July 28, 2012: While Iran has added a lot of new weapons (especially Chinese missiles) to its arsenal in the last decade, its military leaders are well aware that their opponents (the Gulf Arabs and their Western allies, especially the U.S.) have also upgraded, and generally beefed up, their military power more than Iran has. Much of the Iranian buildup was largely propaganda. Most Iranians don't know this but Iran's enemies and Iranian military leaders (most of them) do. Thus Iran recently backed off on its threats to try and block the Straits of Hormuz (the entrance to the Persian Gulf, through which most of world oil exports move) as long as Iran was still allowed to use it.
Iran continues to refuse to negotiate restrictions on its nuclear power program and denies that it is working on nuclear weapons. Iran is equally opposed to any limitations on its ballistic missile program and is apparently trying to develop an ICBM that could hit North America. Iran appears to understand that possessing nuclear weapons (no matter how primitive) will compensate for their growing inferiority in non-nuclear weapons. Israel and Gulf Arabs are terrified at the prospect of Iranian nukes.
Iran is accusing Israel of carrying out the July 18, suicide bombing in Bulgaria that killed seven (including five Israelis). This is in response to the growing pile of evidence that Iran was behind the attack, in an effort to strike back at Israel for the many successful Israeli assaults against Iran's nuclear weapons program in the last two years. Iran has openly vowed to strike back, and Israel claims that Iran has agents in 24 countries trying to organize attacks. In the last year Iranians have been arrested in eight countries and charged with planning terrorism against Israel. Documents, weapons, and explosives have often been seized as well. Iran denies everything but the pattern is embarrassing. Bulgarian and Israeli investigators have tracked the July 18th attacks to a team that had spent a month in Bulgaria setting things up. It is believed that Iran used Hezbollah personnel to help organize this operation. It is believed that the bomber was a European (he had fair skin and blue eyes) who had been hired to smuggle drugs and that the bomb was set off remotely by the terrorist team that hired him. The bomb was apparently set off prematurely because the bomber (who had the bomb in his backpack) had gotten into an argument over wanting to carry his bag onto the bus instead of keeping it in the cargo area under the passenger compartment. The bomber was carrying fake American documents and remains unidentified. Hezbollah is heavily involved in the drug trade and has many operatives and supporters in Europe.
Another form of terrorism, Internet monitoring and censorship, is conducted indoors. Following China's lead (and apparently with some Chinese help) Iran has made using the Internet difficult and sometimes dangerous for Iranians. Not only are thousands of "anti-Iranian" web sites blocked but most Iranians have their messages (via email or posting to web sites) monitored for suspicious content. There is a major effort by Iranians overseas to help their compatriots back home evade the censorship and monitoring, but Iranians caught participating in this can go to jail or be prosecuted for espionage (a hanging offence).
Iran is applying its smugglings skills (acquired over decades of beating American and UN weapons sanctions) to help sell its oil. The new round of sanctions makes it much more difficult for Iran to export oil. So Iranian agents are offering deep discounts to buyers willing to create false documents and move the Iranian crude. This is risky, for those who get caught can be prosecuted, jailed, and fined. But Iranian smugglers know who is willing to take chances, if the payoff is large enough. Selling oil at discounts of 30 percent or more still costs Iran. So also does the expense of secretly buying tankers that will pretend to belong to another country while moving the black market oil. The U.S. and the UN are alert to these schemes and the great game of cat and mouse. While Iran has been successful in the past, that was because it was often moving items (like weapons components) that could be hidden in a cargo container. Oil is another matter. Iran has experimented with using shipping containers to smuggle oil but this is very inefficient and you can still get caught. Iran fears that between the CIA (photo satellites and spies) and the maritime insurance industry (that monitors world shipping) it will be very difficult to move the illegal oil. How difficult will probably be known by the end of the year.
