Iran options for the next US President/ The Middle East and the financial crisis

Oct 13, 2008 | AIJAC staff

Update from AIJAC

October 13, 2008
Number 10/08 #04

Today’s Update contains some additional good commentary on the Iranian nuclear conundrum likely to be faced by the next US president.

First up is Washington Post columnist Michael Gerson, who argues that the Iranian problem is in some ways more significant than the financial crisis because economies are cyclical, but proliferation is much harder to reverse. He cites former UN chief weapons inspector David Kay that Iran is 80% of the way to having deployable bombs, but criticises Kay’s preferred options of further diplomacy and containment – the former because it is unlikely to succeed and the latter because of Iran’s propensity for “dangerous terrorist adventures”. He pinpoints the likelihood that the next president is going to have only a few days to decide whether or not to use force as Iran moves to create highly enriched uranium. For this original re-formulation of the next US president’s likely Iranian dilemma, CLICK HERE.  Similar comments about the failure of both Obama and McCain to credibly explain how they will carry out their pledge to stop Iran going nuclear comes from columnist Jonathan Tobin. 

Next up, Shoshana Bryen, security policy director at The Jewish Institute for National Security Affair (JINSA), a Washington think-tank, re-examines calls for direct US diplomacy with Iran’s leaders. She corrects the impression that the US does not talk to Iran, saying it does so already both indirectly and behind the scenes. She also makes the case that there is little the US can offer Iran in exchange for ending its nuclear misbehaviour, given the “positive worldview” of the Iranian leadership, promoting as a foreign policy vision, not nuclear weapons as such, but “the belief that expansion is the fate of Shi’ite Islam and that this destiny is a good one.” She offers her own suggestion of policy measures the US might take based on its own “positive worldview”. For her full opinion, CLICK HERE. Meanwhile, Iran’s Vice-President says that Iran will only talk to the US if it first pulls all troops out of the Middle East and renounces all support for Israel. 

Finally, Israeli scholar Dr. Jonathan Spyer explores the likely effects on the Arab world of the global financial meltdown. He argues that the Arab world is very poorly prepared to deal with a major global economic downturn, especially with current declining oil prices, and that the poorer states which rely on employment in the Gulf for a major part of their economic lifeblood are likely to hardest hit. He demonstrates how radical Islamist and terrorist groups are already trying to exploit the crisis and that they are indeed likely to be the major political beneficiaries of  any major economic downturn in the Middle East. For his full argument, CLICK HERE. Plus, another Israeli academic, Nizan Feldman, looks at how the financial crisis may affect relations between the US and the Persian Gulf states. Meanwhile, Israel looks comparatively well-placed to survive the financial storm without too much damage, according to assessments here and here.

Readers may also be interested in:

The President Who Will Deal With Iran  

By Michael Gerson

Washington Post, Friday, October 10, 2008; Page A19

A specter is haunting the presidential race — and it is not just the economy. It is the specter of a nuclear Iran.

Economic downturns are wrenching but cyclical. Nuclear proliferation is more difficult to reverse, creating the permanent prospect of massive miscalculation and tragedy. America’s next leader may be known to history as the president who had to deal with Iran.

This topic received glancing attention in the second presidential debate. Barack Obama called a nuclear Iran “unacceptable.” John McCain said it would raise the prospect of “a second Holocaust.” But neither man seriously confronted the choices ahead.

Days earlier, at an event at the Nixon Center here, the former chief weapons inspector for the United Nations, David Kay, delivered a bleak assessment of Iranian capabilities and intentions. The Iranian regime, he argues, is about 80 percent of the way toward its nuclear goals — perhaps two to four years from “effective, deployable weapons.”

Kay believes that the reaction to this threat by both political parties is unrealistic. By simply saying a nuclear Iran is unacceptable, America is set up for a choice between “suicide” (a disastrous military attack on Iran) and “humiliation” (a galling acceptance of the unacceptable). Instead, Kay calls for a new round of “skillful diplomacy” to persuade Iran to stop at what he calls “virtual capability” — a global recognition that it could produce nuclear weapons in short order, without all the drawbacks caused by actually producing those weapons.

