WarSclerotic

Netanyahu to Panetta: Time Running Out on Iran | FrontPage Magazine.

“Will Israel attack Iran’s nuclear program?” is a parlor game played by numerous people who don’t have enough information to know the answer.

It may be that there still is no definite answer; on Tuesday night Israeli prime minister Binyamin Netanyahu openly told a national TV audience that he still hadn’t reached a decision on the matter.

Recent events, though, seem to warrant a conjecture that something is afoot.

U.S. defense secretary Leon Panetta was in Israel on Wednesday, meeting first with Israeli defense minister Ehud Barak and then with Netanyahu. His visit came hard on the heels of visits by Secretary of State Hillary Clinton two weeks ago and by National Security Adviser Tom Donilon just a few days before that (along with, from the other side of the aisle, Republican presidential candidate Mitt Romney’s visit at the start of this week).

And that string of visits by Donilon, Clinton, and Panetta is only part of an ongoing succession of top-level U.S. visitors in Israel over the past several months. David Horovitz, editor of The Times of Israel, notes that “according to one count” today’s meeting between Panetta and Barak was no less thantheir ninth this year.

The inescapable conclusion is that someone, at least—Washington—relates seriously to Israel’s warnings that it may take action against Iran, and is particularly anxious to reassure Jerusalem that the sanctions-and-diplomacy approach is working and deserves more time.

Barak, though, told Panetta on Wednesday that he saw an “extremely low” probability that sanctions would ever—on any timeline—get Tehran to give up its nuclear program, and that meanwhile Israel’s window to act is closing as Iran keeps brazenly on its course.

Netanyahu, in a joint press conference with Panetta after their meeting, was even more straightforward, telling the defense secretary point-blank:

Neither sanctions nor diplomacy have yet had any impact on Iran’s nuclear weapons program.

…You yourself said a few months ago that when all else fails, America will act. But these declarations have also not yet convinced the Iranians to stop their program.

…Right now the Iranian regime believes that the international community does not have the will to stop its nuclear program. This must change and it must change quickly, because time to resolve this issue peacefully is running out.

On Tuesday night Netanyahu had given interviews to Israeli TV whose immediate purpose was to deflect leftist and populist flak over recent tax hikes and budget cuts. But the follow-up issue on the agenda was Iran, and Netanyahu addressed claims—which are heard from Israel itself to the pages of theNew York Times—that the Israeli defense establishment is opposed to a strike, saying:

In Israeli democracy, just like in any democracy, the political echelon makes the decisions and the professional echelon carries them out.

…I hear [the security chiefs’] evaluations behind closed doors The media debate…on the matter is irresponsible and is detrimental to state security. Appropriate discussions on such sensitive matters are held in private and there are many aspects that don’t even reach [the public]; the external debate is extremely inappropriate and very superficial.

Netanyahu then pointed out that in 1981 some security chiefs opposed Prime Minister Menachem Begin’s decision to bomb Iraq’s nuclear reactor—a step now widely admired and appreciated. On Iran, too, Netanyahu said,

[t]he decision that will be made, whatever it is, belongs to the political echelon. I will not allow a nuclear-armed Iran. The regime of the ayatollah is making bombs to destroy us! To the extent that it’s up to me, I won’t let it happen.

Two points are worth making here. First, it’s often claimed, both within and outside of Israel, that Netanyahu and Barak have been bluffing—talking tough about Iran as a way to goad the West to get serious about the sanctions. But, for one thing, it no longer sounds that way if it ever did. And for another, with Barak saying explicitly that he doubts that sanctions will ever work, such bluffing wouldn’t be logical in any case.

Second, Netanyahu and Barak are familiar with the Middle East and know that endlessly making threats without acting on them is not the way to thrive and survive in it. If they don’t really mean what they say, then their statements are detrimental to Israel by eroding its deterrence and projecting it as a paper tiger. In adducing the Begin-Iraq analogy and openly telling the U.S. defense secretary that time is running out, Netanyahu is putting a good deal on the line.

Articles: Obama’s Body Count.

By Michael Widlanski

Iranians should be ‘very fearful for next 12 weeks,’ ex-Mossad chief tells NY Times | The Times of Israel.

Efraim Halevy, who in March told The Times of Israel that there would be ‘nothing else left’ but force if diplomacy did not quickly work, gives stark assessment

Efraim Halevy (photo credit: Flash90)

The former Mossad chief Efraim Halevy, who told The Times of Israel in an interview in March that there would be “nothing else left” but a resort to force if the diplomatic track with Iran did not quickly produce a breakthrough, hinted Wednesday that the moment of truth on Iran’s nuclear drive was now imminent.

“If I were an Iranian, I would be very fearful of the next 12 weeks,” Halevy, who is also a former national security adviser and ambassador, told The New York Times.

