Iran: Are The Banks Failing?

Jahangir Amuzegar, who was Finance Minister in Iran's pre-1979 government, sifts through the rumours and realities of Iran's banking sector. Originally published in Foreign Policy:

Rumors have recently spread among Iran's jittery populace regarding the state of their country's banking system. Although these rumors happen to be nothing but a false alarm, the financial sector really is, and has been, in crisis for a number of different reasons.

The current spate of rumors began on Jan. 28, when Iran's commercial banks were ordered by the central bank to limit each depositor's daily cash withdrawal to 150 million rials (about $15,000). The order was explained by authorities as a means of implementing the anti-money-laundering legislation just passed by the Majlis, Iran's parliament, and combating what the finance minister called "financial terrorism."



This announcement coincided with an unrelated statement by President Mahmoud Ahmadinejad two days earlier regarding the elimination of "three zeros" from the currency, due to its drop in value, and the government's intention to restore the Iranian currency to its "real value." These dual developments aroused widespread suspicions among the traditionally cynical rank and file, who were already rightly skeptical of the often exaggerated and frequently contradictory economic statistics coming out of Tehran over the past five years. Sporadic news reports about the banking system's undercapitalization and the rising number of its nonperforming loans added to mounting anxieties.

Within a few hours, Facebook and Twitter messages spread and amplified rumors about a run on banks, customers rushing to withdraw their savings, and street clashes among depositors. Two of the largest state-owned commercial banks -- Mellat and Melli -- were said to be on the verge of declaring bankruptcy. Neither the vigorous denials by the two banks, nor the government's solemn assurances regarding the banking system's solid financial position, managed to quash the false alarms, and there were reports of ugly encounters in some provincial bank branches.

Curiously enough, the obvious absurdity of the bankruptcy rumors was missed even in some quarters that should have known better. Commercial banks facing liquidity problems in any modern state can always resort to the central bank's "open window" to borrow needed funds. And the central bank, with a printing press at its disposal, can never run out of money to lend. The bankruptcy of a state central bank, and by implication the failure of state banks, is a theoretical as well as existential impossibility. Depositors in state banks never lose their savings overnight through bank failures, but only through a hidden tax called inflation. Although the Islamic Republic has never established formal deposit insurance, as in the United States, all state bank deposits are de facto guaranteed by the full faith and credit of the central government.

The real problems faced by the Iranian state banking system are rooted in a host of other shortcomings. The banking sector is the most laggard area of the Iranian economy. Iran's state-owned banks suffer from high overhead costs -- too many branches, too many employees, and poor management -- with operating costs estimated at four times the world average. Furthermore, the Majlis and government-dictated loans to state entities and public projects at below-inflation rates make them highly unprofitable.

Finally, Iran's state banks suffer badly from enormous nonperforming assets. These unrepaid loans -- estimated at $48 billion, or 2½ times the banks' own capital -- have increased sevenfold in the last five years. To put that figure in perspective, Iranian banks accumulated less than $4 billion in nonperforming assets during the previous hundred years of Iranian banking history! These loans constitute nearly 20 percent of total bank assets -- compared with a world average of 3 to 5 percent. Around half of the arrears are owed by state-owned corporations. Seventy percent of the total is owed by only 1,000 entities (including some "shell," or nonexisting, paper corporations). Some $23 billion is owned by four state banks -- Melli, Mellat, Saderat, and Tejarat -- with Melli carrying the largest burden.

Borrowed funds are not paid back on time for several reasons. Ahmadinejad's administration limited the banks' annual lending interest rate to 12 percent -- in an economy that is experiencing much higher inflation rates, reaching 29.5 percent in September 2009 -- a heaven-sent incentive for borrowers to renege on their obligations and postpone repayment for as long as possible. The difference between the state banks' borrowing rate on the one hand, and informal bazaar rates on the other, create what economists call an intrinsic "rent" element. That is, the unsupervised funds, borrowed from an Iranian state bank at 12 percent, may be re-lent in the bazaar at rates up to 30 to 45 percent -- or even placed in other banks as long-term savings deposits, accruing 18 percent interest. As a result, borrowers rationally decide to forego the "late payment" penalty of six percent and postpone repayment as long as they can.

The Islamic Republic's endemic cronyism and flawed policies represent a constant impediment to the profitability of Iran's financial sector. Influential and well-connected borrowers -- state entities connected with the Islamic Revolutionary Guard Corps, siblings and grandees of clerical leadership, and clever apparatchiks -- easily manage to borrow large amounts without sufficient guarantees for repayment. One single borrower is reported to have obtained $100 million! These politically connected debtors often refuse to pay back their loans, and suffer no penalties. Under one government project, hundreds of small businesses promising to create jobs have managed to receive funds without proper scrutiny of their projects and are now unable to service their debts due to causes that range from the recession to their own incompetence. The sanctions imposed by the United Nations and the United States, and the poor performance of the Iranian economy -- GDP growth was just 1 percent last year, even with rising oil prices -- has dealt another blow to Iran's banking sector. An estimated 6,700 businesses were unable to service their financial obligations last year and received a one-year grace period by their banks.

