IRAN REGIONAL PRESENCE OFFICE - WINDOW ON IRAN - JANUARY 17,

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TAGS: PGOV PREL PINR IR
SUBJECT: IRAN REGIONAL PRESENCE OFFICE - WINDOW ON IRAN - JANUARY 17,
2009

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CLASSIFIED BY: Ramin Asgard, Director, Iran Regional Presence
Office - Dubai, DOS.
REASON: 1.4 (b),(d)

1. [U] This January 13, 2009 edition of Window on Iran was sent
out on that date via classified e-mail.




2. [S/NF] Russians Offer Iran Security Inducements to Shun US
Negotiations: According to a former Guardian Council member and
as corroborated by a former IRGC general, Russia has reportedly
offered Iran major incentives not to enter negotiations with the
US aimed at defusing bilateral tensions. One major element of
these incentives is reportedly providing Iran the advanced S-300
antiaircraft system. Comment: Russia's "counter-package" is
likely meant to encourage Iran to resist any temptation to
accept the P5+1 incentives package. If accurate, this measure
entails Russia actively undermining the P5+1 bargaining position
and seeking to dissuade any Iranian security accommodation with
the US.




3. [S/NF] Supreme Leader Taking Cautious Steps Towards US-Iran
Reconciliation: Reportedly encouraged by the prospect of a new
US approach to Iran by the incoming US administration, Supreme
Leader Khamenei is taking careful, but important steps towards
laying the foundation for improved ties, say three well-placed
Iranians. First, he has reportedly tapped his highly
influential son, Mojtabah, to head a commission run out of the
Supreme Leader's Office to explore possible steps towards
relations with the US. Second, Khamenei has reportedly ordered
all current occupants [thought to be mostly IRGC] of the former
US Embassy in Tehran to vacate the premises. Comment: While
plans for the US Embassy are perennial grist for rumor, a
high-level commission within the SL's office run through
Mojtabah corroborates other reporting indicating Mojtabah's
central role as the primary gatekeeper to his father and
indicates the importance the SL assigns to direct control of
this issue. Other key figures reportedly charged with advising
the SL on US-Iran relations are Ayatollah Mahdavi-Kani (SG of
the Combatant Clergy Association and president of the
influential Imam Sadiq University),Brigadier General Mohammad
Hejazi (a senior IRGC official serving in a liaison capacity
with the SL's office),and Hashemi Rafsanjani.




4. [S/NF] Khamenei Offers AN Full Support, Rival Principalists
Condition Theirs: According to a former Guardian Council member,
after a period of intense pre-election consultations among
regime insiders, Supreme Leader Khamenei has reportedly decided
to lend his full support to Ahmadinejad's reelection. To
bolster AN's chances, Khamenei has reportedly told AN he may tap
into Iran's foreign exchange reserves for funds as needed. If
the Majles objects, the SL has pledged to wield his status as
velayat-e faqih to quash any dissent. Rival Principalists have
meanwhile conditioned their support for AN's second term on
guarantees he would consult in advance before taking radical
policy steps. Comment: Many analysts believe that AN's economic
reform plan, which calls for elimination of subsidies on fuel,
water, and electricity as well as raising taxes to counter
declining oil prices, will likely pass the Majles in late
February despite concerns the plan will increase inflation and
unemployment. According to a Tehran-based political risk
analyst, AN's opponents are trying to remove the social welfare
components (primarily cash payments in lieu of subsidies),in an
effort to force AN to incur the public backlash for removing
subsidies without the mitigating effect of cash handouts.
Khamenei's pledge of financial resources restores AN's capacity
to provide these handouts, and if needed to use patronage and
subventions to boost his support.




5. [C/NF] Iranian Businessmen Facing Declining Demand, Cost
Increases, Sanctions, and Subsidy Reform: Iranian businessmen
seeking visas in Dubai told IRPO Consular Officer that certain
sectors of the Iranian economy are slowing, perhaps
dramatically, and that businesses are struggling just to
survive. An iron salesman and a concrete salesman reported
declining sales of 30 to 40 percent over the past quarter, which
tracks with a general slowdown in the real estate and
construction sectors. A sugar factory owner estimated that 50
percent of Iranian factories may have closed or will soon do so.
He also noted that his factory's electricity bills now reflect
two prices; one is the current subsidized price, and the second
the price he would pay if subsidies were removed. The

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subsidized price is four times higher, and this factory owner
said he would be forced to close if subsidies were removed. In
addition to these woes, another Iranian industrialist noted that
international economic and financial sanctions are driving up
the cost of business and limiting investment - which is hitting
the private sector especially hard. Comment: Already strained
to the breaking point, the Iranian private sector's survival may
rest on derailing AN's subsidy reform plans. If the bazaar
protests of October 2008 (in response to an attempt to institute
a VAT tax) and the unrest at the outset of the gas rationing
system are any indication, such reforms will trigger upheaval.
Managing this process will require considerable tact, and quite
likely a dose of force by the IRIG.




6. [S/NF] IRIG Stops Historical Research International Visitor
Exchange: IRIG officials have denied participants in the planned
IVLP program on historical research permission to travel to the
U.S. One participant told us that they were forbidden to travel
to the U.S. "as a group" for the next two months but they could
travel abroad as individuals. The denial follows recent press
reports of a new MFA commission established to vet travel
connected to U.S. exchange programs. Participants in the
exchange program only learned of the permission requirement at
the end of December. Comment: The need for university
professors to get permission from their universities for travel
to the U.S. has been on the books for several years, but it has
never been rigorously enforced. Likewise, MFA has generally been
supportive of exchanges according to our contacts; however, the
IRIG has prevented four other exchange programs from going
traveling since September. The two-month travel ban mentioned
by the participant suggests the IRIG may be willing to revisit
the issue of exchanges in a more systematic way, following the
change in administrations and a possible overture from the U.S.




7. [C/NF] Kargozaran Newspaper Closed - May Re-open Under New
Name: A journalist that formerly worked with the now closed
newspaper Kargozaran told IRPO consular officer that the
newspaper may re-open again under a new name in the future. The
Iranian government closed the newspaper on December 31, 2008 for
publishing a commentary by the Office of Consolidating Unity,
Iran's largest student group, "justifying the anti-human crimes
of the Zionist regime" and denouncing Hamas actions as
terrorism. The relevant passage follows: "Today's crimes by
Israel in Gaza should be strongly condemned. But to the same
extent, terrorists hiding among schools and hospitals and
non-combatants should also be condemned and be considered an
anti-humanitarian movement. " Comment: Kargozaran was the
press organ of the Executives of Construction, a technocratic
conservative de facto political party founded and sustained by
Hashemi Rafsanjani.




8. (U) Window on Iran is a new classified, weekly product
providing Washington policy community and Iran watcher
highlights of key developments on Iran. It is produced by the
Iran Regional Presence Office - Dubai. Please direct any
questions/comments to: Kay McGowan (mcgowanka2@state.sgov.gov
) or Charlie Pennypacker
(pennypacker@state.sgov.gov
).
ASGARD