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The Real Struggle for Power in Iran and Implications for the U.S.

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By George Friedman
Reprinted with permission from Stratfor

Speaking of the situation in Iran, U.S. President Barack Obama said June 26, “We don’t yet know how any potential dialogue will have been affected until we see what has happened inside of Iran.” On the surface that is a strange statement, since we know that with minor exceptions, the demonstrations in Tehran lost steam after Iranian Supreme Leader Ayatollah Ali Khamenei called for them to end and security forces asserted themselves. By the conventional wisdom, events in Iran represent an oppressive regime crushing a popular rising. If so, it is odd that the U.S. president would raise the question of what has happened in Iran.

In reality, Obama’s point is well taken. This is because the real struggle in Iran has not yet been settled, nor was it ever about the liberalization of the regime. Rather, it has been about the role of the clergy — particularly the old-guard clergy — in Iranian life, and the future of particular personalities among this clergy.

Ahmadinejad Against the Clerical Elite

Iranian President Mahmoud Ahmadinejad ran his re-election campaign against the old clerical elite, charging them with corruption, luxurious living and running the state for their own benefit rather than that of the people. He particularly targeted Ali Akbar Hashemi Rafsanjani, an extremely senior leader, and his family. Indeed, during the demonstrations, Rafsanjani’s daughter and four other relatives were arrested, held and then released a day later.

Rafsanjani represents the class of clergy that came to power in 1979. He served as president from 1989-1997, but Ahmadinejad defeated him in 2005. Rafsanjani carries enormous clout within the system as head of the regime’s two most powerful institutions — the Expediency Council, which arbitrates between the Guardian Council and parliament, and the Assembly of Experts, whose powers include oversight of the supreme leader. Forbes has called him one of the wealthiest men in the world. Rafsanjani, in other words, remains at the heart of the post-1979 Iranian establishment.

Ahmadinejad expressly ran his recent presidential campaign against Rafsanjani, using the latter’s family’s vast wealth to discredit Rafsanjani along with many of the senior clerics who dominate the Iranian political scene. It was not the regime as such that he opposed, but the individuals who currently dominate it. Ahmadinejad wants to retain the regime, but he wants to repopulate the leadership councils with clerics who share his populist values and want to revive the ascetic foundations of the regime. The Iranian president constantly contrasts his own modest lifestyle with the opulence of the current religious leadership.

Recognizing the threat Ahmadinejad represented to him personally and to the clerical class he belongs to, Rafsanjani fired back at Ahmadinejad, accusing him of having wrecked the economy. At his side were other powerful members of the regime, including Majlis Speaker Ali Larijani, who has made no secret of his antipathy toward Ahmadinejad and whose family links to the Shiite holy city of Qom give him substantial leverage. The underlying issue was about the kind of people who ought to be leading the clerical establishment. The battlefield was economic: Ahmadinejad’s charges of financial corruption versus charges of economic mismanagement leveled by Rafsanjani and others. [Read more…]

Economic Recessions and World Geography

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By Peter Zeihan
Reprinted with permission from Stratfor

The global recession is the biggest development in the global system in the year to date. In the United States, it has become almost dogma that the recession is the worst since the Great Depression. But this is only one of a wealth of misperceptions about whom the downturn is hurting most, and why.

Let’s begin with some simple numbers.

As one can see in the chart, the U.S. recession at this point is only the worst since 1982, not the 1930s, and it pales in comparison to what is occurring in the rest of the world. (Figures for China have not been included, in part because of the unreliability of Chinese statistics, but also because the country’s financial system is so radically different from the rest of the world as to make such comparisons misleading. For more, read the China section below.)

World GDP Change

But didn’t the recession begin in the United States? That it did, but the American system is far more stable, durable and flexible than most of the other global economies, in large part thanks to the country’s geography. To understand how place shapes economics, we need to take a giant step back from the gloom and doom of the current moment and examine the long-term picture of why different regions follow different economic paths.

The United States and the Free Market

The most important aspect of the United States is not simply its sheer size, but the size of its usable land. Russia and China may both be similar-sized in absolute terms, but the vast majority of Russian and Chinese land is useless for agriculture, habitation or development. In contrast, courtesy of the Midwest, the United States boasts the world’s largest contiguous mass of arable land — and that mass does not include the hardly inconsequential chunks of usable territory on both the West and East coasts.

