Assessing The Damage In Iran

Post-election ‘tidying up’ continues throughout Iran as the regime reasserts its hold on power slowly but surely. It seems that many important networks hedged their bets until they could see which the wind was blowing.

The influential Society of Scholars of Qom Seminary waited until this weekend to remove its doubts and to throw itself behind the President with a message of congratulations. This is interpreted as clerical determination to place the survival of the Islamic republic above any other consideration.

However, the Financial Times also reports that the reformist Association of Scholars and Researchers of Qom Seminary, representing a minority of clerics, took a different view, questioning the legitimacy of the election.

This story seems to tell us that the regime may be secure but that the ‘reformists’ are beginning to coalesce around a narrative that is not necessarily revolutionary but that is almost certainly determined on change. It may yet come to power in a few years through constitutional means.

We also note the claims (still unconfirmed) that the Iranians plan to put on trial a local British Embassy staff member for allegedly helping to instigate the recent protests. This is the only one of the original nine arrested who is still in custody.

The Iranian authorities also released a Greek journalist: his arrest was for the rather mild matter of exceeding the duration of his visa. With the analyst far from certain to face charges, it is a question whether Western hysteria or Islamic villainy offers the best explanation of recent events.

We detect a sort of sub-racist attitude to Islamic justice based largely on some particularly nasty anti-homosexual and other communal incidents in the backwoods.

This is probably like condemning the US Constitution on the basis of lynching in the Deep South but liberals are determined to label this regime as only one step down from that of the Nazi Party.

Even if Western worries about an Iranian ‘white terror’ have clearly been overdone, the EU, at British request, was placing maximum but ratcheted pressure on Iran, starting with a summoning of Iranian Ambassadors and warnings of tougher measures, including visa restrictions.

However, it is equally clear that there was no stomach in Europe for a few possibly slightly naughty diplomatic auxiliaries to be allowed to derail a dialogue with Iran. The sentiment is likely to be similar amongst high officials in Tehran.

The problem here is that the conspiracy theory about Western interference is like the counter-conspiracy theory of vote-rigging. Both rely on suggestive circumstantial evidence. Neither side has full access to the facts available within the other side’s system.

In a sense, the West started this tit-for-tat in hysteria by shifting from criticism of the handling of protests in the direction of full acceptance of protestors' claims about the implied legitimacy of the regime.

Tehran now has every incentive and perhaps some need to create a show trial in which it can present its case, based on its intelligence data, for Western, specifically British, dabbling in its internal affairs.

From there, it can track back into the Iranians complicit with a plot which they may yet be able to prove (not necessarily as official at all) regardless of the protests of the FCO whose impotence is now out there for all to see.

The targeted individual is a ‘respected political analyst’ who could face a long jail sentence and it does point up the ambiguity when a local analyst offers advice to officials of a foreign power but the whole business does seem to have been over-egged by all sides.

Meanwhile, the Israelis continue to stir the pot with claims that Mossad has advised that, as a result of ‘secret’ talks with Saudi officials, the Kingdom would turn a blind eye to Israeli jets flying over its territory. The Saudis deny talks but Israel is clearly placing a direct attack on Iran back on the agenda.

There is much at stake. The question is not whether the arrested individual is released but whether the release is political despite any British involvement in Iran’s internal affairs in order to keep dialogue with the West on track.

And if the matter goes to trial, the issue becomes whether the trial is fair and fairly reported despite FCO determination to protect its own. This may all be sorted out diplomatically but the underlying questions surrounding the nature of British direct or indirect support for the reform movement remain unanswered.

The Israeli-Saudi reference is important in this context. Decision-making within Iran is taking place under the same perceived atmosphere of external threat that fuelled the turn to terror after the French and Russian revolutions. 

It will take some restraint on the part of the Iranian regime not to be provoked into unnecessarily draconian measures. If the UK and the EU are trying to calm things, the Israelis are clearly trying to fuel paranoia for reasons that are malign and dangerous both to peace and the reform movement.

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Dynastic Whim & Business Risk in the Gulf

When the credit crunch first hit British business, it seemed like a good idea to scuttle out of a depressed London and head for the black gold-fuelled shores of the Gulf. Like lemmings, panicked law firms and many others headed for the desert ... but is it really so risk-free in the long term?

A Contracting Gulf

The IMF has reported that the Gulf economies are now expected to contract in 2009, largely because of the slump in the oil price from its $147 peak in July 2008. The IMF has also noted the stresses in the banking sector, most notably in the UAE, as a result of the property collapse.

