Iran’s Horrible Year

  • Middle East Policy

    Middle East Policy has been one of the world’s most cited publications on the region since its inception in 1982, and our Breaking Analysis series makes high-quality, diverse analysis available to a broader audience.

Nathaniel Kern, Matthew M. Reed

Earlier this year, Ayatollah Khamenei claimed that the unrest seizing the Arab world was inspired by the Iranian revolution of 1979. America, meanwhile, watched old friends lose power and uncertainty upset the much preferred status quo. Iranian gains seemed likely. Arab revolts promised to empower those less interested in pursuing American interests and curbing Iranian influence. A thorough review suggests that 2011 has not been so kind to Tehran, however, in spite of regional chaos and American troubles.

Trouble at Home

For two years now, President Ahmadinejad and the Ayatollah have struggled to define the Islamic Republic, as the president promotes Persian nationalism over Islamic identity, and his own executive privileges at the expense of the Supreme Leader’s. This year Khamenei was left no choice but to cut down the president whose controversial election he called a “divine assessment” in 2009.

The conflict exploded in April, when the president asked Intelligence Minister Heydar Moslehi to resign. Ayatollah Khamenei intervened since Moslehi was the only cleric then serving in Ahmadinejad’s cabinet. The minister stayed. And the president, humiliated, responded by boycotting his own cabinet meetings for 11 days. He then fired three other ministers, and tried to replace the oil minister as temporary caretaker before OPEC’s June meeting. Ahmadinejad’s stunt invited the wrath of the Guardian Council in May. In keeping with the wishes of Khamenei, it denied the president the chance to pretend he enjoyed real power on an international stage.

Arrests and criminal accusations followed. The conservative Judiciary imprisoned dozens of Ahmadinejad’s associates. Parliamentarians maneuvered to tie the president’s closest and most controversial advisor — Esfandiar Rahim Mashaei — to the prime suspect in a major bank embezzlement scheme. On July 2, Ahmadinejad fired back by hinting that the Iranian Revolutionary Guard Corps (IRGC), Iran’s elite military branch beholden to the Ayatollah and the revolution, was also a multi-billion dollar smuggling outfit. “No one should be immune from the law,” Ahmadinejad said at a conference in which he posited that the total value of smuggled goods through Iran was $8-9 billion. “No ministry has the right to have a dock or harbor outside the control of the Customs and Excise.” IRGC Commander Mohammad Ali Jafari denied the accusations the next day in a rare interview.

Khamenei weighed in on July 4 and warned that “foreign bodies are so happy” to see the regime attack itself. He then established a new government body named the Supreme Council for Resolving the Differences between the Three Branches. Led by former Judiciary Chief Mahmoud Shahroudi, the council hopes to suck venom out of Iranian politics and end questions about the regime’s durability. Regardless of these measures, the public dispute drew local and international media attention. Ahmadinejad’s tenure may ultimately change Iran’s system of government — but not in the way he intended: Ayatollah Khamenei is now flirting with dissolving the presidency after 2011 proved so embarrassing.

An OPEC Presidency Wasted

Alphabetical rotation allowed Iran to assume the OPEC presidency this year. But Iran did not host any meetings in 2011, as increased tensions between Iran and major oil producers, particularly Saudi Arabia, forced the organization to meet on neutral territory. More importantly, Iran (which ranks second in OPEC in terms of exports) and other price hawks failed to curb production. Gulf Arab producers went ahead and increased production anyway. On December 14, OPEC finalized its first new output agreement in three years after Iran’s representative, Oil Minister Rostam Qasemi, agreed to terms preferred by Saudi Arabia.

Domestic politics certainly hurt Iran’s performance. As stated above, Ahmadinejad tried to appoint himself oil minister but lost out to the Guardian Council. He then appointed a former deputy from his days as mayor of Tehran. His appointee, Mohammad Aliabadi, had no prior experience in the industry; he served as vice president responsible for athletics before being named caretaker oil minister. After Aliabadi presided over the disastrous June 8 OPEC meeting in Vienna, which Saudi Oil Minister Ali Naimi complained was “one of the worst meetings we’ve ever had,” Ahmadinejad nominated Qasemi, an IRGC commander, perhaps as a peace offering to the Supreme Leader.

