An Israeli F-16 fighter aircraft, January 18, 2011

War seems imminent again. According to The Washington Post‘s David Ignatius, the Americans believe that there is a strong likelihood that Israel will strike Iran before June of this year when Iran is expected to enter what the Israelis described as a “zone of immunity” to commence building a nuclear bomb.

“Very soon,” he writes, “the Israelis fear, the Iranians will have stored enough enriched uranium in deep underground facilities to make a weapon—and only the United States could then stop them militarily.”

Israeli Prime Minister Benjamin Netanyahu doesn’t want to leave the fate of Israel dependent on American action, which would be triggered by intelligence that Iran is building a bomb, which it hasn’t done yet.

The United States are reluctant to engage in military action against Iran. Attacking the country carries great tactical and strategic risks.

Iran has threatened to shut the narrow Strait of Hormuz if menaced which would put roughly 40 percent of the world’s seaborn oil transports at risk.

Tehran has more retaliatory options at its disposal across the Middle East. It could seek to incite Shī’ah violence in Bahrain and eastern Saudi Arabia as well as in Iraq where there are no longer American forces to quell sectarian unrest. The Iranians could also encourage Hezbollah to initiate a renewed missile barrage against Israel. Reportedly, the Israelis are anticipating such a counterstrike and expect casualties on their side to number in the several hundreds.

According to Ignatius, Israel believes that a military strike could be limited and contained. “They would bomb the uranium enrichment facility at Natanz and other targets; an attack on the buried enrichment facility at Qom would be harder from the air.”

This would appear to confirm a 2004 report in the German magazine Der Spiegel which said Israel had prepared a “complex yet manageable” plan of attack against six nuclear sites which were to be bombed simultaneously. The scenario envisioned Israeli jets traversing Iraqi airspace. With the Americans no longer present in the country, that could be complicated.

Israeli fighters are more likely to fly over southern Turkey or northern Saudi Arabia to reach their targets now. Neither country wants to have another nuclear neighbor.

The mountainous terrain in the northwest of Iran inhibits the country’s antiquated radar warning systems from spotting the Israelis from afar which makes the northern route an attractive one. Turkey, however, likes to think of itself as an interlocutor between Iran and the West and does not want to be perceived as an ally of Israel’s anymore.

The Saudis, by contrast, are engaged in something of a cold war with the Iranians and wouldn’t stop Israeli aircraft from overflying their northern desert. They have even warned that if Tehran gets the bomb, other powers in the region (i.e., Saudi Arabia) will seek a similar weapons capacity.

Ballistic missiles probably aren’t an option for Israel because they aren’t as accurate as aircraft delivering precision guided munition.

Iran’s nuclear facilities are scattered and concealed. It would be nearly impossible for an attacker, whether it’s Israel, the United States or both, to take out all of the Iranian nuclear sites in a single strike even if their bunker busting bombs are capable of obliterating the ayatollahs’ fortified positions. A unilateral Israeli strike this year would at best set the Iranians back several years in their alleged quest for a nuclear weapons capacity. Indeed, it would likely strengthen their conviction that Iran needs the ultimate weapon to defend itself against Israel.

Turkey's foreign minister Ahmet Davutoğlu is interviewed on France24, January 21

Turkey’s foreign minister told France24 in an interview this weekend that his country was prepared “to do everything for [the] Syrian people.” Ahmet Davutoğlu said the demands of the Syrian opposition “are right demands” but insisted that international action against the regime of President Bashar al-Assad should be coordinated with the United Nations.

In the wake of the “Arab spring,” Ankara has distanced itself from Damascus despite fostering trade relations with the Ba’athist regime there in previous years. President Abdullah Gül said that he had “lost confidence” in his Syrian counterpart in August of last year and Turkey has refused to close its border with Syria for refugees seeking to escape the brutal crackdown on anti-government demonstrations.

Erecting a “buffer zone” along the border may be a step too far for the Turks to do on their own even if a Syrian National Council that aims to organize the opposition to President Assad has been allowed to set up its headquarters in Istanbul.

