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Bloomberg.com July 21, 2009

Iran Turmoil May Cost Hezbollah, Hamas Amid Retreat

By Ben Holland and Massoud A. Derhally

July 21 (Bloomberg) -- The power struggle in Iran sparked by the disputed re-election of President Mahmoud Ahmadinejad is weakening the country’s ability to back Islamist groups Hamas and Hezbollah, as well as Iraqi militants.

The main coordinator of support to these groups has been Iran’s Revolutionary Guards, whose Basij militia played a role in suppressing demonstrations against last month’s election results.

With the country still divided over the election, the Guards will focus on keeping their patron Ahmadinejad in office, said Jeremy Binnie, an analyst at Jane’s Defence Weekly in London.

“Their head guys would presumably at this stage be more worried about domestic opposition than they would be about regional scheming,” Binnie said.

A decline in support for Iran’s clients may facilitate President Barack Obama’s Middle East policy in two ways: by giving Syria an incentive to move closer to the U.S., and by encouraging American allies Saudi Arabia and Egypt to push Hamas toward a unity government with Palestinian President Mahmoud Abbas that would hold peace talks with Israel.

“It could change the map of the region,” said Radwan Ziadeh, a fellow at Harvard University’s Carr Center of Human Rights in Cambridge, Massachusetts. Iran’s leaders will “have to focus more on the economy and internal issues” than on supporting regional surrogates, he said.

Hamas, Hezbollah

Support from Iran has helped Hamas stay in power in the Gaza Strip, and Iranian arms were used by Hezbollah in Lebanon during its 2006 war against Israel. Last year, Iran provided more than $200 million to Hezbollah and trained about 3,000 of its fighters in Iran, according to the U.S. State Department’s April 2009 report on global terrorism. It has also sent weapons to Iraqi militants fighting U.S. forces, the report said.

“Iran can become a constructive actor in the region if it stops threatening its neighbors and supporting terrorism,” Secretary of State Hillary Clinton said in a July 15 speech in Washington. The U.S. considers Hamas and Hezbollah terrorist organizations.

Iran’s support for Islamic groups stems from the 1979 revolution that overthrew Shah Mohammed Reza Pahlavi and brought Ayatollah Ruhollah Khomeini to power. His call to Muslims to establish religious regimes has concerned Egypt and Jordan, which have suppressed domestic Islamist parties, and Saudi Arabia, whose Sunni rulers oversee a population that is about 15 percent Shiite, the sect that dominates Iran.

Street Protests

Khomeini’s successor as supreme leader, Ayatollah Ali Khamenei, has been facing the biggest challenge to the regime in its 30-year history. Hundreds of thousands took to the streets after the June 12 re-election of Khamenei ally Ahmadinejad, saying the vote was rigged. Protests continued this month and police used tear gas against opposition supporters who held a demonstration against Ahmadinejad after prayers in Tehran on July 17, the Associated Press reported.

Mir Hossein Mousavi, who lost to Ahmadinejad in the vote and spearheaded protests afterward, accused the president during the campaign of focusing on provocative foreign policies while neglecting Iran’s economy. Inflation reached 24 percent in January, according to the central bank, and unemployment was 10.5 percent in February, the most recent month available.

Syria and Iran

The turmoil in Iran may help the U.S. improve relations with Syria, which has a defense cooperation agreement with Iran and has been a conduit for Iranian arms to Hezbollah, said Josh Landis, director of the Center for Middle East Studies at the University of Oklahoma in Norman.

The State Department announced June 24 that it would send a U.S. ambassador to Damascus, resuming full relations for the first time in four years. Syrian President Bashar Al-Assad said this month that he would welcome an Obama visit to Damascus, and favored reviving the indirect peace talks with Israel that broke off in December when Israel attacked Gaza.

“The Obama team may see in the Iran events a vindication of its policy of dialogue and compromise,” Landis said. “It should give Obama greater courage to press forward with Arab- Israeli peace.”

Iran’s Lebanese protégé, Hezbollah, has been weakened by a June 7 election defeat at the hands of the country’s pro-Western coalition. Shiite religious parties in Iraq also lost support in January’s local elections, although the winner of that vote, Prime Minister Nuri al-Maliki’s Dawa party, is also Shiite- dominated and has ties with Iran.

Mahdi Army

Iran has backed militant groups in Iraq such as Moqtada al- Sadr’s Mahdi Army, which has fought against U.S. troops and Maliki’s government.

While attacks on American forces in Iraq have lessened in the past two years and the U.S. has agreed to pull its troops out by 2011, the State Department report said that “Shiite militant groups’ ties to Iran remained a challenge and threat to Iraq’s long-term stability.”

A weakened Iran may also create opportunities for other sponsors of Hamas to increase their influence, said Theodore Karasik, director of research at the Dubai-based Institute of Near East and Gulf Military Analysis.

Saudi Arabia is one of Hamas’s two biggest sources of cash, along with Iran, according to the Washington-based research group GlobalSecurity.org. It and Egypt may now seek to push Hamas toward a unity government, Karasik said.

To contact the reporters on this story: Ben Holland in Istanbul at bholland1@bloomberg.netMassoud A. Derhally in Amman, Jordan at mderhally@bloomberg.net.

Copyright 2009, Bloomberg, LP