To be fair, contractors are now saying that Dubai developers are tentatively beginning to honour their contracts after months of delay. The colour is returning to the pale white cheeks of many a British businessman operating in the region. Yet, under the surface, all is still not fundamentally well.

There is, of course, no one single Gulf economy. Each Gulf state has its own economic profile. The massive reserves of both Saudi Arabia and of Abu Dhabi make these states very resilient, whereas Kuwait (outside the GCC), Dubai (a financially extended UAE component) and, possibly, Bahrain are not.

The issues are complex but a great deal depends on political stability. If local dynasties remain in charge then there is enough petrodollar cash floating around in the long run to ensure that the region will weather the storm and come out economically vibrant and strong.

Unfortunately, the strains of the credit crunch are raising the first signs of social unrest where it matters, in the middle classes who have most benefited from the recycling of petrodollars. We may be seeing the first signs of tension between popular aspiration and authoritarian leadership.

A Secure Saudi Arabia, A Flaky Dubai ...

In Saudi Arabia, much of this tension is alleviated by the fact that elite reformers have a voice within the regime. A split from the regime would only serve extremely conservative forces who have been troubled even by the weak reforms undertaken to date.

This tension will grow as it becomes clearer that the very conservative Prince Naif might become the next King at the expense of the equally conservative but more Westernised Prince Sultan. Reaction from the desert is more to be feared than a bourgeois revolution.

The smaller states are a very different kettle of fish. Their political problems with the middle classes fall into two broad categories. Discontent at economic mismanagement (Kuwait and Dubai) and the 'shame' of being arbitrary and feudal whilst claiming to be modern (Abu Dhabi).

Dubai is where most British business and professional service businesses have gone. It is Dubai that appears to be second only to Kuwait in being a potential basket case, dependant on the goodwill of its jealous and rich partner within the UAE, Abu Dhabi.

One clue to the seriousness of the situation is provided by the fact that the Director-General of Dubai’s Finance Department, Nasser Al-Shaikh, was removed from office late yesterday and replaced with Abdul-Rahman Saleh al-Saleh.

No reason was given for the removal from office but this will worry the business elite and the banking sector because Al-Shaikh was regarded as a young and realistic reformer amongst a bunch of feudal economic fantasists.

There may have been good reason for his removal but the suspicion must be that dynasts do not want modernisation if they then have to answer to technocrats. In another sign of trouble, shareholders have also staged an unprecedented walk-out at the AGM of Emaar, Dubai’s largest real estate company.

First Stage in a Regional Bourgeois Revolution?

It is hard to assess is how defiant the Gulf middle classes will become towards what will amount (in their eyes) to feudal incompetence if there is no recovery soon. Since there is still no real knowledge-based productive capacity, recovery can only mean another credit-fuelled boom based on the oil price.

This smells of the very first stage in a classic European-style ‘bourgeois revolution’ to the extent that Western diplomats may be secretly worried that the dynasts, at least in the UAE, appear not to be getting the message that reform, in the long term, is a matter of survival.

Here is the big problem - Abu Dhabi. Everyone in Europe is sucking up to Abu Dhabi because it is an open secret that its vast wealth is being played competitively yet almost randomly by competing dynasts seeking either personal status or dynastic political influence or both.

Observers are puzzled by the multiplicity of investment arms and their precise strategies. All that is clear is that Abu Dhabi has gone on a multi-billion dollar shopping spree – some $10bn has been invested overseas in the past six months and its purchases have been rather convenient for Western politicians.

The investments include entities as diverse as Daimler, Manchester City, the Chrysler Building and Barclays. The only credible interpretations are dynastic whim and fancy or of attempts to spend cash on shopping items with PR or political value.

If Abu Dhabi is trying to buy its way into influence, then this wasteful and opaque strategy may work. Desperate European elites want to offload bits of duff banks and manufacturing on Arabs keen to diversify family wealth and who want to buy strategic protection from Iran to the north.

Unfortunately for Abu Dhabi, these same European elites are about to feel some pressure themselves from below. Their new found friends are not exactly liberal. Whether labour rights in Dubai, women's or faith rights in Saudi Arabia or arbitrary justice in the UAE, these are rum pals for Western progressives.

