What to Say about Iran?

I'd feel remiss if I didn't mention anything about the events in Iran since last Friday but I am not sure I have much to say or even know how to begin to wrap my head around everything. There are so many moving parts to this story that I don't know where to place them all at this point. Some things that interest me/bother me (in no discernible order)-

* The election itself. What does one make of it? I think this first issue on my list is the most difficult. Juan Cole in post on his blog on Saturday lists the reasons he thinks the election was stolen. Compelling but not necessarily a silver bullet. Other analysts/commentators have over the course of the past few days listed reasons why the election was probably legitimate- most infamously now Ken Ballen and Patrick Doherty's op-ed in the Post. (Some of the air was let out of the polling balloon by both the ABC polling unit and an organization called FiveThirtyEight.) Finally, the Post yesterday published an amalgamation of both sides of the argument in a front page article, perhaps in an attempt to take some heat off of the criticism of the Ballen/Doherty op-ed. As for this part of the moving story, I tend to think along with the Post, we'll never know what really happened on Friday unless someone decides to spill the beans publicly in a hope for redemption.

*The Protests. Lots of folks are noting that the protests, particularly in Tehran, are the biggest to rock the country since the Iranian election. What surprises me most about them is not how large they are or the fact that people keep coming to the street day after day, but that EVERYONE beyond the community of folks on Twitter and Facebook are surprised by them. I am still in a bit of shock that conventional media outlets have only gotten around to paying any attention to the social network response in the past 24 hours. Only today did the New York Times actually publish an article than resembled what's been reported non-stop on You Tube, FB, and Twitter since Friday. NBC caught on a bit more quickly but that was only after Monday's massive (!) protest and the deaths of 7 demonstrators. I am floored that even the experts I talked to on Monday thought this was a northern Tehran phenomenon only. This as You Tube was filled with videos of riot police in Shiraz and Isfahan.

Why were people surprised by the strength of feeling going into this vote? Did they assume that Iran's apathetic youth would remain apathetic? Did no one get the sense watching the rallies in support of Mousavi in the last week and a half before the election that perhaps this time it would be a little different? Reading posts on Facebook suggested that Iranians were much more engaged in the pre-election run up, watching the debates, arguing about the outcome. Why then, were folks surprised by the level of anger when Ahmedinejad and Khamenei quickly pulled the trigger on the results? It's not as if we're talking about a populace with no history of political uprisings, for god's sake. Ultimately, the protests may not change the election results but they have changed a few things. 1)Internal dynamics within Iran. I'd be surprised if the regime can ever put this genie back in the box entirely. I'd be afraid of the kind of repression it would take to make the populace passive again. 2) The way that everyone, both in the media and within governments, looks at social networking. I can't begin to understand its force (even as someone who uses it) but it will be one to be reckoned with for a long time to come. I hope we in the US finally begin to appreciate that.

*The Iranian Government Itself. Where can they possibly go from here? The little diversionary tactic of having the guardian council review some of the ballots has clearly failed and the response seems that the only way forward is to go more draconian. The You Tube images of students being hunted down in Isfahan (if they are credible) and gunshots in the night in Tehran are deeply disturbing. Clearly whomever is running the show these days is no student of history. The Shah tried to use the Savak to keep things under wrap, clearly an unsuccessful strategy. A friend of mine posted an interesting video to her FB profile of policemen standing alongside protesters. A consensus is forming that most of the violence being perpetrated against citizens is not being undertaken by conventional forces but by groups like the Basij. If this is true, it could indicate that the government could very quickly loose control of the security services outside of the militias. Yikes. The government's other tactic of shutting down media outlets is failing miserably. Let's face it- there are plenty of ways to get around government filters and those plugged in Iranians have been using them all, and using them pretty well. I can't tell you how many requests I've seen to spread anti-filter software around. How does the government get control back of the situation? I would posit that they don't unless the air goes out of the balloon for some reason. But the more violence and the more intractable Khamenei seems, the more likely this continues in my mind. A lot of people see Khamenei as the lynch pin, including this NY Times article. I'd argue that things are probably broken, perhaps not irreparably, but broken all the same for him as well.

