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The situation in Iran has been interesting, somewhat violent, and has led to very little in the way of influencing the financial markets. All of this points to it being more than a regional issue, at least for now. Unless of course, things change.
At the center of the dispute, and the demonstrations, are allegations of a "rigged vote," a claim that was directly denied in a Friday speech by Iran's Supreme Leader Ayatollah Ali Khamenei, who finally took off the gloves and called for an end to the demonstrations, while threatening force.
Indeed, Stratfor.com reported that "Several commanders of the Islamic Revolutionary Guards Corps (IRGC) have been arrested because of their opposition to plans scheduled for tomorrow (Friday), Iranian Web site Tehran Bureau reported June 18. Tehran Bureau added that “the plan is to create chaos and bloody confrontations” to justify a crackdown." The crackdown did not materialize on Friday, but a stern warning and the potential use of force were clearly threatened by Khamenei in his speech. This suggests that the next move by the government may be violent.
Khamenei was thought by some to have moderated his position. But his Friday speech destroyed that notion, and showed a clear move to a hard line stance, and at least for now, a public and strong backing of Ahmadinejad and his policies.
Khamenei followed familiar lines of argument accusing "what he called arrogant Western powers, particularly Britain and the United States, of showing their hostility to the Iranian Islamic revolution in remarks casting doubt on the election. And he warned them not meddle in Iran’s affairs, accusing them of failing to understand the nature of Iranian society," according to The New York Times.
Yet, some insiders are making some cautious statements. According to The New York Times: '“Most analysts believe the outreach is just to kill time and extend this while they search for a solution, although there doesn’t seem to be any,” said a political analyst in Tehran, who spoke on the condition of anonymity for fear of reprisal. “This will only be a postponement of the inevitable, which is indeed a brutal crackdown.”
According to Stratfor.com, the situation in Iran is near the boiling point, noting: "Considering the potential for the demonstrations to spiral out of control, particularly if Khamenei’s appeal ends up backfiring, Iran’s state security apparatus may resort to more extreme measures to put down the protests. Thus far, plainclothes Basij militiamen — which form the paramilitary arm of the powerful Islamic Revolutionary Guard Corps (IRGC) — and local police have been intimidating opposition protesters and breaking up demonstrations. A source in Tehran told STRATFOR on Thursday that the IRGC has now taken command of law and order operations in the capital."
Strafor notes that there is a great deal of activity ongoing as "the street demonstrations and level of behind-the-scenes efforts by clerical elites to contain Ahmadinejad are extremely worrying from the Supreme Leader’s point of view. If he feels that the foundation of the Islamic Republic is at stake, he very well could be compelled to turn to the IRGC."
In fact, Stratfor notes that the the IRGC is the focal point of what comes next as "Iran is in uncharted territory: There is a battle under way between clerics, the presidency is under attack and the Supreme Leader is getting backed into a corner while trying to manage the fracas. Should the IRGC — which was designed to serve and protect the clerics — be called into Tehran to impose martial law, it would be in a position to exceed those traditional constraints and gain a much bigger say in how the Islamic Republic is run."
Conclusion
The fact that Islamic rule is potentially in trouble in Iran, even conceptually, was hard to visualize just a few days ago. That Ahmadinejad's electoral win is being questioned is even more amazing. And that a crackdown may or may not resolve the situation is even more of a potentially surprising outcome.
Yet, that seems to be what is happening. Large demonstrations, public questioning of the state, and a signficant internal struggle are all apparent and ongoing, suggesting that at some point, something is going to give.
Iran has a history of public uprisings leading to a change in government. Just ask those in the Shah's family that now live in exile how things turned out the last time something like this happened.
At the center of the dispute is politics, more specifically, how the pie gets divided. And in Iran, the pie has been badly divided for some time, especially with regard to energy, a huge irony in a country that is best known for its oil and natural gas reserves.
For the markets, the firmness in the price of oil, and the support for natural gas prices, despite ample supplies of the latter, suggests that the smart money is building positions, just in case.
As the weekend approaches, so does the danger of something very big happening in Iran increase. As Stratfor puts it: "if the Supreme Leader’s appeal for calm is openly flouted, his patience runs out and a decision is made to send in the IRGC, the post-election saga could be approaching its climax."
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