The government boasts of how GDP has grown at the annual rate of 4.4 percent during the first three months of the year. That sounds good but at the start of 2016 the government announced plans to achieve GDP growth of 8 percent a year via foreign investment of over $30 billion a year. That is not happening for reasons most Iranians know all too well and the government is reluctant to even mention. This is the notoriously corrupt Iranian bureaucracy. The religious dictatorship tolerates a lot of this corruption in order to assure the continued loyalty of many key supporters. But the majority of Iranians, and most foreign investors, are victimized by the corruption. Even the Chinese and Russians are wary, but both of these nations are even more corrupt and know how to deal with corruption encountered overseas. The Chinese and Russians do this with threats and whatever else (legal or illegal) that will protect their investments. This works often enough to keep doing it although neither Russia nor China invest for the long haul overseas. Corrupt nations tend to be politically unstable in the long run and when the revolution comes the foreign investors are usually big losers. Moreover the current Iranian government is kept in power largely because of the many religious fanatics willing to die to protect religious rule. China and Russia are not officially denounced by the Iranian government (as the U.S., Israel and West are) but China and Russia are not seen, by most Moslems, as friends of Islam. In short, Iran is a dangerous and unpredictable business partner and shows no signs of trying to change that. A lot of Iranians agree, which is one reason Iran allows so many well educated Iranians to emigrate. That simply reduces the number of potential (and more able) rebels. Meanwhile other regional powers with a tolerance for corruption, like India, Pakistan and most Arab states, are also able to invest in Iran with a reasonable chance of success and are increasingly doing so. But Iran needs Western tech and trade as well and that is proving more difficult to attract. Meanwhile the corruption continues to cripple the economy, even though it is now growing again because of lifted sanctions.
The Axis Of Convenience
The government is trying to put together a new military-diplomatic coalition with Russia and Turkey. Russia is willing, given that Russia has few real allies these days. Turkey is another matter. Turkey is run by an increasingly corrupt and undemocratic Islamic political party that is in the process of purging members of rival political parties (religious and secular) from the government and major institutions. However Iran and Turkey reaffirmed, in June that both nations were dedicated to dealing with Sunni Islamic terrorism, especially in Syria. Turkey is largely Sunni but has been threatened by Sunni Islamic terrorist groups for years. Turkey and Iran are also traditional enemies but that rivalry has been on the back burner for centuries. The two nations have become major trading partners and both tend to accentuate the positive these days, especially in the face of the ISIL (Islamic State in Iraq and the Levant) threat. In particular Iran wants to partner with Turkey and Russia to put down the rebellion in Syria and restore the Shia Assad dictatorship to full control of the country. Turkey wants peace in Syria, if only to shut down a base for Islamic terrorists and separatist minded Kurds. But there is the Shia angle. Russia just wants something resembling an end to the fighting in Syria so it can declare victory and go home.
Meanwhile Turkey, Syria and Iran will still be there. Turkish leader Erdogan is a Sunni but many Turks call him “The Sultan” and a wannabe dictator because they suspect he wants to restore some form of Turkish military, economic and religious domination of the region that Turkey enjoyed for over 500 years until the Turkish Ottoman Empire collapsed in 1918. Turkey, the nation most able to settle the mess in Syria, will be sidetracked by messy domestic politics for a while. Yet there lasting issues that unite Turkey and its neighbors. In the long run the Turks, the Assads, Iran and the Iraqi government all agree that an independent Kurdish state is a bad thing and must be prevented at all costs. Kurds in Syria and Iraq have proved to be the most effective local fighters when it comes to dealing with ISIL. For centuries the Kurds have wanted to unite in their own state and use the portions of Turkey, Syria, Iraq and Iran they currently live in to do that.
