Symposium on Iran and Policy Options for the Next Administration: Session One: Iran's Domestic Politics

Despite a sagging economy and a public that has grown weary of the ruling regime, Iran's conservative camps retain a firm grip on power nearly three decades after the Iranian Revolution. Farideh Farhi, an adjunct professor of political science at the University of Hawaii, said at a CFR symposium on U.S. policy toward Iran that the next U.S. president should prepare to negotiate with an increasingly fractious camp of conservative Iranian lawmakers. But Ali Ansari, professor and director of the Institute for Iranian Studies at the University of St. Andrews, said conservative infighting has not impacted the office of Iran's Supreme Leader ability to influence the domestic agenda. The last decade has seen "the exponential growth of the leadership office," Ansari said. "What you see is the growth of this shadow government, or this revolutionary government as oppsed to the orthodox republican organs of government, and they've started essentially to take over." An examination of Iran's budgets offers evidence. For instance, Ansari said, recent governmental spending on welfare organizations increased by 3.2 percent while spending on religious foundations more than doubled. "When you have that shift in financial wealth …it shows where the balance of power is going," he said. "The leader is now taking on the role essentially as a monarch."

This was part of the Symposium on Iran and Policy Options for the Next Administration, which was made possible through the generous support of the Carnegie Corporation of New York.

This was part of the Symposium on Iran and Policy Options for the Next Administration, which was made possible through the generous support ofthe Carnegie Corporation of New York.

RICHARD N. HAASS (President, Council on Foreign Relations): Well, good morning. Welcome to the Council on Foreign Relations. This has a back-to-school quality. So I haven't seen any red apples this morning, but you're -- it's good to see so many of you. I hope you had a sensational summer. I should reintroduce myself, as I'm sure many have forgotten. I am Richard Haass, and I am remain fortunate to be in this position as president of the council -- and, I should say, the newly branded Council on Foreign Relations. You can see our new backdrop. You can see your name tags have changed. And you'll see it in all of our communications -- the website, our publications. It's a new look, to give us a consistent design that we think will help differentiate us and identify us in an increasingly competitive marketplace.

I for one am very happy to be here after two weeks on the road, first in Denver and then in Minneapolis/St. Paul. It's been an extraordinarily busy and interesting two weeks.

And one of the subjects which did arise every now and then during those two weeks is the subject of today, which is Iran and U.S. foreign policy toward Iran. And the reason this issue arose -- it is one that is sure to face the 44th president, whoever he may be.

Now obviously it won't be the only challenge facing either Senator McCain or Senator Obama. Obviously we will still have Iraq. We will have Pakistan, and Afghanistan, or, as some prefer to say, Pakistan/Afghanistan. We will obviously have the challenge of a newly resurgent Russia, China, global issues and so forth. But Iran will be on the short list of the most difficult and important issues, and I think that's because it has the potential to shape the greater Middle East. What happens with Iran will obviously have a tremendous impact on the global economy, and it will obviously have a significant impact on the nonproliferation regime.

It's now been several decades -- indeed, by the time the new president takes office, it will have been three decades, 30 years -- since the Iranian revolution -- obviously significant changes in Iran, what motivates it, its capacities, from where I sit, slightly less by ideology, more by traditional factors of power politics. And obviously now it's fueled, literally and figuratively, by oil at upwards of a hundred dollars a barrel.

And its position has been enhanced by the -- one of the unexpected consequences -- or at least for some, unexpected consequences -- of the Iraq war, the weakening of Iraq as a regional actor. And the result, I would say, is that Iran is now an imperial power -- imperial, not imperialist, but imperial in the sense that it seeks to project its power and seeks to shape a region to its liking. And I think that is simply a fact of life.

And virtually everything one could discuss about the greater Middle East, whether it's Iraq, whether it's the future of Afghanistan, whether it's Lebanon, whether it's Syria, whether it's the Israeli-Palestinian equation, whether it's domestic stability in various Middle Eastern countries, whether it's the energy equation -- I can't think of anything now that one discusses about the greater Middle East that does not have an Iranian dimension. And that explains why it is we are doing what we are doing today.

As you may have seen from the program, we have three sessions. The first will be on essentially looking at Iraq (sic) inside out, from the inside, to look at the question of its domestic politics. The second session will be on the nuclear dimension of the challenge posed by Iran. And the third session will be really from the outside in, from the point of view of the United States, and look at the question of U.S. policy across the board towards Iran, emphasizing the policy choices facing the next president, who will take office in approximately -- not even half a year now, less than half a year.

This event today is part of a larger set of projects the Council on Foreign Relations is doing vis-a-vis Iran. We've got a lot of research going on, publications, meetings, website coverage, what have you. Three of our fellows -- Gary Samore, who in his spare time runs the studies program here, Ray Takeyh and Vali Nasr -- all work considerably on Iran. Gary himself is doing a book on how to think about the nuclear challenge, letting -- setting forth the basic options.

This -- the question of Iran also figures prominently in a joint study being done by fellows from the Council on Foreign Relations and councils at the Saban Center at Brookings. That'll be coming out during the transition, meant to inform the thinking of the new administration.

Before we get started, let me just thank the Carnegie Corporation of New York, as opposed to the Carnegie Corporation of Des Moines or St. Louis, but the Carnegie Corporation of New York, led by Vartan Gregorian, for their support of what we're doing here today.

Lee Cullum has graciously -- and, I guarantee, ably -- agreed to head up this first session. We'll then have a short break, then the second session; short break, the third session and, I believe, lunch. Is that the scenario? I will be back for the third session, which I will help lead, over the question of what the United States should do about it.

But again Lee, thank you for doing this. And thank you all for your interest in being here today.

Let me say one last thing. This is also the beginning of our most busy month of the year, with the special session of the U.N. General Assembly, and we look forward to seeing you early and often, as they say about voting in Illinois. We look forward to seeing you early and often for the rest of what I think will be an extraordinary and important month here, given the meetings that will take place in New York against the backdrop of the next two months leading up to the vote in the United States in early November.

Lee.

LEE CULLUM: Thank you very much, Richard. And I certainly feel very proud -- I know we all do -- that you're just back from Denver and from Minneapolis and St. Paul, and proud of the hand that the -- the large hand that the council took in adding a foreign policy dimension to both those gatherings. And thank you, too, for all you do to make the council a vital forum that is more necessary than ever.

In this first session, we are going to be looking inside the politics of Iran, which I discover is far livelier and contentious and more fraught with bitterness than some of us might suppose. I think our two panelists will attest to that.

We have two excellent guides to this journey to the inside of politics in Iran. We have Ali Ansari, of the University of St. Andrews in Scotland, and we have Farideh Farhi, who's with the University of Hawaii. Both of them were from Iran. Actually, Ali Asari was born in Rome. His father was a diplomat. And he has traveled often to Iran, but no longer has family there. Farideh Farhi grew up in Iran. Both of them are in the academy. Both of them write extensively about Iran. Both of them are close to reformists in Iran.

And they have both stopped going there. Ali Ansari has not been there since 2005, the election of Ahmadinejad. Before that, as a student, he was able to roam around freely and talk to whomever he pleased, but that came to an end. So he says now they come to him. The Iranians enjoy going to Scotland. And maybe they play a little golf and brace up to go home again.

Farideh Farhi has not been back for two years, and that's for this reason: She takes a great interest in women's issues. She reported, in fact, in February of this year that a very fine women's magazine, Zanan, has been shut down. Its license has been revoked and nothing has been done to rev it up again. She got involved in a demonstration for women's rights and was detained. She says it was entirely her fault; a policeman told her to move and she didn't move, and that was that. And so she was detained for five days.

And she doesn't want to talk about this. Somebody -- she doesn't know who -- intervened and got her out, and that was very lucky. Three or four months later, she could have been in the position of some other Iranian-Americans whom we know about who fared -- fared much worse and really very badly.

But it's -- they both write extensively, as I said; fascinating book titles. Her title is "States and Urban-Based Revolutions," both Iran and Nicaragua, a fascinating juxtaposition -- an unexpected juxtaposition of nations. And Ali Ansari's latest book is "Confronting Iran: The Failure of American Foreign Policy and the Seeds of Mistrust." Both are skeptical, I think, about the position of Washington vis-a-vis Iran.

But both of you also have noticed in articles over the last couple of years -- have noted that a year and a half ago, Khamenei -- Ayatollah Khamenei, the religious leader -- rebuked President Ahmadinejad. He seemed to be siding with those who were really very worried that Ahmadinejad was taking a cavalier view of the sanctions and they, in fact, were harming the nation. But more recently, the religious leader is speaking nicely of Ahmadinejad, as Ahmadinejad is quick to point out at every opportunity.

So, Farhi, what's going on? Why this shifting back and forth on the part of the supreme religious leader?

FARIDEH FARHI: I'm not exactly sure that it's a total shift. Khamenei, as the religious leader of Iran, has consistently throughout his career -- and he said so in his last speech talking to government officials -- he has consistently supported the executive branch. But in this particular speech, he said that I have consistently supported the executive branch but this government has characteristics that makes me have warmer feelings towards this government. And these characteristics were that the government works very hard, it is a government that is true to the ideological foundations of the Islamic Republic, and it's a government that is people-oriented. He actually laid out very -- it's a very interesting speech, actually. He lays out very concretely and really methodically why he supports the government.

And then he goes on and says, but I have to criticize the government for a variety of reasons. And his criticisms are actually not very different from the kind of criticisms that exist the government in the society, that Ahmadinejad's government has not been true -- very true to laws; in fact, there was a major conflict with the parliament where Ahmadinejad tried not to implement the laws that have been passed in the parliament. He was also very -- also warned Ahmadinejad against going to the provinces and essentially promises the world to everybody that comes around, essentially saying it's extremely important not to do that. And then a whole litany of other stuff; you know, concerns about inflation.

So I would make an argument that he has tried very hard, in a sense, to maintain his public persona, that he is a rational mediator in Iranian conflicts. They're interested in critical commentary against the executive branch, but not a destructive approach.

Now, the interesting -- (inaudible) -- is that once he speaks then you have all these other groups inside Iran, whether they come from the reformist, centrist or conservatives, who actually try to inculcate what he has said. And, of course, the conservatives say -- Ahmadinejad's folks say -- that of course this means he fully supportive of Ahmadinejad. And, of course, the reformists take the argument that he has been critical.

I would argue that's part and parcel of the Iranian competitive process, where it's important in the upcoming presidential election -- the sense, everybody wants to know who really Khamenei supports? And therefore, everybody is banking on this (part ?) of the argument. And he has always played that role, or tried to play that role as much as possible (to balance things out ?).

CULLUM: I want to add something about Ali Ansari. He is a fellow in Middle East studies at Chatham House. We're not following the Chatham House rules today, however. This is completely (off ?) the record.

I want to come back to Khatami. You said something quite interesting in a lecture that I watched online. (You're ?) a very good lecturer, incidentally, with a very subtle mind. And I want to add about Farideh Farhi, I found reading her things that she had those in for great clarity, which isn't always the case. Some are desperate to be not understood and she is -- great clarity, which I appreciated very much.

But you said about the religious leader that he has heretofore preferred to operate in the shadows. And now all of a sudden he's coming out and exposing himself to more attention. He loves to have people curry his favor, vie for his favor, and he wants this all in the open instead of in the shadows. What's going on?

ALI ANSARI: I don't necessarily think that he wants it to be in the open, but I think inevitably that's the trend that's going on. I think there's two quite important changes or two important points that I think we ought to bear in mind. One is that, to my mind, as much as Khamenei would like to present a perception of himself as a mediator or a balancer of different forces, he's made it very clear, I think certainly over the last 10 years even during the reform administration of Mr. Khatami and then subsequently, where his ideological leanings lie. And I think his ideological leanings are very firmly and squarely with the Ahmadinejad -- what they would call their principalist camp. I mean they define this in a rather broad sense, but nonetheless I think his ideological leanings are there. And it's quite clear that even during the Khatami administration he did intervene quite effectively actually, I think, in the program. I mean, it was quite unheard of, actually, for a leader to be so active in the day-to-day running of the government or in politics.

And I think that's emblematic of another very significant change, which actually has its roots in the period of the Khatami administration. And that is really the exponential growth of the leadership's office. And one of the things I think we need to perhaps (understand ?) is not to see Khamenei as an individual but really as the sort of the symbol of the leader's office, which is really quite a huge operation.

CULLUM: And by the leader you mean the religious leader?

ANSARI: Yes, the supreme leader, Khamenei. And Khamenei himself has never to my mind been really what you would call a decisive or strong personality. I think he's always lived under the shadow of Khomeini. I think he's found himself struggling in some ways to maintain a balance of forces within the country, some of which are more hard line than he is.

But nonetheless, he's shifted very much into that more hawkish view. And what you see is the growth of this shadow government or this revolutionary government as opposed to the orthodox republican organs of government, and they've started essentially to take over. There's nothing clearer to my mind in this process than the budgets that Mr. Ahmadinejad has had. If you look at some of the earlier budgets he put forward when they were shifting the bulk of the country, Ahmadinejad came into office really on a platform of welfare and redistributing wealth and putting oil money on the tables of the people and so on and so forth.

But actually if you look at the details, at the facts on the ground, the budget for the welfare organization in Iran -- (and respected ?) by the way of the fact that subsidies have increased because of oil revenues and others, but the budget for the welfare organization I think increased by something like 3.2 percent, something rather minimal, something quite inconsequential. But then the budget for a host of religious foundations, which I should say are completely unaccountable and not transparent at all in the shift in resources, increased by about 100 (percent) or 120 percent. Now when you have that shift in financial wealth into organizations that frankly have no means of basically being accountable to even the parliament for that matter, it shows where the balance of power is going.

And the balance of power is essentially going into the leadership's office. And the leader is, to my mind, now taking on the role -- it's the cycle of hypocrisy in Iran, sadly. But the leader is now taking on the role essentially of a monarch. And the monarch basically now has official (run ?) and Ahmadinejad -- he's not a terribly well-behaved child it has to be said, but nonetheless he is someone who is essentially now the prime minister in all but name. And other people occasionally, perhaps Larijani, occasionally other people will take the role of foreign minister.

That is the idea. I mean, I think that is the trend. I'm not entirely certain that people will be happy with that development taking place, but you can see the day-to-day interference that the leadership's office is having in the running of affairs is far in excess in actual fact of what arguably Khomeini originally had envisioned.

And Khomeini's rather sort of amorphous or ambiguous notion of what the leader should be was somewhat like a moral guardian (who came ?) from afar and made judgments now and then and occasionally made critical comments, occasionally supporting. But the day-to-day running of government was meant to be left to the republic, to the elements of the republican administration. And I think the last great attempt to settle this happened under Khatami and that failed. And because it failed and shifted the resources into the sort of (revolutionary ?) -- that to my mind is the sort of crisis of republicanism if you can put it that way in Iran today.

CULLUM: Well you have virtually said that the republic, the Islamic Republic, may be over, that Khamenei arranged to have himself presented as the son of the prophet,(much like ?) Ali, the son-in-law of the prophet, and that, in fact, his own son may succeed him.

ANSARI: What I argued in a recent article was that the way things are going one could effectively say, certainly if we were to look at the recent elections (and I put those in inverted comments ?) what has occurred in Iran -- the republican experiment, I said, had been suspended. And basically those elements of competition had moved from the more formal exercise into perhaps yes, the contest of the elites behind the background in the little bit of, sort of, competition. But actually what was being presented to the public -- and I think if you talk to the public today in Iran they'll say that actually what's being presented to us is a bit of a theater. It's not really anything remotely (effective ?) even by Iranian standards.

And what you do see among some of the more ideologically hard line elements within Iran -- I mean I remember very vividly sitting in Iran watching a public information broadcast that was then broadcast by the then head of television Mr. Larijani, in which they spliced together clips from the film "The Message," which was the film about the life of the prophet, with scenes from the revolution. And the implication was a very explicit implication, and arguably a blasphemous implication I should add, that the Islamic revolution was analogous to the rise of Islam and the prophetic mission of the prophet Mohammed. And then, of course, what they would do -- what they do in Iran is they throw out these suggestions to see what the public reaction will be.

And there was a moment when they started to talk of Khamenei, who's first name is Ali, as the Ali of the age. Now, it's very, very important to realize -- CULLUM: Ali being the son-in-law of the prophet.

ANSARI: -- the son-in-law of the prophet. But in Shi'a Islam you have to bear in mind that Ali holds almost a -- almost a -- a quite unique position in sort of Shi'a theology. I mean he's the gateway of knowledge. He's seen as really the only true sort of -- Ali and his successors -- (inaudible) -- means to know the unknown, to know God effectively as (successor ?) to the prophet.

Now to call Khamenei the Ali of the age, and if you look at the motif being used in Iran, it's almost like saying essentially he has surpassed the founder of the revolution. He is a bigger figure, in some ways, and that what you have is essentially the potential for hereditary succession. These elements are talked about. I agree that, in a sense, this is an incredibly bold, I think, agenda. I don't think it will be something that necessarily many of the other elites in the Islamic Republic will be happy with. But it exists. I mean, the fact is these views exist and they have tried them. So, I think these elements -- I think we have to bear in mind that the domestic political discussion in Iran is moving in a particular direction which is unhelpful, to use a very understated British term, unhelpful to the democratizing process in Iran.

CULLUM: Farideh Farhi, you wrote right after the elections to parliament on March 14 of this year that the question was not whether the reformists versus the conservatives were going to dominate the discussion in parliament. That had been settled, the election was rigged before anybody went to the polls, in favor of the conservatives. Only 30 reformists were allowed to run for office and they won easily, but there weren't very many of them. You said the question was will these conservatives in parliament stand up to Ahmadinejad? Have they done it? I mean, they tried with those caretakers running the economy and transportation and interior, but how has it proceeded since then?

FARHI: Well the parliament, first of all, has been in summer recess so it has just come back and we shall see what will happen. The point I want to make is that first of all the Iranian political system has never been a democratic political system. I mean, the notion of a republic should never be understood within the context of Iran as a democratic political system. It has always been a system based on a game of elite competition. It is a very contested political environment. And while it may be true that the reformists have been pushed out of the circles of political power at this time, the center of competition has moved inside the principalist camp, the conservative camp.

CULLUM: Who are the principalists? What do we mean by principalists?

FARHI: Essentially, the conservatives in Iran. They have re-named themselves because the reformists have a name, they are also a camp, and they are called reformists. Since then, they have come up with this name, essentially principalists, believers in the principles of the revolution. And this is actually a very (rowdy bunch ?). It is constituted of many wings, at least three of them very prominent, but they are also -- principalists are also very factionalized, so they go beyond the three wings.

And since the parliamentary election it has become clear, especially through the process of when Ahmadinejad tried to nominate new cabinet ministers for economy, interior and transportation, there was tremendous resistance in this parliament that is controlled by conservatives. And ultimately he was forced to abandon the nomination of two of his candidates and introduce two new ones for the all- important ministries of economy and interior, and face an open rebellion on the part of his own main supporters. Ahmadinejad's main supporters are called (sweet sense of service ?) in Iran.

CULLUM: (Sweet sense of service ?).

FARHI: And the reason for that name comes from a sentence used by Mr. Khamenei that talks about this new administration and the sweet sense -- and calling it an administration that essentially is interested only in service. So he faced an open rebellion on the part of his own main supporters in the parliament and was able to pass through the compromise candidate through the support of the reformists as well as what is called the traditional conservatives in Iran. Now the traditional conservatives --

CULLUM: Is this Ali Kordan.

FARHI: Ali Kordan, this is the nominee for the interior ministry and the interior ministry is an extremely important ministry in Iran because it runs the election. And he's obviously a candidate that is close to both Larijani the head of the -- the speaker of the parliament, but also close, he was a member of Rafsanjani's administration. So the hard line conservatives who support Ahmadinejad gave these incredible speeches effectively saying that this guy has -- his degrees are fake and he has been accused of all --

CULLUM: He said he went to Oxford, is that --

ANSARI: He said he got an honorary doctorate from Oxford.

FARHI: Exactly. And so they made a fool out of this guy in public. But nevertheless the parliament went ahead, and after all these revelations, approved him despite this open rebellion. So, the point I was trying to make is indeed that despite the fact that the focus of competition has moved among the conservatives, the Iranian political system remains an extremely contested political system, extremely fractious political system. And that is why I'm a little bit more skeptical than Ali is in terms of the direction of the country and in terms of the possibility that one person or his clique, no matter how dominant they are, can bring order in this very, very fractious and unruly political environment.

CULLUM: Well now Farideh Farhi you mentioned Larijani. He's now speaker of the parliament. He was the nuclear negotiator but resigned, miffed somewhat with Ahmadinejad. But he was running Iranian television and it was he who said that Khomeini was the Ali of the age. Is he running for president next year, Larijani?

FARHI: It's not clear. I doubt it. I doubt that -- I think he's placed in a good position and I simply -- he has to make an assessment whether or not he has gained the national prominence that would allow him to go beyond how well he did or how badly he did actually in the last election. Remember in the last election Larijani ran and in the first round he only received one million votes, in comparison to the much larger vote for Rafsanjani and others. Effectively he came out last or almost next to last because he doesn't have national prominence.

Now, his portfolio as Iran's chief nuclear negotiator and now the head of the -- the speaker of the parliament, might give him some national coverage. But my sense of him is that he's essentially a rather lethargic figure. He is a kind of person that thinks he's entitled, so he wants the country to come to him and essentially say, you know, we're in big trouble and please save us. And Iran is just simply not that kind of an environment. They are a people that, you know, obviously Ahmadinejad is very interested in running the presidency, others are as well. There's going to be a heated competition, a limited heated competition, and Iran is simply not that kind of a country where a politician can come and approach this very ruckus political environment in a very, as I suggested, lethargic way.

CULLUM: Sort of a Eugene McCarthy --

FARHI: Exactly.

CULLUM: -- of the moment. Ali Ansari, Karroubi is the only announced candidate. He ran third, as I recall, in 2005, beat by Ahmadinejad. What kind of chance does he have? He was an adviser to the spiritual leader, the religious leader.

ANSARI: I don't think he does. I mean, I don't think he has much chance at all partly because he's seen as far too much on the fringes, he's far too much of a maverick. I mean I know that's a very popular thing here these days, but I don't think that -- you know there are groups of very good people in Iran, I have to say, who could do a lot of very interesting things. But the fact is they're not being allowed to participate in that way.

And I do think that as fractious as this thing's become, and Iran is of course a fractious society, but it's in fractious societies that dictatorships arise. I mean this is -- it's the exploitation of that fractiousness, I think, that allows autocracy to flourish. And I think the historical record in Iran sadly proves that all too often, and in particular when the oil prices are high.

I mean one of the things I do want to raise, and I think it's very important to show the situation which we're in -- I mean, Farideh made the point, in particular about Mr. Kordan. I think this degree that he had, just to give you an indication of how absurd I think sometimes these discussions take, he bragged that he had an honorary doctorate of law from the University of Oxford. When this rather simple point could be checked out -- (inaudible) -- we all laughed about this because -- (inaudible) -- University of Oxford handing out, selling its degrees, but this degree, when he was caught out, this was not sufficient to get him to withdraw this rather ludicrous allegation.

In fact not only that, he was so convinced that he had an honorary degree that he put the certificate out on the web. I mean, the certificate was there. And this certificate is so badly misspelled, I mean it's -- it does, I have to say, beggar belief that first of all someone could have -- and he drew a salary based on the Ph.D. apparently from a number of different ministries. But when this was exposed, in any sensible environment he would just be thrown out. I mean this was just nonsense. And yet, he was still ratified. I mean he was still ratified (in place ?).

Now this, I think, is an indication of where one of the problems in Iran today, and there are parallels in the pre-revolutionary period of course, is that it's no longer any hint or suggestion of merit, it's a question of loyalty. If you're loyal to the system and loyal to the leader, and people are competing for the leader's favor, that's what gets you ahead. And that's it.

And one of the things that is joked about in Iran, privately, is the level of hand kissing that goes on. And one of the things that Mr. Khamenei has re-introduced into the political spectrum is the fact that people have to kiss his hand on a very regular basis. Now if you go back and look at Mr. Rafsanjani or Mr. Khatami, they did not do this. Mr. Ahmadinejad does this with abundant zeal. Now it's symbolic. One can be cynical about it, of course, but the fact is that an element of deference is returning to the political system which we probably have not seen since the 1970s.

And I think, you know, that again all the indications are of a process that's moving in a direction which -- I agree with Farideh. I don't think Iran has been democratic. I don't think anyone would call it democratic. But I think there were some fairly promising signs of a process of democratization taking place.

And, as I say, my optimism I suppose lies in the fact that (I say ?) it's been suspended. I don't think these things can be erased all together. I mean, this is absurd. But nonetheless we have to also, I think, call a spade a spade. The fact is that Mr. Ahmadinejad has run an appalling government, an appalling government.

In Iran today there are power cuts every day in the capitol. There's water rationing. Mr. Rafsanjani made this point himself. You know, he comes out and he says it is absurd in a country with this sort of oil revenue that we have to ration our petrol and we have to have power cuts in the worst part of the day, mid-afternoon, where everything shuts down. This is not a very efficient way to run a modern economy. And why can't we provide ourselves with (power ?)?

Now, he's run an appalling economy. We have no real idea where the money is going. We have some idea but it's not as (transparent as it should be ?). And yet somehow he continues to survive.

And to add to this Mr. Khamenei then adds in that he should prepare for another four years. Now, to my mind that is a classic indication of a system that is in a sense folding in on itself. I mean, economically it's the weak point, these are the weak points, and he is basically running a very poor economy and I think we should be awake to it, that this is the reality.

I know Iran's projection to the world, and I think Richard Haass made a very good point about Iran's imperial position, but Iran's imperial -- Iran, as I've argued elsewhere, has always had an imperial mentality, it's just that it's rediscovered it since 2003 with the opportunities that's been afforded to it. But the fact is these opportunities have been afforded to it by someone else, basically the United States.

