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No regime change in Iran (analysis of the current protest wave)

Reports suggest small leaderless protests unlikely to threaten government

Alexander Mercouris

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Information about the protests in Iran is very difficult to assess because for the moment it is very sparse.

It appears the protests began in the city of Mashhad on 28th December 2017.  They have however continued and have spread elsewhere though they appear so far to be on a small scale.

Most reports say that the trigger for the protests was economic grievances, with particular stress being given to the 40% shock increase in egg and poultry prices, which was announced last week.

Undoubtedly there is some truth to this but it must be heavily qualified.

The reality is that contrary to some reports Iran’s economy is currently doing very well and after several years of recession which did cause living standards to fall is now actually in the throws of a boom, with double digit growth rates being recorded during the last two years.

Whilst it is said that the benefits of this boom have yet to reach the wider population, the boom has now been underway for almost two years, making it most unlikely that however unevenly its benefits are distributed the wider population has experienced no benefit from it at all.

As for price growth, the trend in Iran over the last four years is for price growth to fall.

The history of inflation in Iran is that Iran has experienced double digit inflation continuously since 1973, when the quadrupling of oil prices that year taken together with the former Shah’s runaway industrialisation programme pushed annual inflation up from its previous trend rate of 3% to an average annual rate over the next four years of more than 15%.

Inflation remained at an annual rate of around 15% in every remaining year of the Shah’s rule except for 1978.

The Iranian Revolution and the war with Iraq in the 1980s then caused inflation to go higher, so that it rose to an average annual rate between 1980 and 1988 of 18%.

In the succeeding period of economic liberalisation under President Rafsanjani from 1989 to 1997 inflation went higher still, hitting an average annual rate of 25%, and peaking in 1996 at 50% (still an inflation record in Iran).

In the succeeding reformist period of President Khatami from 1997 to 2005 average annual inflation fell to 16%, only to rise again during the succeeding more conservative period under President Ahmadinejad from 2005 to 2013 when it went up to an annual average of 17.7%, peaking at 35% in 2013, the year Ahmadinejad left office.

Compared to this record, the situation under President Rouhani is better on the inflation front than it has been at any time since the early 1970s, with average annual inflation in the four years since he became President falling to 12% and falling to just 9% in the Iranian year ending in March 2017.

Whilst this is still a high rate of inflation by international standards, the combination of a rapidly growing economy and a falling inflation rate makes it extremely doubtful that the population as a whole is currently coming under more severe economic pressure than it has been before.  On the contrary it is more likely that after years of contracting living standards caused by the recession more Iranians are now starting to feel better off.

That does not of course mean that some sections of the population may not be finding conditions difficult, and as many correctly point out the still sharp rise in Iran’s working age population means that the fast economic growth of the last two years has still left Iran with an unemployment rate at 12%.

That unemployment rate, though high by the standards of the developed economies, is not however high for Iran’s region (in Turkey the unemployment rate is 11%, in Egypt it is 12% and in Saudi Arabia it is 12.7%).

Though it is understandable therefore that the sharp increase in egg and poultry prices – supposedly caused by a cull triggered by an epidemic of bird flu – may have annoyed many people, it looks like a temporary price blip in an otherwise improving inflation and economic picture.

Exactly this point has been made by Iran’s Vice-President Eshaq Jahangiri, who Fars is reported as saying

the prices of several commodities may have seen a rise due to some incidents, and each case has its own reason

If economic grievances were indeed what originally lay behind the protests, then these improving conditions suggest that the protests will not go on for very long, especially as the growing economy and the recent rise in oil prices have given the government the means to improve the economic conditions of the protesters.

Vice-President Jahangiri in the same interview which I have just quoted is already reported as saying that the government is prepared to take steps to mitigate the effect of the recent rise in egg and poultry prices, presumably by importing more of these products from abroad.

If economic dissatisfaction does not fully explain the protests, what are the other reasons for them?

There have been some suggestions that the original protests in Mashhad – a politically conservative city – were originally orchestrated by conservative opponents of President Rouhani from within the clerical establishment.

