How the Iran Nuclear Standoff Looks From Russia: Dmitri Trenin

Tehran is located 1,531 miles (2,464 kilometers) from Moscow. In 2010, Russia had a defense budget of $59 billion and 1 million active armed forces personnel; Iran's defense budget was $7 billion with 523,000 active armed forces personnel. Russia's nuclear weapons arsenal is estimated to include 10,566 warheads; the capacity of Iran's nuclear program is uncertain. Charts by Everything Type Company

By Dmitri Trenin Feb 15, 2012 8:00 AM GMT+0800

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International Monetary Fund, Direction of Trade Statistics, 2011; International Institute for Strategic Studies Military Balance, 2010; Stockholm International Peace Research Institute Yearbook, 2011; World Bank; Arms Control Association; U.S. Energy Information Administration.

Enlarge image

International Monetary Fund, Direction of Trade Statistics, 2011; International Institute for Strategic Studies Military Balance, 2010; Stockholm International Peace Research Institute Yearbook, 2011; World Bank; Arms Control Association; U.S. Energy Information Administration.

When Russians look at Iran, they see a country that has been their neighbor and rival forever. As the Russian empire advanced, it wrestled the North and South Caucasus from the Shah. Peter the Great annexed, briefly, Iran’s entire Caspian Sea coastline and put his forces just north of Tehran.
In the early 20th century, Russia and the U.K. divided Iran into zones of influence. The Russians got the north and proceeded to occupy Iran twice, during each of the world wars. When Franklin Delano Roosevelt and Winston Churchill met with Josef Stalin in Tehran in 1943, they were protected by the Red Army.
Yet there was never much love lost between the two countries. To Iranians, Russia was too powerful and too threatening. Russians, meanwhile, remembered their own embassy trauma at Iranian hands in 1829. Every schoolchild knows the fate of Alexander Griboyedov, the czar’s ambassador to Persia, who was murdered, with his entire embassy staff, by an angry Tehran mob. Griboyedov was a great Russian author, many of whose lines Russian children -- and grown-ups -- know by heart.
This brief background is vital to understanding where Russians are coming from as they approach Iran’s nuclear program, and why they have adopted such a stop-go approach to supporting international efforts to rein it in. Although Russia has backed limited sanctions at the United Nations, it has clashed with the U.S. and Europe over the much tougher sanctions they are now imposing unilaterally. It strongly opposes any use of military force.

Cyrus and Xerxes

Russians see their neighbor as a historical empire -- going back to the days of Cyrus and Xerxes -- which now seeks to reassert itself as a regional power in the Greater Middle East. They see, all at once, a young and growing population already half the size of Russia’s, a proud nation determined to rise to its full potential, and clever wheeler-dealers always looking for a bargain. They see, too, ruthless fanatics driven by some weird interpretation of their religion -- and shiver as they remember Griboyedov.
If such a country, many Russians reason, wants to acquire nuclear weapons, it probably will. Bombing known facilities would set back the nuclear program, but would also ensure that Iran eventually gets the bomb, to deter any such attacks in the future. The only way to prevent Iran from having nuclear weapons, the Russians believe, is for the international community to craft a deal under which Iran would agree to stop after achieving a nuclear-weapons capability, while the world’s leading powers would agree to reintegrate Iran into the international community by dropping sanctions, unfreezing assets and admitting Iran into the World Trade Organization.
The Russians are not resigned to the prospect of Iran getting nuclear weapons and perfecting its missiles to carry them. Iran, after all, is a close neighbor, meaning that even its medium-range systems can reach deep into Russia. Diplomats from Moscow have been trying hard, in the past decade, to nudge the Iranians toward some sort of a compromise with the world’s powers and have hoped to secure special benefits in exchange for Russia’s role as a mediator in the process. So far, the attempt has failed, but Russia has not given up entirely.
Russia, as a result, is often portrayed as Iran’s ally. Yet the notion sounds weird to most Russians, and probably to most Iranians, too. True, Russia has been selling arms to the regime in Tehran, but Russian weapons dealers have learned to look at their trade as profit-making par excellence. As for Iran, it might prefer other partners to boost its military, but doesn’t have much choice. A couple of years ago, Russia canceled delivery of an air-defense system in an effort to pressure Iran. The Iranians were not amused.

