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SEPTEMBER 17, 2001

International Outlook
Edited by Rose Brady


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Will Iran's Mullahs Overplay Their Hand?

Russia Seeks Space Tourists

Court Rules for Chirac


Will Iran's Mullahs Overplay Their Hand?

There is an old saying in Iran that once you let a mullah ride your donkey, it is very hard to get him off. In the same vein, Iranians, who voted overwhelmingly for reform President Mohammad Khatami in last June's elections, are having a terrible time shaking off the influence of hard-line religious conservatives.

While Khatami won about 70% of the vote, hard-line clerics, who didn't even put up a candidate, have been acting as if they were the winners. In August, they managed temporarily to hold up Khatami's inauguration. They have also taken to staging public floggings in parks and on traffic islands in Teheran to punish drunkenness and fraternization between unmarried men and women. Their aim is to remind Khatami, as he forms his new government, that the conservatives still have clout.

Although they have lost control of the executive branch and the Parliament, this group of clerics, led by judiciary chief Mohammad Hashemi Shahroudi and Ayatollah Ahmad Janati, retains control over law enforcement. It dominates the Council of Guardians, a body that has sweeping powers of review. In the past, conservatives have also enjoyed a great deal of success in convincing Supreme Leader Ali Khamenei that Khatami's program is largely about "sex, drugs, and rock "n' roll," as one Iranian political scientist puts it. In his first term, which began in 1997, Khatami did a poor job of managing Khamenei, who is potentially the most powerful figure in Iran's hydra-headed political system.

SUBTLE GAME. Along with disappointing many Iranians, the recent backlash could damage hopes for improving the country's struggling economy, which badly needs outside capital and knowhow. The infighting can't help but sow doubt in the minds of both Iranian and foreign investors, who had hoped that the political jousting would lessen after the June vote. "I am sure that a lot of foreign companies are reassessing political risk in Iran," says Bijan Khajehpour, managing director of Atieh Bahar Consulting in Tehran.

In response, Khatami and the reformers have to play a subtle game. They are rolling with the punches, hoping that the hard-liners will overplay their hand. The more the mullahs use their control of the judiciary to enforce their positions on social issues, the more unpopular they become with the public. Hard-liners "are making a clear stand now--and this has costs," says Abbas Abdi, a left-wing journalist.

Meanwhile, Khatami is working out a modus vivendi with the Supreme Leader, who, despite his conservative instincts, realizes that the clerics' obstructionism could eventually backfire. Khatami has learned to proceed cautiously. He hasn't put any controversial reformers in his new Cabinet, for example. That's in contrast to his first term, when outspoken Interior Minister Abdullah Nouri landed in jail and other key aides were forced out.

"MORE PROFESSIONAL." Even so, Khatami may now have the personnel he needs to push through reforms such as privatization and devolving more power to local governments. His new Finance Minister, Tahmasab Mazaheri, an ex-presidential adviser, can only be an improvement on his predecessor, Hossein Namazi, a 1960s-style Third World socialist. "This is a more professional Cabinet," says Saiid Laylaz, a prominent Teheran economist. Khatami has cut a deal with conservatives to open the country more to investment.

Still, hard-liners will not yield their power easily, even though their rule has left Iran impoverished and lagging behind much of the world in many fields. Khatami holds out hope of beneficial change, but it's going to be tough for him to deliver.

By Stanley Reed in London and Haleh Anvari in Teheran


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GLOBAL WRAPUP
Russia Seeks Space Tourists

Dutch-based MirCorp is planning to build and launch the world's first commercial space station by 2004. The company, 60% owned by Russian aerospace giant Energiya, ran out of time in its attempt to turn Russia's creaking Mir space station into a hotel before it crashed to earth last March. Now, MirCorp aims to modify existing Russian-made Soyuz modules to hold up to three cosmonauts, including space tourists, for 20 days. Russia's space agency, Rosaviakosmos, must approve plans for the space station, which could cost $100 million. Indeed, the cash-strapped agency is hoping to get a 20% cut of profits from charges of $20 million per person per trip. MirCorp executives say 15 potential space tourists have voiced interest.

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GLOBAL WRAPUP
Court Rules for Chirac

French President Jacques Chirac's reelection prospects are looking brighter. On Sept. 4, an appeals court removed a magistrate who spearheaded an investigation of alleged corruption during Chirac's 1977-95 tenure as Paris mayor. The court accused magistrate Eric Halphen of procedural errors and threw out key evidence he had collected, including a taped confession by a former political operative who linked Chirac to payoffs. Even before the ruling, polls showed Chirac running ahead of Socialist Prime Minister Lionel Jospin, who plans to challenge Chirac next May but is taking the heat for rising unemployment. Also on Sept. 4, Jean-Pierre Chevenement, a former member of Jospin's cabinet, announced he would run for President--a move that could splinter the leftist vote.



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