Iran: Sanctions Biting, Nuclear Program Progressing

Vol. 12, No. 24    4 November 2012

  • With the sanctions on Iran tightening in recent months, its leadership has been trying to project business as usual. Iran is waging an extensive propaganda campaign at home, emphasizing that the sanctions have not harmed Iran’s oil exports and indeed are strengthening its local production in many areas. 
  • Yet the sanctions constitute the greatest economic, political, and governmental challenge Supreme Leader Khamenei has faced since the end of the Iran-Iraq War. Ahmadinejad’s government did not prepare in time for the intensity and scope of the sanctions. They probably assessed that, in light of the ongoing crisis of the Western economies, the likelihood of biting sanctions on the oil and banking sectors was low. 
  • In response to the intensifying sanctions and the ongoing foreign-currency crisis, domestic criticism of Ahmadinejad’s government’s poor performance has mounted. Critics in the Majlis (parliament), the media, and the religious establishment claim the Western-imposed sanctions have had only a minor effect on the economy and the problem mainly lies in the flawed performance of those entrusted to run the Iranian economy. 
  • Iran is now beginning to pay dearly for its heavy dependence on oil revenues. Although this dependence was no secret to the Iranian leadership, they wrongly assessed the seriousness of the West. Thus, Iran’s leadership now faces a higher potential than in the past of renewed public unrest backed by the religious establishment. Indeed, most of Iran’s senior clerics have withdrawn their support for Ahmadinejad and his supporters ahead of the upcoming presidential elections in June 2013. 
  • The Iranian regime has been encouraged by its successes so far in advancing its nuclear program (including the reported completion of the installation of centrifuges at the Fordo uranium enrichment site) and by the changes that are reshaping the Middle East. There is great doubt whether the challenges Iran faces will lead the current leadership to revise its nuclear policy and its preparedness for compromise with the West on the nuclear issue. 
  • Since the effects of the sanctions are evident, in the West there are those who will exploit this fact to defer military action against Iran in order to give the sanctions “just another chance” to work. Iran will continue to promote the different components of its nuclear program and is prepared to pay the price of sanctions, believing it will be able to contain any popular protests as it has done in the past and to rely on the West’s eagerness to avoid any military action.

 

“Let the high praises of God be in their mouth, and a two-edged sword in their hand” – Psalm 149:6

 

With the sanctions on Iran tightening in recent months, its leadership including Supreme Leader Ali Khamenei, President Mahmoud Ahmadinejad, and the heads of the Iranian Revolutionary Guard Corps (IRGC) have been trying to project a business-as-usual atmosphere and underscore that the Iranian people are capable of coping with the “ineffective sanctions” as they have been doing successfully for more than thirty years of the revolution, during which they have stood firm against “the hostility of the United States and the West.” They reiterate that Iran’s nuclear program is only an excuse for imposing the sanctions, whereas the real reason is the West’s desire to contain Iran’s growing influence on the rapidly changing regional reality, especially in light of the Islamic Awakening (as Iran calls the Arab Spring), and to try and sway the results of Iran’s June 2013 elections.

“Sanctions Against Iran”

http://www.farsnews.com/plarg.php?nn=291063&st=603663

The Sanctions Can No Longer Be Ignored

In actuality, the harsher the sanctions – particularly their dramatic effect on Iran’s revenues from crude-oil exports, which are a crucial part of the revenues on which Iran’s national budget depends – the greater their impact on Iran’s economy and society. The sanctions’ impact is gradually becoming a fundamental element of the domestic political-religious discourse conducted among the different political camps, the religious establishment, and the leadership, and between them and the Iranian people.

 

The West’s sanctions and other measures (such as stopping the broadcasts of major Iranian satellite channels by a European satellite provider) are aimed at pressuring Tehran to give up the problematic and military components of its nuclear program and act with full transparency toward the International Atomic Energy Agency.