Bushehr Reactor

Russia is also continuing its nuclear-energy cooperation with Iran. The Bushehr reactor, Iran’s first, has been completed at long last. The Russians see nuclear energy as one of the few fields in which they are globally competitive. They look at Iran as a promising market they would be loath to cede to rivals. Russian officials, however, imposed a condition: Iran had to return all spent fuel to Russia for processing, thus preventing its use in a nuclear-weapons program.
Where the assessment in Moscow does differ from that in Washington is in the scale of the Iranian threat, both in terms of capabilities and intentions. Russians tend to be more conservative in their estimate of Iran’s progress on the nuclear and missile tracks, often pointing to exaggerated American warnings in the past. Russia’s frequent references to the “lack of hard evidence” of the military nature of the Iranian nuclear program are probably meant to keep the door open for dialogue.
As to the intentions of the leadership in Tehran, the Russians are ambivalent. For a number of years after the fall of the Soviet Union, Iran turned out to be a very useful partner for Russia, particularly by abstaining from expanding its revolution to the new Muslim states of the former Soviet Union and by refusing to condemn Russia’s war in Chechnya. Iran even helped Russia to join the Organization of the Islamic Conference as an observer, and in the 1990s helped to end the civil war in Tajikistan, where a variant of Farsi is spoken.
This pragmatic side of Iranian politics, associated in the past with the likes of former Presidents Ali Akbar Hashemi Rafsanjani and Mohammad Khatami, has been overshadowed more recently by the far less cheerful streak of dark warnings and messianic rhetoric from the current president, Mahmoud Ahmadinejad. Neither Russian Prime Minister Vladimir Putin nor President Dmitry Medvedev succeeded in getting much out of him.
Meanwhile, the supreme leader of Iran, the impervious Ayatollah Ali Khamenei, and the increasingly powerful Revolutionary Guard Corps remain totally out of reach for officials in Moscow. Russian Iran-watchers analyzing the evolution of the political regime in Tehran expect it to change in a pretty fundamental way in the foreseeable future, but they have no clue as to the time frame or the direction of the change.
Russians are watching warily as tensions around Iran continue to rise. Sanctions, they think, beyond those already authorized by the UN Security Council, would weaken Iran’s pragmatists and empower its ideologues. Russia believes that the even more stringent sanctions imposed by the U.S. and its European allies not only won’t do what the West wants -- stop the Iranian nuclear program or turn the Iranian people against their government -- but also will fail to stave off an Israeli airstrike. Such an attack inevitably would drag the U.S. into the fray. That means, unless diplomacy is given one last chance, the two things that concern Russian leaders most -- a U.S. war against Iran, and an Iran armed with nuclear weapons -- may become a reality soon.
(Dmitri Trenin is director of the Carnegie Moscow Center. This is the first in a series of op-ed articles about Iran, from writers in countries that have a direct interest in the escalating debate over how to rein in its alleged nuclear weapons program. The opinions expressed are his own.)

editor comment:

it obviously seem Iranian had alliance with federal power of Russian, America, France, Britain, and China.
this 5 super power united supported Iranian against Muslim world.  

Bursa Malaysia, regional market mostly in positive territory

KUALA LUMPUR: Share prices on Bursa Malaysia at mid-morning traded in the positive territory, in line with the trend of regional markets. Trading interest in the local stock market rose ahead of the official launch of the government’s Economic Transformation Programme today.

Sentiment was also boosted by the optimistic prospects in the region, especially with China’s next five-year economic plan to boost domestic consumption. On top of that, some feel-good effect also arose after the Group of 20 officials over the weekend pledged to refrain from “competitive devaluation” and to let markets set foreign- exchange values.

The FBM-KLCI at 10.30am today was at 1,493.75, up 3.11 points, with turnover at 314.36 million shares valued at RM234.9mil. There were 334 gainers, 175 losers and 263 counters traded unchanged on the Bursa Malaysia.

Top gainers at mid-morning were Kuala Lumpur Kepong Bhd, up 44 sen to RM18.94; Southern Acids (M) Bhd, up 27 sen to RM2.97; and Boustead Holdings Bhd, up 26 sen to RM5.92. And counters gaining 20 sen each were Batu Kawan Bhd to RM15.50; British American Tobacco (M) Bhd to RM47; and Panasonic Manufacturing Malaysia Bhd to RM18.70.

Top losing counters at mid-morning were Nestle (Malaysia) Bhd, down 20 sen to RM44. Losing 10 sen each were DFZ Capital Bhd to RM3.52, Far East Holdings Bhd to RM6.70, and Shell Refining Company (Federation Of Malaya) Bhd to RM10.60. Shedding eight sen each were Genting Bhd to RM10.42 and PETRONAS Gas Bhd to RM11.18.

In the region, Singapore’s Straits Times Index gained 14.36 points to 3,187.93; Hong Kong’s Hang Seng Index 195.74 points to 23,713.28; Shanghai’s A share index 4.83 points to 2,979.87; and Seoul’s Kopsi Index 10.12 points to 1,907.43. Tokyo’s Nikkei 225 was down 26.91 points to 9,399.80.

Nymex crude oil was quoted at US$82.42 per barrel as at 10.32am. At 10.42am, spot gold was at US$1,338.60 per ounce, up US$10.15 an ounce; while ringgit was quoted at 3.0940 to the US dollar.

Economics is a religion, not a science

‘Within the cathedral of mainstream economics, there are many chapels devoted to specialised problems’

IS economics a religion? Paul Krugman argued recently in his Aug 21, New York Times column that the policy elite of central bankers, finance ministers and politicians are “acting like priests of an ancient cult, demanding that we engage in human sacrifices to appease the anger of invisible gods.”

