Iran - Between Reform and Mayhem

By: Sam Vaknin, Ph.D.

Also published by United Press International (UPI)

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Written: November 2001

(Click here to read: Preparations for Attack on Iran Almost Complete)

Iran's porous border with Afghanistan is almost 600 miles (1000 km) long. No one knows for sure how many Afghani refugees crossed it in the last 20 years, but well over 2 million would be a fair estimate. Now that Iran transformed all newcomers into illegal aliens, thousands are crossing the border stealthily, joining families and former neighbors in Mashhad and other cities. Subject to US-led sanctions, Iran shouldered the multi-billion dollar burden of feeding, clothing, and employing past refugees out of its own dwindling resources. The current conflict is no different. Aid agencies, spearheaded by the World Food Program, are withdrawing their mountains of supplies from Iran's border. Where there are no official refugees, they say, there can be no aid.

But illicit border-crossing is only one of Iran's host of economic problems. It is a heavily indebted, nefariously corrupted, and hopelessly mismanaged country. Its decision making processes are malignantly politicized and centralized. Its population (especially the women and its minorities) are oppressed by a self-serving, inanely retrograde, clerical establishment. Its reform movement and rump of free press are hobbled by a vicious judiciary and a fractured clergy in a fully theocratic country and terrified by the social costs of a genuine overhaul of the economy. Khatami (Iran's popular President), for instance, shows very little interest in matters economic. The Council of Guardians shot down every legislative effort to encourage foreign investments by extending property rights, though it let Iran apply to the WTO (its application is still blocked by the USA) and accede to the New York Convention (UN convention on awards granted in foreign arbitration). Iran is an economic zombie, kept alive with infusions of rising oil revenues - the serendipitous result of a global surge in oil prices.

Rumors are that, for its tacit collaboration with the USA in its anti-terror campaign, Iran will be rewarded with the long overdue suspension of US sanctions against non-US investors in Iran's oil industry (under the 1996 Iran/Lybia Sanctions Act renewed in July this year). The USA will also waive its resistance to Iranian accession to the WTO. Last year, Madeleine Albright, the then Secretary of State, suspended or cancelled a few minor sanctions (mainly against the importation of luxury goods manufactured in Iran). This coincided with a politically futile trip by President Khatami to New York. He then proceeded to China and negotiated a raft of economic collaboration agreements with its leadership.

The rumors may be true this time. But the partial lifting of some of the sanctions would do little to address Iran's fundamental and structural problems and a lot to highlight the USA's hitherto self-defeating intransigence.

Iran is a young country. A full one third of the burgeoning population (it grows by more than 3% annually) are less than 25 years of age. At least 12 million new jobs will be required by 2010 to absorb this demographic tsunami. The current economy generates less than 500,000 new jobs a year - many of which are parasitic, bureaucratic, positions in Iran's vitality-sapping religious nomenclature. Unemployment, currently at least at 20% (officially at 13%), is projected to reach 5-6 million frustrated employment seekers by 2005.

This mismatch between the promise of the 1979 revolution and its dreary outcomes leads to nothing short of social disintegration. Divorce rates and drug abuse are up to decadent Western levels. There is a future-threatening brain drain and the common fantasy is immigration in search of a better, more promising, life in the Great Satan (i.e., the USA), or elsewhere in the West. The mammoth wave of the immigration of Iran's political and intellectual elite (with the $28 billion they owned) following the 1979 revolution - is equalled by today's relentless exodus.

Iran has just emerged from a debilitating 8 years long trench warfare with its neighbor, Iraq (at the time, a major trade partner). It is still under annually renewed and pointless American sanctions which date back to 1980 and which greatly afflict its oil industry, based as it is on American equipment and ruined by the savage and recurrent warfare. Constitutional legislation prohibiting the granting of mineral concessions to foreigners did not help. Iran was able to conclude deals worth $15 billion, including contracts to upgrade oil rigs and increase production with Japanese and Italian firms only recently and, prior to that, with French, Italian, and Malaysian firms regarding its off-shore fields.  Daily output is predicted to go up by 700,000 barrels, which would bring Iran's total daily production to 4.4 million barrels.