And internally, it is not as strong as it thinks it is, but it's amazing what oil at $130 a barrel can make you think. It cushions a lot of the blows. It disguises a lot of the frictions. And for me, Iran today looks nothing like so much as Iran in the 1970s. There are differences, clearly, but there's an abundance of money, there's an abundance of corruption, and there is an abundance of wishful thinking.

CULLUM: Two follow-ups. When you say kiss his hand, you mean that literally.

ANSARI: Yeah.

CULLUM: You're not being metaphorical.

I gather that you think that Ahmadinejad might not be reelected, but reappointed president.

ANSARI: Well, you know, when we say "reelected," it's a bit of a misplaced term, isn't it, really, in Iran today. I mean, nobody's being elected.

I think basically they're restricting the chance -- I mean, I remember very vividly a meeting that was held with Iranians both inside and outside the country. We had this conference, and it was after the 2004 parliamentary elections, where 3,000 or a number of candidates were vetted and not allowed to run. And someone, a colleague of mine from France, made a very good point, and she said the problem with this election is it's not even fair by Iranian standards. (Laughter.) And that was a good point.

And of course, you know, a succession of governments in Iran, really, for the last 200 years, I have to say, convinced themselves that the Iranian public is stupid and don't see this happening. Of course they see this happening. Of course they see that they're being -- you know, this is a farce. And I think in 2004, 2005, I think there was a slight hiatus in 2006 of the Assembly of Experts, but then they quickly clamped down on that in the municipal elections; they decided they didn't want to revisit that one. And then we go back to very, very rigorously controlled elections.

It's a little bit, you know, like the (radical Peace Party ?), of course, in the '70s -- you maintain a contest, but it's very, very tightly controlled. You know where the debates are happening, you don't let it get out of hand. And you know, even now they're saying that the reformists as a group are being really categorized as a religious minority in the Majlis, where they're entitled to 30 seats and that's it, and you know, they won't be allowed to have a position of power anymore. And I think, you know, this will tend to suffocate, obviously, the level of real debate going on in the country.

CULLUM: Farideh Farhi, Rafsanjani is a former president. He ran for president in 2005 and lost to Ahmadinejad, but then last year came in first in the election for the assembly, which is a group that advises the spiritual leader. What's going on with him now? Can we expect more from him?

FARHI: Actually, he came first for the Assembly of Experts.

CULLUM: Yes.

FARHI: It's not an advisory group; that is a group that presumably decides whether or not to reappoint/get rid of religious -- the supreme leader. So it's a -- for the first time in the history of the Islamic Republic, there was actually a competition for the leadership of that body. That body has always been -- effectively the leader of it has always been selected by acclamation, but in this particular election the conservatives made a point to prevent Mr. Rafsanjani from becoming the head of that assembly, and he won in a split vote. It was a close vote, actually, but he won.

He also has this other position, this advisory position, as the head of the Expediency Council and has tried to actually intercede in the latest -- (inaudible) -- process in order to prevent some of Ahmadinejad's economic policies. But constitutionally, that's an illegal act, and there has been a pushback not only by the parliament, but also from other sectors of the society because they understand that the Expediency Council is not an executive entity, it's supposed to be an advisory body.

And obviously he has turned into, Mr. Rafsanjani, as a very, very important critic and a critical person in relationship to Ahmadinejad's policies.

Now, to me, I see Iran is in a very interesting situation because economically, although there are major differences in the pre- revolutionary period, but there are a couple of very interesting similarities. One is the fact that Iran is going through -- I mean, in 1970s you also had an oil boom that led to tremendous inflationary pressures, and in fact it was shah went through a very, very important anti-profiteering campaign that antagonized the Barzadi (ph) classes because of that inflationary pressure.

And secondly, Iran was also going through these very, very, I mean, long periods of blackouts, no electricity. And in fact, the population was very unhappy because of that. You know, the kind of boom that has been generated by the oil money was not translating into -- in fact, it was making life more difficult in terms of inflationary pressures on everyday life. Well, the end result was a revolution. Ultimately, a lot of other factors involved.

It would be very interesting to see whether or not the kind of incompetence that Ahmadinejad has exhibited will actually lead to an electoral change. And if indeed it does, I think it's a major change in Iranian politics, where people's dissatisfaction is expressed through electoral politics.

So I would ask Ali, actually, whether or not, when he talks about the next election being an appointed election, whether or not he's confident that Ahmadinejad will be elected in the next election. Is it something that is assured at this time? Or -- because, you know, the point I'm trying to make is that while it is true that another principalist, another conservative, may be the alternative and not a reformist, okay, there is no doubt that the other candidate, whoever that is -- whether it is Ghalibaf or, from my point of view not likely, but Larijani -- they would be running on a platform of competence: this government, it is a good ideological government, but it's an incompetent government. And you know, someone like Ghalibaf, who is a popular mayor relatively and people sort of think he's run Tehran very well, will have an important say in pushing that argument. And you know, does Mr. Khamenei have his faith in only backing Ahmadinejad, or he would be, you know, quite happy if any conservative gets elected, and therefore will take a hands-off approach? If he thinks one of the conservatives have a higher chance or have a, you know, a better possibility in doing a better job in running the economy.

CULLUM: Well, now, Ahmadinejad has kept interest rates quite low, as I understand it. Is that right?

FARHI: He brought the interest rates down --

ANSARI: Twice.

FARHI: -- twice, but there has been a pushback.

You know, one of the problems that Ahmadinejad has is that he does not have a unified government. His own ministers have been engaged in pushbacks. And at this point, his major economic confrontation is with the head of the central bank. And he has never been able to unify his economic policies because of resistance on the part of important players.

So he tried this year again to bring down the interest rates on the basis of the argument that if you bring down the interest rates, you generate a more growing economy, and therefore more employment. Obviously, the head of the central bank having seen the inflationary kick that has come into the Iranian economy, stood very strongly and there has been a pushback.

So last week, two of Ahmadinejad's appointees, the head of the central bank and the labor minister, were brought together to sort of try to figure out a common economic approach because Ahmadinejad is proposing a new economic plan that hopefully get rid of subsidies and translate them into direct cash subsidies.

And that is also facing tremendous amount of resistance because of inflation. So we have tried to bring the inflation -- the interest rates down. Some of the government banks are being forced to do so. The private banks have refused to do it, and there has also been a push-back on the part of his own government.

CULLUM: And inflation is worse than 20 percent. Is it 24?

FARHI: That's right, 24 percent.

CULLUM: And by subsidies, you mean subsidies for the price of gasoline.

FARHI: All sorts of subsidies, but that is a very big chunk of it.

CULLUM: Ali Ansari, I spoke with Vali Nasr last night, who will be on one of your panels later today. He was very generous with his time. And he said that the reformists really don't have a chance of winning next year in this June 2009 presidential election; that the best they can do is try to take sides among the conservatives and hope somehow to have some influence there. Would you say that's true?

ANSARI: I think that's probably fair. I mean, I wouldn't want to carry a torch for the reformists, in the sense that they themselves are also responsible or a huge amount of their own misfortune in the way they handled things, as a group, certainly. But the key point really is, is that -- are the elections for the presidency in 2009 -- I mean, how controlled are they going to be? And what are the choices?

For the Islamic Republic, in order to present itself as sort of a legitimate, sort of popular political process, you have to be able to excite the public to participate in these elections. And, you know, nobody that I know certainly believes the figures that were put out for the last parliamentary elections, I mean in terms of turnouts. You know, they're always edged above 50 percent in order to give you that sort of legitimacy.

But in order to do that, you have to convince the public that there are candidates that really would make a difference. And you know, certainly if the contest was going to be between Mr. Ahmadinejad and Mr. Larijani, which -- I mean, I agree with Farideh; I think Mr. Larijani is one of those people who would like, you know, people to come to him, really; I don't think he likes to sort of get up and go and hustle on the stumps himself -- then I think the choice for people really is fairly poor. I mean, I don't think they're particularly interested.

You know, one of the strategies, of course, of the principalists -- which, incidentally, I should point out that "principalist" is an Iranian translation of the word "fundamentalist," by the way. I mean, it's their way of turning the word around and making it positive, despite the best efforts of a number (us to tell us ?) that fundamentalism was not a term of endearment being thrown (up in ?) the West.

Unless they can sort of get some sort of broader choice in terms of who would be running, I don't think people are going to be particularly interested, because one of the tactics of the principalists, as I was trying to say, throughout their rise since 2003, when Ahmadinejad first turned up as mayor of Tehran, is really to depoliticize the public.

Now, there are nice, interesting parallels that can be drawn with other electoral systems, but basically what you do is you make sure -- you figure out that if there's a high turnout, you're going to lose this election, so what you do is you make sure there's a low turnout and you pull out your base.

And that's basically what the principalists did. They ensured there would be a low turnout, people would be disinterested in the political process because there's no change, and with a low turnout, nonetheless their own base would come in and vote.

And Ahmadinejad, you know, became mayor of Tehran with a 15- percent turnout. Nobody took any notice of it, really. And then subsequently, every other time there was successive disillusionment of the reformist base, for a variety of different reasons, but of course the principalists pulled out their own base, out in the rural areas and -- they do have a base, by the way. I mean, let's not get this -- let's not say that Ahmadinejad could not pull, say, 5 (million) or 6 million votes. I'm sure he could. But we're talking about an electorate of about 44 million. So in that, they are always in many ways in essence a minority.

What Ahmadinejad's role was over the last three years was to translate that -- that they wanted to put him in power and translate that unpopularity within the country, through a list of populist measures, into popularity. And in that role, he's failed. And the one test of that is, if they were that sure of their position, they should hold a -- I'll use the term very loosely, but relatively free and fair election.

They should allow him to compete with someone who comes from a diametrically ideologically different view, whatever, still believes in the Islamic republic -- we're not talking about anything dramatic here -- but you know, someone who's within the system, but holds different views. And they won't. I mean, he has not competed in an election of that nature.

CULLUM: I want to turn to questions from you, but I remember you made the point, Ali Ansari, that those parliamentary elections, which should have been held in May or June, were held around March 14th, because it was fairly close to the new year, and people would be traveling and reveling and not interested at all. I mean, it was like holding our election during the holidays in December.

But anyway, that's -- are there other -- let's pause and then -- and have questions from all of you. Yes?

QUESTIONER: Hi. Gary Sick from Columbia. Some -- several of your comments -- well, in fact, from both of you -- the fact that Iran is turning into something like a monarchial system, and it's looking more and more that way. And I definitely share that view. They don't want to admit it, but it's happening.

And secondly, that there are some real unfortunate aspects about the economy and the way it's being managed. There's some new evidence coming out that the shah's government actually was -- the resemblance, in fact, is eerie in the period -- from what is going on now, if you can figure Khamenei -- an emerging monarch, and the system, looking at it the way it would have been under the shah, there's a remarkable similarity. And I wonder if either of you would like to speculate about -- is -- not that we're about to have a revolution, because I really don't think we are, but what does that mean in terms of the system, in terms of legitimacy, in terms of its length of -- its ability to survive over a more substantial period of time? And what is -- how that plays out internally both in terms of who gets elected and where the system goes from there.sa

FARHI: I do not think Iran is in a revolutionary situation. As I said before, the reality is that first of all the context is not there, and the context that existed prior to the revolution was essentially the giving up and development of a network of opposition, organizational -- an organizational structure that allowed mobilization. And one could never underestimate the organizational structure that the mosques created in Iran and of course worked hand in hand with an ideological preparation that had occurred in terms of arguments against the injustices of the shah's system, as well as his close connection to the United States.

At the same time, what you see in Iran is tremendous amounts of dissatisfaction about the way the government is being run. And the next election, I think, in fact is a very, very good test of how the Iranian system, which has shown itself to be quite flexible when it's faced with crisis, in dealing with this kind of situation -- whether or not it will go in a direction that continues the pattern as is and risks the possibility of not popular dissatisfaction but elite rebellion in Iran. You know, that's the dynamic that Khamenei has to deal with.

Khamenei doesn't worry about what the population will do. It has it under control.

But he has to worry about the fact that he's head of -- the person who heads the supervisory body of his office, Betsda Nokakemori (ph), is saying this government is lousy, you know. (Chuckles.) I mean, he comes out and says it in public. So he has to worry about these stellar characters, that they exist in the Iranian political system.

So the question is whether he's going to completely ignore that and allow this fractious course to continue, or pull weight and try to convince Ahmadinejad to operate in a different way, as it was done using the past decision to push -- (inaudible) -- or change the economy minister. This was people pulling their weight and essentially saying you cannot do what you have been doing; you have to change the way you have been approaching the economy, as well as the way you have approached other branches of the government, or allow for some sort of a competition that would bring the possibility of change.

The next election, you will have reformists running in this election, okay? But because these reformists are unable to come up with a unified candidate, they will not win. That is the dynamic of Iranian politics, unless somehow Mr. Khatami is convinced to run. And there is a possibility that he might do well in this election, but he will not do it unless he gets assurances from Mr. Khamenei that this will be an election that would allow him to win if the population comes in to vote for him.

So at this point, I would make an argument that Iran is not in a revolutionary situation, but Mr. Khamenei is also faced with very, very serious questions. And unlike the monarchic situation of the past, those choices will have -- are consequential in terms of his role in the society. If he pushes too far, he undermines his own credibility. And that is not a dynamic that existed in the pre- revolutionary period.

CULLUM: Let's get a couple -- let's have three questions. Then here, here, there, and then back to you.

Go ahead.

QUESTIONER: Thank you. Vali Nasr for the council. First of all, thank you for a very, very -- CULLUM: And thank you for being so kind last night.

QUESTIONER: -- for a very rich discussion.

I find this comparison with the shah's period sometimes jarring. I think there's major differences. First of all, I don't think the shah's government was ever this incompetent. (Laughter.) I mean, within a year after the -- talking about the economy, within a year after the revolution, there were 350 Iranian economic managers at the World Bank and IMF, literally running the central banks from Aruba to Jamaica and onwards.

Secondly, on the other hand, you never had this degree of open rancor in the press ever under the shah -- you know, the president of the country would be criticized, would be called incompetent publicly.

But the bigger issue is that, you know, when we talk -- compared to the shah's period, it always create an expectation that there can be a revolution in Iran, and that somehow the boom and bust of oil or mismanagement would lead to a change.

It's maybe better to look at Iran in the context of the region today. You're in a region in which authoritarianism simply doesn't fall apart unless the United States military shows up in a country and pulls it down. I mean, if Egypt can survive food shortages, if Egypt can survive all kinds of pressures and there is no end to the Mubarak regime, no end to the Saudi regime, no end to the Syrian regime, why should there be in some ways expectation that this regime will not, in fact, weather all of these? And in fact -- and you know, in some some ways, maybe, you know, you look at Russia. It's -- I mean, Putin's becoming a czar; why wouldn't -- and very successfully.

I mean, we can think of, you know, Khamenei actually looking a lot more like that.

And I want to actually push both of you on an aspect of the Iranian regime we didn't talk about, which is much more similar to the countries around, which is the security apparatus and the role that the Revolutionary Guard in the economy, society, play. And in fact, coming next elections, what is their stake in this game in terms of issues you raised. Do they care about competence? Do they care about -- you know, do they see national security requiring a stable economy, and therefore would they support a more competent conservative? I'd appreciate some of those comments.

CULLUM: Let's see. Let's get a few more questions and then -- yes, right here and then back there. Four. One, two, right here.

QUESTIONER: Hi. Bob Lifton. This is an exact follow-up to the point that was just being made. And the analogy I would use is China. What it sounds like is the same kind of thing that goes on in China. The party controls the country, and then you can argue that within the party there are arguments and fights and struggles for power, but in the end the party controls the country, and here the religious authorities control the country, and then we can talk about what goes on inside.

In China we've given up on the idea that there's going to be a revolution, but somehow in Iran we keep fooling ourselves into believing -- this is the very point that was just made -- into believing that something's going to change and that we can help create that change. And it seems to me that that's a possibility that doesn't really exist. And it goes back to who really controls the levers of power in the country.

CULLUM: Right here, and then back there. Thank you.

QUESTIONER: My question is a follow-on to that question, which was a follow-on to the previous position. And the link I would raise is, right down in our Southern Hemisphere, with Mr. Chavez, Mr. Ahmadinejad's wonderful partner, has a similar approach, it seems to me, than the combination of Khamenei and Ahmadinejad have. And the question I've got, having just witnessed firsthand a little bit about what Mr. Chavez does to make sure that he doesn't have too much in the way of attack or dissent, is the continual presence of gross intimidation at the level of either speaking incorrectly and being thrown into jail, or losing your job or losing your opportunity -- and the Revolutionary guard is always there. The women know what they can and can't do in terms of getting beaten with a stick if they show an ankle. How is that security working to prevent real dissent? Are the numbers of people being sent into the equivalent of the salt mines going up? What's going n in that particular area to make sure that there is no real dissent and no real reform?

CULLUM: And right back -- right back there, and then we'll turn back to the panel.

QUESTIONER: Herbert Levin. If you can answer all these questions, I have even more admiration for you.

CULLUM: It's a psychological test.

QUESTIONER: Really.

CULLUM: (Off mike.)

QUESTIONER: This actually goes back to the first one. Some of us are told that the foundations really are a means for the ayatollahs to support their families. These are not monks; they have big families. And you stumble over all these chic Iranians in Paris, and they are supported by these foundations.

And this is the way the ayatollahs also have something in the bank in case there's another change in Iran and they have to go abroad temporarily, as they have done before. And that this is part of the paranoia of the regime. I just jotted down -- the Russians took part of Azerbaijan, and the Arabs are always at it, and they're not trusted, and the U.S. and the U.K. want to put the shah back, and the Kurds, and the Baha'i, the Parsis, the Israeli Jewish spies -- you know, they're paranoid about all of these internal and external threats. And putting the money in Paris and being paranoid about everything else is really what drives them, not Persian imperialism, that they're going to go back to the Bhosporous or something. So this can be completely wrong -- (laughter) -- and I'd appreciate if you'd tell us about it.

CULLUM: Okay, Ali Anwar, is the regime here to stay based on paranoia?

ANSARI: Can I make -- I'm going to try and make a --

CULLUM: And is it like China?

ANSARI: I'm going to be -- I'm going to try and be very brief, so forgive me if I -- (inaudible). First of all, I want to entirely agree, by the way, with all the parallels being drawn with the 1970s which are raised. I mean, I don't want to draw the parallels too far. In fact, the parallel in Iran is actually drawn with a constitutional revolution, not with -- (inaudible). And that analogy is in some ways probably better. That what you find, actually, is a failure of the democratic process, leading ultimately to an inertia in government, leading ultimately to a coup. So these are the arguments.

(Not that I'm saying that's necessarily going to happen ?), but, you know, you are simply trying to look at trends and the way things are going. So I would want to emphasize, particularly to an audience here in the United States, that anticipating a revolution is something I don't think people should be planning on. I don't think it's going to happen. And one of the major reasons for that, of course, is that the Iranians have very fond memories of the revolution they had, so they're not going to rush to go for another one. And that sort of -- that sort of experience has a very dampening effect.

Now, one of the things that Gary raised -- and I think it's really important to bear this in mind -- that in Iran, nationalism is the opium of the masses. And even more than the masses, it's the opium of the elites. And you can go to a diaspora and ask them, actually. I mean, nationalism is the way they circumvent this legitimacy crisis they have created for themselves.

And believe you me, there are many people in Iran within the system who are quite aware of the mess they've gotten themselves into. They're not stupid about this. You know, they know that they've gotten themselves into a bind. But what they do is they throw out, basically, very, very rampant vulgar nationalism to the people, and it's amazing how people lap this up. And the nuclear crisis is just one of them -- and it's done with aplomb, by the way. "And the Americans -- and we can attack the Americans and we can be rude about people and we can do this and we can stick it to the Bushes and we can do" -- and it all looks very good, and everyone laps it up and everyone enjoys it.

And in that sense, the Islamic Republic, I have to tell you, has done a far better job at this than the shah ever did. Far better. They're far better at this. They use many more motifs. They draw on mythological history, recent history. They're very anti-Arab, by the way, don't even pretend that they want Islamic harmony in the region. Okay, they want Islamic harmony under their own directorship. That's about as good as it gets. So, you know, these are things.

And I think this nationalism is something that you need to bear in mind from a policy point of view, in actual fact, because it's going to be extremely serious. And any successive political movement in Iran will have to pay attention to that. And, you know, Ahmadinejad has probably been the most nationalistic president since 1979. And I just remind you, when Putin came to Iran last October -- and I love this analogy -- that they actually built a papier-mache freeze of Persepolis as the press conference -- (inaudible). So when Putin came marching in, there were Achaemenid soldiers behind him.

Now, you have to bear in mind that, you know, this motif was so negative after the fall of the shah that -- for the Islamic Republic and Ahmadinejad to use it in order to present, you know, to the world this image of our great new empire and so on and so forth. So I think the -- you know, one of the things that the Islamic Republic is quite good at and the establishment there is actually very good at seeing in front of their -- you know, right under their noses. They're very good tacticians. They're not terribly good strategic thinkers. The shah could -- had great visions about things, but he couldn't see what all what was going on beneath his feet.

So I mean, this is the difference.

But I think, you know, their obsession with Velvet Revolutions, their obsession with, you know, all sorts of people coming up out of nowhere and causing trouble is an indication actually that there is an element of paranoia here, that there is a little fear, that they are more aware of their own history than perhaps we are. I mean that -- you know, that these things happen. Particularly when you are talking about the return of the Mahdi any day, you know, I mean, that -- it is one of the more absurd aspects of the Islamic Republic that they themselves have created the environment for the emergence of a charismatic revolutionary movement. I mean, it's quite absurd.

And I know that Mr. Ahmadinejad has tried dampen this down by saying actually that the Mahdi supports me, you know, so that's why -- you know.

Look, don't underestimate, by the way, the role of the Russians in all this. I'm sorry to say, but the Velvet Revolution thing and all this and the role of Russians -- I mean, there's a wonderful irony, which I won't go into, about Georgia at the moment, but you know, those were -- there are elements there that I think are very important -- the way Putin and the Russian business interests and other interests have got involved in Iran and the way that's tied in particularly with the IRGC and other elements. There's a huge trade going on there, and there's a huge business relationship -- all informal, all under the radar, but it's there.

And the IRGC, for those of you who have been talking about the security apparatus, I think they are interested in maintaining their interest -- and their vested interests. And for those of you who are familiar with -- well, I mean, it's the same with, I suppose, with the Syrians or with others. You know, they are basically the Janissaries of their age. They have business interest, and they want to maintain their business interest, and they're going to protect that and whoever gives them that deal. Yes, if someone can do it more efficiently, I'm sure they'll go for it. But actually, you know, that's where they're doing -- and Jafari, the head of the IRGC, when he made it very --

CULLUM: What is the IRGC?

ANSARI: The Islamic Revolutionary Guard Corps.

CULLUM: Thank you. All right. ANSARI: Which is, you know, the -- basically, the guardian of the -- coercive wing of the revolution.

I think -- the two quick points I'll make. One is about China, which is -- it's revisited so many times, actually, that I just -- it's -- one of the areas where I do a hundred percent agree with Farideh here is, Iran is just too inefficient, actually, to approach anything China would achieve, I mean, in terms of fractiousness.

But the other thing about China -- and I had a very interesting conversation with the Chinese ambassador to Iran, and he said that the Iranians always come to me and they say: We want to be the China of the Middle East. And he says: You haven't got a chance. And they said: Why? And they said: You haven't got a nuclear weapon -- although some people think they're working toward it -- you haven't got a seat on the Security Council, and above all, you don't have relations with the United States.

And it's an important point. You know, I mean, the fact is China, for all its vaunted -- you know, it's basically a semi-official capitalist country. I mean, you know, Iran is not -- (chuckles) -- I mean, it hasn't really approached it yet. And you know, I look forward to the day when Apple sends its iPhones to be made in Tehran, you know, but it's not going to happen in the near future.

So these sort of things are, you know, these -- I think these sort of analogies -- I think the Iranians like the China model because they think we can have economic development with no political responsibility. That's not, you know, the reality there. Sometimes they talk about the Japanese model, which, I'd point out for them, is even more worrying for them if they want to go down that route. But you know, they have these models, and I don't think they think them through.

I think in terms of suppression, by the way, and repression, what's interesting about Iran is that the tools of repression are not -- and you won't find it -- this is why people going to Iran always get two different countries. We see two different countries when we go. And that is, it's not the GDR. It's not a police state in that sense. What it is is an arbitrary state, if I can use it that way. And invariably the way in which that arbitrariness gets ameliorated is because you always know someone that can sort you out, and you play the game. So it's not a legal society in that sense.

A totalitarian state, which -- a lot of people talk about totalitarianism -- is completely inapplicable to Iran, by that -- for totalitarianism, you need industrialization, and you need some sort of legal system. Neither of these exist in Iran. So what you have in Iran, actually, is that sense, that fear created by the fact that you could be targeted, not that necessarily you would be. You could go in Iran and mind your own business, and nobody would bother you. But the fact is that that tool of coercion, that ability to suppress, is you pick -- you're very selective about who you pick. And everyone's always worried that they may be the next in line. But of course what happens is that you use all your informal networks. It's who you know that basically allows you to get -- nobody has a recourse to law in Iran. Everyone has a recourse to who you know and who you know who can bail you out of a particularly difficult situation. And that's what matters.

And that fundamentally is actually what's wrong with the country. But that's not an Islamic Republican problem; that's a problem that we've had for 150 years, at least.

But this -- these are the problems, that the modern -- Iran is attempting to be a modern state on a 19th century framework. That is our fundamental problem.

And a lot of the danger that we have is that the modern state has a lot of the tools of that modern state in terms of coercion, in terms of listening in to people and so on and so forth. But it doesn't actually have the aspect of civil society or the legal system to protect the citizen against those things. And so it's very arbitrary, and it becomes -- you know, it becomes a very inefficient way to effectively run the state.