Some reports say that this is Rouhani’s view and that it is also the view of some other senior Iranian officials, with fingers supposedly being pointed at the conservatives who supposedly instigated the protests, with complaints being made that the counter revolutionary slogans chanted by some of the protesters during the protests show that the conservative instigators of the protests have lost control over the protests.

Whilst there may be some truth to this, the single factor which almost certainly set the scene for the protests is that this is a time of the year when large numbers of Iranians are likely to be on the streets anyway.

The day which in the Western calendar is 30th December is the day when conservative supporters of the Iranian government annually mobilise in their millions to commemorate a large demonstration staged on 30th December 2009 in response to the so-called ‘Green Revolution’ protests which took place in Iran in 2009.

It looks as if celebration of the anniversary of this demonstration this year has triggered counter protests by opponents of the government, which have been given an extra twist this year by the anger many people feel at the sharp rise in egg and poultry prices.

However another factor behind the protests almost certainly is the international situation.

The US, Israel and Saudi Arabia supposedly reached a secret agreement last month to combine forces in an attempt to reverse the growth of Iranian influence in the Middle East.

Reports of this agreement may have given encouragement to pro-Western opponents of the government within Iran – of whom there are known to be some – encouraging them to come out to protest.

Besides it is a certainty that the US and its allies have their own covert networks of supporters within Iran who were doubtless activated to support and take over the protests as soon as they began.

Many of course go further still and believe that the anti-government part of protests has been entirely orchestrated by the US and its allies as part of a classic US regime change/’colour revolution’ operation.

That is certainly possible, there being after all ample precedent for it.  However it is always important to remember when making this claim that the US can only do this sort of thing in another country when there are already people there ready to work with it.

Outlining the various likely reasons for the protests however shows why – if the intention really is to topple the government – they are most unlikely to succeed.

The very fact that the US – and Donald Trump in particular – are backing the protests, and the widespread and probably justified suspicion within Iran and around the world that the US has a hand in them is certain to alarm many Iranians, deterring them from supporting the protests and causing them to rally behind the government.

Ultimately, with the protests small and scattered, with the government retaining the support of a critical mass of the Iranian population, with the economy strong and growing rapidly, and with the security forces completely loyal to the government, the Iranian government should have no trouble riding these protests out.

The key is to avoid overreaction, which is all but guaranteed to provoke more protests, whilst at the same time remaining firm and making no unnecessary concessions, which would be taken as a sign of weakness, and which would therefore also encourage more protests.

The Iranian government showed in 2009 that it has the knowledge and the skill to handle these sort of protests, and I have little doubt it will successfully do so again, especially with the protests this time being on a much smaller scale and without visible leadership.

If so then before long the protests will subside, with this probably becoming increasingly apparent over the next few days.

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FBI recommended Michael Flynn not have lawyer present during interview, did not warn of false statement consequences

Flynn is scheduled to be sentenced on Dec. 18.

Washington Examiner

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Via The Washington Examiner…


Former FBI Deputy Director Andrew McCabe, who arranged the bureau’s interview with then-national security adviser Michael Flynn at the White House on Jan. 24, 2017 — the interview that ultimately led to Flynn’s guilty plea on one count of making false statements — suggested Flynn not have a lawyer present at the session, according to newly-filed court documents. In addition, FBI officials, along with the two agents who interviewed Flynn, decided specifically not to warn him that there would be penalties for making false statements because the agents wanted to ensure that Flynn was “relaxed” during the session.

The new information, drawn from McCabe’s account of events plus the FBI agents’ writeup of the interview — the so-called 302 report — is contained in a sentencing memo filed Tuesday by Flynn’s defense team.

Citing McCabe’s account, the sentencing memo says that shortly after noon on Jan. 24 — the fourth day of the new Trump administration — McCabe called Flynn on a secure phone in Flynn’s West Wing office. The two men discussed business briefly and then McCabe said that he “felt that we needed to have two of our agents sit down” with Flynn to discuss Flynn’s talks with Russian officials during the presidential transition.