The real problems facing Iran's state banks -- poor management, undue political interference, and the incongruity of mixing seventh-century Islamic finance principles (the foundation of the Iranian banking system) with the exigencies of the highly complicated world of modern international finance -- should inspire Iranians to keep a wary eye on their economy's bottom line.

Latest on Iran (18 February): Watching on Many Fronts

2120 GMT: Author, translator and journalist Omid Mehregan has been released from detention.

2100 GMT: So all our watching on many fronts is overtaken by the "Iran Might Be Getting A Bomb" story. Little coming out of Iran tonight; in contrast, every "Western" news outlet is screaming about the draft International Atomic Energy report on Iran's nuclear programme. (Funny how each, like CNN, is implying that it "obtained" an exclusive copy.)

1830 GMT: Political Prisoner News. "Green media" pull together reports that we carried last night: 50 detainees were released, including Shahabeddin Tabatabei, member of the Islamic Iran Participation Front and head of youth in support of Mir Hossein Mousavi and Mohammad Khatami, Parisa Kakaei of the Committee of Human Rights Reporters, student activist Maziar Samiee, and Khosrow Ghashghai of the Freedom Movement of Iran.

An activist adds that Ardavan Tarakameh was released on bail this evening.

NEW Iran Document: Today’s Mousavi-Karroubi Meeting (18 February)
NEW Iran Analysis: The "Now What" Moment (Farhi)
NEW Iran: Getting to the Point on Detentions & Human Rights (Sadr)
NEW Iran: Another Rethink on Green Opposition (Ansari)
Iran Analysis: Ahmadinejad Stumbles; “Karroubi Wave” Surges
Iran Nuke Shocker: Clinton/White House “Tehran Not Building Weapons”
Iran Document: Fatemeh Karroubi “My Family Will Continue to Stand for the People’s Rights”
The Latest from Iran (17 February): Psst, Want to See Something Important?

1745 GMT: Here We Go. Reuters proves our hypothesis within five minutes with "IAEA fears Iran may be working to make nuclear bomb":

The U.N. nuclear watchdog is concerned that Iran may now be working to develop a nuclear payload for a missile, the agency said in a confidential report on Thursday obtained by Reuters....

"The information available to the agency is extensive ... broadly consistent and credible in terms of the technical detail, the time frame in which the activities were conducted and the people and organizations involved," the report said.

"Altogether this raises concerns about the possible existence in Iran of past or current undisclosed activities related to the development of a nuclear payload for a missile."

1. The report can't be that confidential if Enduring America got a copy of it off the Internet earlier this afternoon.

2. There is nothing new in the passage cited by Reuters. The IAEA has said repeatedly that information "raised concerns" about a possible military nuclear weapons programme. That is different from saying that the information establishes that Iran is pursuing such a programme.

(1840 GMT: We might as well whistle in the wind. BBC and National Public Radio in the US are following the leader with "UN Nuke Agency Worried Iran May Be Working On Arms".)

Meanwhile, from the other side, Speaker of Parliament Ali Larijani has taken a swing at "Western pressure": "The Westerners say, 'You have a reactor in Tehran and its fuel should be supplied by us, and you should acquire fuel in the way we want, and give us your enriched uranium as well." And Deputy Speaker Mohammad Reza Bahonar has declared, "If they (Western countries) accept to swap (uranium) simultaneously in Tehran, we will stop the production of 20 percent fuel."

1740 GMT: On the Nuclear Front. Oh, well, you can pretty much put every internal story in Iran into cold storage for 48 hours --- the International Atomic Energy Agency has just released its latest report on Iran's nuclear programme. There's little, if anything, new in substance, but the IAEA's worried tone is likely to feed those who are pushing for tougher action against Tehran. And it most certainly will feed a media frenzy for the rest of the week.

We've posted the conclusion of the report as well as a snap analysis.

1600 GMT: Mousavi-Karroubi Meeting (see 1110 GMT). We have posted the English text of the statement from today's two-hour discussion.

1540 GMT: Confirmed. Norway has granted asylum to the Iranian diplomat, Mohammed Reza Heidari, who resigned his post in January .

1515 GMT: On the Nuclear Front. Worth watching --- the Turks are now reporting back to the US after Foreign Minister Ahmet Davutoglu's talks in Iran on Tuesday. A Turkish website writes that Davutoglu chatted by phone with Hillary Clinton on Wednesday night. Davutoglu will meet US Undersecretary of State William Burns today, and he told reporters, "Turkey's Prime Minister Recep Tayyip Erdogan will discuss this issue with U.S. President Barack Obama."

1420 GMT: Column of the Day. Roger Cohen of The New York Times asserts that, rather than slapping on further sanctions, US authorities should focus on assisting Iranians with access to and dissemination of information: "With the Islamic Republic weaker than at any time in its 31-year history, fractured by regime divisions and confronted by a Green movement it has tried to quash through force, U.S. sanctions are abetting the regime’s communications blackouts."

