A number of new developments on Tuesday inflected the U.S.-Iran stand-off.  --  In Iran, President Mahmoud Ahmadinejad gave a speech saying that the U.S. "was creating a 'power vacuum' that would benefit Iran and other countries in the region."[1]  --  He also accused the U.S. of "of fomenting ethnic and sectarian violence in Iraq to 'loot' Iraqi and Middle East oil 'under the pretext of insecurity' in Iraq," Najmeh Bozorgmehr of the Financial Times (UK) reported.  --  A few hours later, U.S. President George W. Bush gave a speech to a veterans' group in the U.S. accusing Iran of "murderous activities" in Iraq that he said he has ordered U.S. commanders to "confront."[2]  --  At the same time, he said "that a U.S. retreat from Iraq could embolden Iran to develop atomic weapons and trigger a nuclear arms race in the Middle East," the Financial Times reported.  --  Hours after Bush's speech, "American troops raided a Baghdad hotel Tuesday night and took away a group of about 10 people that a U.S.-funded radio station said included six members of an Iranian delegation here to negotiate contracts with Iraq's government," AP reported.[3]  --  BBC said the Iranian embassy in Baghdad had confirmed the incident, "had contacted the Iraqi Ministry of Foreign Affairs, and would send a formal protest letter in the morning."[4]  --  The intensification of the stand-off, which on Monday French President Nicolas Sarkozy called "the gravest [crisis] that today hangs over the international order," made an Op-Ed piece in Tuesday's Financial Times seem plaintive and moot.  --  In it, Iran expert Ray Takeyh, who has just published Hidden Iran: Paradox and Power in the Islamic Republic, wrote:  "The tensions and problems between the U.S. and Iran cannot be resolved by episodic diplomacy or sanctions and threats.  In the end, the best means of resolving the difficulties between the two states is through comprehensive dialogue encompassing the totality of differences between them.  Only through such a framework can the U.S. and Iran arrive at a common perspective on Iraq, the nuclear issue, and ­terrorism." ...

1.

In depth

Iran

MIDEAST POWER VACUUM 'BENEFITS IRAN'
By Najmeh Bozorgmehr

Financial Times (UK)
August 28, 2007

http://www.ft.com/cms/s/0/4b4ad630-55b7-11dc-b971-0000779fd2ac.html

TEHRAN -- Iran’s president said on Tuesday that diminished U.S. political influence in the Middle East was creating a “power vacuum” that would benefit Iran and other countries in the region.

Mahmoud Ahmadinejad went on to say that that the U.S.’s “weakening” of the Iraqi government -- an apparent reference to recent criticism of prime minister Nouri al-Maliki by senior U.S. politicians -- would not help the U.S. maintain control over the country.

The comments are a reminder of Iran’s long-standing ambition to be the top power in the Persian Gulf, as it was before the 1979 Islamic revolution -- a nightmare scenario for some of the other countries in the region.

Iran’s nuclear program -- which Tehran says is purely for peaceful purposes -- has fuelled Sunni Arab countries’ fears of Shia Iran.

Mr. Ahmadinejad was speaking before U.S. President George W. Bush launched a fresh verbal attack on the Tehran regime’s nuclear program which the U.S. and other Western powers believe is designed to produce nuclear weapons.

“Iran’s actions threaten the security of nations everywhere, and the United States is rallying friends and allies to isolate Iran’s regime to impose economic sanctions,” Mr. Bush told a U.S. veterans’ rally. “We will confront this danger before it is too late.”

But Mr. Ahmadinejad called for co-operation with some of the regional nations who have expressed concern at its growing influence.

“With the help of neighbors and regional friends like Saudi Arabia, we are ready to fill up this vacuum to the benefit of regional nations and Iraq,” Mr. Ahmadinejad said in a press conference. “This is happening . . . and those who close their eyes are fooling themselves.”

Mr. Ahmadinejad downplayed the differences between Iran and Saudi Arabia over Iraq and Lebanon and added that regional co-operation was feasible.

Iran supports the Maliki government and opposes efforts to remove him.