McCabe, by his own account, urged Flynn to talk to the agents alone, without a lawyer present. “I explained that I thought the quickest way to get this done was to have a conversation between [Flynn] and the agents only,” McCabe wrote. “I further stated that if LTG Flynn wished to include anyone else in the meeting, like the White House counsel for instance, that I would need to involve the Department of Justice. [Flynn] stated that this would not be necessary and agreed to meet with the agents without any additional participants.”

Within two hours, the agents were in Flynn’s office. According to the 302 report quoted in the Flynn sentencing document, the agents said Flynn was “relaxed and jocular” and offered the agents “a little tour” of his part of the White House.

“The agents did not provide Gen. Flynn with a warning of the penalties for making a false statement under 18 U.S.C. 1001 before, during, or after the interview,” the Flynn memo says. According to the 302, before the interview, McCabe and other FBI officials “decided the agents would not warn Flynn that it was a crime to lie during an FBI interview because they wanted Flynn to be relaxed, and they were concerned that giving the warnings might adversely affect the rapport.”

The agents had, of course, seen transcripts of Flynn’s wiretapped conversations with Russian then-ambassador Sergey Kislyak. “Before the interview, FBI officials had also decided that if ‘Flynn said he did not remember something they knew he said, they would use the exact words Flynn used … to try to refresh his recollection. If Flynn still would not confirm what he said … they would not confront him or talk him through it,'” the Flynn memo says, citing the FBI 302.

“One of the agents reported that Gen. Flynn was ‘unguarded’ during the interview and ‘clearly saw the FBI agents as allies,'” the Flynn memo says, again citing the 302.

Later in the memo, Flynn’s lawyers argue that the FBI treated Flynn differently from two other Trump-Russia figures who have pleaded guilty to and been sentenced for making false statements. One of them, Alexander Van der Zwaan, “was represented by counsel during the interview; he was interviewed at a time when there was a publicly disclosed, full-bore investigation regarding Russian interference in the 2016 election; and he was given a warning that it is a federal crime to lie during the interview,” according to the memo. The other, George Papadopoulos, “was specifically notified of the seriousness of the investigation…was warned that lying to investigators was a ‘federal offense’…had time to reflect on his answers…and met with the FBI the following month for a further set of interviews, accompanied by his counsel, and did not correct his false statements.”

The message of the sentencing memo is clear: Flynn, his lawyers suggest, was surprised, rushed, not warned of the context or seriousness of the questioning, and discouraged from having a lawyer present.

That is all the sentencing document contains about the interview itself. In a footnote, Flynn’s lawyers noted that the government did not object to the quotations from the FBI 302 report.

In one striking detail, footnotes in the Flynn memo say the 302 report cited was dated Aug. 22, 2017 — nearly seven months after the Flynn interview. It is not clear why the report would be written so long after the interview itself.

The brief excerpts from the 302 used in the Flynn defense memo will likely spur more requests from Congress to see the original FBI documents. Both House and Senate investigating committees have demanded that the Justice Department allow them to see the Flynn 302, but have so far been refused.

In the memo, Flynn’s lawyers say that he made a “serious error in judgment” in the interview. Citing Flynn’s distinguished 30-plus year record of service in the U.S. Army, they ask the judge to go along with special counsel Robert Mueller’s recommendation that Flynn be spared any time in prison.

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Macron offers crumbs to protestors in bid to save his globalist agenda (Video)

The Duran Quick Take: Episode 36.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris take a quick look at French President Macron’s pathetic display of leadership as he offers protestors little in the way of concessions while at the same time promising to crack down hard on any and all citizens who resort to violence.

Meanwhile France’s economy is set for a deep recession as French output and production grinds to a halt.

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Via Zerohedge


As if Brussels didn’t have its hands full already with Italy and the UK, the European Union will soon be forced to rationalize why one of its favorite core members is allowed to pursue populist measures to blow out its budget deficit to ease domestic unrest while another is threatened with fines potentially amounting to billions of euros.

When blaming Russia failed to quell the widespread anger elicited by his policies, French President Emmanuel Macron tried to appease the increasingly violent “yellow vests” protesters who have sacked his capital city by offering massive tax cuts that could blow the French budget out beyond the 3% budget threshold outlined in the bloc’s fiscal rules.