Second is the American maritime transport system. The Mississippi River, linked as it is to the Red, Missouri, Ohio and Tennessee rivers, comprises the largest interconnected network of navigable rivers in the world. In the San Francisco Bay, Chesapeake Bay and Long Island Sound/New York Bay, the United States has three of the world’s largest and best natural harbors. The series of barrier islands a few miles off the shores of Texas and the East Coast form a water-based highway — an Intercoastal Waterway — that shields American coastal shipping from all but the worst that the elements can throw at ships and ports. [Read more…]

Presidential Realities and Obama’s First 100 Days

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by George Friedman
Reprinted with permission from Stratfor

U.S. presidential candidates run for office as if they would be free to act however they wish once elected. But upon election, they govern as they must. The freedom of the campaign trail contrasts sharply with the constraints of reality.

The test of a president is how effectively he bridges the gap between what he said he would do and what he finds he must do. Great presidents achieve this seamlessly, while mediocre presidents never recover from the transition. All presidents make the shift, including Obama, who spent his first hundred days on this task.

Obama won the presidency with a much smaller margin than his supporters seem to believe. Despite his wide margin in the Electoral College, more than 47 percent of voters cast ballots against him. Obama was acutely aware of this and focused on making certain not to create a massive split in the country from the outset of his term. He did this in foreign policy by keeping Robert Gates on as defense secretary, bringing in Hillary Clinton, Richard Holbrooke and George Mitchell in key roles and essentially extrapolating from the Bush foreign policy. So far, this has worked. Obama’s approval rating rests at 69 percent, which The Washington Post notes is average for presidents at the hundred-day mark.

Obama, of course, came into office in circumstances he did not anticipate when he began campaigning — namely, the financial and economic crisis that really began to bite in September 2008. Obama had no problem bridging the gap between campaign and governance with regard to this matter, as his campaign neither anticipated nor proposed strategies for the crisis — it just hit. The general pattern for dealing with the crisis was set during the Bush administration, when the Treasury Department and the Federal Reserve Board put in place a strategy of infusing money into failing institutions to prevent what they feared would be a calamitous economic chain reaction.

Obama continued the Bush policy, though he added a stimulus package. But such a package had been discussed in the Bush administration, and it is unlikely that Sen. John McCain would have avoided creating one had he been elected. Obviously, the particular projects funded and the particular interests favored would differ between McCain and Obama, but the essential principle would not. The financial crisis would have been handled the same way — just as everything from the Third World debt crisis to the Savings and Loan crisis would have been handled the same way no matter who was president. Under either man, the vast net worth of the United States (we estimate it at about $350 trillion) would have been tapped by printing money and raising taxes, and U.S. assets would have been used to underwrite bad investments, increase consumption and build political coalitions through pork. Obama had no plan for this. Instead, he expanded upon the Bush administration solution and followed tradition. [Read more…]

Government and Freedom

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I would like to print these words of wisdom on a card and tape it to the mirror of the President and every member of Congress:

You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it.

–Dr. Adrian Rogers

Turkey and Russia on the Rise

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By Reva Bhalla, Lauren Goodrich and Peter Zeihan
Reprinted with express permission from Stratfor

Russian President Dmitri Medvedev reportedly will travel to Turkey in the near future to follow up a recent four-day visit by his Turkish counterpart, Abdullah Gul, to Moscow. The Turks and the Russians certainly have much to discuss.

Russia is moving aggressively to extend its influence throughout the former Soviet empire, while Turkey is rousing itself from 90 years of post-Ottoman isolation. Both are clearly ascendant powers, and it would seem logical that the more the two bump up against one other, the more likely they will gird for yet another round in their centuries-old conflict. But while that may be true down the line, the two Eurasian powers have sufficient strategic incentives to work together for now.