“The Sanctions Are Creating Problems Throughout Iran”

Khamenei has asserted on a number of occasions that “the West wants to bring the Iranian people to its knees” and bend it to its will, but is doomed to fail.1 Khamenei, during a visit to North Khorasan Province in early October, met with government officials and told local residents in a speech:

Lately the Iranian nation has been facing a gang of enemies headed by the Satanic Zionist circles….Most unfortunately, the United States and several countries in the West are influenced by these circles….They have been opposing the Islamic Republic of Iran since its inception….At present they are intensifying the sanctions against us. These sanctions are not a matter of yesterday or today; they have accompanied the Iranian Revolution since its birth. Time after time they tighten the sanctions that are not working while pretending they will be lifted if Iran just renounces its nuclear capabilities; they are lying, the main reason for the sanctions is their blind hatred and their evil designs against the Iranian people….The sanctions are actually a declaration of war against an entire nation….

Clearly, the sanctions are creating problems all over Iran and in your province….The rising prices and employment are at the top of the list of the people’s problems, but they can be solved, and the Iranian Revolution has coped for thirty years with more difficult problems and challenges and overcame them….The West showed very great interest and reported extensively and in infantile elation on the “bazaar events” [referring to the strike by bazaar merchants on Oct. 3 in the wake of a dramatic currency devaluation]….We must ask them frankly whether the economic situation in Iran is worse than that in some of the European countries with their street demonstrations we have witnessed over the past year….Your economic problems are graver than Iran’s economic problems.2 

The West Wants Revenge

Khamenei has been joined by clerics in Tehran whose Friday sermons similarly describe the reasons for the sanctions. For example, Ayatollah Ahmad Khatami asserted in a sermon at Tehran University that “the enemies of Iran are trying to influence the results of the upcoming presidential elections in Iran and to create an economic crisis with the sanctions.” He said the “real” reason for the sanctions was “the West’s attempt to get revenge on Iran for the Islamic Revolution.” Khatami accused Europe of being an “abject slave” of the United States and said most of the sanctions the European Union has newly imposed on Iran have a primarily symbolic effect and no real effect. At the same time, Khatami acknowledged (similarly to Khamenei) that “there are problems in Iran, but not a crisis….If the Europeans are looking for problems and crises they will find them in Europe. The Iranian people have learned to live and cope with problems and pressures and hence the efforts of the enemies of Iran to weaken the Iranians’ resolve are doomed to fail.”3

The Greatest Challenge Since the Iran-Iraq War

The sanctions levied on Iran over the past year – whose end is not yet in sight – constitute the greatest economic, political, and governmental challenge Khamenei has faced since the end of the Iran-Iraq War. The executive branch of the Iranian leadership, namely, Ahmadinejad’s government, did not prepare in time for the intensity and scope of the sanctions. They probably assessed that, in light of the ongoing crisis of the Western economies, the U.S. elections, and what they regard as the weakening of America’s status in the region and the strengthening of the Islamist movements, the likelihood of harsh sanctions on the oil sector was low. Hence, only in recent months has Iran begun to devise practical solutions (such as setting up private companies through which to export the oil) in an attempt to revive, if only partly, the inflow of revenue via alternative oil export channels that are not susceptible to sanctions, and to adjust the deteriorating Iranian economy to the changing reality.

Plan B

In the framework of the Iranian “answer” to the mounting sanctions, Naser Soudani, vice-chairman of the Majlis Energy Committee, announced that the Majlis (parliament) had drawn up a three-phase “preemptive embargo package” as a retaliatory measure against several European states’ sanctions. In the first stage, countries hostile to Iran “will be deprived of Iran’s high-quality light and heavy crude oil”; in the second, imports from European countries involved in the sanctions will be prohibited; in the third, Iranian tourists will be forbidden to visit these countries. Soudani said that Iran was circumventing sanctions with the help of the private sector and that the Majlis had authorized the government to privatize 20 percent of Iran’s oil exports.4 Mohsen Khojasteh-Mehr, deputy minister of petroleum for planning and supervision on hydrocarbon resources, has termed this the “economy of resistance” (Khamenei’s slogan for the current Iranian year which started on March 20, 2012). This envisions a kind of independent economy whose main characteristics include: “handing over economic activities to the people, reinforcing the private sector, supporting national production,…cutting reliance on oil revenue, reforming management and consumption patterns, and reliance on a knowledge-based economy.”5