I'm sorry it was so long, but I just wanted to get some of -- because I don't think it's a revolutionary situation, but I just -- I don't see it happening. But that constitutional revolutionary analogy is an interesting one. It's one that the Iranians mention a lot themselves.

CULLUM: Well, thank you so much. I think we're almost out of time.

Farideh Farhi, I should have mentioned, lived in Iran for most of the '90s, teaching at the University of Tehran. She hopes to return next year, after the election, so she has a measure of optimism.

Ali Ansari hasn't mentioned going back. I think he's less optimistic, perhaps, about next year.

It occurs to me that we have a party in this country that's gone from being principlist to reformist -- MR. : (Laughs.)

CULLUM: -- and the other party, I guess, might want to give up change and go for the sweet synthesis of perfect that --

MR. : (Laughs.)

CULLUM: -- both looking for the sweet smell of success.

So please be back in 15 minutes, and thank you very much. (Applause.)

.STX


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This was part of the Symposium on Iran and Policy Options for the Next Administration, which was made possible through the generous support ofthe Carnegie Corporation of New York.

RICHARD N. HAASS (President, Council on Foreign Relations): Well, good morning. Welcome to the Council on Foreign Relations. This has a back-to-school quality. So I haven't seen any red apples this morning, but you're -- it's good to see so many of you. I hope you had a sensational summer. I should reintroduce myself, as I'm sure many have forgotten. I am Richard Haass, and I am remain fortunate to be in this position as president of the council -- and, I should say, the newly branded Council on Foreign Relations. You can see our new backdrop. You can see your name tags have changed. And you'll see it in all of our communications -- the website, our publications. It's a new look, to give us a consistent design that we think will help differentiate us and identify us in an increasingly competitive marketplace.

I for one am very happy to be here after two weeks on the road, first in Denver and then in Minneapolis/St. Paul. It's been an extraordinarily busy and interesting two weeks.

And one of the subjects which did arise every now and then during those two weeks is the subject of today, which is Iran and U.S. foreign policy toward Iran. And the reason this issue arose -- it is one that is sure to face the 44th president, whoever he may be.

Now obviously it won't be the only challenge facing either Senator McCain or Senator Obama. Obviously we will still have Iraq. We will have Pakistan, and Afghanistan, or, as some prefer to say, Pakistan/Afghanistan. We will obviously have the challenge of a newly resurgent Russia, China, global issues and so forth. But Iran will be on the short list of the most difficult and important issues, and I think that's because it has the potential to shape the greater Middle East. What happens with Iran will obviously have a tremendous impact on the global economy, and it will obviously have a significant impact on the nonproliferation regime.

It's now been several decades -- indeed, by the time the new president takes office, it will have been three decades, 30 years -- since the Iranian revolution -- obviously significant changes in Iran, what motivates it, its capacities, from where I sit, slightly less by ideology, more by traditional factors of power politics. And obviously now it's fueled, literally and figuratively, by oil at upwards of a hundred dollars a barrel.

And its position has been enhanced by the -- one of the unexpected consequences -- or at least for some, unexpected consequences -- of the Iraq war, the weakening of Iraq as a regional actor. And the result, I would say, is that Iran is now an imperial power -- imperial, not imperialist, but imperial in the sense that it seeks to project its power and seeks to shape a region to its liking. And I think that is simply a fact of life.

And virtually everything one could discuss about the greater Middle East, whether it's Iraq, whether it's the future of Afghanistan, whether it's Lebanon, whether it's Syria, whether it's the Israeli-Palestinian equation, whether it's domestic stability in various Middle Eastern countries, whether it's the energy equation -- I can't think of anything now that one discusses about the greater Middle East that does not have an Iranian dimension. And that explains why it is we are doing what we are doing today.

As you may have seen from the program, we have three sessions. The first will be on essentially looking at Iraq (sic) inside out, from the inside, to look at the question of its domestic politics. The second session will be on the nuclear dimension of the challenge posed by Iran. And the third session will be really from the outside in, from the point of view of the United States, and look at the question of U.S. policy across the board towards Iran, emphasizing the policy choices facing the next president, who will take office in approximately -- not even half a year now, less than half a year.

This event today is part of a larger set of projects the Council on Foreign Relations is doing vis-a-vis Iran. We've got a lot of research going on, publications, meetings, website coverage, what have you. Three of our fellows -- Gary Samore, who in his spare time runs the studies program here, Ray Takeyh and Vali Nasr -- all work considerably on Iran. Gary himself is doing a book on how to think about the nuclear challenge, letting -- setting forth the basic options.

This -- the question of Iran also figures prominently in a joint study being done by fellows from the Council on Foreign Relations and councils at the Saban Center at Brookings. That'll be coming out during the transition, meant to inform the thinking of the new administration.

Before we get started, let me just thank the Carnegie Corporation of New York, as opposed to the Carnegie Corporation of Des Moines or St. Louis, but the Carnegie Corporation of New York, led by Vartan Gregorian, for their support of what we're doing here today.

Lee Cullum has graciously -- and, I guarantee, ably -- agreed to head up this first session. We'll then have a short break, then the second session; short break, the third session and, I believe, lunch. Is that the scenario? I will be back for the third session, which I will help lead, over the question of what the United States should do about it.

But again Lee, thank you for doing this. And thank you all for your interest in being here today.

Let me say one last thing. This is also the beginning of our most busy month of the year, with the special session of the U.N. General Assembly, and we look forward to seeing you early and often, as they say about voting in Illinois. We look forward to seeing you early and often for the rest of what I think will be an extraordinary and important month here, given the meetings that will take place in New York against the backdrop of the next two months leading up to the vote in the United States in early November.

Lee.

LEE CULLUM: Thank you very much, Richard. And I certainly feel very proud -- I know we all do -- that you're just back from Denver and from Minneapolis and St. Paul, and proud of the hand that the -- the large hand that the council took in adding a foreign policy dimension to both those gatherings. And thank you, too, for all you do to make the council a vital forum that is more necessary than ever.

In this first session, we are going to be looking inside the politics of Iran, which I discover is far livelier and contentious and more fraught with bitterness than some of us might suppose. I think our two panelists will attest to that.

We have two excellent guides to this journey to the inside of politics in Iran. We have Ali Ansari, of the University of St. Andrews in Scotland, and we have Farideh Farhi, who's with the University of Hawaii. Both of them were from Iran. Actually, Ali Asari was born in Rome. His father was a diplomat. And he has traveled often to Iran, but no longer has family there. Farideh Farhi grew up in Iran. Both of them are in the academy. Both of them write extensively about Iran. Both of them are close to reformists in Iran.

And they have both stopped going there. Ali Ansari has not been there since 2005, the election of Ahmadinejad. Before that, as a student, he was able to roam around freely and talk to whomever he pleased, but that came to an end. So he says now they come to him. The Iranians enjoy going to Scotland. And maybe they play a little golf and brace up to go home again.

Farideh Farhi has not been back for two years, and that's for this reason: She takes a great interest in women's issues. She reported, in fact, in February of this year that a very fine women's magazine, Zanan, has been shut down. Its license has been revoked and nothing has been done to rev it up again. She got involved in a demonstration for women's rights and was detained. She says it was entirely her fault; a policeman told her to move and she didn't move, and that was that. And so she was detained for five days.

And she doesn't want to talk about this. Somebody -- she doesn't know who -- intervened and got her out, and that was very lucky. Three or four months later, she could have been in the position of some other Iranian-Americans whom we know about who fared -- fared much worse and really very badly.

But it's -- they both write extensively, as I said; fascinating book titles. Her title is "States and Urban-Based Revolutions," both Iran and Nicaragua, a fascinating juxtaposition -- an unexpected juxtaposition of nations. And Ali Ansari's latest book is "Confronting Iran: The Failure of American Foreign Policy and the Seeds of Mistrust." Both are skeptical, I think, about the position of Washington vis-a-vis Iran.

But both of you also have noticed in articles over the last couple of years -- have noted that a year and a half ago, Khamenei -- Ayatollah Khamenei, the religious leader -- rebuked President Ahmadinejad. He seemed to be siding with those who were really very worried that Ahmadinejad was taking a cavalier view of the sanctions and they, in fact, were harming the nation. But more recently, the religious leader is speaking nicely of Ahmadinejad, as Ahmadinejad is quick to point out at every opportunity.

So, Farhi, what's going on? Why this shifting back and forth on the part of the supreme religious leader?

FARIDEH FARHI: I'm not exactly sure that it's a total shift. Khamenei, as the religious leader of Iran, has consistently throughout his career -- and he said so in his last speech talking to government officials -- he has consistently supported the executive branch. But in this particular speech, he said that I have consistently supported the executive branch but this government has characteristics that makes me have warmer feelings towards this government. And these characteristics were that the government works very hard, it is a government that is true to the ideological foundations of the Islamic Republic, and it's a government that is people-oriented. He actually laid out very -- it's a very interesting speech, actually. He lays out very concretely and really methodically why he supports the government.

And then he goes on and says, but I have to criticize the government for a variety of reasons. And his criticisms are actually not very different from the kind of criticisms that exist the government in the society, that Ahmadinejad's government has not been true -- very true to laws; in fact, there was a major conflict with the parliament where Ahmadinejad tried not to implement the laws that have been passed in the parliament. He was also very -- also warned Ahmadinejad against going to the provinces and essentially promises the world to everybody that comes around, essentially saying it's extremely important not to do that. And then a whole litany of other stuff; you know, concerns about inflation.

So I would make an argument that he has tried very hard, in a sense, to maintain his public persona, that he is a rational mediator in Iranian conflicts. They're interested in critical commentary against the executive branch, but not a destructive approach.

Now, the interesting -- (inaudible) -- is that once he speaks then you have all these other groups inside Iran, whether they come from the reformist, centrist or conservatives, who actually try to inculcate what he has said. And, of course, the conservatives say -- Ahmadinejad's folks say -- that of course this means he fully supportive of Ahmadinejad. And, of course, the reformists take the argument that he has been critical.

I would argue that's part and parcel of the Iranian competitive process, where it's important in the upcoming presidential election -- the sense, everybody wants to know who really Khamenei supports? And therefore, everybody is banking on this (part ?) of the argument. And he has always played that role, or tried to play that role as much as possible (to balance things out ?).

CULLUM: I want to add something about Ali Ansari. He is a fellow in Middle East studies at Chatham House. We're not following the Chatham House rules today, however. This is completely (off ?) the record.

I want to come back to Khatami. You said something quite interesting in a lecture that I watched online. (You're ?) a very good lecturer, incidentally, with a very subtle mind. And I want to add about Farideh Farhi, I found reading her things that she had those in for great clarity, which isn't always the case. Some are desperate to be not understood and she is -- great clarity, which I appreciated very much.

But you said about the religious leader that he has heretofore preferred to operate in the shadows. And now all of a sudden he's coming out and exposing himself to more attention. He loves to have people curry his favor, vie for his favor, and he wants this all in the open instead of in the shadows. What's going on?

ALI ANSARI: I don't necessarily think that he wants it to be in the open, but I think inevitably that's the trend that's going on. I think there's two quite important changes or two important points that I think we ought to bear in mind. One is that, to my mind, as much as Khamenei would like to present a perception of himself as a mediator or a balancer of different forces, he's made it very clear, I think certainly over the last 10 years even during the reform administration of Mr. Khatami and then subsequently, where his ideological leanings lie. And I think his ideological leanings are very firmly and squarely with the Ahmadinejad -- what they would call their principalist camp. I mean they define this in a rather broad sense, but nonetheless I think his ideological leanings are there. And it's quite clear that even during the Khatami administration he did intervene quite effectively actually, I think, in the program. I mean, it was quite unheard of, actually, for a leader to be so active in the day-to-day running of the government or in politics.

And I think that's emblematic of another very significant change, which actually has its roots in the period of the Khatami administration. And that is really the exponential growth of the leadership's office. And one of the things I think we need to perhaps (understand ?) is not to see Khamenei as an individual but really as the sort of the symbol of the leader's office, which is really quite a huge operation.

CULLUM: And by the leader you mean the religious leader?

ANSARI: Yes, the supreme leader, Khamenei. And Khamenei himself has never to my mind been really what you would call a decisive or strong personality. I think he's always lived under the shadow of Khomeini. I think he's found himself struggling in some ways to maintain a balance of forces within the country, some of which are more hard line than he is.

But nonetheless, he's shifted very much into that more hawkish view. And what you see is the growth of this shadow government or this revolutionary government as opposed to the orthodox republican organs of government, and they've started essentially to take over. There's nothing clearer to my mind in this process than the budgets that Mr. Ahmadinejad has had. If you look at some of the earlier budgets he put forward when they were shifting the bulk of the country, Ahmadinejad came into office really on a platform of welfare and redistributing wealth and putting oil money on the tables of the people and so on and so forth.

But actually if you look at the details, at the facts on the ground, the budget for the welfare organization in Iran -- (and respected ?) by the way of the fact that subsidies have increased because of oil revenues and others, but the budget for the welfare organization I think increased by something like 3.2 percent, something rather minimal, something quite inconsequential. But then the budget for a host of religious foundations, which I should say are completely unaccountable and not transparent at all in the shift in resources, increased by about 100 (percent) or 120 percent. Now when you have that shift in financial wealth into organizations that frankly have no means of basically being accountable to even the parliament for that matter, it shows where the balance of power is going.

And the balance of power is essentially going into the leadership's office. And the leader is, to my mind, now taking on the role -- it's the cycle of hypocrisy in Iran, sadly. But the leader is now taking on the role essentially of a monarch. And the monarch basically now has official (run ?) and Ahmadinejad -- he's not a terribly well-behaved child it has to be said, but nonetheless he is someone who is essentially now the prime minister in all but name. And other people occasionally, perhaps Larijani, occasionally other people will take the role of foreign minister.

That is the idea. I mean, I think that is the trend. I'm not entirely certain that people will be happy with that development taking place, but you can see the day-to-day interference that the leadership's office is having in the running of affairs is far in excess in actual fact of what arguably Khomeini originally had envisioned.

And Khomeini's rather sort of amorphous or ambiguous notion of what the leader should be was somewhat like a moral guardian (who came ?) from afar and made judgments now and then and occasionally made critical comments, occasionally supporting. But the day-to-day running of government was meant to be left to the republic, to the elements of the republican administration. And I think the last great attempt to settle this happened under Khatami and that failed. And because it failed and shifted the resources into the sort of (revolutionary ?) -- that to my mind is the sort of crisis of republicanism if you can put it that way in Iran today.

CULLUM: Well you have virtually said that the republic, the Islamic Republic, may be over, that Khamenei arranged to have himself presented as the son of the prophet,(much like ?) Ali, the son-in-law of the prophet, and that, in fact, his own son may succeed him.

ANSARI: What I argued in a recent article was that the way things are going one could effectively say, certainly if we were to look at the recent elections (and I put those in inverted comments ?) what has occurred in Iran -- the republican experiment, I said, had been suspended. And basically those elements of competition had moved from the more formal exercise into perhaps yes, the contest of the elites behind the background in the little bit of, sort of, competition. But actually what was being presented to the public -- and I think if you talk to the public today in Iran they'll say that actually what's being presented to us is a bit of a theater. It's not really anything remotely (effective ?) even by Iranian standards.

And what you do see among some of the more ideologically hard line elements within Iran -- I mean I remember very vividly sitting in Iran watching a public information broadcast that was then broadcast by the then head of television Mr. Larijani, in which they spliced together clips from the film "The Message," which was the film about the life of the prophet, with scenes from the revolution. And the implication was a very explicit implication, and arguably a blasphemous implication I should add, that the Islamic revolution was analogous to the rise of Islam and the prophetic mission of the prophet Mohammed. And then, of course, what they would do -- what they do in Iran is they throw out these suggestions to see what the public reaction will be.

And there was a moment when they started to talk of Khamenei, who's first name is Ali, as the Ali of the age. Now, it's very, very important to realize -- CULLUM: Ali being the son-in-law of the prophet.

ANSARI: -- the son-in-law of the prophet. But in Shi'a Islam you have to bear in mind that Ali holds almost a -- almost a -- a quite unique position in sort of Shi'a theology. I mean he's the gateway of knowledge. He's seen as really the only true sort of -- Ali and his successors -- (inaudible) -- means to know the unknown, to know God effectively as (successor ?) to the prophet.

Now to call Khamenei the Ali of the age, and if you look at the motif being used in Iran, it's almost like saying essentially he has surpassed the founder of the revolution. He is a bigger figure, in some ways, and that what you have is essentially the potential for hereditary succession. These elements are talked about. I agree that, in a sense, this is an incredibly bold, I think, agenda. I don't think it will be something that necessarily many of the other elites in the Islamic Republic will be happy with. But it exists. I mean, the fact is these views exist and they have tried them. So, I think these elements -- I think we have to bear in mind that the domestic political discussion in Iran is moving in a particular direction which is unhelpful, to use a very understated British term, unhelpful to the democratizing process in Iran.

CULLUM: Farideh Farhi, you wrote right after the elections to parliament on March 14 of this year that the question was not whether the reformists versus the conservatives were going to dominate the discussion in parliament. That had been settled, the election was rigged before anybody went to the polls, in favor of the conservatives. Only 30 reformists were allowed to run for office and they won easily, but there weren't very many of them. You said the question was will these conservatives in parliament stand up to Ahmadinejad? Have they done it? I mean, they tried with those caretakers running the economy and transportation and interior, but how has it proceeded since then?

FARHI: Well the parliament, first of all, has been in summer recess so it has just come back and we shall see what will happen. The point I want to make is that first of all the Iranian political system has never been a democratic political system. I mean, the notion of a republic should never be understood within the context of Iran as a democratic political system. It has always been a system based on a game of elite competition. It is a very contested political environment. And while it may be true that the reformists have been pushed out of the circles of political power at this time, the center of competition has moved inside the principalist camp, the conservative camp.

CULLUM: Who are the principalists? What do we mean by principalists?

FARHI: Essentially, the conservatives in Iran. They have re-named themselves because the reformists have a name, they are also a camp, and they are called reformists. Since then, they have come up with this name, essentially principalists, believers in the principles of the revolution. And this is actually a very (rowdy bunch ?). It is constituted of many wings, at least three of them very prominent, but they are also -- principalists are also very factionalized, so they go beyond the three wings.

And since the parliamentary election it has become clear, especially through the process of when Ahmadinejad tried to nominate new cabinet ministers for economy, interior and transportation, there was tremendous resistance in this parliament that is controlled by conservatives. And ultimately he was forced to abandon the nomination of two of his candidates and introduce two new ones for the all- important ministries of economy and interior, and face an open rebellion on the part of his own main supporters. Ahmadinejad's main supporters are called (sweet sense of service ?) in Iran.

CULLUM: (Sweet sense of service ?).

FARHI: And the reason for that name comes from a sentence used by Mr. Khamenei that talks about this new administration and the sweet sense -- and calling it an administration that essentially is interested only in service. So he faced an open rebellion on the part of his own main supporters in the parliament and was able to pass through the compromise candidate through the support of the reformists as well as what is called the traditional conservatives in Iran. Now the traditional conservatives --

CULLUM: Is this Ali Kordan.

FARHI: Ali Kordan, this is the nominee for the interior ministry and the interior ministry is an extremely important ministry in Iran because it runs the election. And he's obviously a candidate that is close to both Larijani the head of the -- the speaker of the parliament, but also close, he was a member of Rafsanjani's administration. So the hard line conservatives who support Ahmadinejad gave these incredible speeches effectively saying that this guy has -- his degrees are fake and he has been accused of all --

CULLUM: He said he went to Oxford, is that --

ANSARI: He said he got an honorary doctorate from Oxford.

FARHI: Exactly. And so they made a fool out of this guy in public. But nevertheless the parliament went ahead, and after all these revelations, approved him despite this open rebellion. So, the point I was trying to make is indeed that despite the fact that the focus of competition has moved among the conservatives, the Iranian political system remains an extremely contested political system, extremely fractious political system. And that is why I'm a little bit more skeptical than Ali is in terms of the direction of the country and in terms of the possibility that one person or his clique, no matter how dominant they are, can bring order in this very, very fractious and unruly political environment.

CULLUM: Well now Farideh Farhi you mentioned Larijani. He's now speaker of the parliament. He was the nuclear negotiator but resigned, miffed somewhat with Ahmadinejad. But he was running Iranian television and it was he who said that Khomeini was the Ali of the age. Is he running for president next year, Larijani?

FARHI: It's not clear. I doubt it. I doubt that -- I think he's placed in a good position and I simply -- he has to make an assessment whether or not he has gained the national prominence that would allow him to go beyond how well he did or how badly he did actually in the last election. Remember in the last election Larijani ran and in the first round he only received one million votes, in comparison to the much larger vote for Rafsanjani and others. Effectively he came out last or almost next to last because he doesn't have national prominence.

Now, his portfolio as Iran's chief nuclear negotiator and now the head of the -- the speaker of the parliament, might give him some national coverage. But my sense of him is that he's essentially a rather lethargic figure. He is a kind of person that thinks he's entitled, so he wants the country to come to him and essentially say, you know, we're in big trouble and please save us. And Iran is just simply not that kind of an environment. They are a people that, you know, obviously Ahmadinejad is very interested in running the presidency, others are as well. There's going to be a heated competition, a limited heated competition, and Iran is simply not that kind of a country where a politician can come and approach this very ruckus political environment in a very, as I suggested, lethargic way.

CULLUM: Sort of a Eugene McCarthy --

FARHI: Exactly.

CULLUM: -- of the moment. Ali Ansari, Karroubi is the only announced candidate. He ran third, as I recall, in 2005, beat by Ahmadinejad. What kind of chance does he have? He was an adviser to the spiritual leader, the religious leader.

ANSARI: I don't think he does. I mean, I don't think he has much chance at all partly because he's seen as far too much on the fringes, he's far too much of a maverick. I mean I know that's a very popular thing here these days, but I don't think that -- you know there are groups of very good people in Iran, I have to say, who could do a lot of very interesting things. But the fact is they're not being allowed to participate in that way.

And I do think that as fractious as this thing's become, and Iran is of course a fractious society, but it's in fractious societies that dictatorships arise. I mean this is -- it's the exploitation of that fractiousness, I think, that allows autocracy to flourish. And I think the historical record in Iran sadly proves that all too often, and in particular when the oil prices are high.

I mean one of the things I do want to raise, and I think it's very important to show the situation which we're in -- I mean, Farideh made the point, in particular about Mr. Kordan. I think this degree that he had, just to give you an indication of how absurd I think sometimes these discussions take, he bragged that he had an honorary doctorate of law from the University of Oxford. When this rather simple point could be checked out -- (inaudible) -- we all laughed about this because -- (inaudible) -- University of Oxford handing out, selling its degrees, but this degree, when he was caught out, this was not sufficient to get him to withdraw this rather ludicrous allegation.

In fact not only that, he was so convinced that he had an honorary degree that he put the certificate out on the web. I mean, the certificate was there. And this certificate is so badly misspelled, I mean it's -- it does, I have to say, beggar belief that first of all someone could have -- and he drew a salary based on the Ph.D. apparently from a number of different ministries. But when this was exposed, in any sensible environment he would just be thrown out. I mean this was just nonsense. And yet, he was still ratified. I mean he was still ratified (in place ?).

Now this, I think, is an indication of where one of the problems in Iran today, and there are parallels in the pre-revolutionary period of course, is that it's no longer any hint or suggestion of merit, it's a question of loyalty. If you're loyal to the system and loyal to the leader, and people are competing for the leader's favor, that's what gets you ahead. And that's it.

And one of the things that is joked about in Iran, privately, is the level of hand kissing that goes on. And one of the things that Mr. Khamenei has re-introduced into the political spectrum is the fact that people have to kiss his hand on a very regular basis. Now if you go back and look at Mr. Rafsanjani or Mr. Khatami, they did not do this. Mr. Ahmadinejad does this with abundant zeal. Now it's symbolic. One can be cynical about it, of course, but the fact is that an element of deference is returning to the political system which we probably have not seen since the 1970s.

And I think, you know, that again all the indications are of a process that's moving in a direction which -- I agree with Farideh. I don't think Iran has been democratic. I don't think anyone would call it democratic. But I think there were some fairly promising signs of a process of democratization taking place.

And, as I say, my optimism I suppose lies in the fact that (I say ?) it's been suspended. I don't think these things can be erased all together. I mean, this is absurd. But nonetheless we have to also, I think, call a spade a spade. The fact is that Mr. Ahmadinejad has run an appalling government, an appalling government.

In Iran today there are power cuts every day in the capitol. There's water rationing. Mr. Rafsanjani made this point himself. You know, he comes out and he says it is absurd in a country with this sort of oil revenue that we have to ration our petrol and we have to have power cuts in the worst part of the day, mid-afternoon, where everything shuts down. This is not a very efficient way to run a modern economy. And why can't we provide ourselves with (power ?)?

Now, he's run an appalling economy. We have no real idea where the money is going. We have some idea but it's not as (transparent as it should be ?). And yet somehow he continues to survive.

And to add to this Mr. Khamenei then adds in that he should prepare for another four years. Now, to my mind that is a classic indication of a system that is in a sense folding in on itself. I mean, economically it's the weak point, these are the weak points, and he is basically running a very poor economy and I think we should be awake to it, that this is the reality.

I know Iran's projection to the world, and I think Richard Haass made a very good point about Iran's imperial position, but Iran's imperial -- Iran, as I've argued elsewhere, has always had an imperial mentality, it's just that it's rediscovered it since 2003 with the opportunities that's been afforded to it. But the fact is these opportunities have been afforded to it by someone else, basically the United States.

And internally, it is not as strong as it thinks it is, but it's amazing what oil at $130 a barrel can make you think. It cushions a lot of the blows. It disguises a lot of the frictions. And for me, Iran today looks nothing like so much as Iran in the 1970s. There are differences, clearly, but there's an abundance of money, there's an abundance of corruption, and there is an abundance of wishful thinking.

