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Abridged by Adam Dempsey , Research Associate, U K Defence Forum, from an article, originally published by the New York Times on January 16th 2011, written by William Yong

Iran has embarked on a sweeping program of cuts in its costly and inefficient system of subsidies on fuel and other essential goods that has put a strain on state finances and held back economic progress for years. The government's success in overcoming political obstacles to make the cuts and its willingness to risk social upheaval suggest that President Mahmoud Ahmadinejad may have consolidated power after the internal fractures that followed his bitterly disputed re-election in 2009.

Analysts also believe that the successful implementation of the cuts could influence Iran's position at nuclear talks in Istanbul this month. "The initial success of the subsidy reform will increase the regime's confidence generally," said Cliff Kupchan, a former State Department official who is now a director at the Washington-based Eurasia Group. "This could make them more assertive in the talks. But more importantly, a confident and unified regime is better positioned to reach consensus on some initial agreement."

Secretary of State Hillary Rodham Clinton said recently that international sanctions had slowed Iran's nuclear program, and the restrictions do seem to have disrupted sectors of the economy, particularly banking and export-related industries. But the sanctions do not seem to be the driving force behind the subsidy cuts.

Iran's foreign exchange revenues also sank in recent years as oil prices fell from prerecession highs, creating greater budget pressures. But Tehran has long sought to cut the subsidies — even under the reformist administration of President Mohammad Khatami — and particularly for oil.

The logic is compelling: artificially low prices encourage greater consumption, leaving less oil to export for cash. And the higher oil prices rise, the greater the "opportunity costs" in lost exports. But the timing, whether for political or economic reasons, was never right to cut the subsidies.

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Many Western politicians are likely to share U.S. Senator John D Rockefeller's sentiment that 'Iran is nothing but trouble, and always has been that.' This is especially true of Israeli politicians like former President Moshe Katsav. He has previously claimed that 'Iran stands behind a substantial number of terrorist actions against us, together with Hezbollah and the Islamic Jihad. It pretends to care for the Palestinians.'

Yet other Western politicians hold a more pragmatic view of Iran. Despite condemnation of Iran's human rights record and nuclear programme Senator Howard Berman acknowledges that the country is central to U.S. foreign policy in the Middle East. Iran is also 'a major player in global energy markets, and a key country in terms of our interaction with the Muslim world.'

Such diverse ranges of opinion underpin one of the UK Defence Forum's major research projects for 2011. The 'Iranian Insights' series will provide a comprehensive assessment of the government, politics and people of Iran. Subjects to be covered include:

·         The 'birth' of the modern Iranian state

·         Religion in Iran

·         Human rights and political freedom

·         Iran's internal security apparatus

·         Historical overview of Iran's relations with the Middle East

The series begins, however, with a more contemporary study. Adam Dempsey, Research Associate, has updated the Forum's factsheet on Iran's nuclear weapons programme. All reports will be available at the UK Defence Forum's library, with notification of their publication made on Viewpoints.

 

By Alex Shone, Research Associate, UK Defence Forum

Iran is a country firmly framed in Western perception as a state sponsor of terrorism, whose quest for a nuclear weapon is conceived for purposes of coercive regional diplomacy. Iranian President Ahmadinejad's regime drives this perception, and on the subject of Israel, his rhetoric stokes fears of a new war in the Middle East. This regime is the face of Iran that we in the Western world are presented with.

However, behind this is a far more complex and enigmatic nation. The 'real' Iran is clearly more than the 'Green Movement' of students and leftist intellectuals who were brutally suppressed in the wake of the country's presidential elections. The UK Defence Forum is commencing a new country series on Iran that will analyse all the country's history, society, economics and politics. This new series aims to comprehensively assess these wider aspects of Iran within and beyond the face of the regime.

The progress and extent of Iran's nuclear programme is reassessed continually as new intelligence enters into the public domain. Judgement as to the appropriate response oscillates between a pre-emptive military strike and continued diplomacy with sanctions. The conclusion seems to boil down to whether we choose to 'bomb Iran' or 'live with an Iranian bomb'.

Advocates for the military option have only to cite the indisputable failure of diplomacy to rein in Iran's nuclear ambitions. Economic sanctions have utterly failed to bring down the international support network available to Iran. Critically, the West has not been able to inflict the necessary pressure on Iran's energy sector, in great part due to the failure to secure the cooperation of other key states.

The military option is beset by concerns for the consequences. Airstrikes would end all diplomatic hopes, certainly for the near future. They would also put back any chance of eventual regime change, perhaps by decades, as Ahmadinejad's domestic propaganda would likely take an immoveable hold. There is also the problem of Iran's capacity to retaliate. Iran is a country with varying degrees of influence beyond its borders into Iraq and Afghanistan. Iran, as a state sponsor of terror, also has channels into a network of armed group proxies. The significance of Iranian influence here remains unclear but is still a great concern.

At centre of the problem is the opaqueness against which all assessments must be made. Iran is very much a closed country, regime and society to the West and the limits of our own understanding prohibit formulation of deeper judgements as to where Iranian intent lies. Diplomacy has failed with the Iranian regime and until sanctions develop real teeth, which key world powers genuinely rally behind, it is likely that Iran's government will be inconsolable from their nuclear path.

Rather, it is the Iranian people who are central to any resolution of this crisis. Ahmadinejad's regime and its political course must be de-legitimatised in the eyes of the Iranian population who do not have access to a free media. Understanding all aspects of Iran's society is therefore a paramount requirement if the West is to more effectively engage with the Iranian people to help steer the country from its current confrontational path.

 

By Adam Dempsey, Research Associate, U K Defence Forum

The Caspian Sea is the world's largest body of inland water by volume. According to the United Nations' Atlas of the Oceans the Caspian Sea covers a surface area of 371,000 km2 and has a maximum depth of 1025 metres. The Caspian Sea is classified by geographers as a 'terminal lake' meaning that its water does not reach the ocean. Yet whilst this may imply that the Caspian Sea is a freshwater lake it nevertheless shows characteristics common to the world's oceans. As a 'terminal lake' the Caspian Sea's minerals build up in the water as it evaporates thereby increasing salinity. It is estimated that the Caspian Sea has a salinity of 1.2%, around a third of the oceans' salinity.

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In the 'Great Game' of the 19th century, global powers attempt to gain political control of a key region and therefore access to its resources and exploit its geographical position.

The expression was used particularly for what was in effect a confrontation between the Russian empire and the British Empire over the northern approaches to the Indian Raj – India, Pakistan, Afghanistan.

The Caspian Sea Basin (CSB) is currently an arena for geopolitical competition amongst a range of players from both inside and outside the region.

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