Curtailing the Damage

Meanwhile, as part of the efforts to curtail the sanctions’ impact on public opinion, Iran is waging an extensive propaganda campaign at home, emphasizing that the sanctions have not harmed Iran’s oil exports and indeed are strengthening its local production in many areas. Oil Minister Rostam Qasemi recently rejected claims of a decline in Iran’s oil production and said Iran was continuing to produce four million barrels of crude oil per day. He threatened that if the West increased the pressures and sanctions, Iran would stop exporting crude oil, a step that will lead to global price hikes. He said, without going into detail, that Iran has an alternative plan that will enable it to run the country without any need for crude-oil exports.6 For its part, the Iranian media from time to time reports a rise in Iranian exports of non-oil products. Indeed, at its inception (March 2012) Khamenei declared the Persian year as one of local production, and many spokesmen invoke this statement to explain the dramatic reduction in imports of basic products that are deemed “superfluous” for Iran.

“Bunch of Idiots”

In response to the intensifying sanctions and the ongoing foreign-currency crisis, criticism of Ahmadinejad’s government has mounted. Whereas government officials seek to blame the distress on the sanctions and foreign actors, government critics in the Majlis, the media, and cyberspace claim the sanctions have had only a minor effect on the economy and the problem mainly lies in the flawed performance of the government and those entrusted to run the Iranian economy.

For example, Ahmad Tavakoli, former chairman of the Majlis Research Center, contended that the sanctions had only a minor impact on the foreign-currency crisis compared to the government’s mistaken economic policy. What led to the crisis, he claimed, was the huge amount of money that was pumped into the economy and the ongoing economic stagnation; emerging from the crisis required renewing the system of coupons and the rationing of some basic commodities, steps that would, in his view, ease the distress of the Iranian people.7

Friday sermons throughout Iran also addressed the economic situation and maintained that it was not the sanctions that were at fault. Instead, it was the government’s flawed decision-making process, flight from responsibility, and a lack of coordination between the branches of government that had caused the crisis with its dizzying price rises and escalating burden on the citizens:

  • The Isfahan imam Hojjatoleslam Tabtaba’inez said: “In my view, the main reason for the protests in the bazaar were the president’s irrelevant answers concerning price hikes…he did not blame the price hikes on the government…he thinks that the [Iranian] people are a bunch of idiots and morons.…In my view, a small part of Iran’s economic problems and inflation are due to sanctions, and the main cause is [the government’s] wrong economic policies.”8
  • Ayatollah Ahmad Alamhoda, Mashhad’s prayer leader, attacked the government and said: “When you were elected you told the revolutionary people that you would be able to cope with every problem that the arrogant superpowers [the United States] would place before Iran and now it turns out that you have been traitorous to the people who demanded to live and practice their religion.” He called for using an iron fist against the various elements who raise prices without justification.9
  • Tehran’s interim Friday prayer leader, Hojjataleslam Ahmad Khatami, said poor decision-making rather than sanctions had caused the economic pressure. “These bad decisions should not be blamed on only one branch of government. All three branches must join hands to reduce the pressure on this great nation.”10

The Bitter Truth Is Better than Obfuscation

In an editorial, the popular Iranian website Alef analyzed the “real” reasons for the sanctions, asserting it is not Iran’s uranium enrichment or hostility to Israel, nor the West’s lack of trust in Iran, that is responsible. The real reason, the author claims, is Iran’s fundamental nature and guiding tenets, and the challenge it poses to the West as an ideological and cultural alternative. Hence, the author argues, the truth about the sanctions should not be concealed from the public; this candor will enable it to prepare adequately for the damage they wreak.

Why is the Iranian media not publicizing the fact that Iran is now selling less than a million barrels of oil and even that with great difficulty? If citizens come to know this truth and similar truths, will they not complain less and be understanding and cooperative? Should one not explain to the public that the current sanctions are by far the most severe since the Iran-Iraq War, yet we must stand firm for the sake of the country’s future? Even if we hide the truth from the public, it will in any case discover it in Western media; is it not preferable that the public should hear the explanations straight from the leadership and in a logical fashion?