CULLUM: Two follow-ups. When you say kiss his hand, you mean that literally.

ANSARI: Yeah.

CULLUM: You're not being metaphorical.

I gather that you think that Ahmadinejad might not be reelected, but reappointed president.

ANSARI: Well, you know, when we say "reelected," it's a bit of a misplaced term, isn't it, really, in Iran today. I mean, nobody's being elected.

I think basically they're restricting the chance -- I mean, I remember very vividly a meeting that was held with Iranians both inside and outside the country. We had this conference, and it was after the 2004 parliamentary elections, where 3,000 or a number of candidates were vetted and not allowed to run. And someone, a colleague of mine from France, made a very good point, and she said the problem with this election is it's not even fair by Iranian standards. (Laughter.) And that was a good point.

And of course, you know, a succession of governments in Iran, really, for the last 200 years, I have to say, convinced themselves that the Iranian public is stupid and don't see this happening. Of course they see this happening. Of course they see that they're being -- you know, this is a farce. And I think in 2004, 2005, I think there was a slight hiatus in 2006 of the Assembly of Experts, but then they quickly clamped down on that in the municipal elections; they decided they didn't want to revisit that one. And then we go back to very, very rigorously controlled elections.

It's a little bit, you know, like the (radical Peace Party ?), of course, in the '70s -- you maintain a contest, but it's very, very tightly controlled. You know where the debates are happening, you don't let it get out of hand. And you know, even now they're saying that the reformists as a group are being really categorized as a religious minority in the Majlis, where they're entitled to 30 seats and that's it, and you know, they won't be allowed to have a position of power anymore. And I think, you know, this will tend to suffocate, obviously, the level of real debate going on in the country.

CULLUM: Farideh Farhi, Rafsanjani is a former president. He ran for president in 2005 and lost to Ahmadinejad, but then last year came in first in the election for the assembly, which is a group that advises the spiritual leader. What's going on with him now? Can we expect more from him?

FARHI: Actually, he came first for the Assembly of Experts.

CULLUM: Yes.

FARHI: It's not an advisory group; that is a group that presumably decides whether or not to reappoint/get rid of religious -- the supreme leader. So it's a -- for the first time in the history of the Islamic Republic, there was actually a competition for the leadership of that body. That body has always been -- effectively the leader of it has always been selected by acclamation, but in this particular election the conservatives made a point to prevent Mr. Rafsanjani from becoming the head of that assembly, and he won in a split vote. It was a close vote, actually, but he won.

He also has this other position, this advisory position, as the head of the Expediency Council and has tried to actually intercede in the latest -- (inaudible) -- process in order to prevent some of Ahmadinejad's economic policies. But constitutionally, that's an illegal act, and there has been a pushback not only by the parliament, but also from other sectors of the society because they understand that the Expediency Council is not an executive entity, it's supposed to be an advisory body.

And obviously he has turned into, Mr. Rafsanjani, as a very, very important critic and a critical person in relationship to Ahmadinejad's policies.

Now, to me, I see Iran is in a very interesting situation because economically, although there are major differences in the pre- revolutionary period, but there are a couple of very interesting similarities. One is the fact that Iran is going through -- I mean, in 1970s you also had an oil boom that led to tremendous inflationary pressures, and in fact it was shah went through a very, very important anti-profiteering campaign that antagonized the Barzadi (ph) classes because of that inflationary pressure.

And secondly, Iran was also going through these very, very, I mean, long periods of blackouts, no electricity. And in fact, the population was very unhappy because of that. You know, the kind of boom that has been generated by the oil money was not translating into -- in fact, it was making life more difficult in terms of inflationary pressures on everyday life. Well, the end result was a revolution. Ultimately, a lot of other factors involved.

It would be very interesting to see whether or not the kind of incompetence that Ahmadinejad has exhibited will actually lead to an electoral change. And if indeed it does, I think it's a major change in Iranian politics, where people's dissatisfaction is expressed through electoral politics.

So I would ask Ali, actually, whether or not, when he talks about the next election being an appointed election, whether or not he's confident that Ahmadinejad will be elected in the next election. Is it something that is assured at this time? Or -- because, you know, the point I'm trying to make is that while it is true that another principalist, another conservative, may be the alternative and not a reformist, okay, there is no doubt that the other candidate, whoever that is -- whether it is Ghalibaf or, from my point of view not likely, but Larijani -- they would be running on a platform of competence: this government, it is a good ideological government, but it's an incompetent government. And you know, someone like Ghalibaf, who is a popular mayor relatively and people sort of think he's run Tehran very well, will have an important say in pushing that argument. And you know, does Mr. Khamenei have his faith in only backing Ahmadinejad, or he would be, you know, quite happy if any conservative gets elected, and therefore will take a hands-off approach? If he thinks one of the conservatives have a higher chance or have a, you know, a better possibility in doing a better job in running the economy.

CULLUM: Well, now, Ahmadinejad has kept interest rates quite low, as I understand it. Is that right?

FARHI: He brought the interest rates down --

ANSARI: Twice.

FARHI: -- twice, but there has been a pushback.

You know, one of the problems that Ahmadinejad has is that he does not have a unified government. His own ministers have been engaged in pushbacks. And at this point, his major economic confrontation is with the head of the central bank. And he has never been able to unify his economic policies because of resistance on the part of important players.

So he tried this year again to bring down the interest rates on the basis of the argument that if you bring down the interest rates, you generate a more growing economy, and therefore more employment. Obviously, the head of the central bank having seen the inflationary kick that has come into the Iranian economy, stood very strongly and there has been a pushback.

So last week, two of Ahmadinejad's appointees, the head of the central bank and the labor minister, were brought together to sort of try to figure out a common economic approach because Ahmadinejad is proposing a new economic plan that hopefully get rid of subsidies and translate them into direct cash subsidies.

And that is also facing tremendous amount of resistance because of inflation. So we have tried to bring the inflation -- the interest rates down. Some of the government banks are being forced to do so. The private banks have refused to do it, and there has also been a push-back on the part of his own government.

CULLUM: And inflation is worse than 20 percent. Is it 24?

FARHI: That's right, 24 percent.

CULLUM: And by subsidies, you mean subsidies for the price of gasoline.

FARHI: All sorts of subsidies, but that is a very big chunk of it.

CULLUM: Ali Ansari, I spoke with Vali Nasr last night, who will be on one of your panels later today. He was very generous with his time. And he said that the reformists really don't have a chance of winning next year in this June 2009 presidential election; that the best they can do is try to take sides among the conservatives and hope somehow to have some influence there. Would you say that's true?

ANSARI: I think that's probably fair. I mean, I wouldn't want to carry a torch for the reformists, in the sense that they themselves are also responsible or a huge amount of their own misfortune in the way they handled things, as a group, certainly. But the key point really is, is that -- are the elections for the presidency in 2009 -- I mean, how controlled are they going to be? And what are the choices?

For the Islamic Republic, in order to present itself as sort of a legitimate, sort of popular political process, you have to be able to excite the public to participate in these elections. And, you know, nobody that I know certainly believes the figures that were put out for the last parliamentary elections, I mean in terms of turnouts. You know, they're always edged above 50 percent in order to give you that sort of legitimacy.

But in order to do that, you have to convince the public that there are candidates that really would make a difference. And you know, certainly if the contest was going to be between Mr. Ahmadinejad and Mr. Larijani, which -- I mean, I agree with Farideh; I think Mr. Larijani is one of those people who would like, you know, people to come to him, really; I don't think he likes to sort of get up and go and hustle on the stumps himself -- then I think the choice for people really is fairly poor. I mean, I don't think they're particularly interested.

You know, one of the strategies, of course, of the principalists -- which, incidentally, I should point out that "principalist" is an Iranian translation of the word "fundamentalist," by the way. I mean, it's their way of turning the word around and making it positive, despite the best efforts of a number (us to tell us ?) that fundamentalism was not a term of endearment being thrown (up in ?) the West.

Unless they can sort of get some sort of broader choice in terms of who would be running, I don't think people are going to be particularly interested, because one of the tactics of the principalists, as I was trying to say, throughout their rise since 2003, when Ahmadinejad first turned up as mayor of Tehran, is really to depoliticize the public.

Now, there are nice, interesting parallels that can be drawn with other electoral systems, but basically what you do is you make sure -- you figure out that if there's a high turnout, you're going to lose this election, so what you do is you make sure there's a low turnout and you pull out your base.

And that's basically what the principalists did. They ensured there would be a low turnout, people would be disinterested in the political process because there's no change, and with a low turnout, nonetheless their own base would come in and vote.

And Ahmadinejad, you know, became mayor of Tehran with a 15- percent turnout. Nobody took any notice of it, really. And then subsequently, every other time there was successive disillusionment of the reformist base, for a variety of different reasons, but of course the principalists pulled out their own base, out in the rural areas and -- they do have a base, by the way. I mean, let's not get this -- let's not say that Ahmadinejad could not pull, say, 5 (million) or 6 million votes. I'm sure he could. But we're talking about an electorate of about 44 million. So in that, they are always in many ways in essence a minority.

What Ahmadinejad's role was over the last three years was to translate that -- that they wanted to put him in power and translate that unpopularity within the country, through a list of populist measures, into popularity. And in that role, he's failed. And the one test of that is, if they were that sure of their position, they should hold a -- I'll use the term very loosely, but relatively free and fair election.

They should allow him to compete with someone who comes from a diametrically ideologically different view, whatever, still believes in the Islamic republic -- we're not talking about anything dramatic here -- but you know, someone who's within the system, but holds different views. And they won't. I mean, he has not competed in an election of that nature.

CULLUM: I want to turn to questions from you, but I remember you made the point, Ali Ansari, that those parliamentary elections, which should have been held in May or June, were held around March 14th, because it was fairly close to the new year, and people would be traveling and reveling and not interested at all. I mean, it was like holding our election during the holidays in December.

But anyway, that's -- are there other -- let's pause and then -- and have questions from all of you. Yes?

QUESTIONER: Hi. Gary Sick from Columbia. Some -- several of your comments -- well, in fact, from both of you -- the fact that Iran is turning into something like a monarchial system, and it's looking more and more that way. And I definitely share that view. They don't want to admit it, but it's happening.

And secondly, that there are some real unfortunate aspects about the economy and the way it's being managed. There's some new evidence coming out that the shah's government actually was -- the resemblance, in fact, is eerie in the period -- from what is going on now, if you can figure Khamenei -- an emerging monarch, and the system, looking at it the way it would have been under the shah, there's a remarkable similarity. And I wonder if either of you would like to speculate about -- is -- not that we're about to have a revolution, because I really don't think we are, but what does that mean in terms of the system, in terms of legitimacy, in terms of its length of -- its ability to survive over a more substantial period of time? And what is -- how that plays out internally both in terms of who gets elected and where the system goes from there.sa

FARHI: I do not think Iran is in a revolutionary situation. As I said before, the reality is that first of all the context is not there, and the context that existed prior to the revolution was essentially the giving up and development of a network of opposition, organizational -- an organizational structure that allowed mobilization. And one could never underestimate the organizational structure that the mosques created in Iran and of course worked hand in hand with an ideological preparation that had occurred in terms of arguments against the injustices of the shah's system, as well as his close connection to the United States.

At the same time, what you see in Iran is tremendous amounts of dissatisfaction about the way the government is being run. And the next election, I think, in fact is a very, very good test of how the Iranian system, which has shown itself to be quite flexible when it's faced with crisis, in dealing with this kind of situation -- whether or not it will go in a direction that continues the pattern as is and risks the possibility of not popular dissatisfaction but elite rebellion in Iran. You know, that's the dynamic that Khamenei has to deal with.

Khamenei doesn't worry about what the population will do. It has it under control.

But he has to worry about the fact that he's head of -- the person who heads the supervisory body of his office, Betsda Nokakemori (ph), is saying this government is lousy, you know. (Chuckles.) I mean, he comes out and says it in public. So he has to worry about these stellar characters, that they exist in the Iranian political system.

So the question is whether he's going to completely ignore that and allow this fractious course to continue, or pull weight and try to convince Ahmadinejad to operate in a different way, as it was done using the past decision to push -- (inaudible) -- or change the economy minister. This was people pulling their weight and essentially saying you cannot do what you have been doing; you have to change the way you have been approaching the economy, as well as the way you have approached other branches of the government, or allow for some sort of a competition that would bring the possibility of change.

The next election, you will have reformists running in this election, okay? But because these reformists are unable to come up with a unified candidate, they will not win. That is the dynamic of Iranian politics, unless somehow Mr. Khatami is convinced to run. And there is a possibility that he might do well in this election, but he will not do it unless he gets assurances from Mr. Khamenei that this will be an election that would allow him to win if the population comes in to vote for him.

So at this point, I would make an argument that Iran is not in a revolutionary situation, but Mr. Khamenei is also faced with very, very serious questions. And unlike the monarchic situation of the past, those choices will have -- are consequential in terms of his role in the society. If he pushes too far, he undermines his own credibility. And that is not a dynamic that existed in the pre- revolutionary period.

CULLUM: Let's get a couple -- let's have three questions. Then here, here, there, and then back to you.

Go ahead.

QUESTIONER: Thank you. Vali Nasr for the council. First of all, thank you for a very, very -- CULLUM: And thank you for being so kind last night.

QUESTIONER: -- for a very rich discussion.

I find this comparison with the shah's period sometimes jarring. I think there's major differences. First of all, I don't think the shah's government was ever this incompetent. (Laughter.) I mean, within a year after the -- talking about the economy, within a year after the revolution, there were 350 Iranian economic managers at the World Bank and IMF, literally running the central banks from Aruba to Jamaica and onwards.

Secondly, on the other hand, you never had this degree of open rancor in the press ever under the shah -- you know, the president of the country would be criticized, would be called incompetent publicly.

But the bigger issue is that, you know, when we talk -- compared to the shah's period, it always create an expectation that there can be a revolution in Iran, and that somehow the boom and bust of oil or mismanagement would lead to a change.

It's maybe better to look at Iran in the context of the region today. You're in a region in which authoritarianism simply doesn't fall apart unless the United States military shows up in a country and pulls it down. I mean, if Egypt can survive food shortages, if Egypt can survive all kinds of pressures and there is no end to the Mubarak regime, no end to the Saudi regime, no end to the Syrian regime, why should there be in some ways expectation that this regime will not, in fact, weather all of these? And in fact -- and you know, in some some ways, maybe, you know, you look at Russia. It's -- I mean, Putin's becoming a czar; why wouldn't -- and very successfully.

I mean, we can think of, you know, Khamenei actually looking a lot more like that.

And I want to actually push both of you on an aspect of the Iranian regime we didn't talk about, which is much more similar to the countries around, which is the security apparatus and the role that the Revolutionary Guard in the economy, society, play. And in fact, coming next elections, what is their stake in this game in terms of issues you raised. Do they care about competence? Do they care about -- you know, do they see national security requiring a stable economy, and therefore would they support a more competent conservative? I'd appreciate some of those comments.

CULLUM: Let's see. Let's get a few more questions and then -- yes, right here and then back there. Four. One, two, right here.

QUESTIONER: Hi. Bob Lifton. This is an exact follow-up to the point that was just being made. And the analogy I would use is China. What it sounds like is the same kind of thing that goes on in China. The party controls the country, and then you can argue that within the party there are arguments and fights and struggles for power, but in the end the party controls the country, and here the religious authorities control the country, and then we can talk about what goes on inside.

In China we've given up on the idea that there's going to be a revolution, but somehow in Iran we keep fooling ourselves into believing -- this is the very point that was just made -- into believing that something's going to change and that we can help create that change. And it seems to me that that's a possibility that doesn't really exist. And it goes back to who really controls the levers of power in the country.

CULLUM: Right here, and then back there. Thank you.

QUESTIONER: My question is a follow-on to that question, which was a follow-on to the previous position. And the link I would raise is, right down in our Southern Hemisphere, with Mr. Chavez, Mr. Ahmadinejad's wonderful partner, has a similar approach, it seems to me, than the combination of Khamenei and Ahmadinejad have. And the question I've got, having just witnessed firsthand a little bit about what Mr. Chavez does to make sure that he doesn't have too much in the way of attack or dissent, is the continual presence of gross intimidation at the level of either speaking incorrectly and being thrown into jail, or losing your job or losing your opportunity -- and the Revolutionary guard is always there. The women know what they can and can't do in terms of getting beaten with a stick if they show an ankle. How is that security working to prevent real dissent? Are the numbers of people being sent into the equivalent of the salt mines going up? What's going n in that particular area to make sure that there is no real dissent and no real reform?

CULLUM: And right back -- right back there, and then we'll turn back to the panel.

QUESTIONER: Herbert Levin. If you can answer all these questions, I have even more admiration for you.

CULLUM: It's a psychological test.

QUESTIONER: Really.

CULLUM: (Off mike.)

QUESTIONER: This actually goes back to the first one. Some of us are told that the foundations really are a means for the ayatollahs to support their families. These are not monks; they have big families. And you stumble over all these chic Iranians in Paris, and they are supported by these foundations.

And this is the way the ayatollahs also have something in the bank in case there's another change in Iran and they have to go abroad temporarily, as they have done before. And that this is part of the paranoia of the regime. I just jotted down -- the Russians took part of Azerbaijan, and the Arabs are always at it, and they're not trusted, and the U.S. and the U.K. want to put the shah back, and the Kurds, and the Baha'i, the Parsis, the Israeli Jewish spies -- you know, they're paranoid about all of these internal and external threats. And putting the money in Paris and being paranoid about everything else is really what drives them, not Persian imperialism, that they're going to go back to the Bhosporous or something. So this can be completely wrong -- (laughter) -- and I'd appreciate if you'd tell us about it.

CULLUM: Okay, Ali Anwar, is the regime here to stay based on paranoia?

ANSARI: Can I make -- I'm going to try and make a --

CULLUM: And is it like China?

ANSARI: I'm going to be -- I'm going to try and be very brief, so forgive me if I -- (inaudible). First of all, I want to entirely agree, by the way, with all the parallels being drawn with the 1970s which are raised. I mean, I don't want to draw the parallels too far. In fact, the parallel in Iran is actually drawn with a constitutional revolution, not with -- (inaudible). And that analogy is in some ways probably better. That what you find, actually, is a failure of the democratic process, leading ultimately to an inertia in government, leading ultimately to a coup. So these are the arguments.

(Not that I'm saying that's necessarily going to happen ?), but, you know, you are simply trying to look at trends and the way things are going. So I would want to emphasize, particularly to an audience here in the United States, that anticipating a revolution is something I don't think people should be planning on. I don't think it's going to happen. And one of the major reasons for that, of course, is that the Iranians have very fond memories of the revolution they had, so they're not going to rush to go for another one. And that sort of -- that sort of experience has a very dampening effect.

Now, one of the things that Gary raised -- and I think it's really important to bear this in mind -- that in Iran, nationalism is the opium of the masses. And even more than the masses, it's the opium of the elites. And you can go to a diaspora and ask them, actually. I mean, nationalism is the way they circumvent this legitimacy crisis they have created for themselves.

And believe you me, there are many people in Iran within the system who are quite aware of the mess they've gotten themselves into. They're not stupid about this. You know, they know that they've gotten themselves into a bind. But what they do is they throw out, basically, very, very rampant vulgar nationalism to the people, and it's amazing how people lap this up. And the nuclear crisis is just one of them -- and it's done with aplomb, by the way. "And the Americans -- and we can attack the Americans and we can be rude about people and we can do this and we can stick it to the Bushes and we can do" -- and it all looks very good, and everyone laps it up and everyone enjoys it.

And in that sense, the Islamic Republic, I have to tell you, has done a far better job at this than the shah ever did. Far better. They're far better at this. They use many more motifs. They draw on mythological history, recent history. They're very anti-Arab, by the way, don't even pretend that they want Islamic harmony in the region. Okay, they want Islamic harmony under their own directorship. That's about as good as it gets. So, you know, these are things.

And I think this nationalism is something that you need to bear in mind from a policy point of view, in actual fact, because it's going to be extremely serious. And any successive political movement in Iran will have to pay attention to that. And, you know, Ahmadinejad has probably been the most nationalistic president since 1979. And I just remind you, when Putin came to Iran last October -- and I love this analogy -- that they actually built a papier-mache freeze of Persepolis as the press conference -- (inaudible). So when Putin came marching in, there were Achaemenid soldiers behind him.

Now, you have to bear in mind that, you know, this motif was so negative after the fall of the shah that -- for the Islamic Republic and Ahmadinejad to use it in order to present, you know, to the world this image of our great new empire and so on and so forth. So I think the -- you know, one of the things that the Islamic Republic is quite good at and the establishment there is actually very good at seeing in front of their -- you know, right under their noses. They're very good tacticians. They're not terribly good strategic thinkers. The shah could -- had great visions about things, but he couldn't see what all what was going on beneath his feet.

So I mean, this is the difference.

But I think, you know, their obsession with Velvet Revolutions, their obsession with, you know, all sorts of people coming up out of nowhere and causing trouble is an indication actually that there is an element of paranoia here, that there is a little fear, that they are more aware of their own history than perhaps we are. I mean that -- you know, that these things happen. Particularly when you are talking about the return of the Mahdi any day, you know, I mean, that -- it is one of the more absurd aspects of the Islamic Republic that they themselves have created the environment for the emergence of a charismatic revolutionary movement. I mean, it's quite absurd.

And I know that Mr. Ahmadinejad has tried dampen this down by saying actually that the Mahdi supports me, you know, so that's why -- you know.

Look, don't underestimate, by the way, the role of the Russians in all this. I'm sorry to say, but the Velvet Revolution thing and all this and the role of Russians -- I mean, there's a wonderful irony, which I won't go into, about Georgia at the moment, but you know, those were -- there are elements there that I think are very important -- the way Putin and the Russian business interests and other interests have got involved in Iran and the way that's tied in particularly with the IRGC and other elements. There's a huge trade going on there, and there's a huge business relationship -- all informal, all under the radar, but it's there.

And the IRGC, for those of you who have been talking about the security apparatus, I think they are interested in maintaining their interest -- and their vested interests. And for those of you who are familiar with -- well, I mean, it's the same with, I suppose, with the Syrians or with others. You know, they are basically the Janissaries of their age. They have business interest, and they want to maintain their business interest, and they're going to protect that and whoever gives them that deal. Yes, if someone can do it more efficiently, I'm sure they'll go for it. But actually, you know, that's where they're doing -- and Jafari, the head of the IRGC, when he made it very --

CULLUM: What is the IRGC?

ANSARI: The Islamic Revolutionary Guard Corps.

CULLUM: Thank you. All right. ANSARI: Which is, you know, the -- basically, the guardian of the -- coercive wing of the revolution.

I think -- the two quick points I'll make. One is about China, which is -- it's revisited so many times, actually, that I just -- it's -- one of the areas where I do a hundred percent agree with Farideh here is, Iran is just too inefficient, actually, to approach anything China would achieve, I mean, in terms of fractiousness.

But the other thing about China -- and I had a very interesting conversation with the Chinese ambassador to Iran, and he said that the Iranians always come to me and they say: We want to be the China of the Middle East. And he says: You haven't got a chance. And they said: Why? And they said: You haven't got a nuclear weapon -- although some people think they're working toward it -- you haven't got a seat on the Security Council, and above all, you don't have relations with the United States.

And it's an important point. You know, I mean, the fact is China, for all its vaunted -- you know, it's basically a semi-official capitalist country. I mean, you know, Iran is not -- (chuckles) -- I mean, it hasn't really approached it yet. And you know, I look forward to the day when Apple sends its iPhones to be made in Tehran, you know, but it's not going to happen in the near future.

So these sort of things are, you know, these -- I think these sort of analogies -- I think the Iranians like the China model because they think we can have economic development with no political responsibility. That's not, you know, the reality there. Sometimes they talk about the Japanese model, which, I'd point out for them, is even more worrying for them if they want to go down that route. But you know, they have these models, and I don't think they think them through.

I think in terms of suppression, by the way, and repression, what's interesting about Iran is that the tools of repression are not -- and you won't find it -- this is why people going to Iran always get two different countries. We see two different countries when we go. And that is, it's not the GDR. It's not a police state in that sense. What it is is an arbitrary state, if I can use it that way. And invariably the way in which that arbitrariness gets ameliorated is because you always know someone that can sort you out, and you play the game. So it's not a legal society in that sense.

A totalitarian state, which -- a lot of people talk about totalitarianism -- is completely inapplicable to Iran, by that -- for totalitarianism, you need industrialization, and you need some sort of legal system. Neither of these exist in Iran. So what you have in Iran, actually, is that sense, that fear created by the fact that you could be targeted, not that necessarily you would be. You could go in Iran and mind your own business, and nobody would bother you. But the fact is that that tool of coercion, that ability to suppress, is you pick -- you're very selective about who you pick. And everyone's always worried that they may be the next in line. But of course what happens is that you use all your informal networks. It's who you know that basically allows you to get -- nobody has a recourse to law in Iran. Everyone has a recourse to who you know and who you know who can bail you out of a particularly difficult situation. And that's what matters.

And that fundamentally is actually what's wrong with the country. But that's not an Islamic Republican problem; that's a problem that we've had for 150 years, at least.

But this -- these are the problems, that the modern -- Iran is attempting to be a modern state on a 19th century framework. That is our fundamental problem.

And a lot of the danger that we have is that the modern state has a lot of the tools of that modern state in terms of coercion, in terms of listening in to people and so on and so forth. But it doesn't actually have the aspect of civil society or the legal system to protect the citizen against those things. And so it's very arbitrary, and it becomes -- you know, it becomes a very inefficient way to effectively run the state.

I'm sorry it was so long, but I just wanted to get some of -- because I don't think it's a revolutionary situation, but I just -- I don't see it happening. But that constitutional revolutionary analogy is an interesting one. It's one that the Iranians mention a lot themselves.

CULLUM: Well, thank you so much. I think we're almost out of time.