The foreign entities will act under a "buy-back" contract and receive compensation from NIOC (the all-mighty and, claim the conservatives, thoroughly venal National Iranian Oil Company, currently controlled by the reformists). These "fees" for exploration and development costs will, though not stated clearly, represent a percentage of intake as in conventional production-sharing agreements. Iran sells natural gas to Turkey and has signed in 1993 a memorandum with India regarding an LNG pipeline which was supposed to traverse the territory of Pakistan. It successfully negotiated the sharing of a major oil field in its disputed border with Kuwait. And it is hungrily eyeing the markets of China and Central Asia.

Though OPEC's second largest producer, Iran, according to the U.S. Department of Energy's "Country Analysis Brief" dated October 2001, has only 9% of the world's proven oil reserves - but an impressive 15% of its gas reserves. It exports little else (though non-oil exports, mainly carpets and pistachios, doubled lately) and its budget is reliant on oil revenues. The impressive "growth" in its GDP (6% in 2000, probably 3-4% this year) and its overwhelmingly positive trade surplus (c. 6% of GDP) reflect merely the changing fortunes in oil prices. Iran's income from sales of oil, derivatives, and gas more than doubled since the nadir of 1998. Yet, even this was not enough to dent Iran's daunting short term portion of its external debt (an otherwise manageable $21 billion) or to substantially raise GDP per capita (less than $1200). The stable currency (rial) is propped only by a gush of inflationary petro-dollars (inflation stands at 14%) as well as by the planned merger of the official (1700 to the $) and black market (8000 to the $) rates. Iran's multi-billion dollar "Stabilization Fund" (the storehouse of its excess oil revenues) may have helped as well.

To complicate matters, Iran is in the throes of a devastating drought in its third year (on top of another 10 arid years in the last 20).  It has cost the economy c. $8-10 billion, has ruined the countryside, and flooded the cities, whose decrepit infrastructure is stretched to the point of dismemberment, with millions of destitute farmers. An antiquated, leak prone, water system compounds the 30% drop in rainfall and the many wrongly located water-consuming industrial projects. Now drinking water is scarce and, in some municipalities, buildings are sinking into the crumbling sewers. The government dares not raise water prices to realistic levels, lest it provokes a repeat of the riots a few months ago.

Iran's agricultural sector accounts for 20% of its GDP and 25% of its workforce. Most of it is water-intensive (rice, maize, grapes, tobacco, sugarcane) and thus susceptible to the vagaries of a natural disaster such as the recent drought. Luckily, timber production and off-shore fishing are less vulnerable and have hitherto survived. Still, Iran is a net importer of foodstuffs.

Just a short 18 months ago, things seemed so different. The new 5 year plan, declared in March 2000, called for a "total restructuring" of Iran's economy including the privatization of its bonyads - the lucrative state monopolies controlled by the ayatollahs (the post office, railways, petrochemicals, and upstream oil and gas). The fostering of a vibrant private sector and the reinvigoration of a shareholding middle class, coupled with a drastic reduction in subsidies for food staples and fuel, were predicted to yield an average GDP growth of 6% and 750,000 new jobs annually. The overriding concept was diversification away from oil dependence and into other industries (such as petrochemicals). Free trade zones were established as a way to circumvent the constant sabotage by the implacably xenophobic Council of Guardians. Even Iran's Ali Khamenei (which carries the North Korean sounding title of "Supreme Leader") called upon the clergy to refuse to engage in business activities. "This is what distinguishes our system from other (systems)" - he exclaimed (in a speech in Isfahan, November 5, 2001). Yet, it was the very same Supreme Leader - the head of the clerical pyramid - who publicly signed into law a series of economic projects just minutes after his afore-quoted speech.

Yet the goodwill of Iran's reformists - now in their fifth year in ostensible power - ran afoul of zealots in their own religious establishment and on Capitol Hill. Internal undermining of free market initiatives coupled with the tremulous geopolitics of Iran's neighborhood and the mutual enmity cultivated by Ayatollahs and Congressmen - served to halt all progress to the great detriment of Iranians and the world at large. Iran's march towards ever greater openness is inexorable. Whether this is achieved through reform or through bloody mayhem is up to the citizens of this tortured country and to sensible decision making elsewhere. The transformation of Iran cannot be achieved solipsistically. It needs help and understanding and patience and encouragement. Alas, the West, mainly the USA, have shown too little of these to make a difference. Perhaps September 11 will change all this. What the atrocity proved is that we are all inter-dependent and that New York is no further from Afghanistan than is refugee-flooded Mashhad.