Mr. Ahmadinejad warned that changing the Iraq government could “further complicate” the situation for the U.S., accusing the U.S. of fomenting ethnic and sectarian violence in Iraq to “loot” Iraqi and Middle East oil “under the pretext of insecurity” in Iraq.

However, he said Iran-U.S. talks over security in Iraq could still continue.

Responding directly to Mr. Ahmadinejad’s comments, U.S. State Department spokesman Tom Casey said on Tuesday that the U.S. wanted to see Iran play a more positive role in Iraq but that the president’s remarks reflected “just more of the same Iranian rhetoric that claims to hold down support and friendship for the people of Iraq, while actions, unfortunately, take them in the opposite direction.”

Tensions between Iran and the U.S. have been mounting over Tehran’s nuclear program and its alleged involvement in backing Shia militia in Iraq, while Mr. Ahmadinejad once again reiterated that suspension of uranium enrichment -- as demanded by United Nations resolutions -- was out of the question.

Iran and the International Atomic Energy Agency, reached an agreement on Monday according to which U.N. questions about tests with plutonium -- fuel for atomic bombs -- which Iran says it has no intention to make, were resolved and the U.N. watchdog considered the issue closed.

Mr. Ahmadinejad also shrugged off any possibility of military confrontation but was careful not to make any threats even when he was asked about closing the strategic strait of Hormuz -- through which more than 25 per cent of the world’s oil flows: “Intensifying and expanding tensions is not on anyone’s agenda.”

He also doubted the U.S. would put Iran’s Revolutionary Guards on their list of “terrorist” organizations -- a move advocated by some in Washington.

2.

In depth

Iran

IRAQ RETREAT COULD 'EMBOLDEN IRAN'
By Andres Ward (Washington), Demetri Sevastopulo (Washington), and Najmeh Bozorgemehr (Tehran)

Financial Times
August 28, 2007

http://www.ft.com/cms/s/0/22faddb4-5536-11dc-b971-0000779fd2ac.html

President George W. Bush warned on Tuesday that a U.S. retreat from Iraq could embolden Iran to develop atomic weapons and trigger a nuclear arms race in the Middle East.

His comments came just hours after Mahmoud Ahmadinejad, Iran’s president, said his country was poised to fill the “power vacuum” being created by the U.S.’s waning influence in the region.

Mr. Bush accused Tehran of destabilizing Iraq and Afghanistan and threatening the Middle East with the “shadow of a nuclear holocaust.”

“We will confront this danger before it is too late,” he said.

It would be a “disaster” if the “forces of radicalism and extremism”, including Iran, succeeded in driving the U.S. out of Iraq, Mr. Bush said.

“The region would be dramatically transformed in a way that could imperil the civilized world,” he said. “Iran could conclude that we were weak and could not stop them from gaining nuclear weapons. And once Iran had nuclear weapons, it would set off a nuclear arms race in the region.”

Mr. Bush is preparing for a showdown with Congress over Iraq when he delivers a progress report on the war next month.

It was the president’s second speech in a week about the dangers of a U.S. retreat from Iraq, indicating that the White House was determined to resist pressure to start withdrawing troops.

“Leaders in Washington need to look for ways to help our Iraqi allies succeed, not for excuses to abandon them,” he said.

Earlier in the day, Mr. Ahmadinejad said U.S. influence in Iraq was “collapsing rapidly.” “Soon, we will see a huge power vacuum in the region,” he said. “With the help of neighbors and regional friends like Saudi Arabia, we are ready to fill up this vacuum to the benefit of regional nations and Iraq.”

Mr. Ahmadinejad’s proposal for co-operation with Saudi Arabia appeared as an attempt to ease anxiety in the region about Tehran’s growing influence.

Mr. Bush said he had authorized U.S. commanders in Iraq to “confront Tehran’s murderous activities.” Associated Press reported that U.S. troops on Tuesday night detained seven Iranians visiting Baghdad as part of a government delegation. A spokesman for U.S. forces in Iraq could not be reached for comment.

3.