But there are complications when it comes to Iran and Turkey. The growth of ISIL led Turkey to repair relations with Israel, something which antagonizes ISIL and Iran a great deal. To make that even more annoying Egypt and the Gulf Arabs have also improved their relations with Israel as a result of the Islamic terror threat. Turkey, Egypt and the Gulf Arabs all had developed links with Islamic terror groups over the years but by 2015 realized that Israel was a better ally and certainly less dangerous than Islamic radicals. Arabs criticize Iran, with much justification, for continuing to openly support Moslem terrorism against other Moslems. This is done largely with the Quds Force to help Shia Moslems attack Sunni or simply defend themselves from Sunni terror attacks. Many Arabs miss the Turks, who ruled the region for centuries. While Erdogan has, since the 1990s, talked about Turkey resuming a leading role in the Islamic world, neither Iran nor the Arab states that used to be part of the Ottoman want to again have to deal with a Turkish sultan (the ruler of the empire and also the caliph of the Islamic world). Iran and Saudi Arabia are fighting over who should replace the Turkish caliph (which Turkey renounced in the 1920s) and agree that Turkey should stay out of this struggle.
This temporary Iran-Turkey-Russia alliance could impose peace on Syria, mainly in the name of destroying ISIL and related Sunni Islamic terror groups in Syria. But Islamic terrorism, both Sunni and Shia, would remain. Iran is quite open about how it still supports Shia militancy and the Sunni Moslems that dominate the Arab world have still not agreed, much less acted on, a permanent solution to the recurring (for over a thousand years) Sunni Islamic terrorism. The proposed triple alliance might work in the short term, but not for any longer than that.
Hating Israel Is Mandatory
Supreme leader Ayatollah Ali Khamenei has made it clear this year that the official Iranian position is that any Moslem nation (especially Saudi Arabia and Turkey) that improves relations with Israel is betraying Islam. Along those lines Khamenei also repeats his belief that the United States cannot be trusted and he makes a big deal about how the economic sanctions the July 2015 treaty lifted are not the main economic problem Iran has to deal with. That would be the low oil price, which is Saudi Arabia’s way (along with some other local Sunni oil states) to put the hurt on Iran. One reason for seeking nuclear weapons is to give Iran the ability to persuade the Saudis to ship less oil and let the price go up. After that there will be the demand to let Iran run the Moslem holy places in Mecca and Medina. The Saudis are not willing to make deals and remain firm on their oil policy. Khamenei regularly lets the Iranian people know that their continued poverty is the fault of the Gulf Arabs and their allies (especially Israel and the United States).
Seen from the other side of the Gulf Arab nations have been getting closer to Israel for years and are now quite open about it. Arab states created and sustained the Islamic terrorism but can’t admit that. Israel is the most successful local power when it comes to dealing with Islamic terrorism and is willing to work with Arab states and not make a big deal about where all the Islamic terrorism comes from in the first place. That’s a problem the Arabs in particular and Moslems in general have to deal with.
What Arabs and Iranians both downplay is that the American fracking technology is changing the oil market. Even with record low prices the fracking industry survives and as the price of oil goes up more fracking operations resume production.
While Iran has been successful dealing with external enemies, that is not the case with many internal problems. One of the worst of these is drug addiction. Currently about three percent of Iranians are addicted to methamphetamine, opium or heroin. The most recent and most troublesome of these drugs is methamphetamine (“crystal meth” or “speed”) a synthetic narcotic that is manufactured in Iran and sold cheap. Unlike opium and heroin from Afghanistan, meth can be made locally and since 2014 it has become a popular business opportunity for many unemployed but technically adept Iranians. The government has been finding and destroying dozens of meth labs each month and executing a growing number of those caught making or distributing the drug. That has not slowed it down because meth is cheaper and faster acting than opium and as a stimulant has legitimate uses for people who have to stay alert for long periods at work. So much is being produced in Iran that more and more is smuggled into neighboring countries with the help of bribes to Iranian and foreign border police and coast guards.