Given the concessions recently offered by Italy’s populists, Macron’s couldn’t have picked a worse time to challenge the bloc’s fiscal conventions. As Bloomberg pointed out, these rules will almost certainly set the Continent’s second largest economy on a collision course with Brussels. To be clear, Macron’s offered cuts come with a price tag of about €11 billion according to Les Echos, and will leave the country with a budget gap of 3.5% of GDP in 2019, with one government official said the deficit may be higher than 3.6%.

By comparison, Italy’s initial projections put its deficit target at 2.4%, a number which Europe has repeatedly refused to consider.

Macron’s promises of fiscal stimulus – which come on top of his government’s decision to delay the planned gas-tax hikes that helped inspire the protests – were part of a broader ‘mea culpa’ offered by Macron in a speech Monday night, where he also planned to hike France’s minimum wage.

Of course, when Brussels inevitably objects, perhaps Macron could just show them this video of French police tossing a wheelchair-bound protester to the ground.

Already, the Italians are complaining.  Speaking on Tuesday, Italian cabinet undersecretary Giancarlo Giorgetti said Italy hasn’t breached the EU deficit limit. “I repeat that from the Italian government there is a reasonable approach, if there is one also from the EU a solution will be found.”

“France has several times breached the 3% deficit. Italy hasn’t done it. They are different situations. There are many indicators to assess.”

Still, as one Guardian columnist pointed out in an op-ed published Tuesday morning, the fact that the gilets jaunes (yellow vest) organizers managed to pressure Macron to cave and grant concessions after just 4 weeks of protests will only embolden them to push for even more radical demands: The collapse of the government of the supremely unpopular Macron.

Then again, with Brussels now facing certain accusations of hypocrisy, the fact that Macron was pressured into the exact same populist measures for which Italy has been slammed, the French fiasco raises the odds that Rome can pass any deficit measure it wants with the EU now forced to quietly look away even as it jawbones all the way from the bank (i.e., the German taxpayers).

“Macron’s spending will encourage Salvini and Di Maio,” said Giovanni Orsina, head of the School of Government at Rome’s Luiss-Guido Carli University. “Macron was supposed to be the spearhead of pro-European forces, if he himself is forced to challenge EU rules, Salvini and Di Maio will jump on that to push their contention that those rules are wrong.”

While we look forward to how Brussels will square this circle, markets are less excited.

Exhausted from lurching from one extreme to another following conflicting headlines, traders are already asking if “France is the new Italy.” The reason: the French OAT curve has bear steepened this morning with 10Y yields rising as much as ~6bp, with the Bund/OAT spread reaching the widest since May 2017 and the French presidential election. Though well below the peaks of last year, further widening would push the gap into levels reserved for heightened political risk.

As Bloomberg macro analyst Michael Read notes this morning, it’s hard to see a specific near-term trigger blowing out the Bund/OAT spread but the trend looks likely to slowly drift higher.

While Macron has to fight on both domestic and European fronts, he’ll need to keep peace at home to stay on top. Remember that we saw the 10Y spread widen to ~80bps around the May ’17 elections as concerns of a move toward the political fringe played out in the markets, and the French President’s popularity ratings already look far from rosy.

And just like that France may have solved the Italian crisis.

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Watch: Democrat Chuck Schumer shows his East Coast elitism on live TV

Amazing moment in which the President exhibits “transparency in government” and shows the world who the Democrat leaders really are.

Seraphim Hanisch

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One of the reasons Donald Trump was elected to the Presidency was because of his pugnacious, “in your face” character he presented – and promised TO present – against Democrat policy decisions and “stupid government” in general.

One of the reasons President Donald Trump is reviled is because of his pugnacious, “in your face” character he presented – and promised TO present – in the American political scene.

In other words, there are two reactions to the same characteristic. On Tuesday, the President did something that probably cheered and delighted a great many Americans who witnessed this.