1315 GMT: What's Mahmoud Saying? Yet another installment in the tough-guy posturing between the US and Iran. From Press TV's website:

Iran's President Mahmoud Ahmadinejad has said the Zionist regime of Israel is so terrified of the Lebanese resistance and people. The Iranian president made the remark in a phone conversation with the Hezbollah Secretary General Seyyed Hassan Nasrallah, ISNA reported on Thursday.

President Ahmadinejad and Nasrallah also discussed the latest developments in Lebanon and the region. He further praised Nasrallah's latest stance on the Israeli threats. "The Zionists are really terrified of the resistance and people in Lebanon and the region," President Ahmadinejad emphasized. "But they (the Israelis) are looking for opportunities to make up for their past defeats in Gaza and Lebanon as they feel their credibility and existence are in jeopardy."

However, the president insisted, "They don't dare to do anything as they are afraid of the consequences."
[He] further underlined the need for maintaining readiness against any potential Israeli threats adding, "If the Zionist regime want to repeat the same mistakes they previously made, they must be gotten rid of once and for all, so that the region will be saved from their nuisance for ever."

1215 GMT: We've posted a second analysis today, this one from Farideh Farhi, of the "Now What?" moment for Iran after 22 Bahman.

1200 GMT: Purging Iran of Mousavi. Kayhan newspaper has called for the removal of Mir Hussain Mousavi’s name from a road and a College of Art in Khameneh, a city near Tabriz.

1150 GMT: Rafsanjani Watch (and Much More). Key MP Ali Motahhari has not only defended Hashemi Rafsanjani, he has used that defence to launch another attack on the President in an interview with the pro-Ahmadinejad newspaper Vatan-e-Emrooz.

Motahhari said that Ahmadinejad, during the Presidential campaign, had insulted Rafsajani and his family on television in front of an audience of 50 million. Rafsanjani, Motahhari continued, was not given even a few minutes to defend himself when he requested airtime.

Motahhari's conclusion? To gain support, Ahmadinejad is ready to destroy "revolutionary characters".

1110 GMT:The Facebook site supporting Mir Hossein Mousavi has a brief Persian-language report, "Mousavi and [Mehdi] Karroubi met with each other; soon we will talk to the people."

1035 GMT: Britain's Channel 4 is featuring a video interview with a former Basij member who claims he was jailed and abused for refusing to beat protesters.

1015 GMT: We've posted, as a response to those who dismiss "human rights" in the consideration of post-election Iran, a concise comment by lawyer and human rights activist Shadi Sadr.

0920 GMT: Economy Watch. The Islamic Republic News Agency has a budget deficit of 6 billion toman (just over $6 million).

0910 GMT: Habibollah Asgharowladi, a leading "conservative" member of Parliament and one of the proponents of last autumn's National Unity Plan, has declared in the pro-Larijani Khabar Online that some politicians "still have the illusion of having a majority", a likely reference to Mir Hossein Mousavi. Asgharowladi advises, "They should wake up."

Khabar, which is carrying out a two-front political campaign against both Ahmadinejad and the Mousavi/Green Movement, also features the comments of MP Esmail Kousari that "Greens are a gift from the USA". He denounces their attempt to rally and insists that the Revolutionary Guard and Basij military were not involved in security on 22 Bahman.

0900 GMT: Soroush "Hold A Referendum". In an interview with Rooz Online, leading Iranian intellectual Abdolkarim Soroush considers the Islamic Republic and "religious democracy", calling for a public referendum on the system of velayat-e-faqih (ultimate clerical authority).

0855 GMT: Karroubi Watch. Add another statement from the Karroubi family. Ali Karroubi's wife Nafiseh Panahi has told Deutsche Welle of the 22 Bahman attack on the Karroubi entourage with pepper spray: "The bodyguards remained mostly around [Mehdi Karroubi] and one of the colleagues noticed that the special guards had captured Ali and were taking him away. Had he not seen this, we would not have know that Ali had been arrested.”

Panahi said that she was told, wrongly, that Ali Karroubi had been taken to Evin Prison: "Honestly I felt better, because we know that Evin is more law-abiding than other detention centers. But when he was released and returned home last night and described his ordeal, we realized what kind of a place he had been kept in.” Panahi added:

After interrogations were over they had told him, to go and thank God that they had asked us to release you, because if you had stayed here over night we would have killed you. His eyes were closed until the last moment. Then they opened the door and throw him onto the street. A car suddenly stopped and took him home.

When Ali Karoubi arrived home, his pants were bloody, his head was cut open, and his hands were so injured that they had given him something to wrap them with. They beat him with a baton, fracturing his arm.

0845 GMT: Your Morning Mystery. In early January, Iran's armed forces loudly declared via state media that they were going to hold a large military exercise in early February to improve "defensive capabilities". Infantry, cavalry, telecommunication, and intelligence units of the Army would be carrying out drills in cooperation with some units of the Islamic Revolution Guards Corps.