The New York Times report, focusing on Wednesday’s talks here by Defense Secretary Leon Panetta, said there was “feverish speculation” in Israel that Prime Minister Benjamin Netanyahu “will act in September or early October.”

Apart from Netanyahu’s concern that Israel’s military option would “soon” become redundant, the paper cited several other reasons “for the potential timing.” Among them, it said, was the fact that “Israel does not like to fight wars in winter.” Also, Netanyahu “feels that he will have less leverage if President Obama is reelected” while, were Mitt Romney to win the November elections, “the new president would be unlikely to want to take on a big military action early in his term.”

Still, Wednesday’s article continued, “a number of administration officials say they remain hopeful that Israel has no imminent plans to attack and may be willing to let the United States take the lead in any future military strike, which they say would not occur until next year at the earliest.”

The New York Times further reported that administration officials say “Israeli officials are less confrontational in private” and that Netanyahu “understands the consequences of military action for Israel, the United States and the region. They say they know he has to maintain the credibility of his threat to keep up pressure on the United States to continue with sanctions and the development of military plans.”

In his interview with The Times of Israel in late March, Halevy said that if the then-upcoming international talks with Iran on thwarting its nuclear program did not quickly produce a breakthrough, there will be “nothing else left” but a resort to force.

He also said he had “no doubt that for the past few years Israel has been readying its capabilities to meet the Iranians if necessary by force.

It was “tragic,” Halevy added at the time, that “I don’t see any great effort being made” by the P5+1 group — the five UN Security Council permanent members and Germany — to prepare urgently and effectively for those talks. The lights “should be burning through the night” to get a strategy together, he said. “The number one thing the world should be doing [on Iran] is investing enormous preparation into the P5+1 confrontation, because this is really the ‘Last Train to San Fernando.’”

Iran, he predicted, would doubtless try to play for time in the talks. The international community, therefore, needed to be ready with its strategy and tactics, and to be represented by “a very high-level, experienced, wise and creative negotiator.”

For the international community, said Halevy, “there’s no time for, you know, ‘Let’s meet again in two or three months, let’s do our homework, let’s not rush things, let’s look at it, and so forth.’” Rather, he said, “there has to be a breakthrough… If there is no breakthrough, it means to say that the talks have failed.”

Asked if, by a breakthrough, he meant Iran announcing the suspension of its nuclear program, Halevy demurred. “I don’t want to say ‘Iran suspending the program.’ I don’t believe that everything will become public overnight.” But it would need to be clear, he said, “that there is a serious negotiation… They don’t have to spell it all out, but it has to be clear.”

Halevy said he did see signs of greater potential international coordination over Iran. He was encouraged by the growing consensus on tackling Syria, notably including Russia and China, which he said could also be reflected in a coordinated strategy on Iran. He also noted that the priority for the ayatollahs’ regime in Iran is “survival” at all costs.

Nonetheless, if the negotiations fail, “there’s nothing else left” but a resort to force, he said.

Perhaps, it was put to Halevy, Israel could live with a nuclear weapons-capable Iran? Halevy responded: “I don’t think that we should countenance that as long as we can do what we can to remove it. I don’t accept the notion that Israel is destructible. But I think that if Iran retains a nuclear capability, life here is going to be very tough for a very long period to come. Israel will not disappear, but Israel will go through a period which I would not like it to go through.”

Asked whether he believed the Israeli government wanted a diplomatic solution, he answered: “I’m not sure every Israeli wants a diplomatic solution… I’m not sure that the government is entirely behind this support for a diplomatic solution.”

Israeli Leaders Toughen Iran Stance – WSJ.com.

By ADAM ENTOUS And JOSHUA MITNICK

ASHQELON, Israel—Israeli leaders dismissed the chances that a U.S.-led sanctions campaign would convince Iran to give up its nuclear program, but U.S. officials said they were hopeful Israel wasn’t planning a unilateral strike for now after receiving assurances the U.S. would be prepared to act militarily in the future.

Israeli Prime Minister Benjamin Netanyahu surprised Defense Secretary Leon Panetta on Wednesday with his public challenge to the Obama administration’s strategy, which has focused on diplomacy and sanctions rather than the threat of military action.

But a senior U.S. official said Thursday the U.S. and Israel appeared to be on the same page, at least in private. The official said Mr. Panetta and other officials, in talks in Jerusalem, made clear the Obama administration was prepared to take military action to stop Iran from getting a nuclear weapon. Any decision on a U.S.-led strike would depend on intelligence about Iran’s nuclear program and would only come once diplomatic options have been exhausted, officials said.

It is unclear whether the Israeli air force would be able to destroy many of Iran’s heavily fortified nuclear sites without U.S. help, U.S. and Israeli officials say.