Turkey seems anxious to position itself as a champion of the revolutionary cause lest the new rulers in countries as Egypt and possibly Syria remember that it was quite willing to work with their authoritarian predecessors until just last year. Asked whether he sees a role for Turkey as a regional power broker Davutoğlu said, “Of course.”

Whenever there is any need for Turkish help and assistance, we are always here in the most critical geographical part of the world.

The academic turned politician had more conciliatory words for Iran. Ever the diplomat, Davutoğlu said his country didn’t feel obliged to support unilateral Western sanctions against the Islamic republic. “The best and only way to solve this dispute is diplomacy,” he said.

Turkey’s resurgence as a regional power has complicated its relations with the West. Where it used to be staunchly pro-American and wished to become a member of the European Union, Prime Minister Recep Tayyip Erdoğan and his party appear to have realigned their nation to become a Middle Eastern one again. Davutoğlu will have to more clearly communicate Ankara’s motives to the West if Turkey is to become the interlocutor it says it aspires to be.

America’s and Europe’s rejection of the nuclear fuel exchange agreement which Turkey negotiated with the Iranians in conjunction with Brazil two years ago wouldn’t appear to bode well for its regional aspirations but it is the only NATO member that the Iranians trust as their middle man—even after, just last month, it agreed to host an early warning radar on its soil that will be part of a system designed to shoot down Iranian missiles.

Premier Wen Jiabao speaks in Dalian, China, September 14, 2011 (Adam Dean)

China’s premier on Friday warned Iran not to block access to the Strait of Hormuz and said his country “adamantly opposes Iran developing and possessing nuclear weapons.”

The words came as tensions are rising across the Persian Gulf and were unusually blunt for a Chinese leader. Wen Jiabao’s criticism of Tehran’s threats were well received by his Arab Gulf hosts however who fear Iran’s aspirations to regional leadership.

Wen was in the Middle East for a six day visit of Qatar, Saudi Arabia and the United Arab Emirates, three Sunni monarchies that are wary of Shī’ah Iran projecting influence across the Gulf.

The Islamic republic is under increasing international pressure because Western nations suspect it intends to develop a nuclear weapons capability. China is among few countries that is recognized as a nuclear power under nonproliferation accords. Iran is a signatory to these treaties. A nuclear weapons program would be in violation of them.

The European Union and Japan announced this month that they would join the United States in a boycott of Iranian oil sales. The country is heavily dependent on oil revenue but its export market is limited. If Europe and Japan were to suspend their petroleum imports, it would cut Iran’s sales by roughly a quarter.

China is another major buyer of Iranian oil but its largest supplier is Saudi Arabia. The kingdom and its emirate allies have offered to expand production to make up for gaps if oil consumers won’t trade with Iran. Wen insisted that China considers its business ties with Iran independently of its diplomatic relations. He has little choice but not to. China imports more than a third of its oil and Chinese oil consumption grows by 7.5 percent per year. It needs to buy wherever it can.

The crisis in the Gulf coincides with mounting turmoil in the Sudan. Before South Sudan seceded last year, the country exported the bulk of its oil to China. The Sudanese oil fields are largely situated in the South but the export industry is controlled by Khartoum. It recently confiscated Southern crude exports as compensation for unpaid transit fees.

Although the civil war in Sudan formally ended with Southern independence there continue to be clashes along the border. Oil revenue is a source of considerable discord between the two governments. If there is a disturbance in Sudanese exports, it would force China to increase its dependence on Middle Eastern oil producers, including Iran. Chinese petroleum imports from Iran already surged by 30 percent last year.

Chairman of the Joint Chiefs of Staff General Martin E. Dempsey meets with Lieutenant General Benny Gantz, chief of General Staff of the Israeli Defense Forces, January 20

America’s and Israel’s top military officers on Friday downplayed differences in policy between the two countries. Despite rumors of discord on how best to prevent Iran from attaining a nuclear weapons capacity, Lieutenant General Benny Gantz, the head of Israel’s defense forces, said, “I do know that both our countries share the same interests, both the same values, and I’m sure that we can somehow work it out together.”