U.S. TROOPS REPORTEDLY DETAIN IRANIANS
By Bassem Mroue

Associated Press
August 28, 2007

http://www.forbes.com/feeds/ap/2007/08/28/ap4062619.html

BAGHDAD, Iraq -- American troops raided a Baghdad hotel Tuesday night and took away a group of about 10 people that a U.S.-funded radio station said included six members of an Iranian delegation here to negotiate contracts with Iraq's government.

The Iranian Embassy did not confirm the report. But it said seven Iranians -- an embassy employee and six members of a delegation from Iran's Electricity Ministry -- were staying at the Sheraton Ishtar Hotel, which was the one raided by U.S. soldiers.

An arrest of Iranian officials would add to tensions between Washington and Tehran already strained by the detention of each other's citizens as well as U.S. accusations of Iranian involvement in Iraq's violence and alleged Iranian efforts to develop nuclear bombs.

Videotape shot Tuesday night by Associated Press Television News showed U.S. troops leading about 10 blindfolded and handcuffed men out of the hotel in central Baghdad. Other soldiers carried out what appeared to be luggage and at least one briefcase and a laptop computer bag.

A U.S. military spokesman, Lt. Col. Christopher Garver, declined to comment, saying the action was part of an operation that had not been completed. In Washington, State Department spokesman Tom Casey said, "I've seen that report but I can't verify it."

The Internet site of Radio Sawa, an Arabic-language station financed by the United States, said Iranian officials were detained and taken to an unknown location. It said the Iranian delegation was in Baghdad to negotiate contracts on electric power stations.

An Iranian diplomat told the Associated Press that the Iranian Embassy had notified Iraqi authorities about the Radio Sawa report. The diplomat refused to give his name.

Iran has constantly complained about the U.S. detention since Jan. 11 of five Iranians who were in the northern Iraqi city of Irbil. U.S. officials say the five include the operations chief and other members of Iran's élite Quds Force, which is accused of arming and training Iraqi militants.

The Iranian regime denies any involvement in the violence wracking its neighbor.

U.S. authorities are unhappy about Iran's arrest of four people with dual American-Iranian citizenship for allegedly seeking to undermine the Islamic Republic's security. Two are imprisoned in Iran, while two are free but barred from leaving the country.

Relations also are edgy over the suspicions of the U.S. and its allies that Tehran is using its civilian nuclear power program as a screen to develop atomic weapons. Iran denies that, saying the program only has the peaceful aim of generating electricity.

The strains have many people in the region worried about the possibility of fighting between the U.S. and Iran.

But while making his latest defense of Iran's nuclear program earlier Tuesday, Iranian President Mahmoud Ahmadinejad dismissed the possibility of any U.S. military action against Iran, saying Washington has no plan and is not in a position to take such action.

4.

U.S. 'SEIZES IRANIAN GROUP IN IRAQ'

BBC News 24
August 28, 2007

http://news.bbc.co.uk/1/hi/world/6967850.stm

Seven Iranians working for the Iranian Electricity Ministry have been arrested by U.S. forces in Baghdad, the Iranian embassy says.

A spokesman told the BBC the embassy had contacted the Iraqi Ministry of Foreign Affairs and would send a formal protest letter in the morning.

He said the Iranians were in Baghdad in connection with the building of a power station.

The group were detained at the Sheraton Hotel where they were staying.

Video footage showed soldiers leading a group of men, blindfolded and handcuffed, out of the hotel in central Baghdad.

Other soldiers were seen leaving the hotel carrying what appeared to be luggage and a laptop computer bag.

The arrests come shortly after a speech by U.S. President George W Bush in which he criticiZed Iranian interference in Iraq.

Tension between the U.S. and Iran is running high -- with the U.S. accusing Iran of providing arms, money, and military training to Shia insurgents in Iraq.

President Bush specifically stated that he had authorized his military commanders in Iraq to confront what he called "Iran's murderous activities" in the country.

Earlier the Iranian President, Mahmoud Ahmadinejad, said that American power in Iraq was on the verge of collapse and this would lead to a huge vacuum which Iran would be willing to fill.