“Right now the Iranian regime believes that the international community does not have the will to stop its nuclear program,” Mr. Netanyahu said in Jerusalem on Wednesday, with Mr. Panetta by his side. “This must change, and it must change quickly because time to resolve this issue peacefully is running out.”

Mr. Netanyahu said Iran didn’t appear to believe U.S. statements that all options were on the table.

“You yourself said a few months ago that when all else fails, America will act,” he said to Mr. Panetta. “But these declarations have also not yet convinced the Iranians to stop their program.”

Mr. Panetta, after greeting the prime minister warmly, appeared to have been taken aback by his sharp criticism of the U.S. The defense secretary, in his public remarks, took a more hawkish tone toward Iran, in an effort to ease Israeli concerns.

The friction over strategy underlines the Obama administration’s challenge in heading off a possible Israeli military strike on Iran, which could engulf the region in another major conflict and force the U.S. to act.

At the height of the U.S. presidential campaign, the Obama administration wants to keep Israel from starting a conflict but doesn’t want to appear weak or unsupportive of the country.

Republican presidential hopeful Mitt Romney, who visited Israel this week, has sought to cast himself as a bigger supporter of Israel should it decide to strike Iran.

The Obama administration counters that it has increased security cooperation to new levels. On Wednesday, Mr. Panetta highlighted that cooperation with a visit to a U.S.-subsidized missile-defense system with Israeli Defense Minister Ehud Barak.

U.S. officials say it is difficult to tell whether Israel is serious about attacking Iran or saber rattling in order to sustain the military threat and increase pressure on the U.S. and European Union to do more to curb Iran’s nuclear program—or both.

Mr. Netanyahu has also been grappling with a lack of consensus within Israel’s security establishment about the need to attack Iran anytime soon.

Mr. Netanyahu said in a television interview on Tuesday night that he hasn’t yet made a decision on an attack, trying to tamp down Israeli media reports that military Chief of Staff Benny Gantz and serving Mossad chief Tamir Pardo are opposed to an attack in the coming months. Mr. Netanyahu said the men should keep their assessments private.

In remarks at the prime minister’s office in Jerusalem on Wednesday, Mr. Netanyahu said Mr. Panetta was correct when he said sanctions are having a “big impact” on the Iranian economy. “But unfortunately it is also true that neither sanctions nor diplomacy have yet had any impact on Iran’s nuclear weapons program,” Mr. Netanyahu added.

Mr. Panetta used unusually strong language to make the case that Mr. Obama will do what it takes to prevent Iran from building nuclear weapons. Iran denies its program is intended to build a nuclear bomb. “We will not allow Iran to develop a nuclear weapon. Period,” he said. “We will exert all options.”

But Mr. Panetta added: “We have to exhaust every option, every effort, before we resort to military action.”

The U.S. position reflects a strategic Catch-22: While the Israelis say Iran will only give in if the U.S. makes the threat of attack real, doing so could limit the U.S.’s options by removing the element of surprise and potentially putting the U.S. on a path to war.

So far, talks with Iran, led by the U.S. and other major powers, have gone nowhere, U.S. officials acknowledge. But unlike the Israelis, the U.S. still holds out hope of progress as pressure builds. On Wednesday, the House voted 421-6 and the Senate voted unanimously to approve a round of sanctions on Iran that builds on current penalties targeting Tehran’s central bank.

Such focus on ramping up sanctions represent a challenge to Israeli efforts to prod the Americans to shift strategy.

That tension was evident when Defense Minister Barak said the probability is “extremely low” that U.S. and international sanctions will convince Iran’s religious rulers to give way on their nuclear program.

While Mr. Panetta has acknowledged Iran has yet to agree to give up its nuclear program, he has repeatedly said that the sanctions are working as intended and should be given more time.

That appeared to be a hard argument for Mr. Panetta to sell in Israel.

“We have clearly something to lose by this stretched time upon which sanctions and diplomacy takes place because the Iranian are moving forward” with their enrichment activities, Mr. Barak said at a joint news conference with Mr. Panetta after they toured the Iron Dome missile-defense battery on the outskirts of the southern Israeli city of Ashkelon, five miles from the border with the Hamas-controlled Gaza Strip.

Israel says the Iron Dome is the first missile-defense system capable of detecting and destroying short-range missiles in flight. The system, made by Israel’s Rafael Advanced Defense Systems, is designed to intercept rockets with ranges of up to 44 miles, those typically used by Israel’s declared enemies Hezbollah, which is based in Lebanon, and Hamas.

Mr. Panetta called Iron Dome a “game changer” for Israel’s security and said the U.S. intended to provide funding annually to support the system’s deployment in Israel.

The U.S. has so far committed $275 million to support the Iron Dome, which consists of arrays with about 20 rockets each, a command-and-control center and a radar facility. Each system can cover an area the size of a small city.