Army General Martin E. Dempsey said his first visit to the Jewish state since assuming the chairmanship of the Joints Chiefs of Staff in October of last year reflected “the commitment we have with each other, and I’m here to assure you that’s the case.”

In a later meeting, Dempsey was told by President Shimon Peres that Israel had confidence in the United States military and “that even today in a very complicated situation we can find a common ground.”

Dempsey’s trip, despite assurances that there is no daylight between the two allies, is perceived as part of an effort by the United States to convince Israel to give international sanctions more time and stave off unilateral military action against Iran.

The two Western countries suspect that Iran’s uranium enrichment program is aimed to developing a nuclear weapon. Iran has denied this and threatened to shut access to the Persian Gulf if more sanctions are enacted which would put 40 percent of the world’s seaborn oil transports at risk.

Israeli officials have welcomed tightening sanctions against Tehran but sometimes questioned America’s resolve. Deputy Prime Minister Moshe Ya’alon, a former Israeli military chief, suggested on Sunday there is “hesitation” on the part of the Obama Administration to apply tougher sanctions “for fear of oil prices rising this year.”

Gasoline and oil transport insurance costs could skyrocket if there is a naval skirmish in the Persian Gulf. A prolonged Iranian blockade may lead to shortages because the United States import more than a million barrels of oil per day from Saudi Arabia, the bulk of which is transported by sea through the Gulf. After Canada, the kingdom is America’s second largest oil supplier.

Prime Minister Benjamin Netanyahu hasn’t ruled out a military strike against Iran’s nuclear facilities but his defense minister, Ehud Barack, this week offered more conciliatory words, saying that an Israeli decision on whether to attack Iran was “very far off.”

Vice President Joe Biden and President Barack Obama meet with National Security Staff in the Situation Room of the White House in Washington DC, June 20, 2011

“Iran now faces a unified world community” in opposition to its uranium enrichment program said President Barack Obama on Wednesday. International sanctions are putting “enormous economic pressure” on the Islamic nation while its regional standing is “diminished.”

The president made his statements in an interview with Time magazine. “When I came into office, what we had was a situation in which the world was divided, Iran was unified, it was on the move in the region,” he said. He cited his administration’s “effective diplomacy” in convincing China and Russia, which had previously balked at attempts to isolate Iran, to support sanctions.

Chinese companies are known to have violated United Nations sanctions at least since October of last year however while India aimed to work “creatively” around the punitive measures, fearful of upending ties with Iran which it regards as an ally in keeping Pakistan out of Afghanistan and countering Chinese influence in Central Asia. Neither has signaled a willingness to join an oil embargo which European nations, Japan and the United States are planning to enforce.

Russia did suspend a planned sale of surface to air missiles to Iran and banned trade in military hardware with the Islamic republic.

The most recent unilateral American sanction against Iran targets its central bank, the main conduit for oil revenues. Financial institutions that do business with Iran’s central bank could be subject to fines.

The government in Tehran relies on oil sales for some 85 percent of its income. China and India are among Iran’s main buyers. They take a 16 and 13 percent share respectively. European Union nations, which are expected to enact a boycott this month, buy roughly 15 percent of Iran’s oil.

In response to international pressure, Iran has threatened to block access to the Persian Gulf. The Iranian navy staged exercises in the narrow Strait of Hormuz this month to demonstrate its ability to close the waterway through which passes 40 percent of the world’s seaborn oil transports.

President Obama’s Republican challengers for the presidency have advocated more forceful action against the regime. Former House speaker Newt Gingrich told CNN in December that “Iran is not going to get a nuclear weapon. All the world can decide is whether they help us peacefully stop it or they force us to use violence,” he warned, “but Iran is not going to get a nuclear weapon.”

