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The shock of losing half their oil income in less than a year has accelerated a trend in the Iranian economy. For the last few years, popular anger at how the corrupt clergy mismanaged major portions of the economy has forced religious leaders and organizations to surrender control of many large state-owned enterprises (especially those involved with the oil industry). The government has called this privatization, and it is, but the crucial thing is that it transfers control to more competent managers (either wealthy investors or the large retirement funds that supply half the population with old age benefits). The government hopes that more efficient management of these assets will help deflect the growing public anger at the loss of benefits the missing oil income provided. Some of that pain has been delayed by drawing on financial reserves, but if the new sanctions continue to succeed, the public mood could get very nasty.
Meanwhile, all these changes are causing more arguments within the small (several dozen senior clerics) ruling elite. The clerics are not able to actually run the country but they have veto power over any government decisions (including who can run for office). Many clerics now believe that substantial changes must be made to the way Iran is run. More conservative clerics do not want to risk losing all the power they have enjoyed for three decades. The "1979 Revolution" wasn't supposed to establish a religious dictatorship. But after Saddam Hussein invaded in 1980 (hoping to grab some Iranian oil wells while Iran was weakened by the recent revolution), the subsequent eight year war (that ended in a stalemate), allowed radical clerics to basically stage a coup and establish a religious dictatorship that persists to this day. The clerics brag of mighty economic and cultural achievements but most Iranians know it's a lie. They look at the other oil producing nations in the Gulf and note that, with market economies and more political freedom, those Arabs have done much better with their oil money. This is particularly humiliating for the average Iranian, who knows that for thousands of years Iranian military, economic, and cultural power dominated the region. But now, because of a bunch of wild eyed clerics and their heavily armed secret police and private army of "revolutionary guards," Iran has been reduced to poverty and backwardness. The government issues more and more outlandish press releases about economic and military achievements that exist only as public relations stunts. The new weapons are crude prototypes, the "Iranian space satellite" is a clone of what Russia did in 1957, and the economy is largely lies and corruption. The new oil sanctions are, as many senior clerics fear, the last straw and what may trigger a mass movement towards democracy.
The government has begun blocking Internet users employing encryption (including that used in VPNs) on some Internet traffic that leaves or enters the country. The main reason for this new policy is the need to keep anti-government, obscene, or blasphemous (to Islam) material out. The government still allows government and some businesses to use encryption. With the new restrictions the government will also have an easier time spying on people. As with similar efforts in the past, these new restrictions are expected to be largely ignored or circumvented by more expert Internet users. But for many Iranians this means less freedom on the web.
Iran has several allies in this battle against sanctions. One such ally is Pakistan, which is ignoring American threats of sanctions and continuing to build a natural gas pipeline between Pakistan and Iran. This would enable Pakistan to deny the sanctions by importing Iranian natural gas and paying with goods (barter).
Evidence continues to accumulate that Iran is building a Cyber War capability. Internet security experts say there is more and more evidence that a government sponsored group of hackers is getting more skilled and ambitious as they learn to use their hacking tools and techniques. These new capabilities will be used to support overseas terrorist and espionage activities, as well as to improve Iranian defenses against hacking. Based on past experience, it’s expected that these hacking skills will also be used to assist illegal scams to raise cash for the Iranian government. Iranian leaders have long had an outlaw mentality in that respect, justifying this bad behavior as something necessary to carry out their Mission From God to establish a worldwide Shia religious dictatorship.
Despite continued demands from the United States, Iraq continues to allow Iran to fly weapons and military personnel into Syria via Iraq. Last year Iraq gave in to foreign pressure (especially from the United States) and agreed to inspect all Iranian aircraft passing through Iraq on their way to Syria and check for weapons. Iran protested but agreed. In practice Iraq did not inspect most Iranian aircraft, and those that were forced to land for inspection were found to be clean (apparently because the Iranians were warned in advance). There is ample evidence on the ground that weapons, spare parts, and all manner of military equipment are being flown in from Syria via Iraq. Meanwhile, Iraq complains that it simply does not have the resources to halt and inspect all the Iranian air freighters passing through on their way to Syria. In more practical terms, the Shia dominated government of Iraq feels obliged to remain on friendly terms with Iran. For one thing, Iran is run by a Shia religious dictatorship and so far the Iraqi elected Shia officials have managed to persuade the Iranian leaders not to support that minority of Iraqi Shia Arabs who want to establish a religious dictatorship in Iraq by force (and terrorism). There’s also the problem that Iranian efforts to become the leader of the Moslem world has brought it into direct confrontation with the Gulf Arabs (especially Saudi Arabia, a Sunni kingdom where the Saud family justifies its rule by being the caretakers of Islam’s most holy shrines). Iran believes it would be a better guardian of those shrines and all of Arabia (and all of its oil). This makes even Iraqi Shia Arabs nervous because this is all about the Indo-European Iranians wanting to dominate the Semitic Arabs. The Iranians have been kicking the Arabs around for thousands of years, and that only slowed down a bit when the Arabs managed to convert Iranians to Islam 1400 years ago. Now that conversion is backfiring and all Arabs are nervous about it.
March 17, 2013: Saudi Arabia arrested 18 men (16 Saudis, an Iranian, and a Lebanese) on suspicion of spying for Iran. Saudi officials say they have obtained proof of this from the 18 suspects.
March 16, 2013: The government announced that it had arrested and charged 18 people for involvement with the murder of five senior officials involved with the nuclear weapons program. No other details were given.
The navy received its first Jarmaran 2 class corvette. This is a 1,400 ton vessel armed with one 76mm gun, missiles, and a helicopter. Basically it is an improvement over the earlier Jamaran class corvettes. Two of these have been put into service so far. Until the Sina-7 came along the Jamaran class was the largest locally built surface warship in Iran. One of the Jarmarans was assigned to the Caspian Sea, the other to the Indian Ocean. The Jarmarans were described as “destroyers” when first announced (as under construction) six years ago. In fact, it's a 1,400 ton corvette. The new ship has a crew of 140 and is equipped with anti-aircraft, (one 40mm and two 20mm cannon, four small missiles) anti-submarine (six torpedoes), and anti-ship (four C-802 missiles) weapons. At the moment, the Jarmaran seems to be filled mostly with hope and press releases. The navy made a point that the Jarmarans 2s were better built than the original Jarmarans.
March 15, 2013: The army has given local commanders the authority to immediately respond to any attacks by foreign forces.
The U.S. put sanctions on a Greek businessman and his activities, after accusing him of running a network of tankers to secretly move Iranian oil to buyers who were willing to risk prosecution and fines to get cut-rate Iranian oil. While Iran has been scrambling to find ways around the sanctions, they have a major problem with the fact that oil is a bulk commodity that has to be transported by large ships that the Americans can trace (and have a lot of experience doing this sort of thing).
March 12, 2013: An air force F-4 jet flew towards an American MQ-1 Predator patrolling off the Gulf coast. The MQ-1 was in international waters (more than 22 kilometers from Iran) and American forces monitoring the local air space feared that the Iranians were going to try and shoot it down. The Iranians had tried this before and may have actually shot down smaller American UAVs that were near their border in the past. Last November an Iranian F-4 fired two missiles at an MQ-1 in a similar situation, but both missiles missed and the F-4 turned away rather than try an attack with cannon. The U.S. told Iran that there would be repercussions if they tried that again. This time two American jet fighters were nearby, apparently in case Iran tried to attack American UAVs, and told the approaching Iranian F-4 that it would be attacked if it got any closer. The Iranian jet turned away and was never closer to the UAV than 25 kilometers. An Iranian F-4 would not last long against any current American jet fighters.