In January, five Iranians -- who the U.S. say are linked to Iran's Revolutionary Guard and were training militants in Iraq -- were captured in the northern city of Irbil.

The five remain in U.S. custody.

5.

BEWARE ATTACKING IRAN'S GUARDS
By Ray Takeyh

Financial Times (UK)
August 28, 2007

http://www.ft.com/cms/s/0/184e5e1a-557a-11dc-b971-0000779fd2ac.html (subscribers only)

President George W. Bush’s plan to designate Iran’s Revolutionary Guards as a terrorist organization is yet another example of Washington’s incoherent Iran policy. On the surface, the Revolutionary Guards are ideal candidates for sanctions, as they are in control of Iran’s expanding nuclear infrastructure and are busy training Shia militias in Iraq. However, at a time when the administration professes a desire for a negotiated settlement with Tehran, coercing a pillar of the theocratic regime erodes the possibility of a diplomatic ­resolution.

The 125,000-strong Revolutionary Guards were created in the early 1980s and continue to be commanded by reactionary ideologues who are committed to the values and outlook of the clerical hardliners. Throughout the 1990s, the Guards pressed for suppression of the reform movement.

In recent years, the Guards have steadily intruded into economic activities, establishing their own companies with privileged access to contracts in industries such as telecommunications and imported consumer goods. Through this network, the Guards have enhanced their patronage power, allowing them to cultivate their constituents. More ominously, under the auspices of the Revolutionary Guards an entire array of organizations such as the Defense Industries Organization, university laboratories, and a plethora of companies have provided an impetus for Iran’s expanding nuclear efforts.

In recent years, many members of the Revolutionary Guards have entered the political sphere. President Mahmoud Ahmadinejad and hardline elements within the parliament are among the most prominent guardsmen-turned-politicians. However, it is too facile to suggest that all the guardsmen entering politics have been dogmatic and intransigent. In one of the many paradoxes of Iran, many members of the reform movement and the democratic opposition are also former members of the Revolutionary Guards, making their terrorist label even more problematic.

Beyond the intricacies of Iran’s internal politics, the practical impact of such a terrorist designation on the Revolutionary Guards’ commercial activities will be limited.

To begin with, the U.S. has no trade linkages to Iran that it can sever, and European companies are unlikely to adhere to yet another set of American sanctions. Moreover, given the murky and ambiguous nature of the Revolutionary Guards’ business enterprises, it is difficult to suggest in a conclusive manner whether a company is really operating on their behalf. As such, the type of information and intelligence that is needed for targeted sanctions is unlikely to be available.

While the economic ramifications of the new policy will probably be in­adequate, its political impact is likely to be considerable. Past and present Guardsmen permeate Iran’s security network. The staff of Ali Larijani, Iran’s national security adviser and chief nuclear negotiator, is composed mostly of Revolutionary Guards. Iran’s policy toward Iraq and Afghanistan is also under the purview of the Guards.

Despite their attempts to arm and train Iraqi Shia militias and advance Iran’s nuclear program, the Guards have not opposed negotiations with the U.S. Indeed, it would be inconceivable for talks on the nuclear issue or Iraq to have proceeded without the Guards’ approbation. The administration’s attempt to coerce and put pressure on this organization is likely to trigger its antagonism towards further dealings with the U.S.

The Bush administration has embraced a dual-track approach of coercion and negotiations at the same time, without an appreciation of how one track undermines the other. The offer by Condoleezza Rice, secretary of state, to negotiate with Iran on its nuclear programme and Iraqi security will be subverted when the administration restricts Iran’s access to global financial institutions or designates the entire Revolutionary Guard corps as a terrorist entity.

The tensions and problems between the U.S. and Iran cannot be resolved by episodic diplomacy or sanctions and threats. In the end, the best means of resolving the difficulties between the two states is through comprehensive dialogue encompassing the totality of differences between them. Only through such a framework can the U.S. and Iran arrive at a common perspective on Iraq, the nuclear issue, and ­terrorism.

--The writer is a senior fellow at the Council on Foreign Relations and the author of Hidden Iran: Paradox and Power in the Islamic Republic.