Former Massachusetts governor Mitt Romney, who is deemed likeliest to be nominated by the opposition party to run against the president in November, declared boldly during a televised debate in November that, “If we reelect Barack Obama, Iran will have a nuclear weapon. If we elect Mitt Romney, they will not have a nuclear weapon.”

The president admitted that there isn’t a guarantee that sanctions will change Iran’s behavior. “Which is why I have repeatedly said we don’t take any options off the table in preventing them from getting a nuclear weapon.”

But what I can confidently say, based on discussions that I’ve had across this government and with governments around the world, is that of all the various difficult options available to us we’ve taken the one that is most likely to accomplish our goal and one that is most consistent with America’s security interest.

He also reiterated that there is still “a diplomatic path where they forego nuclear weapons, abide by international rules and can have peaceful nuclear power as other countries do” but there seems little reason to suppose that, after the Iranians rejected several overtures on the part of Western powers, this is the path they’ll chose to walk.

Ali bin Ibrahim Al-Naimi, the Saudi oil minister, addresses a climate change conference in Montreal, Canada, December 8, 2005

Saudi Arabia on Monday warned Iran that using oil as a weapon against the West would be futile. The world’s top oil exporters and second largest producer said that it could lift production by some two million barrels per day “almost immediately” to make up for a reduced Iranian supply.

In an interview with CNN, the kingdom’s oil minister declared that all he needed to do was “turn valves” to boost production.

“This spare capacity is to respond to emergencies worldwide,” Ali bin Ibrahim Al-Naimi explained. “That is really the focus. Our focus is not on who drops out of production but who wants more.”

The announcement came a day after Iran warned Gulf Arab oil producers against increasing production to offset a drop in Tehran’s crude exports. The government’s OPEC governor was quoted in an Iranian newspaper on Sunday saying that attempts by other countries to replace Iran’s output with their own would make them an “accomplice in further events.”

Saudi Arabia is the only petroleum exporting country with a sizable spare capacity. It keeps production below capacity to sustain a price of roughly $100 per barrel. If the price of a barrel of oil drops below $80, Saudi Arabia’s government would be in financial trouble. Countries like Iraq and Russia, by contrast, need oil to trade over $100 per barrel to balance their budgets.

Iran is heavily dependent on oil revenue but its export market is limited. European countries are expected to enact an embargo which would reduce Iran’s oil sales by roughly 15 percent. China and India are its two other main buyers and take a 16 and 13 percent share respectively. Japan and South Korea also import oil from Iran but have been under pressure from the United States to suspend their trade.

Iranian oil production was an historic low before the boycots. Whereas Iran produced six million barrels per day before the overthrow of the monarchy in 1978, today, production is roughly half that number while global oil demand has only increased and prices with it.

In response to international sanctions against its uranium enrichment program, which Western countries suspect is designed to build a nuclear weapon, Iran has threatened to shut access to the Persian Gulf. The Iranian navy staged exercises in the Strait of Hormuz earlier this month to demonstrate its ability to close the narrow waterway through which passes some 40 percent of the world’s seaborn oil transports. Saudi Arabia, which exports the bulk of its oil through the Gulf, fears that a skirmish in the region could hurt its economy.

Energy industry in Ibaraki Prefecture, Japan, October 7, 2007 (Ryan McCune)

Japan on Thursday vowed to take “concrete” steps toward reducing its dependence on Iranian oil as the United States allied their Asian ally to put pressure on Tehran which they suspect is developing a nuclear weapons capacity.

Japan’s pledge is an encouraging sign for American foreign policy after China rebuffed sanctions aimed at starving the Iranian regime of the oil sales that provide 85 percent of its government revenue. Along with India, China and Japan account for more than 40 percent of Iran’s oil exports.

The European Union, another major buyer, has already committed to banning imports of Iranian oil. An embargo is expected to come into effect late in January.

The United States have lobbied Japanese and South Korean officials for months to reduce their Iranian oil buys. For each nation, Iranian crude makes up roughly 10 percent of their petroleum imports.