July 27, 2012: The government confirmed rumors that it was importing additional food (mainly wheat, cooking oil, sugar, and rice) and explained that it was doing this to create a three month emergency supply of food for the entire population. This was to allay growing fear of food shortages and provide a tool to control rapidly increasing food supplies. That has been caused by difficulty importing some food items and prices for those items skyrocketing. There's also more panic buying of staples, causing local shortages of those basic foods (wheat, cooking oil, sugar, and rice) and driving up prices. Inflation is currently running at over 30 percent a year. The official government rate is 21 percent, but no Iranian who has gone shopping lately believes that. While the government subsidizes the prices on some food items, many unsubsidized items cost three times what they did a year ago. There have been videos of recent street protests against the high prices for meat.
July 24, 2012: Bowing to the inevitable, the government announced large (as much as 30 percent) budget cuts and investing more in local production of goods, so that fewer things have to be imported. The sanctions have cut oil exports by as much as 40 percent, which means less foreign currency to pay for imports. Even when money is available for imports the sanctions make importing anything more difficult.
July 23, 2012: The government announced that it had arrested more of the assassins who have been killing Iranian nuclear scientists. It appears that the Iranians have not caught any of the real assassins because no evidence has been produced. Iran has done this before, arresting some people they don't like anyway, prosecuting them using fabricated evidence, and then maybe even hanging a few. The "show trial" was not invented by the Russian communists in the 1930s. It's been around a lot longer than that and still works, sort of.
July 22, 2012: Iran's clerical dictatorship has ordered a new round of morality raids. The religious (or "lifestyle") police raided hundreds of coffee ships and Internet cafes and shut many of them down. As expected, a lot of women were found not wearing their head and body coverings and were arrested. There is an element of class warfare in all this, as the raids generally hit the fifth of the population (including many children of the senior clerics and government officials) that can afford such amenities. The kids with influential parents get released (and yelled at back home) but the growing number of very poor Iranians feel a little better.
July 21, 2012: The government is cutting back on the amount of foreign currency (especially dollars) Iranians can buy (at a discount) to pay for imports. The cost of those dollars, on the open market, has doubled in the past year. The government will still provide cheaper (up to 37 percent cheaper) dollars for critical imports and pricier dollars for less critical items. But a growing number of items are now classified as "luxuries" and no cheap dollars are available.
July 20, 2012: India has refused to allow three Iranian banks to open branches in India. Despite the large amount of trade between the two countries, the banks in question had a reputation for dealing with criminals and Islamic terrorists.
July 19, 2012: President Ahmadinejad publicly commented that the suicide bombing attack in Bulgaria was a response for the Israeli attacks on Iran. Ahmadinejad did not elaborate and Iranian media did not repeat those comments, instead insisting that Iran had nothing to do with the attack.
July 18, 2012: In Bulgaria a suicide bomber got on a bus full of Israeli tourists and detonated his explosives. This killed himself, five Israelis, and the Bulgarian bus driver. Israel promptly accused Iran of being responsible.
Yemen has openly called on Iran to stop sending spies and weapons to Yemen. This was in response to the recent arrest of an Iranian officer who was caught trying to enter the country, using false documents, to organize a spy network. Yemeni security forces captured documents and recorded phone conversations and text messages sent by members of the spy organization. Iran has long supported Shia tribes in northern Yemen, who have been fighting for greater autonomy. Last month two Iranians were arrested in Kenya and bomb making material and incriminating documents seized. The two are being prosecuted as Iranian agents trying to organize terror attacks in Kenya.
July 17, 2012: The American Secretary of Defense stated that the U.S. would not allow Iran to block the Straits of Hormuz. The U.S. has been reinforcing its military forces in the Persian Gulf since the beginning of the year. This is apparently in the belief that, as the new sanctions begin to do more and more damage, Iran might strike out with force.
July 13, 2012: The U.S. has accused two men (one from Iran, the other from China) of attempting to obtain nuclear weapons components and trying to smuggle them to Iran. The two are under arrest and headed for trial.