We must say (candidly) that the sanctions are indeed taking a considerable toll; the approach adopted by some of the media and the senior officials, claiming the sanctions are having no impact, is meant to boost the public’s morale, but is it not preferable to admit that the sanctions are having and will have effects and consequences, but we must suffer these consequences for reasons of one kind or another? Even if the public is told that the sanctions are having no effect, are they not able to realize this themselves in light of the dramatic rise in the prices of products?

The article’s author also warns against some elements’ exploiting the sanctions to slam the government and advance their interests in the run-up to the elections.

Because if they do not acknowledge the real impact of the sanctions and cast the blame for this and all the other problems on the current government while portraying it as unsuitable and culpable for the situation, they can then promote themselves as candidates for the president’s seat. Is this not a disgraceful political tack to take? To make yourself stupid and drag the public into this stupidity for political purposes.11

And Meanwhile…the President Is Occupied with Trifles

In recent weeks an affair has rocked Iran and revealed the intensity of the dispute between its different camps as well as the nadir to which Ahmadinejad’s status has sunk domestically. It concerns the president’s requests to visit Ali Akbar Javanfekr, his senior media adviser who is now imprisoned in Tehran’s Evin Prison, and the rebuff of his requests by the judiciary on two occasions. The affair shows again how Ahmadinejad and his “deviant” camp are trying to move the goalposts in challenging Khamenei and his authority.

In response to Ahmadinejad’s requests to visit Javanfekr, a spokesman for the judiciary said:

If we look closely at the situation, we see that under the current circumstances it is not appropriate to permit a visit to Evin Prison, since this is likely to arouse doubt in people’s minds, who can ask themselves why [the president], instead of dealing with the foreign-currency situation, with the gloomy state of the economy, is interested in a visit at Evin Prison, a matter that is a peripheral issue….We are now on the eve of elections in Iran and we have to avoid any problematic step or decision, as the leader of Iran has ordered, and maintain a calm atmosphere.12

Moreover, the religious establishment and the senior sources of religious authority (“sources of emulation”) – who are constantly exposed to the real sentiments and growing distress of the population – have also intensified their attacks lately on the government in general and Ahmadinejad in particular, calling on the government to solve the problems of rising food prices, high unemployment, and housing. As Grand Ayatollah and source of emulation Naser Makarem Shirazi said about the recent correspondence between Ahmadinejad and the judiciary concerning visiting Evin Prison:

Lately there have been such exchanges of letters of a communicative and public nature, something that arouses tensions. Under the current circumstances, a legal prohibition has been applied to creating tension. The country has problems that we must grapple with. The responsible officials must put aside the peripheral and unimportant issues and address the problems of the public such as the high cost of living, inflation, the sanctions, economic distress, and moral problems. Do not deal with issues that are not essential to the country; look at the foreign media and see what a sensation they are making out of these matters, claiming that the leaders of the country are fighting with each other.

The criticism of the government’s impotence before the Iranian people’s economic distress was also joined by other sources of emulation such as Grand Ayatollah Lotfollah Safi Golpaygani and Grand Ayatollah Hussein Nouri Hamedani.13

Ali Saeedi, Khamenei’s representative to the Revolutionary Guard, also criticized Ahmadinejad and even expressed regret for supporting him in the past. The criticism mainly concerned his apparent willingness for dialogue with the United States and his periodic challenging of Khamenei’s authority:

I am unable to understand what goes on in his mind when he speaks of dishonorable relations with the United States, with which we have a fundamental, fierce, and bitter conflict….At the head of the executive branch must stand someone with a sound worldview and basic beliefs who is not easily influenced by external elements….His statements today are different from his statements in the past….The problem is that the presidents confuse between their role and the role of the leader of the regime, they make themselves copywriters and act far beyond their authorities. They forget that the regime has different branches. Three branches that act under the leader.14

“Persian Spring”? “Get Out of Syria, Find a Solution to Our Problems!”