Japan’s finance minister cautioned that his nation wouldn’t be able to stop buying Iranian oil overnight. After a devastating tsunami and earthquake last year, Japan is struggling to build its economy. It is heavily dependent on foreign energy buys, especially as its nuclear industry is under pressure after the accident at the Fukushima power plant in March.

The United States have already banned Iranian oil imports. President Barack Obama imposed sanctions on its central bank and financial institutions that do business with it before the New Year’s. Japan hopes to secure a waiver for its banks from these punitive measures by supporting a Western oil embargo.

Iran insists that its uranium enrichment program serves no military purposes and staged naval exercises in the Persian Gulf earlier this year to try to stave off further international pressure. It has threatened to shut the narrow Strait of Hormuz through which passes 40 percent of the world’s seaborn oil transports every day.

Even if the United States don’t buy Iran’s oil, they are heavily dependent on exports from the other side of the Persian Gulf where Saudi Arabia’s oil industry is concentrated. A disruption in oil shipments could cause prices and insurance costs to rise but also hurt Iran’s economy as it may no longer be able to export to oil buyers in Asia while the US Navy tried to break an Iranian blockade of the Strait.

President Mahmoud Ahmadinejad of Iran arrives at Caracas airport, Venezuela, January 8

With his nation under pressure from international sanctions and facing a European oil embargo, Iranian president Mahmoud Ahmadinejad turns to a small and shrinking group of Latin American allies this week.

Ahmadinejad arrived in Caracas on Sunday to team up with Venezuelan president Hugo Chávez in denouncing America’s attempts at isolating Iran. He travels to Nicaragua on Monday to attend Daniel Ortega’s inauguration ceremony. The socialist leader won a third presidential term in November and has intensified relations with Iran and other anticapitalist regimes in recent years.

The Iranian president will also visit Cuba and Ecuador. Like Nicaragua, these nations belong to Hugo Chávez’ Bolivarian Alliance for the Americas, an organization that rejects the expansion of free trade and efforts at liberalization that have defined South America’s other economies for the last two decades.

Outside of these pariah states, the Iranian leader hasn’t a huge fan base in Latin America. Despite her nation’s previous attempts at diplomacy with Iran, Brazilian president Dilma Rousseff has shown little interest in deepening ties with the Islamic republic and isn’t scheduled to meet Ahmadinejad. The Iranian did come to Brazil in 2009 when he last visited the region but promises made then have yet to be fulfilled—among them, pledges to build an oil refinery in Ecuador and a port in Nicaragua.

After it brokered a nuclear fuel exchange agreement with Iran in conjunction with the Turks almost two years ago and failed to convince Western nations of Tehran’s sincerity, the Brazilian Government appears to have started moving away from its ideological commitment to nonalignment and conducted a pragmatic foreign policy with its own interests in mind foremost.

Brazilian trade with Iran has doubled in the last six years but the country is no ally of Iran’s. Rousseff even criticized her predecessor, the extremely popular Lula da Silva, for abstaining from voting on a United Nations resolution that condemned the Iranian regime for human rights abuses in the country.

Colombia, Chile and Mexico, economically and militarily among the strongest nations in Latin America, are allied to the United States while Argentina, in 2006, issued an arrest warrant for Iran’s former president Akbar Hashemi Rafsanjani in relation to the 1994 bombing of a Jewish community center in Buenos Aires which killed eighty-five people and was likely carried out by Hezbollah. There is little sympathy for Iran’s confrontational foreign policy in these quarters.

Outside of a few poor and decaying leftists regimes, Iran’s transatlantic support is limited indeed. It is doubtful moreover whether this supports extends beyond these nations’ eccentric leaders who talk a lot of challenging American “imperialism” in Latin America but amount to little more than a nuisance to the United States’ position on the continent. With Rousseff signaling a more pro-American policy and expressing no interest in expanding relations with the Islamic state, Ahmadinejad’s visit is actually a rather sad one this week.