But this would be the third major attempt at diplomacy, not the first. Russia has offered Iran enriched nuclear material for use in its civilian nuclear plants in exchange for abandoning its fuel-enrichment program. Iran refused, demonstrating, at the least, that it wants the technical know-how — the “breakout capability” — to produce nuclear weapons. The Bush administration has offered direct, face-to-face talks with Iran if it would merely suspend (not abandon) its enrichment program. This also has been turned down. Another diplomatic effort — perhaps offering normalized relations and the lifting of sanctions in exchange for Iran’s full cooperation — might further isolate Iran if it refuses the deal. But even many supporters of such an initiative admit that Iran is likely to refuse.

So Kay seems resigned to a policy of containment — holding Iran directly responsible if it transfers nuclear weapons to terrorists, providing nuclear guarantees to our friends in the region so they don’t feel pressured to develop their own. Past nuclear proliferation to nations such as France and India, he argues, proved less destabilizing than many first feared.

The problem with this approach? Iran may be a different proliferation threat from any we have faced before. The regime cultivates ties to violent nonstate proxies in Lebanon, Iraq, Afghanistan and the Palestinian territories. While in some ways calculating, its leaders also seem drawn toward dangerous terrorist adventures — such as blowing up U.S. troops in Beirut or Jewish community centers in South America. Iran’s religious radicalism introduces an unpredictable element of irrationality. And some future conflict between a nuclear Iran and a nuclear Israel could easily and quickly escalate.

What are the alternatives? Attempting to destabilize the Iranian regime from within — by covert action and support for dissidents — does not seem realistic on a four- or five-year timeline. American capabilities in this regard are limited, and Iranian repression of reformers is ruthless.

So if a nuclear Iran is truly unacceptable, we may be left with the use of military force. And this seems credible only under narrow circumstances. As Gary Samore, my colleague at the Council on Foreign Relations, points out, Iran can move from breakout capability to the development of nuclear weapons in only two ways. It can do the final enrichment of weapons-grade material at some secretly constructed facility with a few thousand hidden centrifuges — a difficult and risky proposition. Or it can quickly convert its known centrifuges for such production. This would probably take a few weeks and require the expulsion of international inspectors. During this short time lag, Iran’s intentions would be fully revealed, and the case for bombing its facilities would be strongest.

This may be the true test of the next president: a few days to make one of the most consequential decisions in modern history. It is difficult to imagine why anyone would covet the responsibility for that choice — but it is necessary to discern who is best prepared to make it.

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In dealing with Iran, the wrong kind of talk can be dangerous 

By Shoshana Bryen   

Jewish Telegraphic Agency, October 5, 2008

WASHINGTON (JTA) — There are at least two problems with the increasing calls for the United States to engage Iran.

Asserting that the United States should “talk to Iran” assumes that we don’t — but we do.

Asserting that America’s president should talk to Iran’s president misunderstands who wields power in Iran and what Iran wants — it is not Ahmadinejad and it is not nuclear weapons capability.

Real power in Iran is in the hands of the clerics who formulated Iran’s broad, well-thought-out and very serious religious and political worldview. It is Shi’ite in design, not Persian. (Ahmadinejad talks about Iran. The clerics talk about Islam.) Their program is not born of imagined slights or misdeeds by a particular U.S. president, and a new president will not reverse it.

Their worldview is positive, not reactionary, in that it proceeds from the belief that expansion is the fate of Shi’ite Islam and that this destiny is a good one. They don’t want to be our friends; they do want us not to be in their way.

The nuclear quest began with the shah, was adopted by the Islamic Revolution and has proceeded through “reformist” and “reactionary” Iranian presidents — Ahmadinejad is nastier, but no more important than the others. Nuclear capability is a tactical goal in the strategic quest for regional hegemony and expansion of Shi’ite Islam. Focus on nuclear weapons as an end in themselves distracts from Iran’s immediate, though not necessarily existential, threats to the United States and Israel.

