Iran Case File July-Aug 2017
Executive Summary This report discusses three major aspects of the Iranian affairs on the Internal, Arab, and International levels in the months of July and August 2017. I. INTERNAL AFFAIRS Presidency of the Republic This part handles the statements and events accompanied inauguration of the presidency of the republic under the patronage of the Iranian Supreme Leader, Ali Khamenei. It also discusses the receiving of sixteen ministers out of 17 the parliamentary confidence. In addition, this part of the report handles Reformers’ disappointment of Rouhani’s cabinet formation and the arrest of Hussein Faridoun- President Rouhani’s brother- for charges of financial malpractice and the reasons and indications of this arrest. Military Institution This part discusses a number of military activities in Iran during the months of July and August 2017: 1. Military exercises: Iran conducted “al-Iqtidar wal-’amn al-Mustadam 96” exercise at the Caspian Sea. It is also planning to conduct another exercise that will be a simulation of an electronic warfare in the near future. 2. Military industry: this part discusses the latest arms announced by Iran during this period. 3. Inauguration of a number of new military installations 4. Formation of a number of Army ground forces battalions Security This part discusses the latest security developments in Iran in the months of July and August 2017 as follows:
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a. The Iranian constant claims about being exposed to ISIS attacks b. The clashes and attacks that took place in a number of the Iranian provinces. c. Conditions in Sistan and Baluchistan d. The clashes between the Iranian Peshmerga and IRGC. e. Seizer of arms and drugs and the arrest of armed militants in different areas in Iran Economics This part discusses developments in all economic sectors during the months of July and August 2017 as follows: 1. Energy sector 2. Foreign trade and investments 3. Banking sector 4. Services sector 5. The Iranian internal living conditions during this period II. ARAB AFFAIRS
1. Gulf-Iran relations: this part is divided into two points: a. The Iranian support to Qatar against the ostracizing countries b. Kuwait accusations to Iran of smuggling Al-Abdali cell into the Kuwaiti territories 2. Motives and scenarios of difference between Houthi-Saleh alliance, indications of escalation between both sides and its impact on the Iranian role in Yemen, and the future scenario of this coalition 3. Reading of Iran’s stance toward al-Sadr’s visit to the Gulf States and the Iraqi Kurdistan referendum through Iran’s position indications of al-Sadr’s visit to Saudi Arabia and the UAE and reasons behind the Iranian fear from the Iraqi Kurdistan referendum 4. This part analysis Astana 5 conference, recent developments on Iran’s role in war in Syria, and the nature of Russia-US rivalry on the liberated territories from ISIS and its impact on the Iranian role in war against this organization III. INTERNATIONAL AFFAIRS 1. US-Iran relations This part discusses the recent developments on the US-Iran through handling both countries’ positions toward a number of major questions and issues during the months of July and August 2017. It handles the Iranian nuclear deal, Iran’s regional role, and its ballistic missile program. The nuclear deal was the most prominent issue in the interaction between the two countries during this period. Iran wanted to benefit from this agreement to maintain a status quo at which the regional and international powers recognize Iran’s role. Tehran also aimed at benefitting from the terms of this agreement to eliminate all pressures without IRAN CASE FILE
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any parallel obligations. However, the United States completely hindered Iran from achieving this goal. It believes the nuclear deal cannot survive unless Iran reconsiders its position in terms of regional interference, supporting terrorism, and development of its defense capabilities- especially missile capabilities. The US stance is not confined to the vow of canceling the nuclear deal, it is moving within a comprehensive strategy that might take Iran back to the stage of isolation again. 2. Russia-Iran relations. This part handles the interactions between the two countries on the Syrian crisis in light of the latest developments following the US increasing presence in Syria, the Israeli active movement in the Russian decision-making to curb the Iranian role in Syria, Iran’s position toward the reducing tension territories and its motives in declining the current delineation of these territories, analyzing the areas of cooperation between the two countries, and the impact of Kingdom of Saudi Arabia movement toward enhancing relations with Russia on Iran.