*The US Response Almost as appalling confusing as the election itself is the varying expectations of how the US should respond. On the one hand, you have conservatives arguing that the system was broken before the election so we should just accept the fact that yes, the election may have been illegitimate (are they ever legitimate? goes this line), but Ahmedinejad is the winner and he's the one we'll deal with. You almost get the sense that there is some glee in this camp since Ahmedinejad is such an unlikeable character he's easy to kick around. Tied to this argument although a bit separate from it is the insinuation (as evidenced by the tone of the Ballen/Doherty op-ed) that there is something inherently untrustworthy about Iranians themselves so it should be no surprise that they re-elected a feckless, evil leader. Meyrav Wurmser in the NYT blog "Room for Debate" and Fouad Ajami on CNN break this way. Wurmser is particular wacky, ending her piece with the line "What is left is a military strike to stop the bomb program and rattle the regime." (Christ, remind me to defect to Canada if she ever enters government!) On the other extreme, you have the Journal's op-ed page today which accuses President Obama of abdicating his responsibility towards democracy in Iran. (Here's the first and here's the second)

Fortunately, the President himself seems pretty deaf to all of this nonsense. He knows that he will have to deal with whomever comes out of this nasty fray and he can't kick Ahmedinejad around beforehand (although he will certainly be able to do so post facto, I imagine) but at the same time he can't risk isolating a new movement in Iranian politics if that is in fact what is emerging. I think he's planning it pretty cool at the moment. Express your concern but stay uninvolved. Look what our history of interference has wrought in the past anyway.

Regardless, the events in Iran are frightening and fascinating all at once. It's almost like watching a woman in the midst of a terrifying childbirth. You're absolutely not sure that modern technology will save mother and baby but you can't help rooting for the daring will to survive and change.

As for the rest of the region, what happens in Iran is critical to every one's self interest. No one should expect that even if, by some as yet unseen miracle, a new election happens the policies of the state will radically change. But something is about to change. If I were a neighbor, I'd be holding my breath right now. But wait a second, I already am.

Some wholly unconnected bits of news

Here are a few things I found interesting in BME this morning-

Gas prices locked and loaded for a big bang

Nearly two thirds of Gulf companies not hiring

A third of Dubai's homes may be empty by end of next year

Recovery? What interesting times we live in...

Moderation in the Making?

Not being a political scientist and lacking in any hard data regarding public opinion, I have been struck with the results of the elections in Lebanon and the current presidential race in Iran. The Lebanon race is a bit harder to read in terms of popular sentiment, but one could argue that at least a plurality of voters who turned out are looking for a change away from Hizballah's "in your face" tactics. What exactly they are rejecting is unclear. The Washington Post argued yesterday that the majority of Saad Hariri's supporters are expecting a direct confrontation with Hizballah in order to overturn the group's veto right in the Lebanese parliament. Somehow, however, I doubt that all voters who favored Hariri's March 14 coalition want that knowing that such a confrontation risks an open rift with Hizballah, who still remains a powerful force in the country. So perhaps the election best represents a general shift towards the middle and away from the confrontational tactics that Hizballah best embodied, especially since the conflict with Israel in 2006.

Even more interesting is the campaign in Iran as it approaches election day on Friday. Again, take a look at this article in the Post on the pre-election atmosphere in Tehran. Some of the tactics being used by Mr. Mousavi's supporters seem almost directly in line with the energy and enthusiasm that President Obama was able to capture by harnessing social networking here in the US. At the end of the day, Mr. Ahmadinejad may in fact be re-elected but one cannot discount the strength of the support Mr. Mousavi has been able to garner and the creativity of his campaign, especially for Iran. The pictures that accompany the article in the Post are equally interesting since they represent a side of Iran not many people see, or have seen since Mr. Ahmadinejad's election. Mr. Mousavi appears to be tapping into a desire for change or at least moderation in Iran that his opponent continues to roundly reject. The Times has a nice synopsis of each of the candidate's positions on major issues that highlights this moderation in action.