Farideh Farhi, I should have mentioned, lived in Iran for most of the '90s, teaching at the University of Tehran. She hopes to return next year, after the election, so she has a measure of optimism.

Ali Ansari hasn't mentioned going back. I think he's less optimistic, perhaps, about next year.

It occurs to me that we have a party in this country that's gone from being principlist to reformist -- MR. : (Laughs.)

CULLUM: -- and the other party, I guess, might want to give up change and go for the sweet synthesis of perfect that --

MR. : (Laughs.)

CULLUM: -- both looking for the sweet smell of success.

So please be back in 15 minutes, and thank you very much. (Applause.)

.STX


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This was part of the Symposium on Iran and Policy Options for the Next Administration, which was made possible through the generous support ofthe Carnegie Corporation of New York.

RICHARD N. HAASS (President, Council on Foreign Relations): Well, good morning. Welcome to the Council on Foreign Relations. This has a back-to-school quality. So I haven't seen any red apples this morning, but you're -- it's good to see so many of you. I hope you had a sensational summer. I should reintroduce myself, as I'm sure many have forgotten. I am Richard Haass, and I am remain fortunate to be in this position as president of the council -- and, I should say, the newly branded Council on Foreign Relations. You can see our new backdrop. You can see your name tags have changed. And you'll see it in all of our communications -- the website, our publications. It's a new look, to give us a consistent design that we think will help differentiate us and identify us in an increasingly competitive marketplace.

I for one am very happy to be here after two weeks on the road, first in Denver and then in Minneapolis/St. Paul. It's been an extraordinarily busy and interesting two weeks.

And one of the subjects which did arise every now and then during those two weeks is the subject of today, which is Iran and U.S. foreign policy toward Iran. And the reason this issue arose -- it is one that is sure to face the 44th president, whoever he may be.

Now obviously it won't be the only challenge facing either Senator McCain or Senator Obama. Obviously we will still have Iraq. We will have Pakistan, and Afghanistan, or, as some prefer to say, Pakistan/Afghanistan. We will obviously have the challenge of a newly resurgent Russia, China, global issues and so forth. But Iran will be on the short list of the most difficult and important issues, and I think that's because it has the potential to shape the greater Middle East. What happens with Iran will obviously have a tremendous impact on the global economy, and it will obviously have a significant impact on the nonproliferation regime.

It's now been several decades -- indeed, by the time the new president takes office, it will have been three decades, 30 years -- since the Iranian revolution -- obviously significant changes in Iran, what motivates it, its capacities, from where I sit, slightly less by ideology, more by traditional factors of power politics. And obviously now it's fueled, literally and figuratively, by oil at upwards of a hundred dollars a barrel.

And its position has been enhanced by the -- one of the unexpected consequences -- or at least for some, unexpected consequences -- of the Iraq war, the weakening of Iraq as a regional actor. And the result, I would say, is that Iran is now an imperial power -- imperial, not imperialist, but imperial in the sense that it seeks to project its power and seeks to shape a region to its liking. And I think that is simply a fact of life.

And virtually everything one could discuss about the greater Middle East, whether it's Iraq, whether it's the future of Afghanistan, whether it's Lebanon, whether it's Syria, whether it's the Israeli-Palestinian equation, whether it's domestic stability in various Middle Eastern countries, whether it's the energy equation -- I can't think of anything now that one discusses about the greater Middle East that does not have an Iranian dimension. And that explains why it is we are doing what we are doing today.

As you may have seen from the program, we have three sessions. The first will be on essentially looking at Iraq (sic) inside out, from the inside, to look at the question of its domestic politics. The second session will be on the nuclear dimension of the challenge posed by Iran. And the third session will be really from the outside in, from the point of view of the United States, and look at the question of U.S. policy across the board towards Iran, emphasizing the policy choices facing the next president, who will take office in approximately -- not even half a year now, less than half a year.

This event today is part of a larger set of projects the Council on Foreign Relations is doing vis-a-vis Iran. We've got a lot of research going on, publications, meetings, website coverage, what have you. Three of our fellows -- Gary Samore, who in his spare time runs the studies program here, Ray Takeyh and Vali Nasr -- all work considerably on Iran. Gary himself is doing a book on how to think about the nuclear challenge, letting -- setting forth the basic options.

This -- the question of Iran also figures prominently in a joint study being done by fellows from the Council on Foreign Relations and councils at the Saban Center at Brookings. That'll be coming out during the transition, meant to inform the thinking of the new administration.

Before we get started, let me just thank the Carnegie Corporation of New York, as opposed to the Carnegie Corporation of Des Moines or St. Louis, but the Carnegie Corporation of New York, led by Vartan Gregorian, for their support of what we're doing here today.

Lee Cullum has graciously -- and, I guarantee, ably -- agreed to head up this first session. We'll then have a short break, then the second session; short break, the third session and, I believe, lunch. Is that the scenario? I will be back for the third session, which I will help lead, over the question of what the United States should do about it.

But again Lee, thank you for doing this. And thank you all for your interest in being here today.

Let me say one last thing. This is also the beginning of our most busy month of the year, with the special session of the U.N. General Assembly, and we look forward to seeing you early and often, as they say about voting in Illinois. We look forward to seeing you early and often for the rest of what I think will be an extraordinary and important month here, given the meetings that will take place in New York against the backdrop of the next two months leading up to the vote in the United States in early November.

Lee.

LEE CULLUM: Thank you very much, Richard. And I certainly feel very proud -- I know we all do -- that you're just back from Denver and from Minneapolis and St. Paul, and proud of the hand that the -- the large hand that the council took in adding a foreign policy dimension to both those gatherings. And thank you, too, for all you do to make the council a vital forum that is more necessary than ever.

In this first session, we are going to be looking inside the politics of Iran, which I discover is far livelier and contentious and more fraught with bitterness than some of us might suppose. I think our two panelists will attest to that.

We have two excellent guides to this journey to the inside of politics in Iran. We have Ali Ansari, of the University of St. Andrews in Scotland, and we have Farideh Farhi, who's with the University of Hawaii. Both of them were from Iran. Actually, Ali Asari was born in Rome. His father was a diplomat. And he has traveled often to Iran, but no longer has family there. Farideh Farhi grew up in Iran. Both of them are in the academy. Both of them write extensively about Iran. Both of them are close to reformists in Iran.

And they have both stopped going there. Ali Ansari has not been there since 2005, the election of Ahmadinejad. Before that, as a student, he was able to roam around freely and talk to whomever he pleased, but that came to an end. So he says now they come to him. The Iranians enjoy going to Scotland. And maybe they play a little golf and brace up to go home again.

Farideh Farhi has not been back for two years, and that's for this reason: She takes a great interest in women's issues. She reported, in fact, in February of this year that a very fine women's magazine, Zanan, has been shut down. Its license has been revoked and nothing has been done to rev it up again. She got involved in a demonstration for women's rights and was detained. She says it was entirely her fault; a policeman told her to move and she didn't move, and that was that. And so she was detained for five days.

And she doesn't want to talk about this. Somebody -- she doesn't know who -- intervened and got her out, and that was very lucky. Three or four months later, she could have been in the position of some other Iranian-Americans whom we know about who fared -- fared much worse and really very badly.

But it's -- they both write extensively, as I said; fascinating book titles. Her title is "States and Urban-Based Revolutions," both Iran and Nicaragua, a fascinating juxtaposition -- an unexpected juxtaposition of nations. And Ali Ansari's latest book is "Confronting Iran: The Failure of American Foreign Policy and the Seeds of Mistrust." Both are skeptical, I think, about the position of Washington vis-a-vis Iran.

But both of you also have noticed in articles over the last couple of years -- have noted that a year and a half ago, Khamenei -- Ayatollah Khamenei, the religious leader -- rebuked President Ahmadinejad. He seemed to be siding with those who were really very worried that Ahmadinejad was taking a cavalier view of the sanctions and they, in fact, were harming the nation. But more recently, the religious leader is speaking nicely of Ahmadinejad, as Ahmadinejad is quick to point out at every opportunity.

So, Farhi, what's going on? Why this shifting back and forth on the part of the supreme religious leader?

FARIDEH FARHI: I'm not exactly sure that it's a total shift. Khamenei, as the religious leader of Iran, has consistently throughout his career -- and he said so in his last speech talking to government officials -- he has consistently supported the executive branch. But in this particular speech, he said that I have consistently supported the executive branch but this government has characteristics that makes me have warmer feelings towards this government. And these characteristics were that the government works very hard, it is a government that is true to the ideological foundations of the Islamic Republic, and it's a government that is people-oriented. He actually laid out very -- it's a very interesting speech, actually. He lays out very concretely and really methodically why he supports the government.

And then he goes on and says, but I have to criticize the government for a variety of reasons. And his criticisms are actually not very different from the kind of criticisms that exist the government in the society, that Ahmadinejad's government has not been true -- very true to laws; in fact, there was a major conflict with the parliament where Ahmadinejad tried not to implement the laws that have been passed in the parliament. He was also very -- also warned Ahmadinejad against going to the provinces and essentially promises the world to everybody that comes around, essentially saying it's extremely important not to do that. And then a whole litany of other stuff; you know, concerns about inflation.

So I would make an argument that he has tried very hard, in a sense, to maintain his public persona, that he is a rational mediator in Iranian conflicts. They're interested in critical commentary against the executive branch, but not a destructive approach.

Now, the interesting -- (inaudible) -- is that once he speaks then you have all these other groups inside Iran, whether they come from the reformist, centrist or conservatives, who actually try to inculcate what he has said. And, of course, the conservatives say -- Ahmadinejad's folks say -- that of course this means he fully supportive of Ahmadinejad. And, of course, the reformists take the argument that he has been critical.

I would argue that's part and parcel of the Iranian competitive process, where it's important in the upcoming presidential election -- the sense, everybody wants to know who really Khamenei supports? And therefore, everybody is banking on this (part ?) of the argument. And he has always played that role, or tried to play that role as much as possible (to balance things out ?).

CULLUM: I want to add something about Ali Ansari. He is a fellow in Middle East studies at Chatham House. We're not following the Chatham House rules today, however. This is completely (off ?) the record.

I want to come back to Khatami. You said something quite interesting in a lecture that I watched online. (You're ?) a very good lecturer, incidentally, with a very subtle mind. And I want to add about Farideh Farhi, I found reading her things that she had those in for great clarity, which isn't always the case. Some are desperate to be not understood and she is -- great clarity, which I appreciated very much.

But you said about the religious leader that he has heretofore preferred to operate in the shadows. And now all of a sudden he's coming out and exposing himself to more attention. He loves to have people curry his favor, vie for his favor, and he wants this all in the open instead of in the shadows. What's going on?

ALI ANSARI: I don't necessarily think that he wants it to be in the open, but I think inevitably that's the trend that's going on. I think there's two quite important changes or two important points that I think we ought to bear in mind. One is that, to my mind, as much as Khamenei would like to present a perception of himself as a mediator or a balancer of different forces, he's made it very clear, I think certainly over the last 10 years even during the reform administration of Mr. Khatami and then subsequently, where his ideological leanings lie. And I think his ideological leanings are very firmly and squarely with the Ahmadinejad -- what they would call their principalist camp. I mean they define this in a rather broad sense, but nonetheless I think his ideological leanings are there. And it's quite clear that even during the Khatami administration he did intervene quite effectively actually, I think, in the program. I mean, it was quite unheard of, actually, for a leader to be so active in the day-to-day running of the government or in politics.

And I think that's emblematic of another very significant change, which actually has its roots in the period of the Khatami administration. And that is really the exponential growth of the leadership's office. And one of the things I think we need to perhaps (understand ?) is not to see Khamenei as an individual but really as the sort of the symbol of the leader's office, which is really quite a huge operation.

CULLUM: And by the leader you mean the religious leader?

ANSARI: Yes, the supreme leader, Khamenei. And Khamenei himself has never to my mind been really what you would call a decisive or strong personality. I think he's always lived under the shadow of Khomeini. I think he's found himself struggling in some ways to maintain a balance of forces within the country, some of which are more hard line than he is.

But nonetheless, he's shifted very much into that more hawkish view. And what you see is the growth of this shadow government or this revolutionary government as opposed to the orthodox republican organs of government, and they've started essentially to take over. There's nothing clearer to my mind in this process than the budgets that Mr. Ahmadinejad has had. If you look at some of the earlier budgets he put forward when they were shifting the bulk of the country, Ahmadinejad came into office really on a platform of welfare and redistributing wealth and putting oil money on the tables of the people and so on and so forth.

But actually if you look at the details, at the facts on the ground, the budget for the welfare organization in Iran -- (and respected ?) by the way of the fact that subsidies have increased because of oil revenues and others, but the budget for the welfare organization I think increased by something like 3.2 percent, something rather minimal, something quite inconsequential. But then the budget for a host of religious foundations, which I should say are completely unaccountable and not transparent at all in the shift in resources, increased by about 100 (percent) or 120 percent. Now when you have that shift in financial wealth into organizations that frankly have no means of basically being accountable to even the parliament for that matter, it shows where the balance of power is going.

And the balance of power is essentially going into the leadership's office. And the leader is, to my mind, now taking on the role -- it's the cycle of hypocrisy in Iran, sadly. But the leader is now taking on the role essentially of a monarch. And the monarch basically now has official (run ?) and Ahmadinejad -- he's not a terribly well-behaved child it has to be said, but nonetheless he is someone who is essentially now the prime minister in all but name. And other people occasionally, perhaps Larijani, occasionally other people will take the role of foreign minister.

That is the idea. I mean, I think that is the trend. I'm not entirely certain that people will be happy with that development taking place, but you can see the day-to-day interference that the leadership's office is having in the running of affairs is far in excess in actual fact of what arguably Khomeini originally had envisioned.

And Khomeini's rather sort of amorphous or ambiguous notion of what the leader should be was somewhat like a moral guardian (who came ?) from afar and made judgments now and then and occasionally made critical comments, occasionally supporting. But the day-to-day running of government was meant to be left to the republic, to the elements of the republican administration. And I think the last great attempt to settle this happened under Khatami and that failed. And because it failed and shifted the resources into the sort of (revolutionary ?) -- that to my mind is the sort of crisis of republicanism if you can put it that way in Iran today.

CULLUM: Well you have virtually said that the republic, the Islamic Republic, may be over, that Khamenei arranged to have himself presented as the son of the prophet,(much like ?) Ali, the son-in-law of the prophet, and that, in fact, his own son may succeed him.

ANSARI: What I argued in a recent article was that the way things are going one could effectively say, certainly if we were to look at the recent elections (and I put those in inverted comments ?) what has occurred in Iran -- the republican experiment, I said, had been suspended. And basically those elements of competition had moved from the more formal exercise into perhaps yes, the contest of the elites behind the background in the little bit of, sort of, competition. But actually what was being presented to the public -- and I think if you talk to the public today in Iran they'll say that actually what's being presented to us is a bit of a theater. It's not really anything remotely (effective ?) even by Iranian standards.

And what you do see among some of the more ideologically hard line elements within Iran -- I mean I remember very vividly sitting in Iran watching a public information broadcast that was then broadcast by the then head of television Mr. Larijani, in which they spliced together clips from the film "The Message," which was the film about the life of the prophet, with scenes from the revolution. And the implication was a very explicit implication, and arguably a blasphemous implication I should add, that the Islamic revolution was analogous to the rise of Islam and the prophetic mission of the prophet Mohammed. And then, of course, what they would do -- what they do in Iran is they throw out these suggestions to see what the public reaction will be.

And there was a moment when they started to talk of Khamenei, who's first name is Ali, as the Ali of the age. Now, it's very, very important to realize -- CULLUM: Ali being the son-in-law of the prophet.

ANSARI: -- the son-in-law of the prophet. But in Shi'a Islam you have to bear in mind that Ali holds almost a -- almost a -- a quite unique position in sort of Shi'a theology. I mean he's the gateway of knowledge. He's seen as really the only true sort of -- Ali and his successors -- (inaudible) -- means to know the unknown, to know God effectively as (successor ?) to the prophet.

Now to call Khamenei the Ali of the age, and if you look at the motif being used in Iran, it's almost like saying essentially he has surpassed the founder of the revolution. He is a bigger figure, in some ways, and that what you have is essentially the potential for hereditary succession. These elements are talked about. I agree that, in a sense, this is an incredibly bold, I think, agenda. I don't think it will be something that necessarily many of the other elites in the Islamic Republic will be happy with. But it exists. I mean, the fact is these views exist and they have tried them. So, I think these elements -- I think we have to bear in mind that the domestic political discussion in Iran is moving in a particular direction which is unhelpful, to use a very understated British term, unhelpful to the democratizing process in Iran.

CULLUM: Farideh Farhi, you wrote right after the elections to parliament on March 14 of this year that the question was not whether the reformists versus the conservatives were going to dominate the discussion in parliament. That had been settled, the election was rigged before anybody went to the polls, in favor of the conservatives. Only 30 reformists were allowed to run for office and they won easily, but there weren't very many of them. You said the question was will these conservatives in parliament stand up to Ahmadinejad? Have they done it? I mean, they tried with those caretakers running the economy and transportation and interior, but how has it proceeded since then?

FARHI: Well the parliament, first of all, has been in summer recess so it has just come back and we shall see what will happen. The point I want to make is that first of all the Iranian political system has never been a democratic political system. I mean, the notion of a republic should never be understood within the context of Iran as a democratic political system. It has always been a system based on a game of elite competition. It is a very contested political environment. And while it may be true that the reformists have been pushed out of the circles of political power at this time, the center of competition has moved inside the principalist camp, the conservative camp.

CULLUM: Who are the principalists? What do we mean by principalists?

FARHI: Essentially, the conservatives in Iran. They have re-named themselves because the reformists have a name, they are also a camp, and they are called reformists. Since then, they have come up with this name, essentially principalists, believers in the principles of the revolution. And this is actually a very (rowdy bunch ?). It is constituted of many wings, at least three of them very prominent, but they are also -- principalists are also very factionalized, so they go beyond the three wings.

And since the parliamentary election it has become clear, especially through the process of when Ahmadinejad tried to nominate new cabinet ministers for economy, interior and transportation, there was tremendous resistance in this parliament that is controlled by conservatives. And ultimately he was forced to abandon the nomination of two of his candidates and introduce two new ones for the all- important ministries of economy and interior, and face an open rebellion on the part of his own main supporters. Ahmadinejad's main supporters are called (sweet sense of service ?) in Iran.

CULLUM: (Sweet sense of service ?).

FARHI: And the reason for that name comes from a sentence used by Mr. Khamenei that talks about this new administration and the sweet sense -- and calling it an administration that essentially is interested only in service. So he faced an open rebellion on the part of his own main supporters in the parliament and was able to pass through the compromise candidate through the support of the reformists as well as what is called the traditional conservatives in Iran. Now the traditional conservatives --

CULLUM: Is this Ali Kordan.

FARHI: Ali Kordan, this is the nominee for the interior ministry and the interior ministry is an extremely important ministry in Iran because it runs the election. And he's obviously a candidate that is close to both Larijani the head of the -- the speaker of the parliament, but also close, he was a member of Rafsanjani's administration. So the hard line conservatives who support Ahmadinejad gave these incredible speeches effectively saying that this guy has -- his degrees are fake and he has been accused of all --

CULLUM: He said he went to Oxford, is that --

ANSARI: He said he got an honorary doctorate from Oxford.

FARHI: Exactly. And so they made a fool out of this guy in public. But nevertheless the parliament went ahead, and after all these revelations, approved him despite this open rebellion. So, the point I was trying to make is indeed that despite the fact that the focus of competition has moved among the conservatives, the Iranian political system remains an extremely contested political system, extremely fractious political system. And that is why I'm a little bit more skeptical than Ali is in terms of the direction of the country and in terms of the possibility that one person or his clique, no matter how dominant they are, can bring order in this very, very fractious and unruly political environment.

CULLUM: Well now Farideh Farhi you mentioned Larijani. He's now speaker of the parliament. He was the nuclear negotiator but resigned, miffed somewhat with Ahmadinejad. But he was running Iranian television and it was he who said that Khomeini was the Ali of the age. Is he running for president next year, Larijani?

FARHI: It's not clear. I doubt it. I doubt that -- I think he's placed in a good position and I simply -- he has to make an assessment whether or not he has gained the national prominence that would allow him to go beyond how well he did or how badly he did actually in the last election. Remember in the last election Larijani ran and in the first round he only received one million votes, in comparison to the much larger vote for Rafsanjani and others. Effectively he came out last or almost next to last because he doesn't have national prominence.

Now, his portfolio as Iran's chief nuclear negotiator and now the head of the -- the speaker of the parliament, might give him some national coverage. But my sense of him is that he's essentially a rather lethargic figure. He is a kind of person that thinks he's entitled, so he wants the country to come to him and essentially say, you know, we're in big trouble and please save us. And Iran is just simply not that kind of an environment. They are a people that, you know, obviously Ahmadinejad is very interested in running the presidency, others are as well. There's going to be a heated competition, a limited heated competition, and Iran is simply not that kind of a country where a politician can come and approach this very ruckus political environment in a very, as I suggested, lethargic way.

CULLUM: Sort of a Eugene McCarthy --

FARHI: Exactly.

CULLUM: -- of the moment. Ali Ansari, Karroubi is the only announced candidate. He ran third, as I recall, in 2005, beat by Ahmadinejad. What kind of chance does he have? He was an adviser to the spiritual leader, the religious leader.

ANSARI: I don't think he does. I mean, I don't think he has much chance at all partly because he's seen as far too much on the fringes, he's far too much of a maverick. I mean I know that's a very popular thing here these days, but I don't think that -- you know there are groups of very good people in Iran, I have to say, who could do a lot of very interesting things. But the fact is they're not being allowed to participate in that way.

And I do think that as fractious as this thing's become, and Iran is of course a fractious society, but it's in fractious societies that dictatorships arise. I mean this is -- it's the exploitation of that fractiousness, I think, that allows autocracy to flourish. And I think the historical record in Iran sadly proves that all too often, and in particular when the oil prices are high.

I mean one of the things I do want to raise, and I think it's very important to show the situation which we're in -- I mean, Farideh made the point, in particular about Mr. Kordan. I think this degree that he had, just to give you an indication of how absurd I think sometimes these discussions take, he bragged that he had an honorary doctorate of law from the University of Oxford. When this rather simple point could be checked out -- (inaudible) -- we all laughed about this because -- (inaudible) -- University of Oxford handing out, selling its degrees, but this degree, when he was caught out, this was not sufficient to get him to withdraw this rather ludicrous allegation.

In fact not only that, he was so convinced that he had an honorary degree that he put the certificate out on the web. I mean, the certificate was there. And this certificate is so badly misspelled, I mean it's -- it does, I have to say, beggar belief that first of all someone could have -- and he drew a salary based on the Ph.D. apparently from a number of different ministries. But when this was exposed, in any sensible environment he would just be thrown out. I mean this was just nonsense. And yet, he was still ratified. I mean he was still ratified (in place ?).

Now this, I think, is an indication of where one of the problems in Iran today, and there are parallels in the pre-revolutionary period of course, is that it's no longer any hint or suggestion of merit, it's a question of loyalty. If you're loyal to the system and loyal to the leader, and people are competing for the leader's favor, that's what gets you ahead. And that's it.

And one of the things that is joked about in Iran, privately, is the level of hand kissing that goes on. And one of the things that Mr. Khamenei has re-introduced into the political spectrum is the fact that people have to kiss his hand on a very regular basis. Now if you go back and look at Mr. Rafsanjani or Mr. Khatami, they did not do this. Mr. Ahmadinejad does this with abundant zeal. Now it's symbolic. One can be cynical about it, of course, but the fact is that an element of deference is returning to the political system which we probably have not seen since the 1970s.

And I think, you know, that again all the indications are of a process that's moving in a direction which -- I agree with Farideh. I don't think Iran has been democratic. I don't think anyone would call it democratic. But I think there were some fairly promising signs of a process of democratization taking place.

And, as I say, my optimism I suppose lies in the fact that (I say ?) it's been suspended. I don't think these things can be erased all together. I mean, this is absurd. But nonetheless we have to also, I think, call a spade a spade. The fact is that Mr. Ahmadinejad has run an appalling government, an appalling government.

In Iran today there are power cuts every day in the capitol. There's water rationing. Mr. Rafsanjani made this point himself. You know, he comes out and he says it is absurd in a country with this sort of oil revenue that we have to ration our petrol and we have to have power cuts in the worst part of the day, mid-afternoon, where everything shuts down. This is not a very efficient way to run a modern economy. And why can't we provide ourselves with (power ?)?

Now, he's run an appalling economy. We have no real idea where the money is going. We have some idea but it's not as (transparent as it should be ?). And yet somehow he continues to survive.

And to add to this Mr. Khamenei then adds in that he should prepare for another four years. Now, to my mind that is a classic indication of a system that is in a sense folding in on itself. I mean, economically it's the weak point, these are the weak points, and he is basically running a very poor economy and I think we should be awake to it, that this is the reality.

I know Iran's projection to the world, and I think Richard Haass made a very good point about Iran's imperial position, but Iran's imperial -- Iran, as I've argued elsewhere, has always had an imperial mentality, it's just that it's rediscovered it since 2003 with the opportunities that's been afforded to it. But the fact is these opportunities have been afforded to it by someone else, basically the United States.

And internally, it is not as strong as it thinks it is, but it's amazing what oil at $130 a barrel can make you think. It cushions a lot of the blows. It disguises a lot of the frictions. And for me, Iran today looks nothing like so much as Iran in the 1970s. There are differences, clearly, but there's an abundance of money, there's an abundance of corruption, and there is an abundance of wishful thinking.

CULLUM: Two follow-ups. When you say kiss his hand, you mean that literally.

ANSARI: Yeah.

CULLUM: You're not being metaphorical.

I gather that you think that Ahmadinejad might not be reelected, but reappointed president.