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Conclusion I. INTERNAL AFFAIRS 1. President Rouhani’s inauguration showed Khamenei’s control of the invitation list for these ceremonies. This was evident by excluding former President Mohammed Khatami due to his support to Rouhani and rejection of the policies of fundamentalists. In addition, the exclusion of the Iranian Sunni leader, Moulavi Abdul Hamid, contradicted Khamenei’s statements when he said that the Iranian people have many tendencies, views, and senses. This exclusion implies that Khamenei is still maintaining his dominant role on the Iranian policy and that Rouhani is going to experience another term of dispute and rivalry with Khamenei same as the second half of his first term in the presidency. 2. Reformers were very disappointed after Rouhani’s rejection of taking their suggestions into consideration about appointing his new cabinet. 3. A wide range of key Reformer personalities believes that Rouhani used this current in the presidential elections and ignored their demands after winning a second term of presidency. 4. Despite Reformers disappointment with Rouhani’s cabinet formation, they believe he is the person best suited to work with during the forthcoming phase. 5. Reformers think the arrest of Hussein Faridoun was to take revenge from Rouhani after his campaign on fighting corruption in a number of fundamentalists-led institutions 6. The most important goals for Iran’s constant military exercises were to distract the attention from the economic, social, and political crises in the country and to create internal public mobilization state to support the Iranian regime 7. The constant announcement about the Iranian military industries is a significant strategy used by Iran’s media to achieve certain goals like deterrence of the regional countries from taking any steps against Tehran and force them to give up, terrifying the Iranian people to make them forget about their economic conditions, social crises, and objecting the regime. 8. Iran’s talks about ISIS intrusion into its territories took a new curve when it announced that this organization had broken into official governmental websites like the Cultural Heritage Organization and the Iranian Tourism and Archeology News Agency sites. 9. The twin attacks on the parliament and Khomeini tomb last June still represent big security challenge for the security forces and IRGC. 10. The Iranian street is still questioning the theory saying that ISIS was responsible for the twin attacks on the parliament and Khomeini tomb. 11. Clashes between the Iranian Kurdish Peshmerga forces and IRGC might lead
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to more escalation on the Iraqi-Iranian borders over the forthcoming phase. 12. Economically, according to the governance annual report released by the Swedish Basel Institute on 146 countries, Iran was ranked first on the world’s list for money laundering crimes and support of terrorism for the fourth year respectively. 13. Energy Sector. Iran signed an agreement with the French Total for 4.8 billion USD to develop the eleventh stage of South Pars Field in twenty years. The Iranian media went too far with the agreement, saying that it amounted to 54 billion USD. On the other hand, India decreased its oil imports from Iran tremendously during the month of August by 42% in response to the Iranian decision about granting a huge gas field for a Russian company instead of contracting an Indian company. The Iranian Petrochemical exports to Turkey and China faced obstacles because of the certificates of origin in Turkey and the new amendments in laws and financial transactions in China. The Iranian Gas exports to Iraq started on June 21st of this year 2017 despite signing these contracts for years ago. Exportation capacity amounted to 7-8 million cubic meters per day by pipelines. 14. Foreign Trade and Investments. Foreign trade statistics revealed about 24% increase in the Iranian imports during the period from April to July 2017 registering 15 billion and 800 million USD. China was the top exporters to Iran followed by the UAE. Trade exchange between Iran and other countries and international blocs. Trade exchange increased 94% between Iran and the EU during the first half of this year 2017 mainly in crude oil exports. It also increased between Iran, Qatar, and several African countries during the same period, while decreased with Turkey and the United States. On the other hand, Iran strove to have a share in the reconstruction works of the Iraqi and Syrian cities liberated from ISIS like Mosel that needs about 100 billion USD for reconstruction. The Iranian Ambassador in Iraq described this issue saying, “Iraq is an opportunity for us”. 15. Banking sector. The increase in the interest rates severed the Iranian economy and led to the transition from production to mediating activities and producers’ trend toward depositing their funds in the Iranian banks instead of production and creating jobs despite conservation on the funds of some financial institutions like the “Caspian” in order to pay the funds for depositors. China also closed bank accounts of a number of Iranians in China because of the US sanctions. In the beginning, the Iranian government denied the Chinese justification, but finally gave up. 16. Services sector. In addition to the US obstruction of selling American and European made airplanes like Boeing and Airbus, it hindered selling Russian passenger aircrafts to Iran like “Sukhoi Super Jet 100” that utilize the US made spare parts in its structure. This issue binds selling this aircraft to the US Department
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of Treasury permission, which complicated the process of developing the Iranian air fleet. As for the ground transportation sector, the French Alstom group signed a joint agreement with Iranian companies to build metro cars in Iran.