Preparations for Attack on Iran Almost Complete

July 10, 2009

Late last year, Israel embarked on a coordinated campaign of leaks to the press regarding its determination to take out Iran's nuclear facilities if Obama's then-new administration fails to sway the Iranians diplomatically. Israel is unwilling to accept a nuclear Iran: "It is not an option", say its senior intelligence and military leadership.

On January 20, 2009, I appeared as a guest in the most popular political affairs program in Macedonia ("Glasot na Narodot", or The Voice of the People). I warned that Israel is willing to wait 6 to 8 months for Obama's "diplomacy" with regards to Iran's nuclear capability to show some progress. If Iran remains recalcitrant, Israel plans to bomb two facilities in Iran as it did in Iraq in 1981, I said. Refueling won't be a problem, I assured the program's host, Slobodan Tomic: both Egypt and Saudi-Arabia offered to help.

Israel has decided to go ahead. Taking into account political, geopolitical, military preparedness, and climatic conditions, there are two windows: between July 21 and 24 and between August 6 and 8. Advance teams comprised of Mossad agents and military personnel are already on the ground in Saudi Arabia, Egypt, and Iraq (including in the Kurdish lands, adjacent to Turkey).

A mock has been erected not far from Eilat (near the Red Sea, opposite Aqaba). A defunct airbase in Biq'at Ha'Yareach (Moon Vale) has been resurrected to accommodate Air Wing 10. In a country as small and intimate as Israel, it is amazing that this has been kept a secret: hundreds of recruits and reservists - from mechanics and pilots to cooks and administrators - have been re-stationed there in the last few months.

A mysterious facility also sprouted up not far from Dimona's nuclear reactor, next to a university town called Sde Boker. It is not known what is its role, though speculation is that it is intended to shield the sensitive facility from an Iranian counter-attack. Several batteries of aged Patriot missiles have been recently replaced with brand new anti-missile rockets developed by Israel.

Citizens are reporting dry runs in the skies of the Negev, Israel's traditional air force training grounds and a desert with some resemblance to Iranian conditions. Piecing these scant testimonies together, it seems that the Israelis are concentrating their effort on midair refueling and surgical strikes on multiple targets.

Finally, HAGA (Hagana Ezrakhit), the Civilian Defense Force, a part of the Israeli Defense Force (IDF), has been instructed to begin preparations for a possible Iranian counter-strike with long-range conventional missiles. At this stage, Israel is not contemplating chemical or biological warfare (though the distribution of gas masks does seem to be part of the drill).

No one knows for sure where will Israel strike. Wiping off all the widely distributed and impregnable components of Iran's capability to enrich uranium is close to impossible. The after-effects of even a limited air attack may be devastating and not necessarily short-term, as the Israelis are convinced. The price of oil is likely to spike and radicals and extremists throughout the benighted region are bound to leverage the attack to smear and taunt Israel and its allies but, then, what else is new. The Arab countries are likely to breathe a sigh of relief that the Iranian bully has been humbled.

The big question mark is how will the Obama administration react to such a fait accompli that flies in the face of the new President's stated policies. Will Obama try to make an example out of Israel and harshly punish it - or will he merely verbally lash it and proceed with business as usual? Time will tell. Soon.

Attack on Iran to Include Ground Forces

July 16, 2009

An eventual attack on Iran may include ground forces. Units of Sayeret Matka"l ("Headquarters Scouts", Israel's elite special forces) have been transferred to the mock in Biq'at Hayareach ("Moon Vale"), not far from Eilat. They have spent the last few weeks training there: parachuting, paragliding, urban warfare (laba"b in Hebrew), and hand to hand combat. Special emphasis is placed on explosives. The area is isolated (it got its name from its eerie similarity to the moonscape), but various civilian suppliers have reported massive explosions during the day.