In the Middle East, Iran arms, trains and supports Shi’ite Hezbollah in Lebanon, and Sunni Hamas in the Gaza Strip and increasingly on the West Bank. Iran’s investment in Hezbollah before the 2006 war was more than $1.5 billion; what was lost has been replaced and upgraded. Iran is the main supporter of Syria’s President Assad, has aided the PKK paramilitary group seeking an independent Kurdish state and provides training and equipment for militias in Iraq (including Sunni ones).

In our hemisphere, Iran has joined Cuba, Venezuela and Nicaragua in showy displays of anti-Americanism. Energy-based Iranian relations with Russia, China, India, Turkey and Western Europe serve to undermine American interests.

About what should we talk? Which of these, or nuclear weapons, will Iran give up and why? And who would we betray in our efforts to cement a deal?

Inside Iran, the clerical police — not Ahmadinejad — are the guardians of “public morality.” They are the “modesty police” who can beat women for supposed indiscretions of dress, and they are the ones who hang homosexuals and stone adulterers. They arrest and “disappear” student leaders, ban books, monitor phone calls, break up demonstrations and persecute the Bahai.

The Iranian people desperately hope we will not abandon them to “talk” to their jailers.

Iranian pursuit of nuclear weapons does not only threaten Israel, although Israel rightly takes the greatest interest in its progress. The Arab world from the Gulf to Lebanon to Egypt fears an aggressive Iran; it is terrified by the thought of a nuclear one.

Interestingly, Israeli Defense Minister Ehud Barak recently told a visiting delegation of American Jews, “We have common ground with moderate forces in the Arab world. Israel’s [nuclear] program never threatened them; Iran’s does. We have a common interest in not seeing Iraq subjugated by Iran and worry about the future of Syria.”

This suggests a policy direction for the United States: Don’t “talk” with a powerless “president” or clerics who believe they are on the right side of history, push back where alliances are possible and adopt an energy policy based on national security.

As Iran is positive in its worldview, we must be in ours. That means several important steps. In addition to maintaining strong support for Israel, we must:

* Make Latin America more favorable to the United States and inhospitable to Iran by approving the Colombia Free Trade Pact, dropping tariffs on Caribbean sugar for ethanol (ecologically better than corn), taking socialist, pro-free-market democratic Brazil and Chile seriously, and isolating Nicaragua (not hard; the Sandinistas aren’t popular).

* Diversify American sources of energy, deriving as much as we can domestically. Energy is fungible — an increase in global supply makes Iranian oil less expensive and reduces the windfall to the mullahs.

* Strike back at Iran when it violates the border of Iraq to strike at U.S. troops. The same should apply to Syria’s decision to reopen its eastern border and allow al-Qaida access to western Iraq.

* Forge new regional relationships independent of the Palestinians. After the Arab states and Israel come to understandings about security, the Palestinians will have the Arab cover they need to make their peace with Israel.

* Avoid steps that legitimize the regime, otherwise we risk abandoning people who are not our enemies and who should be our friends.

* Ensure close coordination of American and Israeli policies, and continue firm American support for Israel; it sends a message.

Sometimes talk is cheap. In this case, the wrong kind of talk can be dangerous.

(Shoshana Bryen is the senior director for security policy at The Jewish Institute for National Security Affairs in Washington.)

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Analysis: Who in the Arab world benefits from crisis?



Stock markets across the Arab world experienced unprecedently sharp losses when trading began following the Id al-Fitr holiday earlier this week. The seven stock markets in the oil rich Gulf states shed around $150 billion of their capitalization in the course of the week.

The market in Saudi Arabia sank by 7 percent. In Egypt, the key index fell by around 16%. One Saudi economist quoted by Agence France Presse described the latest developments as a “catastrophe.” For a number of reasons, the Arab world may well prove particularly vulnerable to the world economic downturn. This fact has political implications for the region, which are already being glimpsed and acted upon by various regional forces.