The Darquain oilfield in Khuzestan, southwestern Iran, June 11, 2003 (Roozbeh Feiz)

Members of the European Union have reportedly agreed to impose an embargo on Iranian oil trade in an effort to put pressure on the regime in Tehran which Western countries suspect is developing a nuclear weapon.

The embargo, which would represent the toughest European sanction on Iran to date, would go into effect before the end of January and eventually bar all member states from importing oil from Iran.

Iran sells some 15 percent of its oil to countries in the European Union.

Existing sanctions against Iran’s uranium enrichment program have capped its oil and gas production but were offset by buoyant crude prices. With demand for oil in China rising at a slower rate than expected and Saudi Arabia signaling a willingness to boost output if necessary, such comfort is unlikely to last.

China is one of the Iranian Government’s prime financiers as it depends for 85 percent for its revenue on oil sales. Other main costumers include India, Japan and South Korea. The latter have been under American pressure to reduce their oil buys from Iran.

The Islamic nation has tried to deter further action by staging naval exercises in the Persian Gulf and threatening to shut the narrow Strait of Hormuz through which passes roughly 40 percent of the world’s seaborn oil transports every day.

The United States welcomed the news of Europe’s embargo plans. A State Department spokesperson argued that “the place to get Iran’s attention is with regard to its oil sector.”

President Barack Obama, earlier this month, enacted legislation that sanctioned Iran’s central bank and any financial institution that does business with it. The central bank is the main conduit for Iran’s oil revenues.

Ayatollah Ali Khamenei, supreme leader of Iran, September 17

Trying to make sense of Iranian power struggles from afar is rather akin to Cold War Kremlinology. In a closed power system as Iran’s, it is extremely difficult to tell who’s at odds with whom at a given time. Foreign analysts look for hints in the slightest gestures and sometimes frame otherwise perfectly meaningful quotes from officials as part of a comprehensive drama. Much is probably exaggerated in the process but still, we try.

Thus beware, we may be misreading the signals but with some expertise and even more common sense, we may be able to put together a picture of what’s going on behind the scenes in Tehran that approximates reality.

There is little doubt that, Iranian grandstanding aside, international sanctions against the regime have hurt. President Barack Obama said in August of last year that his administration had picked up “rumblings that there is disquiet about the impact” of the sanctions. The Iranian economy certainly isn’t growing at a more impressive rate that the decadent and decaying West. Rather it’s in shambles with high unemployment and inflation soaring to such an extent that Iranians are reportedly stockpiling dollars and gold.

The Iranian navy’s recent announcement that it could “easily” shut the Strait of Hormuz from international oil trade and would test its ability to do just that seems to confirm that the regime is feeling squeezed from all sides. With its sole regional ally Syria in turmoil and Russia suspending weapons sales, Tehran is isolated indeed and perhaps afraid that Israel and the United States will launch military strikes against its uranium enrichment program.

In America, Republican opposition candidates for the presidency have quite outspokenly endorsed an attack against Iran while defense secretary Leon Panetta last week said that he couldn’t let the Iranians develop a nuclear weapon which he expected they would be able to within a year.

“If they proceed and we get intelligence that they are proceeding with developing a nuclear weapon then we will take whatever steps necessary to stop it,” Panetta told CBS News.

Little wonder that the Iranians seek a nuclear weapons capacity. They know that once they have an atomic bomb, they’ll be better able to deter Western interventionism. Support for Iran’s nuclear program transcends partisan divides therefore. Even former prime minister Mir-Hossein Mousavi, who was President Mahmoud Ahmadinejad’s main challenger for the highest office in the disputed elections of 2009, supported the enrichment program.

It’s unclear whether Ahmadinejad and Iran’s supreme leader Ali Khamenei see eye to eye. Events earlier this year suggested a split when the president fired his intelligence minister and was quickly forced to rehire him by Khamenei. What is clear is that Ahmadinejad and his allies have targeted conservative clergymen and parliamentarians have called for his impeachment. Supporters of the president’s have suggested that “Iran needs to remove the mullahs from power once for all and return to a great civilization without the Arab style clerics who have tainted and destroyed the country for the past thirty-one years.”