The Democrats have been unanimous in taking any chance to roast the President, or to call for his impeachment, or to incite violence against him. But Tuesday was President Trump’s turn. He invited the two Democrat leaders, presumptive incoming House Speaker Nancy Pelosi, and Senate Minority Leader Chuck Schumer, and then, he turned the cameras on:

As Tucker Carlson notes, the body language from Schumer was fury. The old (something)-eating grin covered up humiliation, embarrassment and probably no small amount of fear, as this whole incident was filmed and broadcast openly and transparently to the American public. Nancy Pelosi was similarly agitated, and she expressed it later after this humiliation on camera, saying, “It’s like a manhood thing for him… As if manhood could ever be associated with him.”

She didn’t stop there. According to a report from the New York Daily News, the Queen Bee took the rhetoric a step below even her sense of dignity:

Pelosi stressed she made clear to Trump there isn’t enough support in Congress for a wall and speculated the President is refusing to back down because he’s scared to run away with his tail between his legs.

“I was trying to be the mom. I can’t explain it to you. It was so wild,” Pelosi said of the Oval Office meet, which was also attended by Vice President Pence and Senate Minority Leader Chuck Schumer (D-N.Y.). “It goes to show you: you get into a tinkle contest with a skunk, you get tinkle all over you.”

This represented the first salvo in a major spin-job for the ultra-liberal San Francisco Democrat. The rhetoric spun by Mrs. Pelosi and Chuck Schumer was desperate as they tried to deflect their humiliation and place it back on the President:

With reporters still present, Trump boasted during the Oval meeting he would be “proud” to shutdown the government if Congress doesn’t earmark cash for his wall before a Dec. 21 spending deadline.

Pelosi told Democrats that Trump’s boisterousness will be beneficial for them.

“The fact is we did get him to say, to fully own that the shutdown was his,” Pelosi said. “That was an accomplishment.”

The press tried to characterize this as a “Trump Tantrum”, saying things like this lede:

While “discussing” a budgetary agreement for the government, President Donald Trump crossed his arms and declared: “we will shut down the government if there is no wall.”

While the Democrats and the mainstream media in the US are sure to largely buy these interpretations of the event, the fact that this matter was televised live shows that the matter was entirely different, and this will be discomfiting to all but those Democrats and Trump-dislikers that will not look at reality.

There appears to be a twofold accomplishment for the President in this confrontation:

  1. The President revealed to his support base the real nature of the conversation with the Democrat leadership, because anyone watching this broadcast (and later, video clip) saw it unedited with their own eyes. They witnessed the pettiness of both Democrats and they witnessed a President completely comfortable and confident about the situation.
  2. President Trump probably made many of his supporters cheer with the commitment to shut down the government if he doesn’t get his border wall funding. This cheering is for both the strength shown about getting the wall finished and the promise to shut the government down, and further, Mr. Trump’s assertion that he would be “proud” to shut the government down, taking complete ownership willingly, reflects a sentiment that many of his supporters share.

The usual pattern is for the media, Democrats and even some Republicans to create a “scare” narrative about government shutdowns, about how doing this is a sure-fire path to chaos and suffering for the United States.

But the educated understanding of how shutdowns work reveals something completely different. Vital services never close. However, National Parks can close partly or completely, and some non-essential government agencies are shuttered. While this is an inconvenience for the employees furloughed during the shutdown, they eventually are re-compensated for the time lost, and are likely to receive help during the shutdown period if they need it. The impact on the nation is minimal, aside from the fact that the government stops spending money at the same frenetic pace as usual.

President Trump’s expression of willingness to do this action and his singling out of the Dem leadership gives the Democrats a real problem. Now the entire country sees their nature. As President Trump is a populist, this visceral display of Democrat opposition and pettiness will make at least some impact on the population, even that group of people who are not Trump fans.

The media reaction and that of the Democrats here show, amazingly, that after three years-plus of Donald Trump being a thorn in their side, they still do not understand how he works, and they also cannot match it against their expected “norms” of establishment behavior.

This may be a brilliant masterstroke, and it also may be followed up by more. The President relishes head-to-head conflict. The reactions of these congress members showed who they really are.

Let the games begin.

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