Accusations and Nuclear Revelations

Regime error and international pressure combined to further isolate Iran this year. The most extraordinary claims came in October, when the U.S. Justice Department indicted a senior officer in Iran’s Quds Force for his critical role in plotting the assassination of Saudi Arabia’s ambassador to Washington. Saudi diplomats went to the United Nations, where 106 nations approved a resolution condemning the plot and demanding that Iran aid an investigation (9 voted ‘no’; 40 abstained). Ahmadinejad dismissed the accusations and called them a “fabrication.” Iran’s ambassador to the UN claimed they were a “big lie.” But regardless of their protestations Iran is obligated to cooperate as a signatory to a UN treaty, which forbids crimes against diplomats. Riyadh and Washington appear convinced that pressing Iran to recognize these obligations is the best way forward.

The UN’s Special Rapporteur on human rights in Iran, Ahmed Shaheed, released a devastating report less than one week after the assassination plot went public. The account highlighted hundreds of executions, systemic intimidation of dissidents, and torture. Iranian officials questioned the report’s methodology but did not invite Mr. Shaheed to visit Iran and correct the record. The troubling report also claimed that Ahmadinejad’s 2009 presidential challengers, Mehdi Karroubi and Mir Hossein Mousavi, were placed under house arrest in February, presumably because they could recharge Iran’s Green Movement. The report raised questions about the regime’s legitimacy given its cruelty.

On November 8, the International Atomic Energy Association (IAEA) reported that Iran had “carried out activities relevant to the development of a nuclear explosive device” in the past decade and that “some activities may still be ongoing.” The report’s message was clear: Iran must clarify the purpose of its program. The agency’s 35-nation board overwhelmingly approved a follow-up resolution expressing “deep and increasing concern about the unresolved issues regarding the Iranian nuclear program, including those which need to be clarified to exclude the existence of possible military dimensions.” It also demanded that Tehran grant inspectors total access to facilities and “engage seriously and without preconditions in talks.” China and Russia approved the compromise text.

New Sanctions and a Costly Gamble

In response to the IAEA report, the U.S. Treasury expanded sanctions and labeled Iran an area of “primary money laundering concern.” Britain’s finance ministry also ordered all UK institutions to halt business with Iran and its central bank effective November 21, making it the first time London had ever completely denied a country access to its financial system. Canada also banned all exports used for the production of petrochemical, oil and gas in Iran.

Iran’s response was crude and counter-productive. One week after Britain severed financial ties, a pro-government mob stormed the embassy in Tehran. Some Iranian officials praised the siege while the foreign ministry apologized. Other nations accused the regime of engineering the attack. Regime-affiliated media later acknowledged the involvement of the Basij — a volunteer militia with direct connections to the IRGC and Supreme Leader. In the days leading up to the assault, Fars News, a semi-official media outlet, offered a provocative story titled, “Is the British Embassy any different than the United States Den of Espionage?” And only one day before the attack, Basij bloggers announced they would soon “seize the embassy of the Old Fox [i.e. Britain].” Official denials remain unconvincing.

Iranian-European relations have since collapsed. Britain closed its embassy and evacuated all staff shortly thereafter. It then closed Iran’s embassy in London. Germany, France, the Netherlands and Italy all withdrew their ambassadors. The European Union will consider sanctions in January that would target Iran’s vital crude exports. Banning Iranian crude imports to Europe could hurt the Euro zone in a time of crisis, however, and European finance and foreign ministers have yet to agree on the actual costs of such measures. With or without new sanctions, European powers are showing no tolerance for Tehran’s provocations.

The Covert War Continues

The covert war against Iran’s nuclear program continued apace in 2011. A mysterious explosion at an IRGC base killed 17 people only 50 km from the capital on November 12. Included was Major General Hassan Moqqadam, who has since been credited with developing Iran’s missile program. Officials refuse to admit it was an act of sabotage but still referred to the victims as “martyrs” in eulogies aired on state television. Particularly telling was the presence of Ayatollah Khamenei at the funeral.

Since assuming the title of Supreme Leader in 1989, Khamenei has only attended five funerals, according to available reports. His appearance suggests the victims were special and that the explosion was not an accident. Israel’s Defense Minister, Ehud Barak, encouraged speculation when he told interviewers that he did not “know the extent of the explosion,” but that “it would be desirable if they multiply.” Israel is believed to be behind several acts of sabotage, including assassinations. In July, Dariush Rezai, an Iranian nuclear physicist, was shot dead outside his home in Tehran. His death makes him the sixth scientist associated with Iran’s nuclear program to be killed under mysterious circumstances in the past two years.