Well, it's mid-February, and I must have missed the big show. Did it ever take place? Was the Iranian military merely blowing a bit of smoke (and, if so, wouldn't some folks in Iran have noticed the false declaration)? Or were the exercises planned, presumably at a great deal of expense, and then cancelled?

Any answers, especially, from the Iranian Armed Forces, welcomed.

0830 GMT: And A Very Big Diversion. I am not sure the Obama Administration thought through the results of this week's combination of Hillary Clinton's tough talk on Iran "dictatorship" and the visit of Admiral Mike Mullen, the Chairman of the Joint Chiefs of Staff, to Israel.

Here's one Washington may want to note. The Chief of Russia's Armed Forces General Staff, General Nikolai Makarov made his own grand declaration on Wednesday, warning that the US could strike Iran if it gets out of its current commitments in Iraq and Afghanistan.

That's an easy read: Russia reassures Iran, even as it is delaying the sale of S-300 missiles (partly in response to an appeal by Israeli Prime Minister Benjamin Netanyahu), that it is watching Tehran's back. And it warns the US Government to chill out a bit on the regional posturing.

[youtube]http://www.youtube.com/watch?v=BHaZzJE7C14[/youtube]

0820 GMT: Meanwhile, beware of distractions, notably those of "Nuclear Watch". Iranian state media throws up the latest diversion, quoting Turkish Parliament Speaker Mehmet Ali Sahin in a meeting with Iranian Education Minister Hamid-Reza Hajibabaie in Ankara: "Turkey will continue its support for the peaceful Iranian nuclear program. All the countries have the right to develop nuclear technology for peaceful purposes and Turkey has a clear policy regarding nuclear programs."

That's a cover for the more news-worthy but less convenient episode of Turkish Foreign Minister Ahmet Davugotlu's mission to Iran on Tuesday. With no break-through on a deal for uranium enrichment, it's the minor encounter (what role would an Education Minister have in Iran's nuclear programme?) that gets played up. Loudly.

0800 GMT: A busy Wednesday means that we now have several fronts to cover as the post-election conflict takes on new shapes in Iran.

There's "Economy Watch", which is an umbrella term to cover the renewed "conservative" challenge to President Ahmadinejad. For the moment, it appears that those who have been unsettled for months and who have been planning for weeks to push aside Ahmadinejad will focus on the President's budget and alleged economic mismanagement for their attacks. (There will be a significant exception in MP Ali Motahhari, who is now the point man to put wider demands, all the way to release of political prisoners.)

There's "Rafsanjani Watch". With the Government and its supporters still fearing that former President Hashemi Rafsanjani will "choose a side" and come out in direct opposition to Ahmadinejad, attacks on Rafsanjani have been stepped up in the last 48 hours. This front, for the moment, is likely to be more of a skirmish than an all-out battle: Rafsanjani will take cover in declared loyalty to the Supreme Leader. (Watch out, however, for the activities of Rafsanjani's children, notably his daughter Faezeh Hashemi. Yesterday they expressed open sympathy with the Karroubi family after the attack on Mehdi Karroubi's son Ali on 22 Bahman.)

And there's "Karroubi Watch". Count up the statements and letters to Ayatollah Khamenei in the last five days: Mehdi Karroubi, his wife Fatemeh, his son Hossein, even the mother-in-law of Ali Karroubi. No coincidence for me that a group, the "Sun Army", would try and silence the Karroubis by hacking the website Saham News, which is still rebuilding this morning.

None of this is to ignore the Green Movement as it considers its next moves. We have an analysis by Nazenin Ansari this morning.

Iran Analysis: The "Now What" Moment (Farhi)

Farideh Farhi writes for Inter Press Service:

After eight tumultuous months, during which attention from all sides of Iran's political spectrum as well as anxious watchers around the world focused on a series of street clashes between protesters and the government's security forces, an eerie calm has taken hold in Iran.

The government's ability to control the aesthetics of street demonstrations on the occasion of the revolution's 31st anniversary on Feb. 11 has once again confirmed the robust nature of the Iranian state, which used its long experience with government-sponsored demonstrations to stage what it now claims was a decisive "show of unity" involving "50 million" people "to bury the corpse of sedition."

Iran: Another Rethink on Green Opposition (Ansari)
Latest on Iran (18 February): Watching on Many Fronts

This is a significant development insofar as it disabuses policymakers outside Iran, as well as a large number of Iranian exiles, of the fantasy of the impending doom of the Islamic Republic or the belief that substantive change in Iran can or will come quickly.



Yet, despite the government's proclaimed unity, nothing that happened on Feb. 11 suggests that the fundamental cleavages that have rocked Iran in the past few months have been overcome. Indeed, the only message of Feb. 11 is that, by spending a tremendous amount of resources and energy on security, arrests and mobilisation, the government can control the crowds.

Reports from a variety of participants suggest that many supporters of the opposition that has come to be known as the Green Movement did come out, but simply did not know what to do or how to make their presence felt in the streets. In addition, the regime's deployment of abundant numbers of security personnel ensured that anyone who did make his or her presence known was swiftly pulled out of the crowd, led away or arrested.