The Iron Dome’s radar detects rockets when they are launched. The command-and-control center then quickly determines whether to launch an interceptor missile. That depends if the missile is headed toward an area that is populated or has critical infrastructure.

Mr. Barak said the system has intercepted more than 100 rockets so far fired from Gaza and has a success rate of more than 80%.

Centrifuges continue to spin – Israel Opinion, Ynetnews.

Analysis: Stalled talks, provocative military exercises indicate Iranian regime will continue defying West

Lawrence, Nisman

On July 25, in a rare public acknowledgement, Iranian Supreme Leader Ayatollah Ali Khamenei shed light on the detrimental impact of international sanctions on Iranian society. During a meeting with President Mahmoud Ahmadinejad and his political rival, Speaker Ali Larijani, Khamenei called for an end to infighting over Iran’s deteriorating economy, stressing the need for national unity.

“The reality is that there are problems, however you must not blame them on this or that party,” Khamenei was quoted as saying by Fars News Agency. “Instead you must solve those problems with unity.”

Pundits and politicians in the West should be in no rush to laud this admittance of Iran’s floundering economy as a sign that the regime’s resilience in pursuit of nuclear capability has begun to waver. For those in Jerusalem grappling with a historic decision, sanctions have failed to achieve their baseline goal – suspension of the Iranian nuclear program.

Current sanctions aim to foment public discontent in Iran by inducing economic hardship, threatening to usher in a Persian edition of the Arab Spring. Recently implemented sanctions by the European Union have been rightfully hailed as the harshest to date, and there are indeed indications that this ban on oil imports has taken a toll on the Iranian economy.

Reduced participation in the international banking system due to American sanctions has forced Iran to trade through barter arrangements of commodities in place of hard currency. As a result, the rial has devaluated, contributing to rampant inflation. Official government estimates place inflation rates at 22.4% annually, but economists assert that it may be higher. This translates into soaring prices for common consumer goods like bread, whose price is 16 times higher than in 2010 when bread subsidies were withdrawn. Inflation has since contributed to domestic discontent, most recently when protests erupted in the northeastern Iranian city of Nishabur over the cost of chicken in July 2012.

On July 4, 2012, an official Iranian website (briefly) displayed the results of a public opinion survey, which indicated that 60% of those polled would forgo their country’s nuclear progress in exchange for an easing of sanctions. However, while the poll illustrates that resentment toward the government for economic hardship is growing, a significant portion of the population still blames the international community for using sanctions that disproportionately impact the public rather than the regime. Included in this group are Iran’s influential merchant and labor sectors. These segments of society played an important role in overthrowing the Shah in 1979, and any successful uprising would be short-lived without their participation.

Clock ticking down

The potential for domestic pressure to spur a decisive shift in the regime’s nuclear program itself currently remains limited as well. The ill-fated uprising attempts in 2008-09 and 2011-12 largely dealt with issues of democratic and political reform, not nuclear policy. Meanwhile, those sectors of society which encompass the regime’s power base view nuclear enrichment as a national entitlement, spelling dire political consequences for any reneging by the Ayatollahs on their pursuit of a seat at the nuclear table.

While sanctions may be gradually stirring discontent amongst the population, the rate at which they are doing so is slower than the progress of Iran’s suspected nuclear weapons program. Indeed, continued deadlocks in negotiations, provocative military exercises involving long-range missiles, and announcements on nuclear achievements illustrate the regime’s intentions to continue defying the West.

During the same July 25 meeting with Ayatollah Khamenei, President Mahmoud Ahmadinejad reportedly told the supreme leader that Iran has 10% more centrifuges operating in July 2012 than it had at the time of the last IAEA report in May 2012. With each declaration of progressing enrichment activity, Iran further toes Israel’s red lines for military action.

It is no coincidence that following Ahmadinejad’s statement, Israeli Defense Minister Ehud Barak asserted that current sanctions “are not enough to stop Iran’s nuclear program,” and that Israel would have to make “tough and crucial decisions” about its security.

The endless line of Obama Administration officials rotating through Jerusalem will likely find little success in swaying Israeli policy makers to place their bets on current sanctions. For Israel’s leadership, an Iranian bomb is considered an existential threat to survival of the Jewish State, and the stakes are too high to risk holding out for regime change.

With the clock ticking down toward Iranian nuclear breakout capability, those hopeful for a diplomatic solution for this potentially destructive crisis would be wise to switch time zones. Although the West’s sanctions continue to bite, the Ayatollah’s centrifuges continue to spin, ensuring that a regional conflagration is only a matter of time.

The authors are intelligence analysts at Max-Security Solutions, a geo-political risk consulting firm based in Tel Aviv, Israel.

Don’t overplay your hand on Iran, US officials reportedly warn Israel | The Times of Israel.