US administration officials over the weekend called Lebanon the bellwether of the region. Certainly, Iran is not just a bellwether but a driver of events. With this in mind, what is really going on with the Arab/Persian electorate? Why the sudden lurch towards the political center? A few commentators over the weekend wondered if President Obama's speech might have influenced the outcome in Lebanon. Possibly, but could this also then account for the sudden frenzied support for Mr. Mousavi as well? Even more interesting is that the turns in the electorate in both countries seem to have taken most observers unawares. The Lebanon election was deemed to be a "surprising" outcome and as the Post article linked above notes even Mr. Mousavi has been surprised by the level of support he has received. Could it be that the region was simply waiting for an US administration that held out an olive branch? If Mr. Mousavi does get elected, the events of the past week in Lebanon and Iran might be the most damning condemnation of the Bush administration's policies in the Middle East yet.

What Obama Got Wrong

I'll start off by saying that I really loved the President's speech in Cairo today. Admittedly, I am an American who already has a tremendous respect for the work that President Obama has been doing to try and re-orient the country back towards a pragmatic, centrist position. But I think he hit the right notes almost across the board in quoting the Qu'ran, using a small flavor of Arabic, and more honestly addressing the Israeli-Palestinian problem than any other president since the first George Bush. He even referred to Palestine, a tremendously big deal for those who pay attention to such things.

What I didn't like were the policy recommendations towards the end of the speech when it comes to economic development. And here, I honestly chalk that up to the almost complete lack of nuanced understanding of the region from an economic perspective that is so pervasive among the "intelligentsia" and policy formulators in this country. I can almost hear local Washington think tanks or State Department spouting off the truisms that come with "analysis" of Middle East economies- not enough investment in education, need for entrepreneurship, etc, etc. Sadly, this is the one area where President Obama's vision for the Middle East diverged not one iota from the Bush administration's. I know having worked on the blighted from the beginning Broader Middle East project of 2004.

The fact of the matter is that illiteracy has largely been eradicated in the region, according to UNESCO, with the exceptions of a few countries (it continues to be an issue in Morocco and Yemen). Females in the region are being educated to an equal if not greater extent than their male counterparts and more often than not continue on to higher education in greater numbers. The reason the statistics still look a bit screwy is that you have a "lost generation" of females in particular who missed out on the mass wave of educational investment in the late 1970s/early 1980s. Women over 35 are likely the ones to remain illiterate. Well and good if you want to reach those segments of the population, but that requires a whole different set of policy responses than simply expanding primary education.

As for entrepreneurs, yes, it is a problem perhaps that you don't have more Bill Gates in the region. MEED a few years ago ran a cover story on this same issue. But the REAL problem here is not a lack of ideas as much as a lack of capital. The fact of the matter is that with the exception of the Gulf, perhaps ironically, bank lending remains largely tied up in claims on the government. Across the region, but especially prevalent in North Africa, most banks don't lend. And that is largely because of 1) the financing requirements of the state and 2) (and more importantly here) the fear of the banks that they will not be repaid. The Gulf, beginning in Saudi Arabia in 2003, got around this issue with a really basic, self-evident premise- the government instituted direct deposit. With paychecks going directly to one's checking account the banks could ensure that repayment on loans happened before anything else. How simple is that? With direct depositing, lending to the private sector flourished between 2003-2008. (I am not sure where lending stands this year yet.) And, as a result, private sector growth in much of the Gulf far outstripped government and oil growth. Not exactly rocket science.

So, my suggestion to the President would be to drop the summits and the focus on illiteracy and get down to business. Some of the best "exchanges" the region had with the US under the Bush administration was negotiating FTAs with the US. Give the region an incentive to change instead of meetings to attend.

You know it's bad when...

...you look to Iraq for assistance in economic growth. (Wall Street Journal article today on Syria.)

On an unrelated topic- another interesting article in the Journal today. This one on the disconnect between physical and financial markets in oil. As readers of this blog know, it's one of my favorite rants.