ANSARI: Well, you know, when we say "reelected," it's a bit of a misplaced term, isn't it, really, in Iran today. I mean, nobody's being elected.

I think basically they're restricting the chance -- I mean, I remember very vividly a meeting that was held with Iranians both inside and outside the country. We had this conference, and it was after the 2004 parliamentary elections, where 3,000 or a number of candidates were vetted and not allowed to run. And someone, a colleague of mine from France, made a very good point, and she said the problem with this election is it's not even fair by Iranian standards. (Laughter.) And that was a good point.

And of course, you know, a succession of governments in Iran, really, for the last 200 years, I have to say, convinced themselves that the Iranian public is stupid and don't see this happening. Of course they see this happening. Of course they see that they're being -- you know, this is a farce. And I think in 2004, 2005, I think there was a slight hiatus in 2006 of the Assembly of Experts, but then they quickly clamped down on that in the municipal elections; they decided they didn't want to revisit that one. And then we go back to very, very rigorously controlled elections.

It's a little bit, you know, like the (radical Peace Party ?), of course, in the '70s -- you maintain a contest, but it's very, very tightly controlled. You know where the debates are happening, you don't let it get out of hand. And you know, even now they're saying that the reformists as a group are being really categorized as a religious minority in the Majlis, where they're entitled to 30 seats and that's it, and you know, they won't be allowed to have a position of power anymore. And I think, you know, this will tend to suffocate, obviously, the level of real debate going on in the country.

CULLUM: Farideh Farhi, Rafsanjani is a former president. He ran for president in 2005 and lost to Ahmadinejad, but then last year came in first in the election for the assembly, which is a group that advises the spiritual leader. What's going on with him now? Can we expect more from him?

FARHI: Actually, he came first for the Assembly of Experts.

CULLUM: Yes.

FARHI: It's not an advisory group; that is a group that presumably decides whether or not to reappoint/get rid of religious -- the supreme leader. So it's a -- for the first time in the history of the Islamic Republic, there was actually a competition for the leadership of that body. That body has always been -- effectively the leader of it has always been selected by acclamation, but in this particular election the conservatives made a point to prevent Mr. Rafsanjani from becoming the head of that assembly, and he won in a split vote. It was a close vote, actually, but he won.

He also has this other position, this advisory position, as the head of the Expediency Council and has tried to actually intercede in the latest -- (inaudible) -- process in order to prevent some of Ahmadinejad's economic policies. But constitutionally, that's an illegal act, and there has been a pushback not only by the parliament, but also from other sectors of the society because they understand that the Expediency Council is not an executive entity, it's supposed to be an advisory body.

And obviously he has turned into, Mr. Rafsanjani, as a very, very important critic and a critical person in relationship to Ahmadinejad's policies.

Now, to me, I see Iran is in a very interesting situation because economically, although there are major differences in the pre- revolutionary period, but there are a couple of very interesting similarities. One is the fact that Iran is going through -- I mean, in 1970s you also had an oil boom that led to tremendous inflationary pressures, and in fact it was shah went through a very, very important anti-profiteering campaign that antagonized the Barzadi (ph) classes because of that inflationary pressure.

And secondly, Iran was also going through these very, very, I mean, long periods of blackouts, no electricity. And in fact, the population was very unhappy because of that. You know, the kind of boom that has been generated by the oil money was not translating into -- in fact, it was making life more difficult in terms of inflationary pressures on everyday life. Well, the end result was a revolution. Ultimately, a lot of other factors involved.

It would be very interesting to see whether or not the kind of incompetence that Ahmadinejad has exhibited will actually lead to an electoral change. And if indeed it does, I think it's a major change in Iranian politics, where people's dissatisfaction is expressed through electoral politics.

So I would ask Ali, actually, whether or not, when he talks about the next election being an appointed election, whether or not he's confident that Ahmadinejad will be elected in the next election. Is it something that is assured at this time? Or -- because, you know, the point I'm trying to make is that while it is true that another principalist, another conservative, may be the alternative and not a reformist, okay, there is no doubt that the other candidate, whoever that is -- whether it is Ghalibaf or, from my point of view not likely, but Larijani -- they would be running on a platform of competence: this government, it is a good ideological government, but it's an incompetent government. And you know, someone like Ghalibaf, who is a popular mayor relatively and people sort of think he's run Tehran very well, will have an important say in pushing that argument. And you know, does Mr. Khamenei have his faith in only backing Ahmadinejad, or he would be, you know, quite happy if any conservative gets elected, and therefore will take a hands-off approach? If he thinks one of the conservatives have a higher chance or have a, you know, a better possibility in doing a better job in running the economy.

CULLUM: Well, now, Ahmadinejad has kept interest rates quite low, as I understand it. Is that right?

FARHI: He brought the interest rates down --

ANSARI: Twice.

FARHI: -- twice, but there has been a pushback.

You know, one of the problems that Ahmadinejad has is that he does not have a unified government. His own ministers have been engaged in pushbacks. And at this point, his major economic confrontation is with the head of the central bank. And he has never been able to unify his economic policies because of resistance on the part of important players.

So he tried this year again to bring down the interest rates on the basis of the argument that if you bring down the interest rates, you generate a more growing economy, and therefore more employment. Obviously, the head of the central bank having seen the inflationary kick that has come into the Iranian economy, stood very strongly and there has been a pushback.

So last week, two of Ahmadinejad's appointees, the head of the central bank and the labor minister, were brought together to sort of try to figure out a common economic approach because Ahmadinejad is proposing a new economic plan that hopefully get rid of subsidies and translate them into direct cash subsidies.

And that is also facing tremendous amount of resistance because of inflation. So we have tried to bring the inflation -- the interest rates down. Some of the government banks are being forced to do so. The private banks have refused to do it, and there has also been a push-back on the part of his own government.

CULLUM: And inflation is worse than 20 percent. Is it 24?

FARHI: That's right, 24 percent.

CULLUM: And by subsidies, you mean subsidies for the price of gasoline.

FARHI: All sorts of subsidies, but that is a very big chunk of it.

CULLUM: Ali Ansari, I spoke with Vali Nasr last night, who will be on one of your panels later today. He was very generous with his time. And he said that the reformists really don't have a chance of winning next year in this June 2009 presidential election; that the best they can do is try to take sides among the conservatives and hope somehow to have some influence there. Would you say that's true?

ANSARI: I think that's probably fair. I mean, I wouldn't want to carry a torch for the reformists, in the sense that they themselves are also responsible or a huge amount of their own misfortune in the way they handled things, as a group, certainly. But the key point really is, is that -- are the elections for the presidency in 2009 -- I mean, how controlled are they going to be? And what are the choices?

For the Islamic Republic, in order to present itself as sort of a legitimate, sort of popular political process, you have to be able to excite the public to participate in these elections. And, you know, nobody that I know certainly believes the figures that were put out for the last parliamentary elections, I mean in terms of turnouts. You know, they're always edged above 50 percent in order to give you that sort of legitimacy.

But in order to do that, you have to convince the public that there are candidates that really would make a difference. And you know, certainly if the contest was going to be between Mr. Ahmadinejad and Mr. Larijani, which -- I mean, I agree with Farideh; I think Mr. Larijani is one of those people who would like, you know, people to come to him, really; I don't think he likes to sort of get up and go and hustle on the stumps himself -- then I think the choice for people really is fairly poor. I mean, I don't think they're particularly interested.

You know, one of the strategies, of course, of the principalists -- which, incidentally, I should point out that "principalist" is an Iranian translation of the word "fundamentalist," by the way. I mean, it's their way of turning the word around and making it positive, despite the best efforts of a number (us to tell us ?) that fundamentalism was not a term of endearment being thrown (up in ?) the West.

Unless they can sort of get some sort of broader choice in terms of who would be running, I don't think people are going to be particularly interested, because one of the tactics of the principalists, as I was trying to say, throughout their rise since 2003, when Ahmadinejad first turned up as mayor of Tehran, is really to depoliticize the public.

Now, there are nice, interesting parallels that can be drawn with other electoral systems, but basically what you do is you make sure -- you figure out that if there's a high turnout, you're going to lose this election, so what you do is you make sure there's a low turnout and you pull out your base.

And that's basically what the principalists did. They ensured there would be a low turnout, people would be disinterested in the political process because there's no change, and with a low turnout, nonetheless their own base would come in and vote.

And Ahmadinejad, you know, became mayor of Tehran with a 15- percent turnout. Nobody took any notice of it, really. And then subsequently, every other time there was successive disillusionment of the reformist base, for a variety of different reasons, but of course the principalists pulled out their own base, out in the rural areas and -- they do have a base, by the way. I mean, let's not get this -- let's not say that Ahmadinejad could not pull, say, 5 (million) or 6 million votes. I'm sure he could. But we're talking about an electorate of about 44 million. So in that, they are always in many ways in essence a minority.

What Ahmadinejad's role was over the last three years was to translate that -- that they wanted to put him in power and translate that unpopularity within the country, through a list of populist measures, into popularity. And in that role, he's failed. And the one test of that is, if they were that sure of their position, they should hold a -- I'll use the term very loosely, but relatively free and fair election.

They should allow him to compete with someone who comes from a diametrically ideologically different view, whatever, still believes in the Islamic republic -- we're not talking about anything dramatic here -- but you know, someone who's within the system, but holds different views. And they won't. I mean, he has not competed in an election of that nature.

CULLUM: I want to turn to questions from you, but I remember you made the point, Ali Ansari, that those parliamentary elections, which should have been held in May or June, were held around March 14th, because it was fairly close to the new year, and people would be traveling and reveling and not interested at all. I mean, it was like holding our election during the holidays in December.

But anyway, that's -- are there other -- let's pause and then -- and have questions from all of you. Yes?

QUESTIONER: Hi. Gary Sick from Columbia. Some -- several of your comments -- well, in fact, from both of you -- the fact that Iran is turning into something like a monarchial system, and it's looking more and more that way. And I definitely share that view. They don't want to admit it, but it's happening.

And secondly, that there are some real unfortunate aspects about the economy and the way it's being managed. There's some new evidence coming out that the shah's government actually was -- the resemblance, in fact, is eerie in the period -- from what is going on now, if you can figure Khamenei -- an emerging monarch, and the system, looking at it the way it would have been under the shah, there's a remarkable similarity. And I wonder if either of you would like to speculate about -- is -- not that we're about to have a revolution, because I really don't think we are, but what does that mean in terms of the system, in terms of legitimacy, in terms of its length of -- its ability to survive over a more substantial period of time? And what is -- how that plays out internally both in terms of who gets elected and where the system goes from there.sa

FARHI: I do not think Iran is in a revolutionary situation. As I said before, the reality is that first of all the context is not there, and the context that existed prior to the revolution was essentially the giving up and development of a network of opposition, organizational -- an organizational structure that allowed mobilization. And one could never underestimate the organizational structure that the mosques created in Iran and of course worked hand in hand with an ideological preparation that had occurred in terms of arguments against the injustices of the shah's system, as well as his close connection to the United States.

At the same time, what you see in Iran is tremendous amounts of dissatisfaction about the way the government is being run. And the next election, I think, in fact is a very, very good test of how the Iranian system, which has shown itself to be quite flexible when it's faced with crisis, in dealing with this kind of situation -- whether or not it will go in a direction that continues the pattern as is and risks the possibility of not popular dissatisfaction but elite rebellion in Iran. You know, that's the dynamic that Khamenei has to deal with.

Khamenei doesn't worry about what the population will do. It has it under control.

But he has to worry about the fact that he's head of -- the person who heads the supervisory body of his office, Betsda Nokakemori (ph), is saying this government is lousy, you know. (Chuckles.) I mean, he comes out and says it in public. So he has to worry about these stellar characters, that they exist in the Iranian political system.

So the question is whether he's going to completely ignore that and allow this fractious course to continue, or pull weight and try to convince Ahmadinejad to operate in a different way, as it was done using the past decision to push -- (inaudible) -- or change the economy minister. This was people pulling their weight and essentially saying you cannot do what you have been doing; you have to change the way you have been approaching the economy, as well as the way you have approached other branches of the government, or allow for some sort of a competition that would bring the possibility of change.

The next election, you will have reformists running in this election, okay? But because these reformists are unable to come up with a unified candidate, they will not win. That is the dynamic of Iranian politics, unless somehow Mr. Khatami is convinced to run. And there is a possibility that he might do well in this election, but he will not do it unless he gets assurances from Mr. Khamenei that this will be an election that would allow him to win if the population comes in to vote for him.

So at this point, I would make an argument that Iran is not in a revolutionary situation, but Mr. Khamenei is also faced with very, very serious questions. And unlike the monarchic situation of the past, those choices will have -- are consequential in terms of his role in the society. If he pushes too far, he undermines his own credibility. And that is not a dynamic that existed in the pre- revolutionary period.

CULLUM: Let's get a couple -- let's have three questions. Then here, here, there, and then back to you.

Go ahead.

QUESTIONER: Thank you. Vali Nasr for the council. First of all, thank you for a very, very -- CULLUM: And thank you for being so kind last night.

QUESTIONER: -- for a very rich discussion.

I find this comparison with the shah's period sometimes jarring. I think there's major differences. First of all, I don't think the shah's government was ever this incompetent. (Laughter.) I mean, within a year after the -- talking about the economy, within a year after the revolution, there were 350 Iranian economic managers at the World Bank and IMF, literally running the central banks from Aruba to Jamaica and onwards.

Secondly, on the other hand, you never had this degree of open rancor in the press ever under the shah -- you know, the president of the country would be criticized, would be called incompetent publicly.

But the bigger issue is that, you know, when we talk -- compared to the shah's period, it always create an expectation that there can be a revolution in Iran, and that somehow the boom and bust of oil or mismanagement would lead to a change.

It's maybe better to look at Iran in the context of the region today. You're in a region in which authoritarianism simply doesn't fall apart unless the United States military shows up in a country and pulls it down. I mean, if Egypt can survive food shortages, if Egypt can survive all kinds of pressures and there is no end to the Mubarak regime, no end to the Saudi regime, no end to the Syrian regime, why should there be in some ways expectation that this regime will not, in fact, weather all of these? And in fact -- and you know, in some some ways, maybe, you know, you look at Russia. It's -- I mean, Putin's becoming a czar; why wouldn't -- and very successfully.

I mean, we can think of, you know, Khamenei actually looking a lot more like that.

And I want to actually push both of you on an aspect of the Iranian regime we didn't talk about, which is much more similar to the countries around, which is the security apparatus and the role that the Revolutionary Guard in the economy, society, play. And in fact, coming next elections, what is their stake in this game in terms of issues you raised. Do they care about competence? Do they care about -- you know, do they see national security requiring a stable economy, and therefore would they support a more competent conservative? I'd appreciate some of those comments.

CULLUM: Let's see. Let's get a few more questions and then -- yes, right here and then back there. Four. One, two, right here.

QUESTIONER: Hi. Bob Lifton. This is an exact follow-up to the point that was just being made. And the analogy I would use is China. What it sounds like is the same kind of thing that goes on in China. The party controls the country, and then you can argue that within the party there are arguments and fights and struggles for power, but in the end the party controls the country, and here the religious authorities control the country, and then we can talk about what goes on inside.

In China we've given up on the idea that there's going to be a revolution, but somehow in Iran we keep fooling ourselves into believing -- this is the very point that was just made -- into believing that something's going to change and that we can help create that change. And it seems to me that that's a possibility that doesn't really exist. And it goes back to who really controls the levers of power in the country.

CULLUM: Right here, and then back there. Thank you.

QUESTIONER: My question is a follow-on to that question, which was a follow-on to the previous position. And the link I would raise is, right down in our Southern Hemisphere, with Mr. Chavez, Mr. Ahmadinejad's wonderful partner, has a similar approach, it seems to me, than the combination of Khamenei and Ahmadinejad have. And the question I've got, having just witnessed firsthand a little bit about what Mr. Chavez does to make sure that he doesn't have too much in the way of attack or dissent, is the continual presence of gross intimidation at the level of either speaking incorrectly and being thrown into jail, or losing your job or losing your opportunity -- and the Revolutionary guard is always there. The women know what they can and can't do in terms of getting beaten with a stick if they show an ankle. How is that security working to prevent real dissent? Are the numbers of people being sent into the equivalent of the salt mines going up? What's going n in that particular area to make sure that there is no real dissent and no real reform?

CULLUM: And right back -- right back there, and then we'll turn back to the panel.

QUESTIONER: Herbert Levin. If you can answer all these questions, I have even more admiration for you.

CULLUM: It's a psychological test.

QUESTIONER: Really.

CULLUM: (Off mike.)

QUESTIONER: This actually goes back to the first one. Some of us are told that the foundations really are a means for the ayatollahs to support their families. These are not monks; they have big families. And you stumble over all these chic Iranians in Paris, and they are supported by these foundations.

And this is the way the ayatollahs also have something in the bank in case there's another change in Iran and they have to go abroad temporarily, as they have done before. And that this is part of the paranoia of the regime. I just jotted down -- the Russians took part of Azerbaijan, and the Arabs are always at it, and they're not trusted, and the U.S. and the U.K. want to put the shah back, and the Kurds, and the Baha'i, the Parsis, the Israeli Jewish spies -- you know, they're paranoid about all of these internal and external threats. And putting the money in Paris and being paranoid about everything else is really what drives them, not Persian imperialism, that they're going to go back to the Bhosporous or something. So this can be completely wrong -- (laughter) -- and I'd appreciate if you'd tell us about it.

CULLUM: Okay, Ali Anwar, is the regime here to stay based on paranoia?

ANSARI: Can I make -- I'm going to try and make a --

CULLUM: And is it like China?

ANSARI: I'm going to be -- I'm going to try and be very brief, so forgive me if I -- (inaudible). First of all, I want to entirely agree, by the way, with all the parallels being drawn with the 1970s which are raised. I mean, I don't want to draw the parallels too far. In fact, the parallel in Iran is actually drawn with a constitutional revolution, not with -- (inaudible). And that analogy is in some ways probably better. That what you find, actually, is a failure of the democratic process, leading ultimately to an inertia in government, leading ultimately to a coup. So these are the arguments.

(Not that I'm saying that's necessarily going to happen ?), but, you know, you are simply trying to look at trends and the way things are going. So I would want to emphasize, particularly to an audience here in the United States, that anticipating a revolution is something I don't think people should be planning on. I don't think it's going to happen. And one of the major reasons for that, of course, is that the Iranians have very fond memories of the revolution they had, so they're not going to rush to go for another one. And that sort of -- that sort of experience has a very dampening effect.

Now, one of the things that Gary raised -- and I think it's really important to bear this in mind -- that in Iran, nationalism is the opium of the masses. And even more than the masses, it's the opium of the elites. And you can go to a diaspora and ask them, actually. I mean, nationalism is the way they circumvent this legitimacy crisis they have created for themselves.

And believe you me, there are many people in Iran within the system who are quite aware of the mess they've gotten themselves into. They're not stupid about this. You know, they know that they've gotten themselves into a bind. But what they do is they throw out, basically, very, very rampant vulgar nationalism to the people, and it's amazing how people lap this up. And the nuclear crisis is just one of them -- and it's done with aplomb, by the way. "And the Americans -- and we can attack the Americans and we can be rude about people and we can do this and we can stick it to the Bushes and we can do" -- and it all looks very good, and everyone laps it up and everyone enjoys it.

And in that sense, the Islamic Republic, I have to tell you, has done a far better job at this than the shah ever did. Far better. They're far better at this. They use many more motifs. They draw on mythological history, recent history. They're very anti-Arab, by the way, don't even pretend that they want Islamic harmony in the region. Okay, they want Islamic harmony under their own directorship. That's about as good as it gets. So, you know, these are things.

And I think this nationalism is something that you need to bear in mind from a policy point of view, in actual fact, because it's going to be extremely serious. And any successive political movement in Iran will have to pay attention to that. And, you know, Ahmadinejad has probably been the most nationalistic president since 1979. And I just remind you, when Putin came to Iran last October -- and I love this analogy -- that they actually built a papier-mache freeze of Persepolis as the press conference -- (inaudible). So when Putin came marching in, there were Achaemenid soldiers behind him.

Now, you have to bear in mind that, you know, this motif was so negative after the fall of the shah that -- for the Islamic Republic and Ahmadinejad to use it in order to present, you know, to the world this image of our great new empire and so on and so forth. So I think the -- you know, one of the things that the Islamic Republic is quite good at and the establishment there is actually very good at seeing in front of their -- you know, right under their noses. They're very good tacticians. They're not terribly good strategic thinkers. The shah could -- had great visions about things, but he couldn't see what all what was going on beneath his feet.

So I mean, this is the difference.

But I think, you know, their obsession with Velvet Revolutions, their obsession with, you know, all sorts of people coming up out of nowhere and causing trouble is an indication actually that there is an element of paranoia here, that there is a little fear, that they are more aware of their own history than perhaps we are. I mean that -- you know, that these things happen. Particularly when you are talking about the return of the Mahdi any day, you know, I mean, that -- it is one of the more absurd aspects of the Islamic Republic that they themselves have created the environment for the emergence of a charismatic revolutionary movement. I mean, it's quite absurd.

And I know that Mr. Ahmadinejad has tried dampen this down by saying actually that the Mahdi supports me, you know, so that's why -- you know.

Look, don't underestimate, by the way, the role of the Russians in all this. I'm sorry to say, but the Velvet Revolution thing and all this and the role of Russians -- I mean, there's a wonderful irony, which I won't go into, about Georgia at the moment, but you know, those were -- there are elements there that I think are very important -- the way Putin and the Russian business interests and other interests have got involved in Iran and the way that's tied in particularly with the IRGC and other elements. There's a huge trade going on there, and there's a huge business relationship -- all informal, all under the radar, but it's there.

And the IRGC, for those of you who have been talking about the security apparatus, I think they are interested in maintaining their interest -- and their vested interests. And for those of you who are familiar with -- well, I mean, it's the same with, I suppose, with the Syrians or with others. You know, they are basically the Janissaries of their age. They have business interest, and they want to maintain their business interest, and they're going to protect that and whoever gives them that deal. Yes, if someone can do it more efficiently, I'm sure they'll go for it. But actually, you know, that's where they're doing -- and Jafari, the head of the IRGC, when he made it very --

CULLUM: What is the IRGC?

ANSARI: The Islamic Revolutionary Guard Corps.

CULLUM: Thank you. All right. ANSARI: Which is, you know, the -- basically, the guardian of the -- coercive wing of the revolution.

I think -- the two quick points I'll make. One is about China, which is -- it's revisited so many times, actually, that I just -- it's -- one of the areas where I do a hundred percent agree with Farideh here is, Iran is just too inefficient, actually, to approach anything China would achieve, I mean, in terms of fractiousness.

But the other thing about China -- and I had a very interesting conversation with the Chinese ambassador to Iran, and he said that the Iranians always come to me and they say: We want to be the China of the Middle East. And he says: You haven't got a chance. And they said: Why? And they said: You haven't got a nuclear weapon -- although some people think they're working toward it -- you haven't got a seat on the Security Council, and above all, you don't have relations with the United States.

And it's an important point. You know, I mean, the fact is China, for all its vaunted -- you know, it's basically a semi-official capitalist country. I mean, you know, Iran is not -- (chuckles) -- I mean, it hasn't really approached it yet. And you know, I look forward to the day when Apple sends its iPhones to be made in Tehran, you know, but it's not going to happen in the near future.

So these sort of things are, you know, these -- I think these sort of analogies -- I think the Iranians like the China model because they think we can have economic development with no political responsibility. That's not, you know, the reality there. Sometimes they talk about the Japanese model, which, I'd point out for them, is even more worrying for them if they want to go down that route. But you know, they have these models, and I don't think they think them through.

I think in terms of suppression, by the way, and repression, what's interesting about Iran is that the tools of repression are not -- and you won't find it -- this is why people going to Iran always get two different countries. We see two different countries when we go. And that is, it's not the GDR. It's not a police state in that sense. What it is is an arbitrary state, if I can use it that way. And invariably the way in which that arbitrariness gets ameliorated is because you always know someone that can sort you out, and you play the game. So it's not a legal society in that sense.

A totalitarian state, which -- a lot of people talk about totalitarianism -- is completely inapplicable to Iran, by that -- for totalitarianism, you need industrialization, and you need some sort of legal system. Neither of these exist in Iran. So what you have in Iran, actually, is that sense, that fear created by the fact that you could be targeted, not that necessarily you would be. You could go in Iran and mind your own business, and nobody would bother you. But the fact is that that tool of coercion, that ability to suppress, is you pick -- you're very selective about who you pick. And everyone's always worried that they may be the next in line. But of course what happens is that you use all your informal networks. It's who you know that basically allows you to get -- nobody has a recourse to law in Iran. Everyone has a recourse to who you know and who you know who can bail you out of a particularly difficult situation. And that's what matters.

And that fundamentally is actually what's wrong with the country. But that's not an Islamic Republican problem; that's a problem that we've had for 150 years, at least.

But this -- these are the problems, that the modern -- Iran is attempting to be a modern state on a 19th century framework. That is our fundamental problem.

And a lot of the danger that we have is that the modern state has a lot of the tools of that modern state in terms of coercion, in terms of listening in to people and so on and so forth. But it doesn't actually have the aspect of civil society or the legal system to protect the citizen against those things. And so it's very arbitrary, and it becomes -- you know, it becomes a very inefficient way to effectively run the state.

I'm sorry it was so long, but I just wanted to get some of -- because I don't think it's a revolutionary situation, but I just -- I don't see it happening. But that constitutional revolutionary analogy is an interesting one. It's one that the Iranians mention a lot themselves.

CULLUM: Well, thank you so much. I think we're almost out of time.

Farideh Farhi, I should have mentioned, lived in Iran for most of the '90s, teaching at the University of Tehran. She hopes to return next year, after the election, so she has a measure of optimism.

Ali Ansari hasn't mentioned going back. I think he's less optimistic, perhaps, about next year.