Along with the criticism of President Ahmadinejad and his government’s poor performance and inability to deal effectively with the economic crisis, there are signs of life among the reformist elements. These elements stress what they say is a link between, on the one hand, the ongoing foreign-currency market crisis in particular and Iran’s problems in general, and on the other, Iran’s ongoing massive assistance to the regime of Bashar Assad (similar claims having been made in the past about Iran’s aid to the Palestinians). The reformists claim that the “Green discourse” continues under the surface and has taken hold in certain sectors.

This tendency was exemplified by the “bazaar demonstrations” which, even if not directly organized by the Green Movement, well reflect the Green and reformist discourse. Seyed Mustafa Tajezadeh, a political prisoner who served as a deputy minister in the Khatami government and later as President Khatami’s adviser, has joined the Islamic Iran Participation Front (Jehbe-ye Mosharekat). Speaking from prison, Tajezadeh said after the bazaar demonstrations that when the demonstrators cried “Get out of Syria, find a solution to our problems!” it was clear that their economic demands were closely linked to the political reality and to Iran’s foreign involvements at the expense of the country’s own residents. The involvement in Syria, he asserted, is a good example and a poor policy that has led to the devaluation of the rial against the dollar and to the burning of Iranian flags and passports in Syria.15

In any case, the developments in Syria are likely to have far-reaching implications for the domestic Iranian arena. The fall of Bashar Assad – who is perceived in Iran as one of the symbols of steadfastness against the West and Israel – is likely to be perceived by the opposition as weakness and they are likely to exploit it by intensifying their protests.

Nobel Prize winner Shiran Abadi recently expressed optimism about a possible “Persian Spring,” saying, “It is not going to be too long before that day arrives,” although just when this would happen “was difficult to predict.” She said an uprising against the government would be “a function of Iran’s relationship with the United States, Iran’s relationship with neighboring states, and the economic situation of the country.” She noted that while the disturbances sparked by the June 2009 presidential elections had indeed subsided, “they are continuing but in different forms” including “cyberspace” and “civil disobedience” as well as contacts with foreign media. Abadi added that anger remains intense because “the economic situation of the people is becoming worse every day. In the past year, the value of our national currency has devalued by some 60 percent, and human rights violations in Iran are rife and widespread.” In her view, a change would not be brought about by elections since “they are not free and fair in Iran….It is a power struggle, and it all depends on which side the Islamic Guards of the Revolution decide to support.…What emerges from the election is not the vote of the people; this is a battle for power.”16

The Price of Dependence

Iran is now beginning to pay dearly for its dependence on oil revenues. Although this dependence was no secret to the heads of the regime, they wrongly assessed the seriousness of the West, which, while it indeed wants to avoid military action against Iran, seeks instead to impose biting sanctions at a time of global economic travails. Iran’s leadership, which wants to downplay as much as possible the economic crisis caused by the sanctions, especially with the ongoing loss of oil revenues, now faces a higher potential than in the past of renewed public protest backed by the religious establishment. That is why the leadership broke up the bazaar demonstrations sparked by the foreign-currency crisis. Nevertheless, the regime’s ongoing involvement and strong support for Syria, in the face of the escalating economic crisis, continues to fan public criticism of the regime among different sectors.

So far, however, the sanctions’ impact on the public has not caused a substantial change in the nature of the anti-regime protest; it is still confined to cyberspace with only a few manifestations in physical reality. At the same time, most of Iran’s senior religious officials have withdrawn their support for Ahmadinejad. They attack him for pursuing a personal agenda that ignores the public and blame his government, not the sanctions, for the socioeconomic crisis. Should the social protest gather steam, figures from the religious establishment, some of whom already support the Green Movement and reformist elements, will likely join the protest and give it religious-legal validation. Any change in Iran will indeed require validation by the religious establishment, as was the case with other revolutions in Iranian history.

In any event, the June 2013 elections have already begun to play a central role in Iran’s domestic discourse and are already directly associated – at home and abroad – with the issue of the sanctions and the economic crisis. Iran’s leadership claims – as it did in the previous elections – that the West is trying to use the sanctions to determine the results of the election and bring about a change in the Iranian regime. The closer the date of the elections, the more the regime is likely to beef up security measures. It is already warning elements in the domestic security forces against any attempt to disrupt the elections and the preparations for them.