In other words, the security and intelligence organisations managed the stage so effectively that, despite the attendance of more than 400 foreign journalists and photographers, the presence of the government's supporters
dominated the coverage. This was achieved not only by the massive security presence, but also by limiting the movement of foreign journalists; restricting - and, at times, even preventing - access to the Internet and cellular communications networks; the pre-emptive arrest of suspected protest organisers; and preventing the participation of recognised Green leaders, notably Mir Hussein Mousavi and his spouse Zahra Rahnavard, Mehdi Karroubi and former president Mohammad Khatami, through intimidation and pre-meditated mob attacks. The fact that, unlike the protests during Ashura on Dec. 27, no one was killed last week added to the impressiveness of the government's efficiency in controlling the streets, a striking contrast to the eight months that followed the disputed June elections.

But managing the stage and controlling the crowds on any given day are not the same as actually resolving the problems and grievances that have repeatedly brought protesters into the streets. Unless some of these are addressed, the Iranian state will remain on edge, vigilant, and engaged in a permanent crackdown that will effectively undermine the country's economic and regional ambitions.

The fact that some Green Movement activists may now be less inclined to use official holidays to mount their protests - or even be pushed underground --- will make dissent less predictable and thus significantly more difficult to control without the expenditure of even more state resources for the purposes of repression.

It is this dilemma that the Iranian leaders must address in the coming months. Even if it is accepted that the Green Movement is disheartened and the government "victorious," the country's multi-voiced and faction-ridden leadership cannot simply walk away from the events of the past eight months and avoid the "what now" question.

The country, after all, remains the same as before Feb. 11. Iran's political system, with its bickering elites, remains as dysfunctional as ever. And President Mahmoud Ahmadinejad's administration is still perceived as incompetent even by many of its conservative backers at a time when the government faces the dual challenge of embarking upon what it calls the "economic surgery" of reforming the country's unwieldy subsidy system and thwarting growing foreign pressures to curb the country's nuclear programme.

To be sure, facing simultaneous economic and external challenges is nothing new for the Iranian leadership. During the Iran-Iraq War, the government did precisely that by relying on the post-revolutionary spirit of sacrifice and unity in the face of extreme adversity.

But, as pointed out by the conservative editor of Ayandenews, Fouad Sadeghi, the still-unaddressed internal divisions have turned Iran's dual challenge into a triple one, making overcoming the first two unlikely, if not impossible, without addressing the third.

It must be considered a sign of the raw nerve this conundrum struck that Sadeghi, whose brother was killed in the Iran-Iraq War and who was himself  an active member of Basij militia while studying at the highly politicised Amir Kabir Technical University in the 1990s, was arrested on the very eve of the anniversary celebration, soon after publishing his commentary.

Read rest of article....

Iran: Another Rethink on Green Opposition (Ansari)

Nazenin Ansari writes for Open Democracy:

For the first time in thirty-one years, Iranians across the world and across the political spectrum welcomed the anniversary of the Islamic revolution in 1979 as an opportunity to assert their sovereignty. The result may not have been what most of them wished for, but their expectation was justified in one respect: 11 February 2010 has indeed turned out to be a defining moment for the Islamic Republic and the “green movement”, as well as for the international community.

The manner in which the regime enforced control and the huge cost of its operation confirm that it recognises its failure to command genuine popular support. But the greens too now recognise the limits of their capacity, not least that their dependence on domestic communication-networks to mobilise their supporters makes them vulnerable. As a result they understand that it is time to refocus their efforts: to propose more defined ideas, to articulate ultimate goals, to refine tactics, and to establish other (non-internet-based) means of communication.



In the approach to 11 February, green voices in Iran campaigned hard with the intention of bringing millions of their supporters onto the streets. Some even announced plans to storm the dreaded Evin prison to free political prisoners, and to seize the state’s broadcasting facilities. Their allies abroad disrupted official Iranian engagements and organised demonstrations in major capital cities. The most fervent greens had such high expectations that they genuinely believed that the final victory was in sight.

But while the green movement had been raising its hopes, the Tehran regime was making its plans. It implemented a dual strategy based on incentives and concessions mixed with increased repression and brutality. The results were pitiless but effective. The state’s security forces paralysed the greens’ own plans through mass-arrests of political and civil-society activists and journalists; they summarily executed two young students (but refrained from further executions); sought to divide the opposition, including by allowing some voices of dissent limited access to the media; declared a five-day holiday both to entice Tehran residents to leave town and prepare to transport core supporters and state employees to the official rally; and launched a cyber-war to cut their opponents’ access to the net and independent news-channels.

This stringent approach extended to the day itself. Thousands of security personnel - including masked and plainclothed special units from the Revolutionary Guards - were deployed on the streets; around 300,000 people (the regime’s core supporters among them) were bused to the most strategic points in Tehran and the cordoned-off area where Mahmoud Ahmadinejad was to speak. The dissident analyst Mohsen Sazegara estimates that the regime spent around $300 million to mount the entire operation. It was martial-law in all but name.