Russia’s World

Russia is among the world’s most strategically vulnerable states. Its core, the Moscow region, boasts no geographic barriers to invasion. Russia must thus expand its borders to create the largest possible buffer for its core, which requires forcibly incorporating legions of minorities who do not see themselves as Russian. The Russian government estimates that about 80 percent of Russia’s approximately 140 million people are actually ethnically Russian, but this number is somewhat suspect, as many minorities define themselves based on their use of the Russian language, just as many Hispanics in the United States define themselves by their use of English as their primary language. Thus, ironically, attaining security by creating a strategic buffer creates a new chronic security problem in the form of new populations hostile t o Moscow’s rule. [Read more…]

Violent Mexican Gangs Heading North

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By Fred Burton and Scott Stewart
Stratfor.com

reprinted with permission from Stratfor

Last week we discussed the impact that crime, and specifically kidnapping, has been having on Mexican citizens and foreigners visiting or living in Mexico. We pointed out that there is almost no area of Mexico immune from the crime and violence. As if on cue, on the night of Feb. 21 a group of heavily armed men threw two grenades at a police building in Zihuatanejo, Guerrero state, wounding at least five people. Zihuatanejo is a normally quiet beach resort just north of Acapulco; the attack has caused the town’s entire police force to go on strike. (Police strikes, or threats of strikes, are not uncommon in Mexico.)

Mexican police have regularly been targeted by drug cartels, with police officials even having been forced to seek safety in the United States, but such incidents have occurred most frequently in areas of high cartel activity like Veracruz state or Palomas. The Zihuatanejo incident is proof of the pervasiveness of violence in Mexico, and demonstrates the impact that such violence quickly can have on an area generally considered safe. [Read more…]

Little Change So Far in U.S. Foreign Policy

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By George Friedman
Stratfor.com

re-published with express permission

While the Munich Security Conference brought together senior leaders from most major countries and many minor ones last weekend, none was more significant than U.S. Vice President Joe Biden. This is because Biden provided the first glimpse of U.S. foreign policy under President Barack Obama. Most conference attendees were looking forward to a dramatic shift in U.S. foreign policy under the Obama administration. What was interesting about Biden’s speech was how little change there has been in the U.S. position and how much the attendees and the media were cheered by it.

After Biden’s speech, there was much talk about a change in the tone of U.S. policy. But it is not clear to us whether this was because the tone has changed, or because the attendees’ hearing has. They seemed delighted to be addressed by Biden rather than by former Vice President Dick Cheney — delighted to the extent that this itself represented a change in policy. Thus, in everything Biden said, the conference attendees saw rays of a new policy. [Read more…]

Rumor of New Tax Filing Deadline

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If there are any accountants out there who read this blog – I understand that individual tax returns are due on April 15, unless that date falls on a Saturday or Sunday, or unless the IRS extends the deadline because of a natural disaster.

I understand that there is a new exception – you need not file your returns or pay any outstanding taxes due until you are formally nominated for a cabinet position in the Obama Administration.

Your Tax Dollars at Work – $20 Million to Bring Hamas “Refugees” to the United States

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The following was published in the Federal Register earlier this month:

Presidential Determination No. 2009-15 of January 27, 2009 Unexpected Urgent Refugee and Migration Needs Related To Gaza Memorandum for the Secretary of State

By the authority vested in me by the Constitution and the laws of the United States, including section 2(c)(1) of the Migration and Refugee Assistance Act of 1962 (the “Act”), as amended (22 U.S.C. 2601), I hereby determine, pursuant to section 2(c)(1) of the Act, that it is important to the national interest to furnish assistance under the Act in an amount not to exceed $20.3 million from the United States Emergency Refugee and Migration Assistance Fund for the purpose of meeting unexpected and urgent refugee and migration needs, including by contributions to international, governmental, and nongovernmental organizations and payment of administrative expenses of Bureau of Population, Refugees, and Migration of the Department of State, related to humanitarian needs of Palestinian refugees and conflict victims in Gaza. You are authorized and directed to publish this memorandum in the Federal Register.

(Presidential Sig.)

THE WHITE HOUSE, Washington, January 27, 2009

[FR Doc. E9-2488 Filed 2-3-09; 8:45 am]

It is truly gratifying to learn that $20 million of our tax dollars has been authorized to help Hamas terrorists migrate to the United States.    This is so outrageous as to defy comment.