In my previous article, titled "Preparations for Attack in Iran Almost Complete" (dated July 10), I revealed the existence of the training mock near Eilat and Aqaba  by the Red Sea. A few days later, Israel made the presence of its Navy in the Red Sea public. Though it has not been a secret hitherto, it has hardly been trumpeted. The navy's role is support the mission with sea-launched precision cruise missiles (of Israeli manufacture). In general, Israel is trying to minimize the involvement of American materiel in its forthcoming foray into Iran.

One word about the "windows" mentioned in my earlier article. As any military planner and intelligence agent knows, these are not actual operational dates. "Windows" are possible operational dates and are dictated by the confluence of weather projections, known troop movements, political and geopolitical circumstances, and military preparedness. Additional windows exist in September and October this year (I have the dates). It is likely, therefore, that Israel will attack in July or August, but no later than October this year.

Attack on Iran: Rift in the Military and the Role of Commandos

July 19, 2009

The targets for Israel's attack on Iran have been chosen: one is close to the sea, the other is inland. Members of Sayeret Matka"l are now conducting joint (often nightly) exercises with Israel's Navy SEALS (the "Shayetet") off the coast of Ashkelon and on the beaches of Haifa. While the deployment of the commandos and other ground forces will be done mostly by air, their evacuation, 4-6 hours later, will be accomplished by sea.

The role of the commandoes was re-defined last week to exclude the kidnapping of Iranian scientists. This change in operational goals followed a row among the upper echelons of Israel's military and intelligence community. Now, Israel's elite warriors are merely to return with soil samples and equipment from the facilities in the wake of the aerial bombardment. They are also to mine the area and to detonate explosives in sensitive locations. They are to avoid Iranian losses of life and collateral damage. Two Mossad A-Teams are already in operation inside Iran, close to the coast, having been deployed there by a submarine last week.

Faced with what it regards as an existential threat, Israel is reviving old and dormant intelligence networks and assets worldwide. Erstwhile members of the Lishka le-Kishre Mada (Laka"m, headed in the 1980s by Rafi "The Stinker" Eitan), or the "Bureau for Scientific Contacts" of Pollard infamy, were recently called to duty. They are working closely with physicists from the Weitzman Institute, the Technion, and Tel-Aviv and Beer-Sheba Universities. These combined team of seasoned intelligence operatives and top-level scientists have spent the last two weeks briefing the commando units in their base of operations near Eilat and in the nuclear reactor in Dimona.

Prominent members of the Israeli government, the Headquarters of the Israeli Defense Forces, and the intelligence community are against any military operation in Iran. They believe any such a move would be tantamount to geopolitical and, in the long-term, physical suicide. But they are in the minority. The majority of decision-makers are siding with Prime Minister Binyamin Netanyahu who is pressing for an early military resolution of the problem.

Yet, the very phrase "military solution" is an oxymoron, claim his critics. Iran's nuclear program is spread over 60 sites, some of them deep inland. Redundancy is high and there is no way to take Iran's nuclear capacity out as was done in Iraq in 1981 and in Syria, lately. Better to wait for political change and voluntary disarmament as happened in Libya, they insist.

Attack on Iran: Israel Turns to Russia

July 22, 2009

Russian senior air defense officers, accompanied by mid-level diplomats have recently visited Israel. The discussions focused on Iran and their contents are only partly know. Israel may be asking Russia to leverage its growing influence within Iran to rein in the latter's nuclear weapons agenda. In return, Israeli sources claim that Israel has shared with the Russian visitors intelligence, including hard to obtain HUMINT, about the Iranian leadership, its oil economy, and military. The Americans were apprised of the discussions. Israel asked Russia not to supply Iran with strategic air defense systems "in the next 3 months" (presumably, until after Israel's aerial bombardment on Iranian facilities). Russia remained non-committal, "noting" Israel's concerns.

Out of courtesy, Netanyahu decided to postpone any military action until after the visit of Gates, the US Defense Secretary at the end of July. But this should not be construed as an abandonment of the martial option. On the contrary: exercises have been stepped up, live ammunition and all. Some of these are taking place at nighttime. Are the Israelis going to attack during the night? Doubtful. But they are sure going to use the cover of the dark to try to rescue pilots shot down over hostile territory and to extract trapped warriors. This means that they will attack in the afternoon, at around 2 or 3 PM.