Even then, the opposition managed to launch protests in Tehran and several cities around the country - albeit they fell well short of its stated plans. This suggests that the greens may have reached the limit of their present operational capacity. At the same time, the general disillusion and frustration that generated the movement remains; the state’s economic policies are chaotic; and there are bitter enmities within the ruling elite.

Abroad, a number of leading states have become more vocal in supporting the campaign for rights and freedom in Iran and condemning the regime’s behaviour. The discussions over a new round of United Nations Security Council sanctions, linked to concerns over Iran’s nuclear programme and intentions, are gathering pace. Iranian activists argue that sanctions should be targeted quite precisely at the pockets of the regime and its cronies, and should impose such measures as freezing foreign assets and bank-accounts and imposing travel restrictions.

Some activists go further by demanding that sanctions should be extended to western companies and banks that do business with Iran; among them, technology companies (such as Nokia Siemens Networks and Sony Ericsson) whose products can be used for surveillance and censorship. These Iranians struggling for change are in desperate need of sophisticated technical assistance of their own in order to operate and protect their communications.

The various groups that compose the green movement are entering a period of stocktaking and reappraisal. The international community seems ready to prove to Iran’s people that it can play the role of a sincere and constructive partner. The Tehran regime continues to regard its own citizens’ aspirations as an existential threat. This is still an emergency.

The Latest from Iran (17 February): Psst, Want to See Something Important?

2250 GMT: Cyber-Warfare. Looks like someone wants to stop the latest Karroubi surge. The "Sun Army" took down Karroubi's website Saham News. The Saham staff have control of the site again but a message indicates that it is "under construction".

2230 GMT:It is reported that Parisa Kakaee of the Committee of Human Rights Reporters Maziar Samei of the One Million Signatures Campaign, Bahar Tarakameh, and Nazanin Hassania have been released from prison. 26 other political prisoners are also reported to have been freed.

1830 GMT: I'm on an evening break which happily involves dinner at Birmingham's best Iranian restaurant.

1820 GMT: More Importantly (Rafsanjani Front Continued). Hashemi Rafsanjani, manoeuvring against the pressure on him, has issued another statement declaring his loyalty to the Supreme Leader:

Certain people inside Iran are fanning divisions that never existed and do not exist, and foreigners looking for propaganda feed themselves some tasty morsels....Why should we have differences? Even now we sit together every two weeks and discuss every issue in the country. These are meetings where we speak without restrictions because they are not recorded.

NEW Iran Analysis: Ahmadinejad Stumbles; “Karroubi Wave” Surges
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NEW Iran Document: Fatemeh Karroubi “My Family Will Continue to Stand for the People’s Rights”
Iran Special: Live-Blogging Ahmadinejad Press Conference (16 February)
Iran: Why The Beating of Mehdi Karroubi’s Son Matters
Iran Document: The 10-Demand Declaration of 4 Labour Unions
Iran Document: Shadi Sadr at the UN on Abuse, Justice, and Rights (12 February)
The Latest from Iran (16 February): Un-Diplomatic Declarations

1815 GMT: For What It's Worth. Some outlets are giving lots of play to the Supreme Leader's use of Hillary Clinton's "dictatorship" statement to issue his own challenges to the "West".

You can get notable extracts in that coverage --- frankly, I know this script and I can't be bothered to post any more of it.


1810 GMT: Shahabeddin Tabatabei, of the reformist Islamic Iran Participation Front, has been released on $500,000 bail after eight months in detention.

1800 GMT: And the Karroubi Front. Following up our analysis of the renewed Karroubi challenge to Ahmadinejad and the text of the interview of Mehdi Karroubi's wife Fatemeh, some more news:

The mother-in-law of Ali Karroubi, the son of Mehdi who was beaten on 22 Bahman, has followed Fatemeh Karroubi’s letter to the Supreme Leader with one of her own: "As a mother of three martyrs of Iran-Iraq War, I ask you to listen to people’s voices and help them and punish those who hurt protesters." Like Fatemeh Karroubi, she said that her letter was not only for Ali but for any innocent person who has been jailed, beaten, or run over by cars as in the Ashura demonstrations.

The children of Hashemi Rafsanjani and the grandson of Ayatollah Khomeini have visited Ali Karroubi and condemned the attack on him.

1755 GMT: On the Rafsanjani Front. Mehdi Hashemi, the son of Hashemi Rafsanjani, has responded to the jibe of Fars News that he has "settled" in London. Hashemi said in a letter, "I am doing my Ph.D. abroad just like any other Iranian. I have not become the refugee of any country. And I will return to Iran when the time comes."

1750 GMT: The Challenge on the Economy. Speaker of Parliament Ali Larijani did not wait long to respond to the President's press conference. He made 15 points against the proposed budget and said that he had mentioned his dissatisfaction in a meeting with the Supreme Leader.

The pro-Larijani Khabar Online is also featuring the statement of an MP that, if Parliament did not have to follow procedure, it would have questioned Ahmadinejad over his illegal actions.