Clerics and parliamentarians from the older generation, who were part of the Islamic Revolution of 1979, seem to fear that Ahmadinejad and his allies are squandering religious principles in favor of a messianic cult that rejects the intermediary role of the clergy and the need to respect the “people’s will,” as the late Ayatollah Khomeini put it. They would rather do away with elections and take their guidance only from the divine in the form of a powerful spiritual leader.

Opposed are conservative Islamists who have coalesced around former president Akbar Hashemi Rafsanjani who resigned as chairman of the Assembly of Experts in March of this year. The body is charged with electing, monitoring and, if necessary, dismissing the supreme leader. Rafsanjani clings to power as head of a committee that settles disputes between the legislature and the Guardian Council which acts as a combination of senate and supreme court.

This group of conservatives, which includes Mousavi and should not be considered particularly moderate, favors privatization of state owned enterprises and stable relations with the West. They have a reputation for corruption and their influence is probably declining relative to Iran’s Revolutionary Guards Corps which seems largely allied to Ahmadinejad.

Second only to the clerics, the Revolutionary Guards could very well emerge as the most powerful faction in Iran as the country’s religious leaders are aging and divided on the future composition of the republic. Secretary of State Hillary Clinton warned last year that Iran was sliding into a military dictatorship. The guards, she said, were gaining influence “across all areas of Iranian security policy, and certainly nuclear policy is at the core of it.”

There is discord among the guards as well with senior commanders and former guardsmen, including the incumbent speaker of the Iranian parliament, reportedly urging the Ayatollah Khamenei to change his way and muzzle his fiery acolyte, Ahmadinejad.

The supreme leader’s allegiances are ambiguous however. He probably has the backing of radical mullahs as well as guardsmen and intelligence officers who maybe weren’t part of the vanguard of the Islamic Revolution but did cut their teeth in Iran’s bloody eight year war with Iraq in the 1980s.

Ahmadinejad’s problems with conservatives pose a dilemma to Khamenei. If he intervenes to rein in the opposition, he will be more closely identified with the president and may lose support from leaders in the Revolutionary Guards who fear that a confrontational foreign policy will lead to war. If he doesn’t, the regime’s internal divisions will deepen ahead of parliamentary elections next year.

The main challenge to Ahmadinejad’s administration is the deplorable state of Iran’s economy. It is estimated that one out of five Iranians is jobless. Inflation could be as high as 30 percent but the government insists it’s under 9 percent—a rate that would still be considered Weimaresque in Europe today.

Prices have doubled on average during the last four to five years but forced to cut spending, Adhmadinejad plans to reduce food and fuel subsidies and replace them with a complicated and unpopular scheme of price compensation for the nation’s poor.

If European countries were to multilaterally cut off their remaining oil ties with Iran, that would send the economy into recession overnight. Oil production provides some 85 percent of government revenue but is far below capacity. Whereas Iran produced six million barrels per day in 1978, before the overthrow of the shah, today, production is roughly half that number while global oil demand has only increased and prices with it.

Petroleum and petrochemicals also account for 85 percent of Iranian exports. China and India are Iran’s main costumers and take a 16 and 13 percent share respectively. Japan and South Korea also import oil from Iran but have been under pressure from the United States to suspend their trade.

For all the political and theological disputes that are now raging, or at least shimmering in Tehran, it’s the economy that could prove Ahmadinejad’s undoing. If his popular support continues to erode, the supreme leader may have little other choice but to force him to resign. Once Ahmadinejad and his allies are removed from office, either the guards could take over with maybe a figurehead president or the conservatives could stage a coup and try to return Rafsanjani to the highest office.

Khamenei, in any event, will persevere. He is the only person whose legitimacy isn’t questioned by any political faction in Iran that’s able to exert influence.