Iran makes no secret of its desire to become the dominant foreign influence in Iraq. It uses religion, aid, diplomacy, threats, bribes and whatever else it can to obtain, maintain and expand that influence. Despite all that the Saudis are keen on maintaining a dominating influence in Iraq because Iraq is a largely (80 percent) Arab country that is majority (60 percent) Shia. The religious angle puts Iraq in an awkward position. The Iraqi Shia Arabs don’t want to be dominated by non-Arab Iran (where Arabs are openly despised) but also don’t want to be dominated by their Sunni Arab neighbors and especially not by their own Sunni Arab minority, which created ISIL and has been a major supporter of Islamic terrorism since 2003. Both Iran and Saudi Arabia seek to create an Iraqi government that is all one (Shia) or the other (Arab). So far this struggle has been a draw, which many Iraqis are OK with as long as the death toll is reduced. But the Iranians in particular are willing to shed a lot of Iraqi blood to get their own way. The Saudis have already done that with their unofficial support of Sunni terrorism in Iraq. Most of the foreign Islamic terrorists in Iraq since 2003 have been from Saudi Arabia, even though the Saudis officially disapprove of their citizens from going elsewhere to kill people for religious reasons. In reality most Saudis are fine with this but the victims in Iraq tended to be Shia Arabs and that is not forgotten.
While Iraqi Shia appreciate Iranian support against ISIL, they are constantly reminded that this support comes with dangerous conditions. Case in point is the need for air support during the upcoming battle to push ISIL out of Mosul. Iraqi military leaders know that American air support is crucial to the success of Iraqi forces in talking Mosul. The Americans have offered substantial air support during the final assault on Mosul. The U.S. led air coalition over Iraq and Syria has been averaging about a hundred attacks (using either a guided missile or smart bomb) a day in June and July. About a third of that is in Syria but more will be switched to Iraq when the fighting is heavy inside Mosul. The Americans have brought in more ground controller teams to operate with Iraqi forces and provide timely air strikes. At its peak there will probably be several hundred guided missiles and smart bombs a day used in Mosul. Iran-backed Shia militia refuse to use American air support at the same time the Iran is pressuring Iraq to allow these Shia militias to play a major role in the Mosul battle. Meanwhile the Iraqi Kurds are already using that air support heavily and successfully to continue their march south into the Mosul suburbs.
Many in the Iraqi government army leadership do not want any of the 100,000 or so Iran backed Shia militia involved in retaking Mosul. The Iraqi Shia that control the Iraqi government and military do not trust Iran and believe the Iran controlled Shia militias are being prepared to support an armed takeover of the current Shia controlled government. Many of the Shia militia are from Baghdad and there are growing fears that Shia cleric Ayatollah Muqtada al Sadr, an open fan of the Shia religious dictatorship in Iran, is planning to use his months long anti-corruption campaign in Baghdad as justification for an armed takeover of the government.
The Iran-backed Shia rebels in Yemen don’t believe the Saudi led Arab coalition is willing to risk the losses necessary to take the capital Sanaa. The rebels know that the public support in the Gulf oil states for participation in the Yemen war would rapidly erode if there were a lot of casualties among their troops. So far the rebels have been right about this. Yet the Saudis cannot afford to leave a hostile Iranian-supported enclave on their southwestern border and it appears the Saudis feel they have to do whatever it takes to prevent the Iran backed Shia rebels from remaining active. Meanwhile Iran continues to back the rebels, especially when it comes to propaganda. Iran and its allies Russia and China are all using their state controlled media to make the Yemen rebels look more successful than they actually are. Iran continues trying to smuggle in weapons and military supplies. Some of those efforts appear to be succeeding.
August 18, 2016: The leader of the PKK (separatist Turkish Kurds) said in a TV interview that the Iranian Kurds should stop fighting their government because that simply serves the interests of Turkey and Saudi Arabia. Better to organize a political party and work legally to achieve more for Iranian Kurds. This message was not popular with Iranian Kurds.
August 17, 2016: Some 500 kilometers southwest of the capital troops and police two clashed twice with armed Sunni Islamic terrorists, killing four and capturing six. The dead and captured were apparently ISIL members from Iraq.
The commander of the Quds Force (which specializes in supporting Shia Islamic terrorists and rebels) announced the formation of a permanent SLA (Shia Liberation Army) in Syria. This would be similar to Hezbollah in Lebanon. Iran helped create Hezbollah (to protect the Shia minority in Lebanon) in the 1980s and continued sustaining the group with cash, weapons, technical assistance and intense hatred of Israel. The problem with groups like Hezbollah and SLA is that they are ultimately working for Iran and that has been very disruptive to Lebanese politics. Iran ordered Hezbollah into Syria and the heavy losses in Syria were unpopular with Lebanese Shia and Hezbollah eventually had to pull most of its forces back to the Lebanon border and concentrated on keeping Islamic terrorists out of Lebanon. Iran took a huge popularity hit in Lebanon by forcing Hezbollah to enter the Syrian war in defense of the Assad government, which is hated by most Lebanese as well as most Syrians. This does not bother Iran as they see themselves as being on a Mission From God and so on.