By gods, he means the “bond vigilantes,” who advocate spending cuts to reduce the fiscal deficit to enable the bond market to become stronger, resulting in greater confidence in the economy.

The biggest advocate of deficit reduction during the Clinton Administration was former US Treasury secretary Robert Rubin.

As he put it in his memoirs, In an Uncertain Age ( 2003): “In important ways, the deficit had become a symbol of the government’s inability to manage its own affairs – and of our society’s inability to cope with economic challenges more generally, such as our global competitiveness, then much in question.

“The view that fiscal discipline was being restored contributed to lower interest rates and increased confidence, and that led to more spending and investment, which in turn led to job creation, lower unemployment rates, and increased productivity.”

Rubin is the mentor of former economic adviser to US President Barack Obama, Larry Summers, and the current US Treasury Secretary Tim Geithner, both of whom served under Rubin in the US Treasury.

Have they adopted fiscal reduction again as the way to restore confidence, despite Krugman’s view that there is a need for further government spending to ‘get back to the job of rebuilding the economy’?

Krugman is advocating Keynesian intervention in the economy, while the bond advocates are going back to the monetarist’s “let the market work”, by cutting back over-blown government spending back to sustainable levels.

Nobel Laureate Joseph Stiglitz, who broke ranks with the Washington Consensus during the Asian crisis on the irresponsibility of tightening interest rates and cutting fiscal deficits in the midst of a crisis, has just written a new book, Freefall: America, free markets, and the sinking of the world economy.

He has written the most powerful book on the current crisis – not a blow-by-blow account of what happened and whodunit – but a damnation of the crisis in economics and the crisis in morals.

“Economics had moved – more than economists would like to think – from being a scientific discipline into become free market capitalism’s biggest cheerleader.”

The mainstream economists had become so smug in their beliefs that the market was almost efficient that “it was a theological position, and it soon became clear that no piece of evidence or theoretical research would budge them away from it.”

Stiglitz does not hesitate to see the economics profession as a religion.

He aptly describes it as: “Within the cathedral of mainstream economics, there are many chapels devoted to specialised problems. Each has its own priests and even its own catechism.”

He is right. Despite the overwhelming evidence against their utility, the mainstream economists have convinced policymakers that there is little wrong with their models or efficient market Capital Asset Pricing Models.

Let’s get back to the business of making money. In a passionate defence of the under-privileged, Stiglitz argued that there is an underlying moral deficit – “far harder to forgive is the moral depravity – the financial sector’s exploitation of poor and even middle-class Americans.”

He laments the fact that “economics, unintentionally, provided sustenance to this lack of moral responsibility.”

What Stiglitz has demonstrated of the economic theologians is that if they believe that they are right, it must be their detractors who are wrong. So their energy is not spent on what is wrong with their beliefs or assumptions, but why those who try to demonstrate that the theory does not fit with reality are infidels.

Should governments cut deficits?

But let us come back to the big debate: Should governments cut deficits or increase them to get jobs going?

My personal view is that if the United States suffers from fundamentally excessive consumption financed by excessive leverage, then simply increasing public debt to substitute for Wall Street losses does not make sense.

De-leveraging has to happen some time, either in the private or public sector and de-leveraging means cutback in consumption.

The dilemma is whether government spending is for creating temporary jobs or for getting long-term growth going that would create new jobs.

Advanced country public debt is so high because the vested interests, from bankers to healthcare, basically would not allow the government to cut spending and instead push for tax decreases. This fiscal model in the long run is not viable.

The Keynesian argument that if the private sector lacks confidence to spend, the government should spend is not wrong. But Keynes did not spell out where the government should spend. Nor did he envisage that lobbyists can influence government spending to be wasteful. Hence, every prophet can be used by his or her successors to prove their own points of view. This is religion, not science.

One of my dreams is to write a film script about how Martians came to visit Earth in the year 2200, when the world is destroyed by a nuclear war.

As Martian archeologists explore the ruins, they notice that the tallest and the most important edifices left standing are the most magnificent. Deep in their basements, they find vaults made of tungsten steel that seem to protect the most sacred items.

In almost every city they find these buildings. When they manage to open the vaults, they find ashes of paper that could have been records of something important.

They think these are religious documents. Then, they discover some small coins, objects for which the Martians have no use. In each coin, they finally decipher the words: In God we Trust.

The Martians conclude that in the last days of Earth, there flourished an important religion that worshipped a god called Money, and these temples were called banks. They did not find traces of the priests, who were called economists.

·Tan Sri Andrew Sheng is adjunct professor at Universiti Malaya, Kuala Lumpur, and Tsinghua University, Beijing. He has served in key positions at Bank Negara, the Hong Kong Monetary Authority and the Hong Kong Securities and Futures Commission, and is currently a member of Malaysia’s National Economic Advisory Council. He is the author of the book, From Asian to Global Financial Crisis.