Allies Under Pressure

Iran’s strategic portfolio is not deep and may even be shrinking. It depends on proxies and terrorism, but these advantages hinge on direct access to resistance movements in Lebanon and the Palestinian territories. No doubt the regime is worried most about Syria, where millions are challenging Bashar al-Assad’s rule. Should he fall, Iran’s connection to its most important assets would be compromised, and supporting Hizballah and Hamas would become increasingly difficult. The stakes could not be higher in Damascus — and so Iran’s leaders are presumably discouraged by the Arab League’s suspension of Syria last month, newly announced sanctions, and Turkey’s tough stance.

Tehran has allegedly provided assistance to Syria this year, although such efforts appear useless as of late 2011: the uprising continues and is becoming militarized; the body count and international outrage grow by the day. Hamas — the Palestinian resistance movement and long-time beneficiary of Iran — has proven sensitive to this outrage, and may soon abandon Damascus, reports suggest. On December 5, Haaretz quoted Palestinian sources who said Iran actually threatened the group’s funding because its leaders refused to support Assad. It now appears likely that Hamas will establish offices in Egypt and Qatar. Both countries will be better positioned to moderate Hamas’ rejectionist platform. Iran’s few friends may soon be fewer.

Iran’s Many Challengers Prove Strong

Turkish-Iranian relations turned sour in 2011. When Turkey turned on Syria, it undermined a pillar of Iranian power. Turkish officials now believe Iran responded by supporting Kurdish terrorism. They point to a secret episode in August when Iran supposedly released PKK leader Murat Karayilan after he agreed to attack Turkey instead of the Islamic Republic. Not to be outdone, the Turks agreed to host a new high-powered U.S. radar system in early September that will provide early warning against Iranian missiles. Especially disappointing for Iran’s leaders is their irrelevance in a time of upheaval. Arab revolutionaries point not to Iran but instead to Turkey as the best guide for creating a prosperous democracy infused with Islam.

Beyond Turkey’s negative shift, the Ayatollah and Ahmadinejad must also be frustrated with Saudi Arabia and the Gulf Cooperation Council (GCC). Iran’s rivals across the Gulf appear immune from the mass protests that unseated Qaddafi, Ben Ali, and Mubarak. Even Bahrain, which suffered the worst unrest, has slowly settled into a new — if fragile — normalcy. The GCC also became an activist organization this year thanks to shared peril. Members invested billions in the region to ensure stability; they made NATO’s Libyan intervention possible by leading outrage at the Arab League; the GCC deployed security forces to Bahrain in March; and tiny Qatar and its Al Jazeera satellite television network framed 2011’s revolutionary narrative with great effect.

Iran will have to account for American power for years to come. The U.S. will keep 40,000 military personnel in the Middle East after withdrawing from Iraq this month, according to testimony delivered by Defense Secretary Leon Panetta in November. Beyond this, a sovereign Iraq poses unique problems for Iran. Supporting the insurgency will no longer be an option since US troops will be stationed elsewhere. America’s absence after eight long years of war may ultimately draw attention to Iran’s shady dealings and heavy involvement in Iraqi politics.


The Arab uprisings of 2011 certainly did not enhance Iran’s status. And the Syrian case proves Tehran’s interests were just as vulnerable as Washington’s, if not more so, given Iran’s short list of friends and Syria’s outsized importance. The country gained little and lost some thanks to self-inflicted wounds and external pressure. Economic sanctions, diplomatic isolation, and negative changes in the strategic landscape all combine to suggest the immediate future will be difficult for Iran to navigate. But any year-end review of Iran must concede a sobering fact: the regime is stable.

There is no debate raging in Iran right now over the value and purpose of Iran’s nuclear program. It is a national project, tied to identity, pride, and prestige, and it is not likely to be forfeited as such. While some have questioned the cost of the program in economic and diplomatic terms, the regime appears steadfast. Also notable in a year defined by regional unrest, rallies in Iran never reached the boiling point seen in other countries. Ayatollah Khamenei also appears set to consolidate power and marginalize contenders by terminating the presidency. Sanctions, condemnations, and sabotage have yet to derail Iran’s nuclear program. It continues to limp forward in spite of American, Israeli, and international efforts.


Foreign Reports is a Washington, D.C.-based consulting firm that writes and distributes timely intelligence reports on political developments in the Middle East relevant to oil markets. Oil companies, governments, and financial institutions rely on Foreign Reports for their insight and analysis on key issues affecting the world generally and the Middle East specifically. The firm was founded in 1956 and the current President is Nathaniel Kern.

  • Middle East Policy

    Middle East Policy has been one of the world’s most cited publications on the region since its inception in 1982, and our Breaking Analysis series makes high-quality, diverse analysis available to a broader audience.

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