II. ARAB AFFAIRS
1. Annulment of the Iranian claims about rapprochement with the GCC countries to normalize relations due to evidence of Iran’s carelessness about the international principles governing relations between neighboring countries. This reflects Iran’s attempts to manage the escape of those charged in al-Abdali terrorist cell, which ensures Iran’s hostile behaviors against even countries with neutral and mediation stances to settle disputes on both banks of the Arabian Gulf and Iran’s claims of maintaining friendly relations with these countries. All in all, Iran does not differentiate between what it classifies as an enemy or friendly countries. 2. The dramatic division in Houthi-Saleh coalition was expected due to their historic enmity, mistrust, and attempts to change the balance of power, ideological differences, and their big losses in the war in Yemen with the Arab coalition. Houthi-Saleh coalition is most likely to break down due to the increase in differences between both sides and unveil of each one’s goals and disparity of their agendas. These differences are no more minor. They will not be able to stop clashes between them- especially in light of Saleh’s supporters call to arm and prepare for the upcoming confrontation and Houthis’ immense deployment in conjunction with the massive deployment of Republican Guards loyal to Saleh all over the main and side streets northern and downtown Sana. 3. Pulling the rug out from under Iran in Iraq and the Iraqi return to its Arab home among its brothers was the central issue in al-Sadr’s talks in Saudi Arabia and the UAE. The attraction of the Iraqi Shiites has become a necessity against the Iranian hegemony on the Iraqi decision-making that damaged the Iraqi relations with its neighbors. In addition, enhancing relations with Saudi Arabia would positively impact the Iraqi interior and its relations with the Arab countries politically, economically, security, and break out the virtual isolation in relations between Iraq and the Arab world. 4. Kurdistan referendum on September 25, 2017, backed some regional countries into a corner and serious risk- especially Iran. This development would threaten Iran’s internal security and unity of its lands and oblige it to find way to stop this referendum or at least has minimum impact on the Iranian Kurds who just started intense movement against Tehran recently- especially after the Kurdish parties like Kurdistan Democratic Party (in Iran) and Alhaya Alhurra Party had joined the military option against the Iranian regime. These parties believe they have no choice but the restoration of fighting against this regime in case of continuity of Kurds suffering and negligence of their demands.
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5. The de-escalation agreement in Syria was a golden opportunity for Iran and the Syrian regime to mobilize their forces and militias in new frontiers away from their normal activities, which means that Iran and the Syrian regime had adopted a new strategy aimed at playing outside Syria’s beneficial areas and extending this concept to include the rich areas with oil and gas in Badia (desert) and Deir Ez-Zor, using the international agreements and spheres of influence between the regional and international major players. 6. Despite the US-Russia unannounced understandings on Syria, including the province of Deir Ez-Zor that is divided between both sides through the agreements of the division of spheres of influence in northern Syria where the Euphrates River is its line of demarcation. According to this division, Eastern Euphrates starting from Jarablus to Bokamal is to be under the US and its allied factions’ control. Western Euphrates, including parts of the city of Aleppo, Raqqa, and Deir Ez-Zor, where the Turkish-supported factions are active, is to be under Russian control, while South Euphrates under the Syrian regime and its allies’ control. Finally, the liberated areas from ISIS are witnessing US-Russian rivalry that might escalate in the future in light of the current circumstances. III. INTERNATIONAL AFFAIRS 1. There is a wide gap between Iran and the United States. Iran is not willing to compromise on the problematic issues, while the US policy seems to be very conservative toward the Iranian file, but the option of comprehensive confrontation is still a deferred option. However, the constant pressures are denying Iran the fruits of the nuclear deal, which would extend the state of tension and escalation in relations between Iran and the US over the forthcoming phase. 2. Russia-Iran alliance is facing a real crisis in dealing with the Syrian issue after the US-Russia rapprochement and restoration of military coordination between both sides to confront terrorism in Syria. 3. The Iranian rejection to de-escalate tension in Syria came to diminish the Turkish influence in northern Syria and prepare for an attack on the Syrian opposition in the province of Idlib. In addition, Iran opposed the expansion of the peaceful area in Dara. Consequently, this might lead to international isolation on Iran and unanimous agreement that Iran is the obstacle in the face of solving the Syrian crisis. 4. The active US movement toward the Syrian crisis by mobilizing its forces on the Syrian-Jordanian borders will take the southern part of Syria out of the Iranian militias’ movements. 5. The Saudi movement toward enhancing relations with Russia confused Tehran and raised its concerns about the credibility of its alliance with Moscow.
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Arabian Gulf Centre for Iranian Studies
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