August 16, 2016: Russia warplanes (Tu-22M3 bombers and Su-34 fighter bombers) began operating from an Iranian airbase at Hamadan (in northwest Iran). Iraq does not object to Russian warplanes flying overhead to and from targets in Syria. Russian bombers are hitting ISIL as well as other rebel groups in Syria. Use of this base is safer and cheaper than operating from a base in Syria, where attacks from Islamic terrorists and rebels in general are much more likely. Russia can get a lot of supplies locally and easily ship in stuff from Russia via ship (the Caspian Sea) and Iranian railroads. Iran is doing this because Russia is about to complete delivery of S-300 anti-aircraft missile systems and help get them operational.
August 13, 2016: The government revealed that at least 400 Iranians had died so far fighting in Syria. Not mentioned were the Hezbollah losses (over a thousand dead so far) and losses by Shia mercenaries recruited, trained, armed and led by Iranian officers and NCOs. Nearly two thousand of these mercenaries have died so far. Thus Iranian losses account for about one percent of the more than 300,000 who have died in Syria since the anti-Assad rebellion began in 2011.
August 11, 2016: In the northwest Iranian artillery fired several dozen shells at rural areas (Erbil province) on the Iraqi side of the border. It is believed the Iranians were (for the second time this year) firing on suspected PJAK (the Iranian Kurdish separatist group based in Iraq) camps in Kurdish controlled northern Iraq. Iran recently launched another offensive against PJAK operating on both sides of the border. Dozens of Iraqi civilians fled the area where the shells were landing but there were apparently no casualties.
August 9, 2016: Iran executed six more Kurds it had prosecuted on various charges. The Kurds are rebellious, often Sunni and not ethnic Iranian, which makes them very vulnerable. Iran has always been an empire, and still is and only half the population is ethnic Iranian. What gives the ethnic Iranians control is that they share power with the quarter of the population that are ethnic Turks (mainly Azerbaijanis) and this power sharing can be seen by the many senior clerics who are ethnic Turks. There is one big problem with empires and that is that there tends to develop a sense of "Greater Iran" which includes, at the least, claims on any nearby areas containing ethnic Iranians. Hitler used this concept to guide his strategy during World War II. Thus internal ethnic or religious opponents are dealt with harshly. There are still dozens of other Sunnis (Kurds, Baluchis, Arabs and others) on death row in Iran and all are expected to be executed eventually. Iran routinely ignores foreign criticism of its mistreatment of its ethnic and religious (Sunni, Sufi, Bahai, Christians and the few remaining Jews) minorities.
Iran Afghan and Iranian officials signed agreements which enable foreign cargo delivered to the port of Chabahar (in southeastern Iran) to enter Afghanistan without any additional tax problems or other restrictions. Iran and India are building the 1,300 kilometer long rail line from the port to the Afghan border in the north. Ultimately the Indians will provide over two billions dollars’ worth of investments for this project. That includes work on the port and new roads and railroads to Afghanistan and Central Asia. Because of the 2015 treaty that lifted economic sanctions on Iran India can now legally become a major investor. This project obviously helps Afghanistan but also hurts Pakistan, which currently monopolizes the movement of most Afghan imports and exports. This new agreement means a lot for India which is spending over $100 million to extend an Afghan highway to the Iranian border where the new rail link from Chabahar will end. This link will make possible Indian trade with Afghanistan, something long blocked by Pakistan. The port of Chabahar and its links to Afghanistan are to be operational by the end of the decade.
August 6, 2016: Pakistan and Iran agreed to work more closely to deal with ISIL activity in the region. At the same time Pakistan sees no problem in maintaining good diplomatic and military relations with Arab nations. Iran is not happy with that but does not get too loud about it.