Iran Defence and Security Report Q3 2009

There is still a confused picture over Iran’s nuclear status, thanks in part to a degree of sabre-rattling that went on with campaigning for the June presidential election. On May 20, the Guardian Council had approved four main candidates: incumbent Ahmadinejad, reformists Mir-Hossein Musavi and Mehdi Karroubi, and conservative Mohsen Rezai. On May 18, Supreme Leader Ali Hoseyni Khamenei warned against candidates who would capitulate to Iran’s ‘enemies’.

However, the campaign has led to some conciliatory statements by President Mahmoud Ahmadinejad who on May 25 said he would be willing to debate global security issues with US President Obama at the UN. Obama ‘supports tough and direct diplomacy with Iran without preconditions’ (according to the White House website), and his main foreign policy goal is make sure that the Islamic Republic is prevented from developing nuclear weapons. However, President Ahmadinejad said that he would not discuss the country’s nuclear programme outside the framework of International Atomic Energy Agency (IAEA). In Q109 the IAEA stated that Iran’s uranium would still require further enrichment if it were to be used to make a bomb. The IAEA has also stated that Iran has slowed down its centrifuge expansion programme for ‘political’ reasons. It is our long-held view that the nuclear stand-off will be settled peacefully, and with the Iranian economy set to weaken over the coming year, Tehran may conclude that the costs of international isolation outweigh the benefits of maintaining its nuclear ambitions.

Recent developments in Iran's domestic security include a suicide bombing on May 28 in Shi’ite mosque, in Zahedan, killing 25 people. Responsibility was claimed by the Baluchi Sunni Islamist Jundullah group.

Iranian authorities hanged three on May 30 for their involvement in the attack. Gunmen also opened fire on Ahmadinejad’s electoral campaign office in Zahedan on May 29 and a bomb was found on a flight from Ahvaz, southwest Iran, on May 30. There have also reportedly been Iranian air strikes and shelling in areas inside Iraqi Kurdistan.

The knock-on effects of relatively low global oil prices will be the principal driver of a slowdown in the Iranian economy this year; however, we have not revised down our economic growth forecasts for the country. This is despite the sharp deterioration to our outlook for the global economy over this period. We see real GDP growth falling to 2.4% in 2009/10 (note: Iranian years begin in March), down from an estimated 4.7% in 2008/09, and a confirmed 7.8% in 2007/08. We expect growth to pick up again in 2010/11 (to 3.7%) as oil prices slowly recover, and project average annual expansion of 3.6% over the course of the forecast period (2009/10 to 2013/14).

This quarter, we have introduced a significant new aspect to BMI's Defence Reports, which is the City Terrorism Rating (CTR). This assesses the risk of a terrorist attack. The CTR takes into account the overall BMI Terrorism Rating for the country in question. It also incorporates the 'prevalence' of terrorism, which recognises the frequency of attacks and whether the city is a target for terrorists. The CTR also recognises the 'threat' of terrorism in terms of the likely numbers of victims and the ability of groups to launch sustained campaigns. In Iran we assess the CTR for Tehran at 72.5, with approximately equal contributions from the state, prevalence and threat components. This places the Tehran among the lower risk cities in the region.