1740 GMT: From the blog of Shadi Sadr, via Pedestrian, referring to journalist Ahmad Zeidabadi, who has been sentenced to six years in prison:

An hour ago, I walked out of the post office and was hurriedly walking towards the metro when I saw a man on the sidewalk with two bags of fruit in his hand. I first saw the tangerines in one of the bags, and then I saw his face, as he was passing by me. He looked so much like Ahmad Zeydabadi! My heart sank. I thought: there were certainly days when Ahmad Zeydabadi too would buy fruit on his way home … those simple days of the past seem like so long ago!

I did not know Ahmad Zeydabadi personally. But I have a distinct memory of him in mind. A few years ago when the Committee of Human Rights Reporters had a press meeting to speak against the controversial family laws, Zeydabadi went to the podium, and instead of talking in difficult, muddled terms, like the politicians who spoke before him, he only spoke of his personal experience, growing up in a family of two wives. And through that, he spoke about how in a family where there are multiple wives, not only do the wives endure pain, but so do the children. His were some of the most honest words I’d ever heard, and I will never forget them. The day after, when I went through the news, no matter how much I looked, I did not see any of Zeydabadi’s words anywhere. Even those friends of mine who were filming the meeting, had not thought anything of Zeydabadi’s speech and had not filmed it! That’s when I realized how much our own culture is still resistant to men who want to break stereotypes.

I can write about Zeydabadi, because I did not know him personally. But I can’t write of my own friends who are in prison, because I’m afraid of what their interrogators will do. I’m afraid that they might put my friends under even more pressure. I can only say this: it has been a good while now that I know that every morning when I wake up and turn on the computer and read the news, a long list of my friends, acquaintances, colleagues, someone I used to know, will be in the list of new prisoners. Every day, familiar names are added behind the walls of Evin Prison, and everyday I ask myself: where did they go, those simple days? …

1735 GMT: Economics 101. Iran's Deputy Energy Minister, Mohammad Behzad, says 20 power plants will be privatised in the first half of the next Iranian year, ending 20 September.

Q. Given the problems in Iran's electricity industry, with the Government owing millions and up to 900,000 workers facing layoffs, who would want to purchase a power plant?

A. Maybe an up-and-coming firm with absolutely no connection whatsoever with the Islamic Revolution GuardsCorps?

1640 GMT: Changing the Numbers. EA readers may have noted our scepticism over some of the President's economic claims in his Tuesday press conference. Jahan-e San'at shares the view, criticising Ahmaninejad for citing data from 2007/8 as the figures for 2008/9.

1635 GMT: The reformist Mojahedin of Islamic Revolution party has thanked all those who participated in the 22 Bahman rally despite threats and intimidations, and it has condemned "hard-line" propaganda for claiming that all those who participated in the rally were supporting "the coup government".

1630 GMT: Tabriz Lockdown? The speech of reformist member of Parliament Mohsen Armin, scheduled for today, has been cancelled. The cancellation follows the claimed halt of an appearance by Mir Hossein Mousavi in the same city on 22 Bahman.

1625 GMT: Iran v. Coma Countries. Quote of the day goes to Brigadier-General Seyyed Massoud Jazayeri, "The West has gone into a coma after mounting a propaganda campaign to sway the public opinion over Iran's nuclear issue."

1600 GMT: Labour Pessimism. Back from a break to find an analysis by two Iran-based journalists, "Opposition Fails to Organize Strikes". Javoo Akbar and Nivoo Sarvi (pseudonyms) conclude:

The absence of an independent workers’ union and the lack of interaction between their different associations across the country has resulted in low levels of political consciousness. That and the fact that so many of the weapons are in the hands of the authorities, means there is no prospect of either the opposition or organised labour initiating widespread workers’ strikes to back Mousavi or any other opposition figure.

1320 GMT: Putting Hashemi in His Box (cont.). More on yesterday's update about renewed attacks against former President Hashemi Rafsanjani ahead of next week's meeting of the Assembly of Experts, which Rafsanjani chairs.

Kalameh reports that Hamzeh Karami, manager of the Jomhouriyat website, which was active during the elections, has been sentenced to 16 years in prison and payment of six billion tooman (just over $6 million).

The link to Rafsanjani? In the Tehran trials last August, Karami gave a high-profile "confession" that implicated Mehdi Hashemi, Rafsanjani's son, in corruption and diversion of election funds to undermine Mahmoud Ahmadinejad.

1225 GMT: How that "Regime Change" Thing Works. First, a couple of US Congressmen, John Cronyn and Sam Brownback, introduce an "Iran Democratic Transition Act" committing the US Government "to fully and publicly support efforts of the Iranian people to oppose and remove the current regime and transition to a freely elected, open, and democratic government in Iran".