Jerusalem’s talk of deadlines and military action is deemed counterproductive, TV report claims, as Panetta vows US will thwart Tehran and White House says it shares PM’s sense that Iran has yet to make the right choice

US Secretary of Defense Leon Panetta tours an Iron Dome battery near Ashkelon with his Israeli counterpart Ehud Barak on Wednesday. Aug1 (photo credit: Tsafrir Abayov/Flash90)

Iran has ”yet to make the choice it needs to make, which is to abandon its nuclear weapons ambitions,” White House spokesperson Jay Carney said in a press briefing aboard Air Force One Wednesday.

“We completely agree with the [Israeli] prime minister’s assessment that Iran has failed to make that choice and that is absolutely a disappointment,” added Carney, presenting a united front between the two countries as visiting Defense Secretary Leon Panetta completed a day of meetings with Israeli leaders.

But a Channel 2 news report said irritated American officials are telling Israel that it is overplaying its hand with its constant warnings about time running out on stopping Iran’s nuclear program and its threats to launch military action against Iran

The message being conveyed by Obama Administration officials behind the scenes, the TV report said, is that the US knows what it is doing on Iran, and that while an Israeli strike could damage the Iranian program, an American strike, if deemed necessary, would finish it. Israel ought to stop talking about deadlines, and stop risk being perceived as meddling with domestic American politics ahead of November’s presidential elections.

The report also quoted an unnamed Israeli insider, said to be opposed to an Israeli strike, as saying that if Israel attacked Iran alone, “it would remain alone.”

The Channel 2 report came hours after Prime Minister Benjamin Netanyahu, at the outset of his meeting with Panetta, had blamed the West for failing to sufficiently impress upon the Iranians that they would not be allowed to attain a nuclear weapon.

“Right now the Iranian regime believes that the international community does not have the will to stop its nuclear program,” Netanyahu said. “This must change, and it must change quickly, because time to resolve this issue peacefully is running out.”

Over and over during the day — in public remarks alongside Netanyahu, Defense Minister Ehud Barak and President Shimon Peres — Panetta reiterated with slightly varying formulations that the US would do everything in its power to ensure Iran dids not attain nuclear weapons.

“We will not allow Iran to build a nuclear weapon, period,” he told Netanyahu. “We will exert all efforts to ensure this does not happen,” he said.

In TV interviews on Tuesday, Netanyahu said he had not yet decided whether to order military intervention to thwart Iran’s nuclear drive. When the time did come to decide, he added, however, objections from military and security chiefs would not prevent him and his government colleagues from ordering a military strike should they deem it necessary. He also said Israel would not subcontract its existential security concerns to its friends — “not even the best of them,” like the US.

Earlier this week, Netanyahu hosted Republican presidential candidate Mitt Romney, who declared that stopping Iran must be America’s “highest national security priority.”

Defense Ministry experts predict 300 Israeli fatalities in war with Iran, Syria – Israel News | Haaretz Daily Newspaper.

Ministry prediction in line with Defense Minister Ehud Barak’s previous statement.

Yes he can – Israel News | Haaretz Daily Newspaper.

The key to preventing disaster is not in the IDF chief of staff’s hands but in the hands of the U.S. president.

Anyone who didn’t understand it last summer understands it this summer. The likelihood of Israel attacking Iran’s nuclear facilities is rising steadily. In the winter we hoped the sanctions would stop Iran. They didn’t. In the spring we hoped the diplomatic talks would stop Iran. They didn’t. At the beginning of the summer we waited for Mitt Romney’s visit. Romney left. Now we’re waiting for the end of the Olympic Games. They will end in 10 days.

So when the children return from their vacation at the end of August, we will all be entering the high-risk zone. It is possible that ultimately nothing will happen. Just as no political tsunami occurred at the end of Summer 2011, no strategic tsunami will occur at the end of Summer 2012. But perhaps something will happen. Foreign observers now say the likelihood of Israel’s striking Iran this year is higher than 25 percent.

Israel could strike Iran for several reasons – its leaders’ resolve to prevent a second Holocaust; the combatants’ capability of giving Israel’s leaders a sense of power; Iran’s technological success, which has almost turned it into a threshold nuclear power; Iran’s success in shielding its nuclear facilities, which will soon make it immune to Israeli attack. But the decisive reason for a possible Israeli attack on Iran is the West.

For 10 years the West has displayed a baffling sluggishness in its regard to the Islamic republic’s nuclear program. Time and again the West has failed to deal with the Iranian apocalypse-seekers who are equipping themselves with apocalyptic weapons. So Israel sees the West as a flimsy, untrustworthy party. Jerusalem’s assessment is that Washington will not stop Natanz this year, or next year, or the year after next. What happened in the 1930s will happen here now. The West will display sympathy toward Czechoslovakia, wave goodbye to it and let it sink into the abyss.

