuclear Non-Proliferation Treaty, under which it
promised not to do so. (It has also proclaimed the extension of its
Shahab-3 missile's range from 850 to 1,250 miles, within striking
distance of Tel Aviv.) Israel, an undeclared nuclear power that has
never signed the NPT, and whose right to exist has never been recognised
by Iran's ruling mullahs, is particularly exercised by the prospect of
an Iranian bomb—and has hinted it might hit a range of would-be nuclear
targets across Iran.

In the end, it is all about national pride—and high-stake risks,
tortuous and deliberately time-consuming negotiation, fine calculations,
deception and bluff.

These are the options:

• The leading three European countries (Britain, France and Germany),
which have been negotiating since last year, manage to persuade Iran to
stop its uranium-enrichment and plutonium-reprocessing programmes that
could have a military as well as civilian purpose, and allow intrusive
checks by the IAEA, in return for trade agreements and other sweeteners.
But the best guess is that the Iranians will still spin things out,
while beavering away at getting the wherewithal for a bomb.

• A “grand bargain” (tentatively mooted by John Kerry) with the
Americans, who would end a quarter of a century of hostility, lift their
economic sanctions now in force, and forge a complete rapprochement.
This would also entail Iran co-operating against terrorism, opening up
its economy, improving human rights and recognising Israel (the
ayatollahs say they would accept a Jewish state once they are satisfied
that the Palestinians do, too). Few people think this option will be
taken up.

• If both those options come to naught, it is possible that Iran will be
referred to the UN Security Council for its breaches of the NPT and
could then face worldwide sanctions. As things stand, China and Russia
are likely to block such a resolution, but it is conceivable that Russia
could change its mind, and China abstain.

• If the blockage continues, either Israel or the United States might
bomb Iran's nuclear sites, just as Israel knocked out Iraq's Osirak
reactor in 1981. It would be harder, as Iran's sites are scattered, and
some are deep underground. A concerted attack would probably set back
Iran's nuclear schemes by several years or more—but not end them. And it
would risk bloody retaliation against Israel and America.

As things stand, Iran will probably attain the capacity to make a bomb
and, after an Indian-style period of “strategic ambiguity”, break out of
the NPT. It would be unlikely ever to use this weapon. But it would be
safer, perhaps, from the sort of attack launched on it by Saddam Hussein
24 years ago.

No sign of the ayatollahs falling, then?
The American administration's hope that sanctions and other pressures
will eventually force a change of regime in Tehran looks, in the
foreseeable future, forlorn. And an Israeli or American attack might
well have the adverse effect of rallying Iranians to their rather
unpopular regime.

Otherwise, only three things could jolt Iran out of its present torpor
of stagnation and depression. One is the presidential election due in
May. Another, further down the road, is a dramatic slump in the oil
price. The third is the possibility of a Gorbachev figure emerging from
within the clerical establishment to open up the deadening political and
economic system. At present none of these three possibilities looks
likely, at least not in the short run.

The presidential candidate, so far undeclared, who has aroused most
debate—and cautious hope among some of those seeking change—is Ali Akbar
Hashemi Rafsanjani, a former president who now heads the Expediency
Council, an influential mediating body. He is generally dubbed a
“pragmatic conservative”. Some businessmen think he would help open the
economy; others demur, considering him the epitome of the rich mullah
with fingers in every pie but no real yen for the market.

He is undoubtedly a cunning fellow with a penchant for intrigue at home
and abroad—Americans have not forgotten how he humiliated them during
the Iran-contra affair. He is also unpopular among the people at large,
scoring dismally in the general election earlier this year. But the
ruling mullahs have their ways of promoting—and blocking—candidates. The
presidency, as Mr Khatami has shown, can anyway be emasculated. But if
Mr Rafsanjani got it, he might make a difference.

Is there a Gorbachev elsewhere among the mullahs? It is an unlikely
prospect, but the inner workings of Iran's clerical establishment are
mysterious and supremely opaque. Mr Khamenei's standing, such as it is,
has fallen—even, it is said, among the clergy. The opposition, at
present, is numb. Only if the price of oil, say, halved, and the economy
really dived would the anger and frustration well up again and bring
people out on the street. And so long as that does not happen, the
Iranians are miserably stuck with what they've got.

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