Then Press TV gets hold of the bill, which is more a bit of political posing than likely legislation, to drive home the "foreigners" v. "good Iranian nation" theme:

Two Republican senators have once again introduced a draft bill in the US Congress seeking full support for the Iranian opposition and the overthrow of the Islamic Republic government in Iran. Senators John Cornyn and Sam Brownback introduced the so-called “Iran Democratic Transition Act” bill on February 11, coinciding with the anniversary of the victory of the Islamic Revolution in Iran, in which unprecedented tens of millions of Iranians poured into the streets to rally and celebrate the 31st anniversary.

An 'extraordinarily' high number of people marched across different cities in the country, throwing their lot with a revolution which toppled a US-backed monarchy in Iran.

The bill repeats the old rhetoric about human rights violations in Iran, its nuclear energy program, and alleged support for terrorism, fully advocating a “regime change” in the country.

1215 GMT: The Clinton Charade. The theatre continues today, with the Supreme Leader using Hillary Clinton's "dictatorship" remark to strike a pose. Khamenei accused her of spreading "lies" and said, "Those who have turned the Persian Gulf into an arms depot in order to milk regional countries for money have now dispatched their official to go around the Persian Gulf and spread lies against Iran."

1115 GMT: For What It's Worth. CNN has posted the video of its interview with Iran's top "human rights" official, Mohammad Javad Larijani: "Iran is the greatest, the only democracy in the Middle East."

1055 GMT: Alireza Beheshti, Mir Hossein Mousavi's chief advisor, has resumed teaching at Tarbiat Modarres University. Beheshti was recently released after several weeks in detention.

1030 GMT: A Buffet of Analyses. We've got Sharmine Narwani taking apart the US Government's conflicting signals on Iran's nuclear programmes, an analysis of Ahmadinejad's stumble and the "Karroubi wave", and the English text of Fatemeh Karroubi's interview with Rooz Online.

0855 GMT: More on the Economic Front. Ali Asghar Yousef-Nejad, a member of the Parliament's Industries Commission, has declared that budget details are unclear and asserted that the Minister of Economy has projected only 3% growth, instead of the 8% envisaged in the budget. (Yesterday the President simply made up a figure for Iran's 2009/10 growth.)

0825 GMT: Not That Close to the US. More fencing on the nuclear issue and "America": Haghighat News, linked to the President, has denied that Ahmadinejad's chief of staff Esfandiar Rahim Mashai met with US officials in Qatar. His trip, which coincided with the stay of Secretary of State Hillary Clinton and her delegation, "was simply aimed to observe the condition of Iranians residing in the Persian Gulf Arabian country".

0815 GMT: In Rah-e-Sabz, Farid Modaresi offers a lengthy analysis on the relationship between Qom's clerics and the Government. Amidst its interesting insights is a meeting between Ayatollah Nouri-Hamedani and the head of Bonyade Shahid, the charitable trust for war veterans and their families. Nouri-Hamedani requested that this message be passed the President: "If you want to stay in power, eliminate problems like high prices (from which 70% of the population suffers), unemployment, discrimination. Eliminate also housing problems."

0750 GMT: Want to See an EA Analysis in Action? Here's a big clue pointing both to the economic Achilles' heel of the Ahmadinejad Government (see 0645 GMT) and the hope that it will just go away. Press TV headlines its summary of the President's press conference, "Ahmadinejad says Iran to install advanced centrifuges."

Number of paragraphs devoted to the nuclear issue? 11
Number of words devoted to the economic questions that dominated the conference? 0

0745 GMT: Evaluating the Movement. Ali Farhadzadeh offers a lengthy critique of the origins and development of the post-election opposition:

No one can deny the role of a leader in bringing protesters together in the freedom movements of modern history, such as the role Gandhi, Mandela and Martin Luther King played in the progress and triumph of the movements of India, South Africa and African Americans in the United States. However, in the Green Movement the lack of leadership is somehow compensated by virtual social networks.

0735 GMT: American Postures. Another shot at Tehran from a US official, although this may be just a specific statement from the American military linked to Iraq's internal development rather than part of a wider get-tough strategy:

The top American commander in Iraq says the U.S. has "direct intelligence" that two senior Iraqi officials in charge of keeping Saddam Hussein loyalists out of the Baghdad government have ties to Iran. Gen. Raymond Odierno says Ali al-Lami and Ahmed Chalabi "are clearly influenced by Iran" and have attended senior-level meetings with members of the hardline Shiite regime there.

0730 GMT: We've posted Tricia Sutherland's human rights special this morning, summarising developments between 7 and 14 February.

0725 GMT: Closing Iran's Movies. The first time EA has taken a story from Hollywood's newspaper, Variety:

Iranian helmer Jafar Panahi has been denied permission by local authorities to travel to Berlin.
Panahi, whose "Offside" was awarded the fest's jury grand prize in 2006, was scheduled to participate in a panel discussion on Iranian cinema during the fest's World Cinema Fund Day today.

The Berlinale sent out a press release Tuesday announcing that Panahi would not be attending the fest, where he was an honorary guest.

"We are surprised and deeply regret that a director who has won so many international prizes has been denied the possibility to take part in our anniversary festival and to speak about his cinematic visions," said fest director Dieter Kosslick.