Israelis who fear an Israeli strike in Iran are counting on Lt. Gen. Benny Gantz and the IDF top brass. They expect senior IDF officers and senior civil servants to thwart the high-risk operation that the prime minister and defense minister are planning. This expectation is undemocratic. It solicits the senior command to generate a military coup against an elected government. It is also irresponsible. The Iran problem is real and anyone suggesting not to solve it by an Israeli strike must propose how it can be solved.

From both the democratic and substantive standpoint, IDF headquarters is not the address. The White House is. The key to preventing disaster is not in the chief of staff’s hands but in the hands of the U.S. president.

Barack Obama is a brilliant orator. Obama has made quite a few exemplary speeches both as presidential candidate and as president. But the American president’s most important speech is the one he has not made so far – the Iran speech. A speech in which the leader of the free world pledges in pubilc that the free world will prevent Iran from obtaining military nuclear ability – at any price. A speech in which the chairman of the Joint Chiefs of Staff says that if the sanctions don’t stop Iran, America’s military power will.

A speech in which the U.S. president stands before the citizens of the United States and its allies and says – it’s on me. I will not ignore your existential needs nor abandon our strategic interests, nor let Iran become a nuclear power. In my name and in the name of Mitt Romney and the bipartisan leadership, I hereby pledge that in the course of 2013 America will paralyze the Iranian centrifuges that could bring an historic catastrophe on us all.

If Obama delivers an Iran speech in this spirit in the coming weeks, he will vindicate himself. He will prevent an Israeli strike, send a powerful message to the Iranians and establish his status as a world leader. His election for a second term will be almost certain.

But if Obama buries his head in the sand even now, he will be taking on a chilling risk. One morning he may wake up to discover the Middle East is going up in flames and the United States is submerged in serious trouble.

Can sanctions stop Iran’s nuke program? – Israel Opinion, Ynetnews.

Analysis: For the time being, Khamenei appears unfazed by soaring inflation, currency depreciation, price hikes and record-low oil production rate

The sanctions are exacting a heavy price from Iran and its citizens. The harshest of these is the US and EU ban on Iranian oil imports, on insuring ships that carry Iranian crude and on financial transactions with Tehran, which resulted in a significant drop in the country’s revenues from the black gold. At the same time, the price of food and housing is seeing a sharp increase. The local currency is collapsing, leading to a rise in the price of imported goods. In the thriving black market for these goods, the dollar is being traded at double its official value. The citizens’ expectations for additional sanctions are further exacerbating the situation.

Iran’s lower classes and the urban middle class, whose members can’t make ends meet and see their savings being depleted on a daily basis, are suffering most from the economic turmoil. As reported by Ynet’s Dudi Cohen, citizens in northeast Iran recently protested against the sharp rise in poultry prices. In another incident, a woman was killed while waiting in line for chicken at a government distribution center.

But this does not seem to faze Ali Khamenei. According to reliable information obtained by Israeli and western diplomats, Iran’s supreme leader has ordered authorities to move forward with the uranium enrichment program. Khamenei believes that for the time being the sanctions are not causing significant financial distress among Iran’s citizens and therefore do not endanger the regime. However, data obtained by the Foreign Ministry indicate that Iran’s economy has been hit hard by the sanctions:

Currency depreciation: Since the beginning of 2011, the rial has lost 60-70% of its value against the dollar. The expectation that Iran’s currency will continue to depreciate as a result of the sanctions is causing major price hikes – though there does not appear to be a shortage of key commodities.

Soaring inflation: According to official data, Iran’s inflation rate has fluctuated between 23% to 25% this year. Western economists who are familiar with the situation in Iran estimate that the real inflation rate has exceeded 40% and continues to rise. The prices of basic goods, such as milk and poultry, have increased by over 100%. A kilogram of beef, for example, costs $23 dollars.

Oil production at all-time low: Over the past six months Iran’s crude oil production rate has dropped from 3.5 million barrels a day to 2.7 million. The UN has determined that in April alone Iran’s oil production rate fell 20-40%. Experts estimate that this downward trend is continuing and that Iran will eventually produce 2 million barrels a day.

Apart from stifling the Iranian economy, the sanctions are also affecting the citizens’ frame of mind. For example, the Tehran Stock Exchange reacted positively to the launch of nuclear negotiations with the West in Istanbul last June, but when the negotiations collapsed, the market fell. A recent poll found that 60% of Iranians support halting the uranium enrichment program in exchange for a gradual removal of international sanctions.

Iran’s economy has also suffered from a flawed subsidy policy, bad management and corruption. Iranians, including Khamanei and members of the conservative parliament, are holding President Mahmoud Ahmadinejad accountable for the country’s economic woes. Ahmadinejad, for his part, was able to cover up some of the economic failures through subsidies that were financed by Iran’s oil export revenues.