It occurs to me that we have a party in this country that's gone from being principlist to reformist -- MR. : (Laughs.)

CULLUM: -- and the other party, I guess, might want to give up change and go for the sweet synthesis of perfect that --

MR. : (Laughs.)

CULLUM: -- both looking for the sweet smell of success.

So please be back in 15 minutes, and thank you very much. (Applause.)

.STX


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This was part of the Symposium on Iran and Policy Options for the Next Administration, which was made possible through the generous support ofthe Carnegie Corporation of New York.

RICHARD N. HAASS (President, Council on Foreign Relations): Well, good morning. Welcome to the Council on Foreign Relations. This has a back-to-school quality. So I haven't seen any red apples this morning, but you're -- it's good to see so many of you. I hope you had a sensational summer. I should reintroduce myself, as I'm sure many have forgotten. I am Richard Haass, and I am remain fortunate to be in this position as president of the council -- and, I should say, the newly branded Council on Foreign Relations. You can see our new backdrop. You can see your name tags have changed. And you'll see it in all of our communications -- the website, our publications. It's a new look, to give us a consistent design that we think will help differentiate us and identify us in an increasingly competitive marketplace.

I for one am very happy to be here after two weeks on the road, first in Denver and then in Minneapolis/St. Paul. It's been an extraordinarily busy and interesting two weeks.

And one of the subjects which did arise every now and then during those two weeks is the subject of today, which is Iran and U.S. foreign policy toward Iran. And the reason this issue arose -- it is one that is sure to face the 44th president, whoever he may be.

Now obviously it won't be the only challenge facing either Senator McCain or Senator Obama. Obviously we will still have Iraq. We will have Pakistan, and Afghanistan, or, as some prefer to say, Pakistan/Afghanistan. We will obviously have the challenge of a newly resurgent Russia, China, global issues and so forth. But Iran will be on the short list of the most difficult and important issues, and I think that's because it has the potential to shape the greater Middle East. What happens with Iran will obviously have a tremendous impact on the global economy, and it will obviously have a significant impact on the nonproliferation regime.

It's now been several decades -- indeed, by the time the new president takes office, it will have been three decades, 30 years -- since the Iranian revolution -- obviously significant changes in Iran, what motivates it, its capacities, from where I sit, slightly less by ideology, more by traditional factors of power politics. And obviously now it's fueled, literally and figuratively, by oil at upwards of a hundred dollars a barrel.

And its position has been enhanced by the -- one of the unexpected consequences -- or at least for some, unexpected consequences -- of the Iraq war, the weakening of Iraq as a regional actor. And the result, I would say, is that Iran is now an imperial power -- imperial, not imperialist, but imperial in the sense that it seeks to project its power and seeks to shape a region to its liking. And I think that is simply a fact of life.

And virtually everything one could discuss about the greater Middle East, whether it's Iraq, whether it's the future of Afghanistan, whether it's Lebanon, whether it's Syria, whether it's the Israeli-Palestinian equation, whether it's domestic stability in various Middle Eastern countries, whether it's the energy equation -- I can't think of anything now that one discusses about the greater Middle East that does not have an Iranian dimension. And that explains why it is we are doing what we are doing today.

As you may have seen from the program, we have three sessions. The first will be on essentially looking at Iraq (sic) inside out, from the inside, to look at the question of its domestic politics. The second session will be on the nuclear dimension of the challenge posed by Iran. And the third session will be really from the outside in, from the point of view of the United States, and look at the question of U.S. policy across the board towards Iran, emphasizing the policy choices facing the next president, who will take office in approximately -- not even half a year now, less than half a year.

This event today is part of a larger set of projects the Council on Foreign Relations is doing vis-a-vis Iran. We've got a lot of research going on, publications, meetings, website coverage, what have you. Three of our fellows -- Gary Samore, who in his spare time runs the studies program here, Ray Takeyh and Vali Nasr -- all work considerably on Iran. Gary himself is doing a book on how to think about the nuclear challenge, letting -- setting forth the basic options.

This -- the question of Iran also figures prominently in a joint study being done by fellows from the Council on Foreign Relations and councils at the Saban Center at Brookings. That'll be coming out during the transition, meant to inform the thinking of the new administration.

Before we get started, let me just thank the Carnegie Corporation of New York, as opposed to the Carnegie Corporation of Des Moines or St. Louis, but the Carnegie Corporation of New York, led by Vartan Gregorian, for their support of what we're doing here today.

Lee Cullum has graciously -- and, I guarantee, ably -- agreed to head up this first session. We'll then have a short break, then the second session; short break, the third session and, I believe, lunch. Is that the scenario? I will be back for the third session, which I will help lead, over the question of what the United States should do about it.

But again Lee, thank you for doing this. And thank you all for your interest in being here today.

Let me say one last thing. This is also the beginning of our most busy month of the year, with the special session of the U.N. General Assembly, and we look forward to seeing you early and often, as they say about voting in Illinois. We look forward to seeing you early and often for the rest of what I think will be an extraordinary and important month here, given the meetings that will take place in New York against the backdrop of the next two months leading up to the vote in the United States in early November.

Lee.

LEE CULLUM: Thank you very much, Richard. And I certainly feel very proud -- I know we all do -- that you're just back from Denver and from Minneapolis and St. Paul, and proud of the hand that the -- the large hand that the council took in adding a foreign policy dimension to both those gatherings. And thank you, too, for all you do to make the council a vital forum that is more necessary than ever.

In this first session, we are going to be looking inside the politics of Iran, which I discover is far livelier and contentious and more fraught with bitterness than some of us might suppose. I think our two panelists will attest to that.

We have two excellent guides to this journey to the inside of politics in Iran. We have Ali Ansari, of the University of St. Andrews in Scotland, and we have Farideh Farhi, who's with the University of Hawaii. Both of them were from Iran. Actually, Ali Asari was born in Rome. His father was a diplomat. And he has traveled often to Iran, but no longer has family there. Farideh Farhi grew up in Iran. Both of them are in the academy. Both of them write extensively about Iran. Both of them are close to reformists in Iran.

And they have both stopped going there. Ali Ansari has not been there since 2005, the election of Ahmadinejad. Before that, as a student, he was able to roam around freely and talk to whomever he pleased, but that came to an end. So he says now they come to him. The Iranians enjoy going to Scotland. And maybe they play a little golf and brace up to go home again.

Farideh Farhi has not been back for two years, and that's for this reason: She takes a great interest in women's issues. She reported, in fact, in February of this year that a very fine women's magazine, Zanan, has been shut down. Its license has been revoked and nothing has been done to rev it up again. She got involved in a demonstration for women's rights and was detained. She says it was entirely her fault; a policeman told her to move and she didn't move, and that was that. And so she was detained for five days.

And she doesn't want to talk about this. Somebody -- she doesn't know who -- intervened and got her out, and that was very lucky. Three or four months later, she could have been in the position of some other Iranian-Americans whom we know about who fared -- fared much worse and really very badly.

But it's -- they both write extensively, as I said; fascinating book titles. Her title is "States and Urban-Based Revolutions," both Iran and Nicaragua, a fascinating juxtaposition -- an unexpected juxtaposition of nations. And Ali Ansari's latest book is "Confronting Iran: The Failure of American Foreign Policy and the Seeds of Mistrust." Both are skeptical, I think, about the position of Washington vis-a-vis Iran.

But both of you also have noticed in articles over the last couple of years -- have noted that a year and a half ago, Khamenei -- Ayatollah Khamenei, the religious leader -- rebuked President Ahmadinejad. He seemed to be siding with those who were really very worried that Ahmadinejad was taking a cavalier view of the sanctions and they, in fact, were harming the nation. But more recently, the religious leader is speaking nicely of Ahmadinejad, as Ahmadinejad is quick to point out at every opportunity.

So, Farhi, what's going on? Why this shifting back and forth on the part of the supreme religious leader?

FARIDEH FARHI: I'm not exactly sure that it's a total shift. Khamenei, as the religious leader of Iran, has consistently throughout his career -- and he said so in his last speech talking to government officials -- he has consistently supported the executive branch. But in this particular speech, he said that I have consistently supported the executive branch but this government has characteristics that makes me have warmer feelings towards this government. And these characteristics were that the government works very hard, it is a government that is true to the ideological foundations of the Islamic Republic, and it's a government that is people-oriented. He actually laid out very -- it's a very interesting speech, actually. He lays out very concretely and really methodically why he supports the government.

And then he goes on and says, but I have to criticize the government for a variety of reasons. And his criticisms are actually not very different from the kind of criticisms that exist the government in the society, that Ahmadinejad's government has not been true -- very true to laws; in fact, there was a major conflict with the parliament where Ahmadinejad tried not to implement the laws that have been passed in the parliament. He was also very -- also warned Ahmadinejad against going to the provinces and essentially promises the world to everybody that comes around, essentially saying it's extremely important not to do that. And then a whole litany of other stuff; you know, concerns about inflation.

So I would make an argument that he has tried very hard, in a sense, to maintain his public persona, that he is a rational mediator in Iranian conflicts. They're interested in critical commentary against the executive branch, but not a destructive approach.

Now, the interesting -- (inaudible) -- is that once he speaks then you have all these other groups inside Iran, whether they come from the reformist, centrist or conservatives, who actually try to inculcate what he has said. And, of course, the conservatives say -- Ahmadinejad's folks say -- that of course this means he fully supportive of Ahmadinejad. And, of course, the reformists take the argument that he has been critical.

I would argue that's part and parcel of the Iranian competitive process, where it's important in the upcoming presidential election -- the sense, everybody wants to know who really Khamenei supports? And therefore, everybody is banking on this (part ?) of the argument. And he has always played that role, or tried to play that role as much as possible (to balance things out ?).

CULLUM: I want to add something about Ali Ansari. He is a fellow in Middle East studies at Chatham House. We're not following the Chatham House rules today, however. This is completely (off ?) the record.

I want to come back to Khatami. You said something quite interesting in a lecture that I watched online. (You're ?) a very good lecturer, incidentally, with a very subtle mind. And I want to add about Farideh Farhi, I found reading her things that she had those in for great clarity, which isn't always the case. Some are desperate to be not understood and she is -- great clarity, which I appreciated very much.

But you said about the religious leader that he has heretofore preferred to operate in the shadows. And now all of a sudden he's coming out and exposing himself to more attention. He loves to have people curry his favor, vie for his favor, and he wants this all in the open instead of in the shadows. What's going on?

ALI ANSARI: I don't necessarily think that he wants it to be in the open, but I think inevitably that's the trend that's going on. I think there's two quite important changes or two important points that I think we ought to bear in mind. One is that, to my mind, as much as Khamenei would like to present a perception of himself as a mediator or a balancer of different forces, he's made it very clear, I think certainly over the last 10 years even during the reform administration of Mr. Khatami and then subsequently, where his ideological leanings lie. And I think his ideological leanings are very firmly and squarely with the Ahmadinejad -- what they would call their principalist camp. I mean they define this in a rather broad sense, but nonetheless I think his ideological leanings are there. And it's quite clear that even during the Khatami administration he did intervene quite effectively actually, I think, in the program. I mean, it was quite unheard of, actually, for a leader to be so active in the day-to-day running of the government or in politics.

And I think that's emblematic of another very significant change, which actually has its roots in the period of the Khatami administration. And that is really the exponential growth of the leadership's office. And one of the things I think we need to perhaps (understand ?) is not to see Khamenei as an individual but really as the sort of the symbol of the leader's office, which is really quite a huge operation.

CULLUM: And by the leader you mean the religious leader?

ANSARI: Yes, the supreme leader, Khamenei. And Khamenei himself has never to my mind been really what you would call a decisive or strong personality. I think he's always lived under the shadow of Khomeini. I think he's found himself struggling in some ways to maintain a balance of forces within the country, some of which are more hard line than he is.

But nonetheless, he's shifted very much into that more hawkish view. And what you see is the growth of this shadow government or this revolutionary government as opposed to the orthodox republican organs of government, and they've started essentially to take over. There's nothing clearer to my mind in this process than the budgets that Mr. Ahmadinejad has had. If you look at some of the earlier budgets he put forward when they were shifting the bulk of the country, Ahmadinejad came into office really on a platform of welfare and redistributing wealth and putting oil money on the tables of the people and so on and so forth.

But actually if you look at the details, at the facts on the ground, the budget for the welfare organization in Iran -- (and respected ?) by the way of the fact that subsidies have increased because of oil revenues and others, but the budget for the welfare organization I think increased by something like 3.2 percent, something rather minimal, something quite inconsequential. But then the budget for a host of religious foundations, which I should say are completely unaccountable and not transparent at all in the shift in resources, increased by about 100 (percent) or 120 percent. Now when you have that shift in financial wealth into organizations that frankly have no means of basically being accountable to even the parliament for that matter, it shows where the balance of power is going.

And the balance of power is essentially going into the leadership's office. And the leader is, to my mind, now taking on the role -- it's the cycle of hypocrisy in Iran, sadly. But the leader is now taking on the role essentially of a monarch. And the monarch basically now has official (run ?) and Ahmadinejad -- he's not a terribly well-behaved child it has to be said, but nonetheless he is someone who is essentially now the prime minister in all but name. And other people occasionally, perhaps Larijani, occasionally other people will take the role of foreign minister.

That is the idea. I mean, I think that is the trend. I'm not entirely certain that people will be happy with that development taking place, but you can see the day-to-day interference that the leadership's office is having in the running of affairs is far in excess in actual fact of what arguably Khomeini originally had envisioned.

And Khomeini's rather sort of amorphous or ambiguous notion of what the leader should be was somewhat like a moral guardian (who came ?) from afar and made judgments now and then and occasionally made critical comments, occasionally supporting. But the day-to-day running of government was meant to be left to the republic, to the elements of the republican administration. And I think the last great attempt to settle this happened under Khatami and that failed. And because it failed and shifted the resources into the sort of (revolutionary ?) -- that to my mind is the sort of crisis of republicanism if you can put it that way in Iran today.

CULLUM: Well you have virtually said that the republic, the Islamic Republic, may be over, that Khamenei arranged to have himself presented as the son of the prophet,(much like ?) Ali, the son-in-law of the prophet, and that, in fact, his own son may succeed him.

ANSARI: What I argued in a recent article was that the way things are going one could effectively say, certainly if we were to look at the recent elections (and I put those in inverted comments ?) what has occurred in Iran -- the republican experiment, I said, had been suspended. And basically those elements of competition had moved from the more formal exercise into perhaps yes, the contest of the elites behind the background in the little bit of, sort of, competition. But actually what was being presented to the public -- and I think if you talk to the public today in Iran they'll say that actually what's being presented to us is a bit of a theater. It's not really anything remotely (effective ?) even by Iranian standards.

And what you do see among some of the more ideologically hard line elements within Iran -- I mean I remember very vividly sitting in Iran watching a public information broadcast that was then broadcast by the then head of television Mr. Larijani, in which they spliced together clips from the film "The Message," which was the film about the life of the prophet, with scenes from the revolution. And the implication was a very explicit implication, and arguably a blasphemous implication I should add, that the Islamic revolution was analogous to the rise of Islam and the prophetic mission of the prophet Mohammed. And then, of course, what they would do -- what they do in Iran is they throw out these suggestions to see what the public reaction will be.

And there was a moment when they started to talk of Khamenei, who's first name is Ali, as the Ali of the age. Now, it's very, very important to realize -- CULLUM: Ali being the son-in-law of the prophet.

ANSARI: -- the son-in-law of the prophet. But in Shi'a Islam you have to bear in mind that Ali holds almost a -- almost a -- a quite unique position in sort of Shi'a theology. I mean he's the gateway of knowledge. He's seen as really the only true sort of -- Ali and his successors -- (inaudible) -- means to know the unknown, to know God effectively as (successor ?) to the prophet.

Now to call Khamenei the Ali of the age, and if you look at the motif being used in Iran, it's almost like saying essentially he has surpassed the founder of the revolution. He is a bigger figure, in some ways, and that what you have is essentially the potential for hereditary succession. These elements are talked about. I agree that, in a sense, this is an incredibly bold, I think, agenda. I don't think it will be something that necessarily many of the other elites in the Islamic Republic will be happy with. But it exists. I mean, the fact is these views exist and they have tried them. So, I think these elements -- I think we have to bear in mind that the domestic political discussion in Iran is moving in a particular direction which is unhelpful, to use a very understated British term, unhelpful to the democratizing process in Iran.

CULLUM: Farideh Farhi, you wrote right after the elections to parliament on March 14 of this year that the question was not whether the reformists versus the conservatives were going to dominate the discussion in parliament. That had been settled, the election was rigged before anybody went to the polls, in favor of the conservatives. Only 30 reformists were allowed to run for office and they won easily, but there weren't very many of them. You said the question was will these conservatives in parliament stand up to Ahmadinejad? Have they done it? I mean, they tried with those caretakers running the economy and transportation and interior, but how has it proceeded since then?

FARHI: Well the parliament, first of all, has been in summer recess so it has just come back and we shall see what will happen. The point I want to make is that first of all the Iranian political system has never been a democratic political system. I mean, the notion of a republic should never be understood within the context of Iran as a democratic political system. It has always been a system based on a game of elite competition. It is a very contested political environment. And while it may be true that the reformists have been pushed out of the circles of political power at this time, the center of competition has moved inside the principalist camp, the conservative camp.

CULLUM: Who are the principalists? What do we mean by principalists?

FARHI: Essentially, the conservatives in Iran. They have re-named themselves because the reformists have a name, they are also a camp, and they are called reformists. Since then, they have come up with this name, essentially principalists, believers in the principles of the revolution. And this is actually a very (rowdy bunch ?). It is constituted of many wings, at least three of them very prominent, but they are also -- principalists are also very factionalized, so they go beyond the three wings.

And since the parliamentary election it has become clear, especially through the process of when Ahmadinejad tried to nominate new cabinet ministers for economy, interior and transportation, there was tremendous resistance in this parliament that is controlled by conservatives. And ultimately he was forced to abandon the nomination of two of his candidates and introduce two new ones for the all- important ministries of economy and interior, and face an open rebellion on the part of his own main supporters. Ahmadinejad's main supporters are called (sweet sense of service ?) in Iran.

CULLUM: (Sweet sense of service ?).

FARHI: And the reason for that name comes from a sentence used by Mr. Khamenei that talks about this new administration and the sweet sense -- and calling it an administration that essentially is interested only in service. So he faced an open rebellion on the part of his own main supporters in the parliament and was able to pass through the compromise candidate through the support of the reformists as well as what is called the traditional conservatives in Iran. Now the traditional conservatives --

CULLUM: Is this Ali Kordan.

FARHI: Ali Kordan, this is the nominee for the interior ministry and the interior ministry is an extremely important ministry in Iran because it runs the election. And he's obviously a candidate that is close to both Larijani the head of the -- the speaker of the parliament, but also close, he was a member of Rafsanjani's administration. So the hard line conservatives who support Ahmadinejad gave these incredible speeches effectively saying that this guy has -- his degrees are fake and he has been accused of all --

CULLUM: He said he went to Oxford, is that --

ANSARI: He said he got an honorary doctorate from Oxford.

FARHI: Exactly. And so they made a fool out of this guy in public. But nevertheless the parliament went ahead, and after all these revelations, approved him despite this open rebellion. So, the point I was trying to make is indeed that despite the fact that the focus of competition has moved among the conservatives, the Iranian political system remains an extremely contested political system, extremely fractious political system. And that is why I'm a little bit more skeptical than Ali is in terms of the direction of the country and in terms of the possibility that one person or his clique, no matter how dominant they are, can bring order in this very, very fractious and unruly political environment.

CULLUM: Well now Farideh Farhi you mentioned Larijani. He's now speaker of the parliament. He was the nuclear negotiator but resigned, miffed somewhat with Ahmadinejad. But he was running Iranian television and it was he who said that Khomeini was the Ali of the age. Is he running for president next year, Larijani?

FARHI: It's not clear. I doubt it. I doubt that -- I think he's placed in a good position and I simply -- he has to make an assessment whether or not he has gained the national prominence that would allow him to go beyond how well he did or how badly he did actually in the last election. Remember in the last election Larijani ran and in the first round he only received one million votes, in comparison to the much larger vote for Rafsanjani and others. Effectively he came out last or almost next to last because he doesn't have national prominence.

Now, his portfolio as Iran's chief nuclear negotiator and now the head of the -- the speaker of the parliament, might give him some national coverage. But my sense of him is that he's essentially a rather lethargic figure. He is a kind of person that thinks he's entitled, so he wants the country to come to him and essentially say, you know, we're in big trouble and please save us. And Iran is just simply not that kind of an environment. They are a people that, you know, obviously Ahmadinejad is very interested in running the presidency, others are as well. There's going to be a heated competition, a limited heated competition, and Iran is simply not that kind of a country where a politician can come and approach this very ruckus political environment in a very, as I suggested, lethargic way.

CULLUM: Sort of a Eugene McCarthy --

FARHI: Exactly.

CULLUM: -- of the moment. Ali Ansari, Karroubi is the only announced candidate. He ran third, as I recall, in 2005, beat by Ahmadinejad. What kind of chance does he have? He was an adviser to the spiritual leader, the religious leader.

ANSARI: I don't think he does. I mean, I don't think he has much chance at all partly because he's seen as far too much on the fringes, he's far too much of a maverick. I mean I know that's a very popular thing here these days, but I don't think that -- you know there are groups of very good people in Iran, I have to say, who could do a lot of very interesting things. But the fact is they're not being allowed to participate in that way.

And I do think that as fractious as this thing's become, and Iran is of course a fractious society, but it's in fractious societies that dictatorships arise. I mean this is -- it's the exploitation of that fractiousness, I think, that allows autocracy to flourish. And I think the historical record in Iran sadly proves that all too often, and in particular when the oil prices are high.

I mean one of the things I do want to raise, and I think it's very important to show the situation which we're in -- I mean, Farideh made the point, in particular about Mr. Kordan. I think this degree that he had, just to give you an indication of how absurd I think sometimes these discussions take, he bragged that he had an honorary doctorate of law from the University of Oxford. When this rather simple point could be checked out -- (inaudible) -- we all laughed about this because -- (inaudible) -- University of Oxford handing out, selling its degrees, but this degree, when he was caught out, this was not sufficient to get him to withdraw this rather ludicrous allegation.

In fact not only that, he was so convinced that he had an honorary degree that he put the certificate out on the web. I mean, the certificate was there. And this certificate is so badly misspelled, I mean it's -- it does, I have to say, beggar belief that first of all someone could have -- and he drew a salary based on the Ph.D. apparently from a number of different ministries. But when this was exposed, in any sensible environment he would just be thrown out. I mean this was just nonsense. And yet, he was still ratified. I mean he was still ratified (in place ?).

Now this, I think, is an indication of where one of the problems in Iran today, and there are parallels in the pre-revolutionary period of course, is that it's no longer any hint or suggestion of merit, it's a question of loyalty. If you're loyal to the system and loyal to the leader, and people are competing for the leader's favor, that's what gets you ahead. And that's it.

And one of the things that is joked about in Iran, privately, is the level of hand kissing that goes on. And one of the things that Mr. Khamenei has re-introduced into the political spectrum is the fact that people have to kiss his hand on a very regular basis. Now if you go back and look at Mr. Rafsanjani or Mr. Khatami, they did not do this. Mr. Ahmadinejad does this with abundant zeal. Now it's symbolic. One can be cynical about it, of course, but the fact is that an element of deference is returning to the political system which we probably have not seen since the 1970s.

And I think, you know, that again all the indications are of a process that's moving in a direction which -- I agree with Farideh. I don't think Iran has been democratic. I don't think anyone would call it democratic. But I think there were some fairly promising signs of a process of democratization taking place.

And, as I say, my optimism I suppose lies in the fact that (I say ?) it's been suspended. I don't think these things can be erased all together. I mean, this is absurd. But nonetheless we have to also, I think, call a spade a spade. The fact is that Mr. Ahmadinejad has run an appalling government, an appalling government.

In Iran today there are power cuts every day in the capitol. There's water rationing. Mr. Rafsanjani made this point himself. You know, he comes out and he says it is absurd in a country with this sort of oil revenue that we have to ration our petrol and we have to have power cuts in the worst part of the day, mid-afternoon, where everything shuts down. This is not a very efficient way to run a modern economy. And why can't we provide ourselves with (power ?)?

Now, he's run an appalling economy. We have no real idea where the money is going. We have some idea but it's not as (transparent as it should be ?). And yet somehow he continues to survive.

And to add to this Mr. Khamenei then adds in that he should prepare for another four years. Now, to my mind that is a classic indication of a system that is in a sense folding in on itself. I mean, economically it's the weak point, these are the weak points, and he is basically running a very poor economy and I think we should be awake to it, that this is the reality.

I know Iran's projection to the world, and I think Richard Haass made a very good point about Iran's imperial position, but Iran's imperial -- Iran, as I've argued elsewhere, has always had an imperial mentality, it's just that it's rediscovered it since 2003 with the opportunities that's been afforded to it. But the fact is these opportunities have been afforded to it by someone else, basically the United States.

And internally, it is not as strong as it thinks it is, but it's amazing what oil at $130 a barrel can make you think. It cushions a lot of the blows. It disguises a lot of the frictions. And for me, Iran today looks nothing like so much as Iran in the 1970s. There are differences, clearly, but there's an abundance of money, there's an abundance of corruption, and there is an abundance of wishful thinking.

CULLUM: Two follow-ups. When you say kiss his hand, you mean that literally.

ANSARI: Yeah.

CULLUM: You're not being metaphorical.

I gather that you think that Ahmadinejad might not be reelected, but reappointed president.

ANSARI: Well, you know, when we say "reelected," it's a bit of a misplaced term, isn't it, really, in Iran today. I mean, nobody's being elected.

I think basically they're restricting the chance -- I mean, I remember very vividly a meeting that was held with Iranians both inside and outside the country. We had this conference, and it was after the 2004 parliamentary elections, where 3,000 or a number of candidates were vetted and not allowed to run. And someone, a colleague of mine from France, made a very good point, and she said the problem with this election is it's not even fair by Iranian standards. (Laughter.) And that was a good point.

