Three decades of cash, weapons and training aid for the Shia Hezbollah militia in Lebanon has paid off. While only representing about a third of the population, Hezbollah has bribed, bullied and connived itself into a position where it now controls the government (via deals with several non-Shia parties in parliament). Iran has offered military assistance, in the form of cash to buy weapons for the Lebanese military, and integration of that force into the Hezbollah militia (which is stronger than the Lebanese armed forces.) Many Lebanese oppose Iranian domination (via Hezbollah), but for the moment this opposition has been outmaneuvered. That may not last. There is no guarantee that Hezbollah will win, in the end.
In Iraq, the Iranian subsidized militia of Iraqi cleric Muqtada al Sadr has been defeated in battle and forced to keep a low profile. Muqtada al Sadr was forced to flee Iraq, to Iran, four years ago because of threats to his life. Sadr had used death squads to kill rivals, and many powerful Iraqis want revenge. When Sadr returned to Iraq last January 5th, he thought he had made deals to call off the assassins. But apparently not, as two weeks later, he fled back to Iran. Iraq has been hostile to Iran because of Iranian support for political militias in Iraq. Then there's the matter of southern Iraq, which many Iranians consider part of Iran.
Iran needs all the allies it can get, because its own military is a mess, after three decades of sanctions, and a policy of promoting officers and NCOs on the basis of loyalty to the religious dictatorship, not for having military skills. There are actually two militaries; the regular one, and the Revolutionary Guard. The latter recruits Islamic zealots willing to die to protect the religious dictatorship. But these guys are more fanatic than professional. Against Afghan drug smugglers and drug dealers, the Guard can be effective. But this is more police work than military operations. More money is being spent on these anti-drug efforts, because drug addiction is a major, and growing, social problem.
With little access to modern weapons and equipment, and poor leadership, the Iranian Revolutionary Guard is not very effective against professional troops. To counter this lack of technology, the Revolutionary Guard issues regular announcements of new weapons. These usually exist only in prototype form and rarely enter actual service. The latest wonder-weapon is a ballistic missile that can hit warships. The wonder-weapons are mainly for public relations, to build morale among the population. Within the military and Revolutionary Guard, it's no secret that these weapons don't exist. The military tries to cope with the shortages, while the Revolutionary Guard members don't really care, as they are on a Mission From God, and reality is not all that important.
The government executed (by hanging) 67 people in January. If it keeps up at that rate, over 800 will be killed this year, a sharp increase from 179 executed last year. While most of those killed continue to be people involved in drug smuggling or distribution, dozens of political reform activists have been condemned, or executed. One of those hanged had claimed to be God. The Netherlands is angry at Iran for executing a 46 year old Iranian woman who was also a citizen of Holland. The woman had joined in demonstrations in 2009, and was later of accused of being a drug smuggler.
Iran is becoming increasingly hostile to Sunni Arab radical groups, even though Iran and these organizations are both out to destroy Israel and the United States. The cause of this rift is growing hostility towards Shia (10 percent of Moslems) from the Sunni community (80 percent of Moslems). For example, Al Qaeda recently began condemning Shia as part of a Christian-Shia conspiracy to destroy Islam, particularly Sunni Islam. Thus despite Iran's enthusiasm for Islamic radicalism, it can find few allies, and many enemies, in the Moslem world.
February 8, 2011; China has agreed to build 5,300 kilometers of railroad in Iran, for $13 billion. China is a major buyer of Iranian oil, and seeks to offset those purchases by doing a lot of business in Iran. Given Chinese willingness to ignore economic sanctions against Iran, this has led to trade between Iran and China going from $400 million a year in the 1990s, to nearly $25 billion a year now.
After nearly a year of denials (about moving 13 cargo containers of weapons through Nigeria to another African nation), Iran admitted that the weapons were Iranian, but that the decision to label the containers something else (to disguise the contents) was the decision of a private shipping company, not the Iranian government. Moreover, Iran claimed (incorrectly) that this deal was not covered by the sanctions. Admitting their involvement in this illegal arms export incident was not a surprise, as the evidence was overwhelming. Iran also admitted that the weapons were headed for Gambia (which has since severed diplomatic relations with Iran because details of this secret deal were revealed). Iran also admitted that the 13 containers of arms were actually the third of three shipments to Gambia. In effect, Iran is telling the rest of the world that the sanctions are an obstacle to Iran, not something Iran feels any obligation to obey. Iran continues to recruit individuals and companies to help smuggle materials needed to sustain ballistic missile and nuclear weapons development.
February 5, 2011: With the help of China, Iran has completed the expansion of its largest oil refinery. The Imam Khomeini refinery, in Central Iran, is now the largest in the Middle East, having increased its capacity from 160,000 to 250,000 barrels of oil a day. The refinery is capable of producing 16 million liters (4 million gallons) of petrol (gasoline) a day.