Today the government is trying to contain the sanctions’ psychological and economic effects by granting subsidies for the middle class, offering direct welfare stipends to the poor and physically repressing any attempts to protest against the regime’s policy. The question is what will happen when Iran’s foreign exchange reserves, which finance the subsidies and imports, shrink even more.

Moreover, country’s that continue to purchase Iranian oil are doing so at a discount and are paying with their local currency. India, for example, pays in rupees instead of dollars, so Iran can use this money to purchase goods mostly in India itself. The ban on insuring tankers carrying Iranian oil has led to the closure of a shipping company jointly owned by India and Iran. Iran has similar trade relations with South Korea and even China.

Iran has resorted to creative measures in an effort to bypass the sanctions. The regime in Tehran and the Revolutionary Guards are smuggling crude oil to the West with the help of Turkey and other countries.

Crude oil that is smuggled from Iran through the Kurdish region in Iraq is sold to Europe as Turkish or Iraqi oil. The Obama administration is working to put an end to this phenomenon, or at least reduce it – in part due to pressure from Israel.

The Gulf States, headed by Saudi Arabia, have contributed greatly to the success of the sanctions policy by increasing their oil production to fill the void left by the shrinking Iranian oil industry – thus preventing a rise in global oil prices.

‘Sanctions not working fast enough’

Iran has also suffered from the continued drop in global oil prices, which is attributed to the recession that has hit the US, Europe and China. According to the CIA’s calculations, Iran has to charge a minimum of $80 a barrel in order to pay for its imports and amass considerable foreign exchange reserves.

Iran has also a hard time storing the oil it has not been able to sell. The New York Times reported recently that Iran has been forced to store some 40 million barrels of oil that “that no one is willing to buy” because of the crippling embargo on a fleet of about 65 tankers “floating aimlessly” in the Persian Gulf.

The newspaper quoted international oil experts as saying that Iranian exports have already been reduced by at least 25% since the beginning of the year, costing Iran roughly $10 billion so far in forgone revenues.

Experts estimate that in addition to the millions of oil barrels stored on the “floating storage facilities,” another 10 million oil barrels are being stored on land. This predicament has forced the regime in Tehran to reduce the production rate at its oil fields– a move that will cause long term damage to the ability of these fields to produce oil.

The Americans are using these statistics to try and convince Israel to give the sanctions a chance and put the military option on the back burner. Senior Israeli officials, for their part, claim that at least a year will pass before the sanctions begin to significantly decrease Iran’s foreign exchange reserves and endanger its oil industry. By then, they warn, Iran will be capable of producing enough uranium to build 5-10 nuclear warheads. This means that Iran will become a nation “on the brink” of nuclear capabilities – and in this situation an Israeli or American strike on its nuclear facilities would be futile.

U.S. and Israel Intensify Talks on Iran Options – NYTimes.com.

By ELISABETH BUMILLER and JODI RUDOREN

ASHKELON, Israel — A series of public statements and private communications from the Israeli leadership in recent weeks set off renewed concerns in the Obama administration that Israel might be preparing a unilateral military strike on Iran, perhaps as early as this fall.

But after a flurry of high-level visits, including one by Defense Secretary Leon E. Panetta to Israel on Wednesday, a number of administration officials say they remain hopeful that Israel has no imminent plans to attack and may be willing to let the United States take the lead in any future military strike, which they say would not occur until next year at the earliest.

The conversations are part of delicate negotiations between the United States and Israel that have intensified over the past month. On Wednesday they continued with Mr. Panetta, who appeared with the Israeli defense minister, Ehud Barak, and declared that the United States would stand by Israel if Iran developed a nuclear weapon.

“We have options that we are prepared to implement to ensure that that does not happen,” Mr. Panetta said. Standing with Mr. Barak in front of an Israeli antirocket missile battery in the southern town of Ashkelon, about five miles from the Gaza border, Mr. Panetta made clear what he meant. “My responsibility is to provide the president with a full range of options, including military options, should diplomacy fail,” he said.

In the last three weeks, a steady stream of administration officials have flown to Israel to meet with Prime Minister Benjamin Netanyahu, among them Secretary of State Hillary Rodham Clinton and Thomas E. Donilon, the national security adviser. The trips were in part planned for other reasons — Mrs. Clinton and Mr. Panetta were going to Egypt to meet with the new president and so diplomatically could not ignore Israel — but administration officials say that there has been an intense effort to stay in close contact with Israel and abreast of its intentions.

The visits, deliberately or not, also sandwiched in Mitt Romney, the presumptive Republican presidential nominee, who was in Jerusalem two days before Mr. Panetta. Mr. Romney, who received a short briefing from the American ambassador in Israel but had no other substantive communication with the administration, appeared to take a harder line against Iran than President Obama has.