Prepared to Pay the Price

Despite the growing challenges in the domestic arena and in the economic sphere and the difficulties the regime is encountering regarding its efforts to unite the Iranian people around the price it is required to pay for Iran’s nuclear independence, the ideological components and the goal that Iran has set for itself to lead the Islamic world have remained strong and firm, as well as its resolve to continue to develop its nuclear program. Recently, it was even reported that Iran is completing the array of centrifuges at the Fordow site near Qom.

Khamenei and his main base of support in the Revolutionary Guard also present the West and particularly the United States (the Great Satan) as a sworn and bitter enemy of Iran. They stress the sanctions that harm the Iranian people, the removal of the Iranian dissident Mujahideen-e-Khalq from the U.S. State Department list of terror organizations, the assassinations of nuclear scientists, the disconnection of the Iranian satellite channels from the European satellite, and Iranophobia. Therefore, any decision to compromise, given this background, would be unbearably difficult from Khamenei’s standpoint. He apparently backs the attacks on Ahmadinejad and his government in order to distance himself from the storm of criticism and public protest. Following recent press reports of direct negotiations between U.S. and Iranian officials (involving Khamenei’s senior international affairs advisor, Ali Akbar Velayati), and ongoing discussion of the issue in the local media, the Institute for Preserving and Publishing the Works and Words of Ayatollah Khamenei has republished his comments during Friday prayer sermons in 1997 regarding relationships with the U.S.: “Talks with the U.S. have no benefits for the Iranian people.”17

The Iranian regime has been encouraged by its successes so far in advancing its nuclear program and by the changes that are reshaping the Middle East. For the moment, it is not deterred by the price it has to pay in the domestic arena for continuing its defiance of the West on the nuclear issue and with its continuing support for Syria. In general, there is great doubt whether the challenges Iran faces – and at their head the intensifying sanctions that levy a heavy price from Iran – will lead the regime to change its nuclear policy and its preparedness for compromise with the West on this issue.

Sanctions and Military Action

In sum, as the Iranian leadership admits, the sanctions are affecting Iran’s economy and presenting challenges of a kind unknown in the past. At the moment the leadership is following a policy of concealment from the public. Yet since the effects of the sanctions are evident, in the West there are those who will exploit this fact to defer military action against Iran in order to give the sanctions another chance to work. Iran will continue to promote the different components of its nuclear program and is prepared to pay the price of sanctions, believing it will be able to contain any popular protests as it has done in the past and to rely on the West’s eagerness to avoid any military action.

 

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Notes

 

1. http://www.farsnews.com/newstext.php?nn=13910725000725

2. http://www.leader.ir/langs/fa/index.php?p=contentShow&id=9952

3. http://tinyurl.com/ISNAKhatani6

4.http://presstv.com/detail/2012/10/23/268330/iran-majlis-adopts-preemptive-embargo/; http://www.farsnews.com/plarg.php?nn=287891&st=599359

5. http://www.shana.ir/197018-en.html

6. http://tinyurl.com/8lgoo7

7. http://www.khabaronline.ir/detail/252121/politics/parliament

8. http://www.farsnews.com/newstext.php?nn=13910714000308

9. http://www.farsnews.com/newstext.php?nn=13910714000308

10. http://www.mehrnews.com/fa/newsdetail.aspx?NewsID=1712579

11. http://alef.ir/vdcayan6649nie1.k5k4.html?168341

12. http://tinyurl.com/9enope8

13. http://tinyurl.com/9nq35ay; http://aftabnews.ir/vdciwwazqt1ayy2.cbct.html

14. http://www.entekhab.ir/fa/news/80964

15. http://www.kaleme.com/1391/07/29/klm-116573/

16. http://www.al-monitor.com/pulse/originals/2012/al-monitor/ebadi-persian-spring.html

17. http://farsi.khamenei.ir/speech-content?id=21379

About Lt. Col. (ret.) Michael Segall

IDF Lt.-Col. (ret.) Michael (Mickey) Segall, an expert on strategic issues with a focus on Iran, terrorism, and the Middle East, is a senior analyst at the Jerusalem Center for Public Affairs and at Foresight Prudence.