The Meaning of the UAE Torture Case

[Please note that the link to the YouTube torture video may be disturbing]

The UAE ‘torture case’ recently exposed on YouTube is just one example of a pattern of feudal arbitrariness and incompetence. It is not the only one by any means. Domestic liberals and international activists are now turning their attention to this issue and towards other human rights issues.

There is some nasty historical baggage for most of the Gulf states (Qatar is probably most progressive in practice) unless they get to grips with putting in place a proper rights-based judicial framework and deal upfront with their own sorry history of torture, arbitrary asset seizure and even kidnapping.

The UAE wants something from the West - nuclear technology - and it is trying to play off an America highly sensitised to its own human rights abuses by warning that if it does not get what it wants, it will turn to some very greedy and amoral Europeans.

But hopes for a nuclear deal between the UAE and the US were severely complicated by the release of the torture video. Congressional resistance to the deal derives not only from human rights concerns but from fears related to the UAE’s role as entrepot for goods and services to Iran.

A deal would permit US civilian nuclear trade with the UAE and it was intended to be a reward for the UAE, an important Western ally. The UAE promised to forgo domestic enrichment or reprocessing – technologies that can lead to nuclear weapons capability - but the issue is this:

• if there is no rule of law in Abu Dhabi and everything depends on dynastic whim, promise-keeping about nuclear use also becomes a matter of whim and that way madness lies ...

What Is Needed ...

Meanwhile, the only example of democracy in the Gulf (outside Iran which is far more democratic than any other Western ally in the region) is Kuwait and it is looking decidedly dangerous from a dynasts’ perspective. The Saudis have not risked going beyond municipal elections and reforms to the Shura.

Kuwait is a political and economic basket case at the moment. This is a truly absurd state of affairs given its massive oil wealth. Its Parliament and Government have been in a state of near permanent confrontation for some time. Nor is this likely to change soon.

The Kuwaitis may have now elected four women members of the 50-member Parliament. This may be interpreted as a vote for wider change in the system by a discontented population but it is still not clear that dynastic arbitrariness and populist democracy can be squared.

What the dynasts really need is for the oil price to get back up to higher levels. Dynasts survive through patronage and subsidy. For all the talk of modernisation, the essence of Gulf politics remains eighteenth century in European terms.

Oil pushed through the $60 barrier this week for the first time since last year (though it drifted back a little later). The price had risen 85% since February (a five year low of $32).

OPEC has now increased output for the first time since prices peaked but a near-doubling since early 2009 is still less than half of what Gulf budgeting had expected a year ago. OPEC had set an initial target of $75 but it seems that the $50-$60 range is now regarded as acceptable.

What this tells us is that OPEC, in which the Gulf plays a significant role, is pleased, in a global recession, just to get what it can so that it can bail out some dreadful business models and hold the line against middle class rage.

Stability Through Baksheesh

The Gulf is in no better state than the UK politically. If New Labour was a machine for recycling the surpluses from an unsustainable credit boom for political advantage, undemocratic dynasts are little better than recyclers of the benefits of their historical luck in sitting on black gold and gas.

If New Labour has proved less than competent in managing the wealth created by an unsustainable boom, then the action of the Gulf dynasts raises similar questions about the political costs of their unsustainable business plans and over-ambition.

On balance, we think that the dynasts will survive. The West is restraining any Iranian attempts at destabilisation from below. A rising oil price and inter-regional stability transfers will soon allow the dynasts to sink their petty personal conflicts for the greater good of survival.

But public scrutiny of the dynasts is not going to go away. If they want Western technological benefits to satisfy their modernisation agenda and to provide jobs for the young, then they are going to have to get political traction for that within the West - and to get that, they are going to have to liberalise.

They will probably get away without democracy and perhaps with treating their migrant workers like social dog poo - and with treating the Shia like second-class citizens - but liberal Parliamentarians and Congressional leaders overseas will raise human rights issues and these will block strategic aspirations.

The dynasts are going to have to consider judicial, economic and property rights reforms that allow Westerners to feel safe in doing business and their domestic politicians not to look like hypocrites. The West wants to give the dynasts what they want and just needs their help in doing so.

If the small Gulf countries do not follow Qatar in drawing a line with the past, they are going to see more campaigning attacks, more unwelcome court cases and more videos on YouTube. They can try and hide behind opacity but the eventual cost might, one day, be sanctions against them and not Iran.

www.tppr.co.uk

www.pendrywhite.com

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[Conflict of Interest Disclaimer: Please note that TPPR is confidentially involved in litigation support involving a human rights case in the region.]