In Jerusalem, Mr. Netanyahu continued on Wednesday with his tough rhetoric of recent days, arguing that sanctions against Iran were largely useless. “Right now the Iranian regime believes that the international community does not have the will to stop its nuclear program,” Mr. Netanyahu said. “This must change and it must change quickly because time to resolve this issue peacefully is running out.”

Administration officials say that Israeli officials are less confrontational in private and that Mr. Netanyahu understands the consequences of military action for Israel, the United States and the region. They say they know he has to maintain the credibility of his threat to keep up pressure on the United States to continue with sanctions and the development of military plans.

“The more the Israelis threaten, the more we respond by showing them that we will take care of the problem if it comes to that,” said Martin Indyk, a former American ambassador to Israel and director of foreign policy at the Brookings Institution.

Mr. Panetta met separately on Wednesday with Mr. Netanyahu, Mr. Barak and Shimon Peres, the Israeli president. Administration officials say the Americans and Israelis shared the latest intelligence on Iran, coordinated implementation of the most recent sanctions and discussed military options. Mr. Panetta said on Tuesday in Cairo that he was not taking any American attack plans to show to the Israelis.

He also said that any American strike would be a last resort. “We have to exhaust every option, every effort, before we resort to military action,” Mr. Panetta said at the Ashkelon missile battery, which is part of the Iron Dome defense system in part paid for by the United States.

On Wednesday, Mr. Panetta used some of his sharpest language on Iran, as if to assure the Israelis that the Obama administration could be equally tough.

“This is not about containment,” Mr. Panetta told reporters at the start of his meeting with Mr. Peres. “This is about making very clear that they are never going to be able to get an atomic weapon.”

In Israel, there remains feverish speculation that Mr. Netanyahu will act in September or early October. Besides the prime minister’s fear that Israel’s window of opportunity will close soon, analysts cite several reasons for the potential timing: Israel does not like to fight wars in winter. Mr. Netanyahu feels that he will have less leverage if President Obama is re-elected, and that if Mr. Romney were to win, the new president would be unlikely to want to take on a big military action early in his term.

“If I were an Iranian, I would be very fearful of the next 12 weeks,” said Efraim Halevy, a former chief of Israel’s intelligence agency and national security adviser.

Others made light of the constant visits from the United States. “The visitors are actually baby sitters to make sure the unpredictable kids do not misbehave,” said Efraim Inbar, the director of the Begin-Sadat Institute for Strategic Studies.

American defense officials and experts in Israel say that because Israel does not have a bomb powerful enough to penetrate Iran’s underground uranium-enrichment facilities, an independent strike would be likely to set the nuclear program back only one or two years, at most. That has led to major dissent among Israel’s security professionals over the wisdom of such an attack. The Pentagon, in contrast, has the munitions, bombers, missiles, stealth aircraft and drones that would cause far more extensive damage.

David Makovsky of the Washington Institute for Near East Policy, who recently spent time in Israel talking to government officials, said that Israel’s longstanding doctrine of self-reliance makes American promises to act later if all else fails less effective. Instead, he said, Israel needs to be convinced that if it waits, it can still retain the option to act independently.

“Make Israel not believe that it’s two minutes to midnight,” Mr. Makovsky said. “If Israel is so convinced that its window of action is shutting, then maybe you try to enlarge Israel’s window. You say, ‘Here, we know there are some things you need. But we don’t want you to use them until several months ahead.’ ”

The Obama administration is eager to prevent an Israeli attack partly to avoid a major foreign policy crisis during the American presidential campaign and partly because officials say an Israeli strike could set off a new conflagration in the region. If Iran retaliated by launching missiles at Tel Aviv that killed thousands of Israelis, administration officials say the United States would be under enormous pressure to defend Israel and respond, and would then be pulled into another war in the Middle East.

Mr. Netanyahu and other Israeli officials have argued that Iran makes progress in enriching nuclear fuel every day, enhancing its capability to withstand a strike and keep any nuclear weapons program on track. Iran denies the intent to develop nuclear weapons and says its program is for peaceful purposes.

The Israeli news media have been filled in recent days with speculation about a strike. One article said that the Obama administration had vowed to strike within 18 months, another reported continuing concerns in the security establishment here about the effectiveness of an Israeli strike, and a third said that Mr. Donilon, Mr. Obama’s national security adviser, had revealed details of the American attack plans during his visit. The articles did not make clear where those accounts came from, but they contributed to a growing atmosphere of expectation.

“Everybody’s leaking like crazy right now — that doesn’t mean there will be a strike, but it means we’re closer to a decision,” said Amos Harel, defense correspondent for the left-leaning Israeli newspaper Haaretz, who estimated the chance of an attack before November at 50 percent. “It’s probably a more crucial junction than it was ever before.”