And of course, you know, a succession of governments in Iran, really, for the last 200 years, I have to say, convinced themselves that the Iranian public is stupid and don't see this happening. Of course they see this happening. Of course they see that they're being -- you know, this is a farce. And I think in 2004, 2005, I think there was a slight hiatus in 2006 of the Assembly of Experts, but then they quickly clamped down on that in the municipal elections; they decided they didn't want to revisit that one. And then we go back to very, very rigorously controlled elections.

It's a little bit, you know, like the (radical Peace Party ?), of course, in the '70s -- you maintain a contest, but it's very, very tightly controlled. You know where the debates are happening, you don't let it get out of hand. And you know, even now they're saying that the reformists as a group are being really categorized as a religious minority in the Majlis, where they're entitled to 30 seats and that's it, and you know, they won't be allowed to have a position of power anymore. And I think, you know, this will tend to suffocate, obviously, the level of real debate going on in the country.

CULLUM: Farideh Farhi, Rafsanjani is a former president. He ran for president in 2005 and lost to Ahmadinejad, but then last year came in first in the election for the assembly, which is a group that advises the spiritual leader. What's going on with him now? Can we expect more from him?

FARHI: Actually, he came first for the Assembly of Experts.

CULLUM: Yes.

FARHI: It's not an advisory group; that is a group that presumably decides whether or not to reappoint/get rid of religious -- the supreme leader. So it's a -- for the first time in the history of the Islamic Republic, there was actually a competition for the leadership of that body. That body has always been -- effectively the leader of it has always been selected by acclamation, but in this particular election the conservatives made a point to prevent Mr. Rafsanjani from becoming the head of that assembly, and he won in a split vote. It was a close vote, actually, but he won.

He also has this other position, this advisory position, as the head of the Expediency Council and has tried to actually intercede in the latest -- (inaudible) -- process in order to prevent some of Ahmadinejad's economic policies. But constitutionally, that's an illegal act, and there has been a pushback not only by the parliament, but also from other sectors of the society because they understand that the Expediency Council is not an executive entity, it's supposed to be an advisory body.

And obviously he has turned into, Mr. Rafsanjani, as a very, very important critic and a critical person in relationship to Ahmadinejad's policies.

Now, to me, I see Iran is in a very interesting situation because economically, although there are major differences in the pre- revolutionary period, but there are a couple of very interesting similarities. One is the fact that Iran is going through -- I mean, in 1970s you also had an oil boom that led to tremendous inflationary pressures, and in fact it was shah went through a very, very important anti-profiteering campaign that antagonized the Barzadi (ph) classes because of that inflationary pressure.

And secondly, Iran was also going through these very, very, I mean, long periods of blackouts, no electricity. And in fact, the population was very unhappy because of that. You know, the kind of boom that has been generated by the oil money was not translating into -- in fact, it was making life more difficult in terms of inflationary pressures on everyday life. Well, the end result was a revolution. Ultimately, a lot of other factors involved.

It would be very interesting to see whether or not the kind of incompetence that Ahmadinejad has exhibited will actually lead to an electoral change. And if indeed it does, I think it's a major change in Iranian politics, where people's dissatisfaction is expressed through electoral politics.

So I would ask Ali, actually, whether or not, when he talks about the next election being an appointed election, whether or not he's confident that Ahmadinejad will be elected in the next election. Is it something that is assured at this time? Or -- because, you know, the point I'm trying to make is that while it is true that another principalist, another conservative, may be the alternative and not a reformist, okay, there is no doubt that the other candidate, whoever that is -- whether it is Ghalibaf or, from my point of view not likely, but Larijani -- they would be running on a platform of competence: this government, it is a good ideological government, but it's an incompetent government. And you know, someone like Ghalibaf, who is a popular mayor relatively and people sort of think he's run Tehran very well, will have an important say in pushing that argument. And you know, does Mr. Khamenei have his faith in only backing Ahmadinejad, or he would be, you know, quite happy if any conservative gets elected, and therefore will take a hands-off approach? If he thinks one of the conservatives have a higher chance or have a, you know, a better possibility in doing a better job in running the economy.

CULLUM: Well, now, Ahmadinejad has kept interest rates quite low, as I understand it. Is that right?

FARHI: He brought the interest rates down --

ANSARI: Twice.

FARHI: -- twice, but there has been a pushback.

You know, one of the problems that Ahmadinejad has is that he does not have a unified government. His own ministers have been engaged in pushbacks. And at this point, his major economic confrontation is with the head of the central bank. And he has never been able to unify his economic policies because of resistance on the part of important players.

So he tried this year again to bring down the interest rates on the basis of the argument that if you bring down the interest rates, you generate a more growing economy, and therefore more employment. Obviously, the head of the central bank having seen the inflationary kick that has come into the Iranian economy, stood very strongly and there has been a pushback.

So last week, two of Ahmadinejad's appointees, the head of the central bank and the labor minister, were brought together to sort of try to figure out a common economic approach because Ahmadinejad is proposing a new economic plan that hopefully get rid of subsidies and translate them into direct cash subsidies.

And that is also facing tremendous amount of resistance because of inflation. So we have tried to bring the inflation -- the interest rates down. Some of the government banks are being forced to do so. The private banks have refused to do it, and there has also been a push-back on the part of his own government.

CULLUM: And inflation is worse than 20 percent. Is it 24?

FARHI: That's right, 24 percent.

CULLUM: And by subsidies, you mean subsidies for the price of gasoline.

FARHI: All sorts of subsidies, but that is a very big chunk of it.

CULLUM: Ali Ansari, I spoke with Vali Nasr last night, who will be on one of your panels later today. He was very generous with his time. And he said that the reformists really don't have a chance of winning next year in this June 2009 presidential election; that the best they can do is try to take sides among the conservatives and hope somehow to have some influence there. Would you say that's true?

ANSARI: I think that's probably fair. I mean, I wouldn't want to carry a torch for the reformists, in the sense that they themselves are also responsible or a huge amount of their own misfortune in the way they handled things, as a group, certainly. But the key point really is, is that -- are the elections for the presidency in 2009 -- I mean, how controlled are they going to be? And what are the choices?

For the Islamic Republic, in order to present itself as sort of a legitimate, sort of popular political process, you have to be able to excite the public to participate in these elections. And, you know, nobody that I know certainly believes the figures that were put out for the last parliamentary elections, I mean in terms of turnouts. You know, they're always edged above 50 percent in order to give you that sort of legitimacy.

But in order to do that, you have to convince the public that there are candidates that really would make a difference. And you know, certainly if the contest was going to be between Mr. Ahmadinejad and Mr. Larijani, which -- I mean, I agree with Farideh; I think Mr. Larijani is one of those people who would like, you know, people to come to him, really; I don't think he likes to sort of get up and go and hustle on the stumps himself -- then I think the choice for people really is fairly poor. I mean, I don't think they're particularly interested.

You know, one of the strategies, of course, of the principalists -- which, incidentally, I should point out that "principalist" is an Iranian translation of the word "fundamentalist," by the way. I mean, it's their way of turning the word around and making it positive, despite the best efforts of a number (us to tell us ?) that fundamentalism was not a term of endearment being thrown (up in ?) the West.

Unless they can sort of get some sort of broader choice in terms of who would be running, I don't think people are going to be particularly interested, because one of the tactics of the principalists, as I was trying to say, throughout their rise since 2003, when Ahmadinejad first turned up as mayor of Tehran, is really to depoliticize the public.

Now, there are nice, interesting parallels that can be drawn with other electoral systems, but basically what you do is you make sure -- you figure out that if there's a high turnout, you're going to lose this election, so what you do is you make sure there's a low turnout and you pull out your base.

And that's basically what the principalists did. They ensured there would be a low turnout, people would be disinterested in the political process because there's no change, and with a low turnout, nonetheless their own base would come in and vote.

And Ahmadinejad, you know, became mayor of Tehran with a 15- percent turnout. Nobody took any notice of it, really. And then subsequently, every other time there was successive disillusionment of the reformist base, for a variety of different reasons, but of course the principalists pulled out their own base, out in the rural areas and -- they do have a base, by the way. I mean, let's not get this -- let's not say that Ahmadinejad could not pull, say, 5 (million) or 6 million votes. I'm sure he could. But we're talking about an electorate of about 44 million. So in that, they are always in many ways in essence a minority.

What Ahmadinejad's role was over the last three years was to translate that -- that they wanted to put him in power and translate that unpopularity within the country, through a list of populist measures, into popularity. And in that role, he's failed. And the one test of that is, if they were that sure of their position, they should hold a -- I'll use the term very loosely, but relatively free and fair election.

They should allow him to compete with someone who comes from a diametrically ideologically different view, whatever, still believes in the Islamic republic -- we're not talking about anything dramatic here -- but you know, someone who's within the system, but holds different views. And they won't. I mean, he has not competed in an election of that nature.

CULLUM: I want to turn to questions from you, but I remember you made the point, Ali Ansari, that those parliamentary elections, which should have been held in May or June, were held around March 14th, because it was fairly close to the new year, and people would be traveling and reveling and not interested at all. I mean, it was like holding our election during the holidays in December.

But anyway, that's -- are there other -- let's pause and then -- and have questions from all of you. Yes?

QUESTIONER: Hi. Gary Sick from Columbia. Some -- several of your comments -- well, in fact, from both of you -- the fact that Iran is turning into something like a monarchial system, and it's looking more and more that way. And I definitely share that view. They don't want to admit it, but it's happening.

And secondly, that there are some real unfortunate aspects about the economy and the way it's being managed. There's some new evidence coming out that the shah's government actually was -- the resemblance, in fact, is eerie in the period -- from what is going on now, if you can figure Khamenei -- an emerging monarch, and the system, looking at it the way it would have been under the shah, there's a remarkable similarity. And I wonder if either of you would like to speculate about -- is -- not that we're about to have a revolution, because I really don't think we are, but what does that mean in terms of the system, in terms of legitimacy, in terms of its length of -- its ability to survive over a more substantial period of time? And what is -- how that plays out internally both in terms of who gets elected and where the system goes from there.sa

FARHI: I do not think Iran is in a revolutionary situation. As I said before, the reality is that first of all the context is not there, and the context that existed prior to the revolution was essentially the giving up and development of a network of opposition, organizational -- an organizational structure that allowed mobilization. And one could never underestimate the organizational structure that the mosques created in Iran and of course worked hand in hand with an ideological preparation that had occurred in terms of arguments against the injustices of the shah's system, as well as his close connection to the United States.

At the same time, what you see in Iran is tremendous amounts of dissatisfaction about the way the government is being run. And the next election, I think, in fact is a very, very good test of how the Iranian system, which has shown itself to be quite flexible when it's faced with crisis, in dealing with this kind of situation -- whether or not it will go in a direction that continues the pattern as is and risks the possibility of not popular dissatisfaction but elite rebellion in Iran. You know, that's the dynamic that Khamenei has to deal with.

Khamenei doesn't worry about what the population will do. It has it under control.

But he has to worry about the fact that he's head of -- the person who heads the supervisory body of his office, Betsda Nokakemori (ph), is saying this government is lousy, you know. (Chuckles.) I mean, he comes out and says it in public. So he has to worry about these stellar characters, that they exist in the Iranian political system.

So the question is whether he's going to completely ignore that and allow this fractious course to continue, or pull weight and try to convince Ahmadinejad to operate in a different way, as it was done using the past decision to push -- (inaudible) -- or change the economy minister. This was people pulling their weight and essentially saying you cannot do what you have been doing; you have to change the way you have been approaching the economy, as well as the way you have approached other branches of the government, or allow for some sort of a competition that would bring the possibility of change.

The next election, you will have reformists running in this election, okay? But because these reformists are unable to come up with a unified candidate, they will not win. That is the dynamic of Iranian politics, unless somehow Mr. Khatami is convinced to run. And there is a possibility that he might do well in this election, but he will not do it unless he gets assurances from Mr. Khamenei that this will be an election that would allow him to win if the population comes in to vote for him.

So at this point, I would make an argument that Iran is not in a revolutionary situation, but Mr. Khamenei is also faced with very, very serious questions. And unlike the monarchic situation of the past, those choices will have -- are consequential in terms of his role in the society. If he pushes too far, he undermines his own credibility. And that is not a dynamic that existed in the pre- revolutionary period.

CULLUM: Let's get a couple -- let's have three questions. Then here, here, there, and then back to you.

Go ahead.

QUESTIONER: Thank you. Vali Nasr for the council. First of all, thank you for a very, very -- CULLUM: And thank you for being so kind last night.

QUESTIONER: -- for a very rich discussion.

I find this comparison with the shah's period sometimes jarring. I think there's major differences. First of all, I don't think the shah's government was ever this incompetent. (Laughter.) I mean, within a year after the -- talking about the economy, within a year after the revolution, there were 350 Iranian economic managers at the World Bank and IMF, literally running the central banks from Aruba to Jamaica and onwards.

Secondly, on the other hand, you never had this degree of open rancor in the press ever under the shah -- you know, the president of the country would be criticized, would be called incompetent publicly.

But the bigger issue is that, you know, when we talk -- compared to the shah's period, it always create an expectation that there can be a revolution in Iran, and that somehow the boom and bust of oil or mismanagement would lead to a change.

It's maybe better to look at Iran in the context of the region today. You're in a region in which authoritarianism simply doesn't fall apart unless the United States military shows up in a country and pulls it down. I mean, if Egypt can survive food shortages, if Egypt can survive all kinds of pressures and there is no end to the Mubarak regime, no end to the Saudi regime, no end to the Syrian regime, why should there be in some ways expectation that this regime will not, in fact, weather all of these? And in fact -- and you know, in some some ways, maybe, you know, you look at Russia. It's -- I mean, Putin's becoming a czar; why wouldn't -- and very successfully.

I mean, we can think of, you know, Khamenei actually looking a lot more like that.

And I want to actually push both of you on an aspect of the Iranian regime we didn't talk about, which is much more similar to the countries around, which is the security apparatus and the role that the Revolutionary Guard in the economy, society, play. And in fact, coming next elections, what is their stake in this game in terms of issues you raised. Do they care about competence? Do they care about -- you know, do they see national security requiring a stable economy, and therefore would they support a more competent conservative? I'd appreciate some of those comments.

CULLUM: Let's see. Let's get a few more questions and then -- yes, right here and then back there. Four. One, two, right here.

QUESTIONER: Hi. Bob Lifton. This is an exact follow-up to the point that was just being made. And the analogy I would use is China. What it sounds like is the same kind of thing that goes on in China. The party controls the country, and then you can argue that within the party there are arguments and fights and struggles for power, but in the end the party controls the country, and here the religious authorities control the country, and then we can talk about what goes on inside.

In China we've given up on the idea that there's going to be a revolution, but somehow in Iran we keep fooling ourselves into believing -- this is the very point that was just made -- into believing that something's going to change and that we can help create that change. And it seems to me that that's a possibility that doesn't really exist. And it goes back to who really controls the levers of power in the country.

CULLUM: Right here, and then back there. Thank you.

QUESTIONER: My question is a follow-on to that question, which was a follow-on to the previous position. And the link I would raise is, right down in our Southern Hemisphere, with Mr. Chavez, Mr. Ahmadinejad's wonderful partner, has a similar approach, it seems to me, than the combination of Khamenei and Ahmadinejad have. And the question I've got, having just witnessed firsthand a little bit about what Mr. Chavez does to make sure that he doesn't have too much in the way of attack or dissent, is the continual presence of gross intimidation at the level of either speaking incorrectly and being thrown into jail, or losing your job or losing your opportunity -- and the Revolutionary guard is always there. The women know what they can and can't do in terms of getting beaten with a stick if they show an ankle. How is that security working to prevent real dissent? Are the numbers of people being sent into the equivalent of the salt mines going up? What's going n in that particular area to make sure that there is no real dissent and no real reform?

CULLUM: And right back -- right back there, and then we'll turn back to the panel.

QUESTIONER: Herbert Levin. If you can answer all these questions, I have even more admiration for you.

CULLUM: It's a psychological test.

QUESTIONER: Really.

CULLUM: (Off mike.)

QUESTIONER: This actually goes back to the first one. Some of us are told that the foundations really are a means for the ayatollahs to support their families. These are not monks; they have big families. And you stumble over all these chic Iranians in Paris, and they are supported by these foundations.

And this is the way the ayatollahs also have something in the bank in case there's another change in Iran and they have to go abroad temporarily, as they have done before. And that this is part of the paranoia of the regime. I just jotted down -- the Russians took part of Azerbaijan, and the Arabs are always at it, and they're not trusted, and the U.S. and the U.K. want to put the shah back, and the Kurds, and the Baha'i, the Parsis, the Israeli Jewish spies -- you know, they're paranoid about all of these internal and external threats. And putting the money in Paris and being paranoid about everything else is really what drives them, not Persian imperialism, that they're going to go back to the Bhosporous or something. So this can be completely wrong -- (laughter) -- and I'd appreciate if you'd tell us about it.

CULLUM: Okay, Ali Anwar, is the regime here to stay based on paranoia?

ANSARI: Can I make -- I'm going to try and make a --

CULLUM: And is it like China?

ANSARI: I'm going to be -- I'm going to try and be very brief, so forgive me if I -- (inaudible). First of all, I want to entirely agree, by the way, with all the parallels being drawn with the 1970s which are raised. I mean, I don't want to draw the parallels too far. In fact, the parallel in Iran is actually drawn with a constitutional revolution, not with -- (inaudible). And that analogy is in some ways probably better. That what you find, actually, is a failure of the democratic process, leading ultimately to an inertia in government, leading ultimately to a coup. So these are the arguments.

(Not that I'm saying that's necessarily going to happen ?), but, you know, you are simply trying to look at trends and the way things are going. So I would want to emphasize, particularly to an audience here in the United States, that anticipating a revolution is something I don't think people should be planning on. I don't think it's going to happen. And one of the major reasons for that, of course, is that the Iranians have very fond memories of the revolution they had, so they're not going to rush to go for another one. And that sort of -- that sort of experience has a very dampening effect.

Now, one of the things that Gary raised -- and I think it's really important to bear this in mind -- that in Iran, nationalism is the opium of the masses. And even more than the masses, it's the opium of the elites. And you can go to a diaspora and ask them, actually. I mean, nationalism is the way they circumvent this legitimacy crisis they have created for themselves.

And believe you me, there are many people in Iran within the system who are quite aware of the mess they've gotten themselves into. They're not stupid about this. You know, they know that they've gotten themselves into a bind. But what they do is they throw out, basically, very, very rampant vulgar nationalism to the people, and it's amazing how people lap this up. And the nuclear crisis is just one of them -- and it's done with aplomb, by the way. "And the Americans -- and we can attack the Americans and we can be rude about people and we can do this and we can stick it to the Bushes and we can do" -- and it all looks very good, and everyone laps it up and everyone enjoys it.

And in that sense, the Islamic Republic, I have to tell you, has done a far better job at this than the shah ever did. Far better. They're far better at this. They use many more motifs. They draw on mythological history, recent history. They're very anti-Arab, by the way, don't even pretend that they want Islamic harmony in the region. Okay, they want Islamic harmony under their own directorship. That's about as good as it gets. So, you know, these are things.

And I think this nationalism is something that you need to bear in mind from a policy point of view, in actual fact, because it's going to be extremely serious. And any successive political movement in Iran will have to pay attention to that. And, you know, Ahmadinejad has probably been the most nationalistic president since 1979. And I just remind you, when Putin came to Iran last October -- and I love this analogy -- that they actually built a papier-mache freeze of Persepolis as the press conference -- (inaudible). So when Putin came marching in, there were Achaemenid soldiers behind him.

Now, you have to bear in mind that, you know, this motif was so negative after the fall of the shah that -- for the Islamic Republic and Ahmadinejad to use it in order to present, you know, to the world this image of our great new empire and so on and so forth. So I think the -- you know, one of the things that the Islamic Republic is quite good at and the establishment there is actually very good at seeing in front of their -- you know, right under their noses. They're very good tacticians. They're not terribly good strategic thinkers. The shah could -- had great visions about things, but he couldn't see what all what was going on beneath his feet.

So I mean, this is the difference.

But I think, you know, their obsession with Velvet Revolutions, their obsession with, you know, all sorts of people coming up out of nowhere and causing trouble is an indication actually that there is an element of paranoia here, that there is a little fear, that they are more aware of their own history than perhaps we are. I mean that -- you know, that these things happen. Particularly when you are talking about the return of the Mahdi any day, you know, I mean, that -- it is one of the more absurd aspects of the Islamic Republic that they themselves have created the environment for the emergence of a charismatic revolutionary movement. I mean, it's quite absurd.

And I know that Mr. Ahmadinejad has tried dampen this down by saying actually that the Mahdi supports me, you know, so that's why -- you know.

Look, don't underestimate, by the way, the role of the Russians in all this. I'm sorry to say, but the Velvet Revolution thing and all this and the role of Russians -- I mean, there's a wonderful irony, which I won't go into, about Georgia at the moment, but you know, those were -- there are elements there that I think are very important -- the way Putin and the Russian business interests and other interests have got involved in Iran and the way that's tied in particularly with the IRGC and other elements. There's a huge trade going on there, and there's a huge business relationship -- all informal, all under the radar, but it's there.

And the IRGC, for those of you who have been talking about the security apparatus, I think they are interested in maintaining their interest -- and their vested interests. And for those of you who are familiar with -- well, I mean, it's the same with, I suppose, with the Syrians or with others. You know, they are basically the Janissaries of their age. They have business interest, and they want to maintain their business interest, and they're going to protect that and whoever gives them that deal. Yes, if someone can do it more efficiently, I'm sure they'll go for it. But actually, you know, that's where they're doing -- and Jafari, the head of the IRGC, when he made it very --

CULLUM: What is the IRGC?

ANSARI: The Islamic Revolutionary Guard Corps.

CULLUM: Thank you. All right. ANSARI: Which is, you know, the -- basically, the guardian of the -- coercive wing of the revolution.

I think -- the two quick points I'll make. One is about China, which is -- it's revisited so many times, actually, that I just -- it's -- one of the areas where I do a hundred percent agree with Farideh here is, Iran is just too inefficient, actually, to approach anything China would achieve, I mean, in terms of fractiousness.

But the other thing about China -- and I had a very interesting conversation with the Chinese ambassador to Iran, and he said that the Iranians always come to me and they say: We want to be the China of the Middle East. And he says: You haven't got a chance. And they said: Why? And they said: You haven't got a nuclear weapon -- although some people think they're working toward it -- you haven't got a seat on the Security Council, and above all, you don't have relations with the United States.

And it's an important point. You know, I mean, the fact is China, for all its vaunted -- you know, it's basically a semi-official capitalist country. I mean, you know, Iran is not -- (chuckles) -- I mean, it hasn't really approached it yet. And you know, I look forward to the day when Apple sends its iPhones to be made in Tehran, you know, but it's not going to happen in the near future.

So these sort of things are, you know, these -- I think these sort of analogies -- I think the Iranians like the China model because they think we can have economic development with no political responsibility. That's not, you know, the reality there. Sometimes they talk about the Japanese model, which, I'd point out for them, is even more worrying for them if they want to go down that route. But you know, they have these models, and I don't think they think them through.

I think in terms of suppression, by the way, and repression, what's interesting about Iran is that the tools of repression are not -- and you won't find it -- this is why people going to Iran always get two different countries. We see two different countries when we go. And that is, it's not the GDR. It's not a police state in that sense. What it is is an arbitrary state, if I can use it that way. And invariably the way in which that arbitrariness gets ameliorated is because you always know someone that can sort you out, and you play the game. So it's not a legal society in that sense.

A totalitarian state, which -- a lot of people talk about totalitarianism -- is completely inapplicable to Iran, by that -- for totalitarianism, you need industrialization, and you need some sort of legal system. Neither of these exist in Iran. So what you have in Iran, actually, is that sense, that fear created by the fact that you could be targeted, not that necessarily you would be. You could go in Iran and mind your own business, and nobody would bother you. But the fact is that that tool of coercion, that ability to suppress, is you pick -- you're very selective about who you pick. And everyone's always worried that they may be the next in line. But of course what happens is that you use all your informal networks. It's who you know that basically allows you to get -- nobody has a recourse to law in Iran. Everyone has a recourse to who you know and who you know who can bail you out of a particularly difficult situation. And that's what matters.

And that fundamentally is actually what's wrong with the country. But that's not an Islamic Republican problem; that's a problem that we've had for 150 years, at least.

But this -- these are the problems, that the modern -- Iran is attempting to be a modern state on a 19th century framework. That is our fundamental problem.

And a lot of the danger that we have is that the modern state has a lot of the tools of that modern state in terms of coercion, in terms of listening in to people and so on and so forth. But it doesn't actually have the aspect of civil society or the legal system to protect the citizen against those things. And so it's very arbitrary, and it becomes -- you know, it becomes a very inefficient way to effectively run the state.

I'm sorry it was so long, but I just wanted to get some of -- because I don't think it's a revolutionary situation, but I just -- I don't see it happening. But that constitutional revolutionary analogy is an interesting one. It's one that the Iranians mention a lot themselves.

CULLUM: Well, thank you so much. I think we're almost out of time.

Farideh Farhi, I should have mentioned, lived in Iran for most of the '90s, teaching at the University of Tehran. She hopes to return next year, after the election, so she has a measure of optimism.

Ali Ansari hasn't mentioned going back. I think he's less optimistic, perhaps, about next year.

It occurs to me that we have a party in this country that's gone from being principlist to reformist -- MR. : (Laughs.)

CULLUM: -- and the other party, I guess, might want to give up change and go for the sweet synthesis of perfect that --

MR. : (Laughs.)

CULLUM: -- both looking for the sweet smell of success.

So please be back in 15 minutes, and thank you very much. (Applause.)

.STX


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