Stuxnet Worm and Middle-East Peace Talks

September-October 2010

Stuxnet is a worm which attacks Siemens SCADA industrial controls. It uses various vectors to enter a system and spread through a network. It leverages two zero-day software vulnerabilities (largely patched by Microsoft by now) and two pilfered digital certificates from Taiwan. It was developed by the resurrected Lishka le-Kishre Mada (Laka"m) in the Office of the Prime Minister: the same unit that handled Jonathan Pollard when it was headed by Rafael (Rafi "the Stinker") Eitan in the 1980s. Its aim was to attack the PCs and, later, the industrial controls of the Iranian uranium-enrichment facility in Natanz (not in Bushehr, as the Iranian misinformation campaign would have it).


The worm contains a "time-bomb" in the form of an Easter egg: a backdoor kernel rootkit. It was set to be activated on Yom Kippur (the Jewish Day of Atonement). The key to its activation was steganographically disguised as a snippet of minacious Biblical text. Following the incapacitation of the facility in Natanz, Israeli forces were to follow with a multi-frontal military attack (for details, see below).


Yet, it was not to be. Netanyahu called it off on September 1, 2010, following a phone call from Hillary Clinton, the US Secretary of State. Former Bush administration officials also warned Israel against civilian casualties incurred by a cloud of radioactive fallout should an attack on physical facilities be attempted after the end of August.


I have been contacted by Israeli intelligence operatives who disputed and denied some of my claims: the reason the operation was terminated was because Stuxnet did its job and ruined more than 5700 centrifuges in Natanz (as well as the controls in Bushehr). A few of the centrifuges blew up and there were civilian casualties, including many technicians and maintenance personnel in Natanz. The Iranian government and military have censored and suppressed this information.


Obama invited the leaders of Israel and Palestine (as well as Egypt and Jordan) to Washington for a peace conference in early September 2010 in order to forestall an imminent Israeli attack on Iran scheduled for September 18-20, 2010. Israel exacted a price for its newfound transigence in American jet fuel and spare parts deliveries as well as access to enhanced intelligence sharing.


Israeli hardliners in the coalition government (and even in the Labor Party) militated against Israel's participation in Obama-Clinton's hastily-convened "negotiations" and the Israeli concessions that are already on the table. Some even resorted to labeling Netanyahu a "traitor" whose personal fate is, thus, sealed. Iran's recent, much-flaunted advances in missiles and drone technologies; the fueling of the Russian-equipped Bushehr nuclear reactor; Iran's improving relations with Turkey and Brazil; and, above all, the dramatic increase in the number of operating uranium-enriching centrifuges - all these led an increasing number of Israeli military thinkers and statesmen to accept the inevitability of a preemptive strike on Iran. Nobel prizewinner Shimon Peres is the last but not the least of these recent converts.


A recap of recent developments:


Late last year, Israel embarked on a coordinated campaign of leaks to the press regarding its determination to take out Iran's nuclear facilities if Obama's then-new administration fails to sway the Iranians diplomatically. Israel is unwilling to accept a nuclear Iran: "It is not an option", say its senior intelligence and military leadership. In the event, the promised attack on Iran did not materialize and many journalists, this author included, felt duped and manipulated.


Iran, Israel on Verge of Agreement


October 6, 2012


Prompted by senior figures in both the current, Obama, administration and the previous, Bush administration, Israel agreed to major concessions in secret negotiations with Iran which have been taking place in Geneva since April of last year.


The outlines of the emerging agreement, which is officially sponsored by the P5+1 (the permanent members of the UN Security Council and Germany) are:


1.     Israel will accept Iran's right to pursue a nuclear program aimed at peaceful purposes and subject to international supervision by the IAEA (International Atmic Energy Agency) and P5 representatives. Israel will also renounce the use of force against Iran;

2.     Iran will agree to limit its stockpile of enriched uranium to 100 kilograms and 20% enrichment level and to use said enriched fuel only in its research facilities and for peaceful purposes;

3.     Russia and China will enrich uranium for Tehran and will provide Iran with ready-made reactor fuel plates as well as relevant technology transfers.


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