Iran Democracy Monitor: No. 139

MOSCOW, TEHRAN TIGHTEN DEFENSE TIES
Even as the United States initiates talks with Iran over its nuclear program, the government of Russian president Vladimir Putin is investing in the Islamic Republic's strategic capabilities. Russia and Iran have reportedly held high-evel talks in Tehran over an expansion of defense coordination between the two countries. Gen. Viktor Bondarev, head of the Russian Air Force, visited Iran in mid-October, where he met with Iranian military officials to discuss "electronic listening systems, radar and missiles."

A particular point of discussion was the S-300 air defense system, which the Kremlin recently offered anew to Iran after unceremoniously tabling a previous 2007 agreement to deliver the batteries, which will be used to protect Iran's nuclear facilities. Iran, for its part, is trying its utmost to seal the deal. During his visit, Bondarev was reportedly presented with a unit of the ScanEagle, an indigenously-developed drone produced by the IRGC, as a concrete demonstration both of Iran's friendship and of the development capabilities of the Iranian defense sector. (Defense News, October 21, 2013; Tehran PressTV, October 21, 2013)

A THAW WITH EGYPT
Iran's relationship with sometime regional rival Egypt has undergone yet another evolution. During the thirty-year rule of strongman Hosni Mubarak, ties between Tehran and Cairo were strained at best, with Mubarak's secular government styling itself as a bulwark against Iranian expansionism in the region. Mubarak's ouster in February 2011 saw the rise of a weak caretaker government - one that appeared to at least countenance giving Iran greater regional influence. The subsequent assumption of power by the ideological Muslim Brotherhood-dominated government of president Mohammed Morsi, reestablished a distance between the two countries, with each seeing the other as a competitor for influence in the Middle East and North Africa.

Now, things are again looking up for Iran. In the wake of Morsi's ouster this past July, Cairo has transitioned back to military rule, but the current caretaker government appears more open to accomodation with Tehran than its predecessor. According to the country's interim Foreign Minister, Nabil Fahmy, Cairo is seeking “stable and positive ties with the Islamic Republic.” His government, Fahmy has said, sees Iran as a “very important” country in the Middle East, and is actively seeking to foster relations with it. (Tehran PressTV, October 7, 2013)

IRAN'S ECONOMIC CLOCK
Just how significant is Iran's economic malaise? According to a top Israeli official, the Iranian economy is now some 18 months away from collapse, as a economic sanctions that have been applied by the West. Israel's Intelligence Minister, Yuval Steinitz, has estimated that the past two years of sanctions have caused about $100 billion in damage to Tehran’s economy. They also continue to bite; with inflation at 40 percent and the Iranian rial devalued by 180 percent, Steinitz notes, Western sanctions have effectively cut Iran off from the world’s financial system. But, he notes, more needs to be done; “if we add to this pressure a credible military threat, the chances will be greatly improved” that the Iranian regime's nuclear development will be brought to heel, Steinitz believes. (Jerusalem Post, October 7, 2013)

NOT ALL QUIET ON THE ENERGY FRONT
Western sanctions may be having a pronounced effect on Iran's financial fortunes, but at least one sector of Iran's economy appears to be booming. Iran’s electricity industry has emerged as a regional powerhouse, with the Islamic Republic exporting an estimated $800 million worth of electricity in the last year. Moreover, despite Western efforts to isolate Iran economically, Tehran currently boasts energy exchange projects with all of its neighbors (Iraq, Turkey, Azerbaijan, Armenia, Afghanistan, and Pakistan), and according to Iranian energy minister Hamid Chitchian, plans are underway to add Russia to Iran’s energy exporting repertoire, connecting the two countries either through Azerbaijan or Turkmenistan. (Iran Daily Brief, September 30, 2013)