The first and most obvious reason why the Arab world is particularly vulnerable to the financial crisis is that a disproportionately large amount of Arab wealth is invested in global stock markets. Since the 1970s, the Arab world (or parts of it) has enjoyed a long windfall of oil wealth.

Oil wealth is the main source for Arab sovereign wealth funds. Arab sovereign wealth funds, with a combined value of more than $1 trillion, are important investors in what are now being exposed as some of the most vulnerable sectors of global finance.

The Kuwait Investment Authority, for example, placed a $2b. investment in Merrill Lynch last year. At the time, this must have seemed like a secure move. Merrill Lynch, of course, no longer exists.

But the extensive Arab involvement in global stock markets is itself a symptom of a larger malaise. The oil-rich Gulf countries have preferred to use their wealth to build luxurious lives for the lucky few.

Instead of investing in education, especially in cutting-edge fields such as information technology, and in industry, money has been gambled on the stock markets, or invested in glittering real-estate projects, built by foreign labor and using foreign know-how.

The result has been islands of luxury and conspicuous consumption, based on no solid national capital of knowledge and skills. This vulnerability is now being exacerbated by the recent decline in the price of oil – which has fallen nearly 40% in recent months.

This reality has implications not only for the thinly populated, oil-rich Gulf states. The population centers of the Arabic-speaking world, above all Egypt, are also unlikely to remain immune. Development in the Gulf has provided otherwise sparse job opportunities for some of the vast population of under-employed university graduates produced by Egypt.

Large numbers of unskilled and semi-skilled laborers have also found work in the Gulf. But if Gulf economies now draw in, this picture is likely to change. Furthermore, the open tap of foreign aid on which the Egyptian economy has been so reliant may begin to run dry – as the US and other Western economies enter hard times.

Since we are discussing the Middle East, it is appropriate to ask “who benefits” from the current worrying situation. Political commentator Rami Khouri, writing in the Beirut Daily Star, notes that “this is not a situation we can blame on anyone but ourselves.” Khouri hopes that the crisis will produce a sobering effect in the politics of the region.

But while it would be comforting to believe that the gravity of the crisis may lead to a sudden outbreak of political maturity, one would be unwise to bet on the prospect. The most notable political response to the financial crisis so far has come from Islamist political circles. The response has taken the form of unabashed glee at America’s discomfiture, along with attempts to cast the blame for the situation on that ever reliable stand-by – the Jew.

Thus, Al-Manar, Hizbullah’s media station, is currently holding an opinion survey of its viewers, asking them “Do you agree with those who see in the international financial crisis the beginning of the US Empire’s fall?”

Unsurprisingly, 84.5% of Al-Manar viewers polled have answered in the positive. The Al-Manar Web site is also running an article under the headline “Jewish Lobby in US to blame for world financial crisis.” The article details the statement by Hamas Spokesman Fawzi Barhoum in which he identified the “Jewish lobby” as the body responsible for the creation of the US financial and banking sector, and asserted that it should therefore take the blame for the current situation.

Not to be outdone, the al-Qaida network has released a statement, contending that “The enemies of Islam are facing a crushing defeat, which is beginning to manifest itself in the expanding crisis their economy is experiencing.” Such elements identify the crisis as offering great opportunities for growth for their style of politics. They are probably right. Impoverishment, extreme uncertainty, the sense of things in flux are the fuel on which they run.

One should not over-labor historical comparisons, of course, but there are some that are instructive. The Wall Street Crash of 1929 is an imperfect but useful historical example for understanding what is happening now. In 1928, in a central European country, a small, very radical party was humiliated in parliamentary elections, winning only 2.6% of the vote. The same party, in the transformed circumstances following the crash, won 18.3% of the vote in 1930.

The country was Germany, the name of the party was the National Socialist German Workers Party, and the rest of the story is known. Who benefits, indeed.

Dr. Jonathan Spyer is a Senior Research Fellow at the Global Research in International Affairs Center, Herzliya

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