The Enemy of Iran's Enemy

Al Qaeda's tangled history with the Islamic Republic.

Despite the alarmist headlines, no one should have been shocked by last week's U.S. Treasury Department designation of a Syrian based in Iran as a conduit for sending money and personnel to al Qaeda.

Iran has had links to members of what became known as al Qaeda since the early 1990s, when both had a presence in Sudan. What many may not know is that the United States missed several opportunities to divide the two and gain custody of senior al Qaeda figures and relatives of Osama bin Laden.

Al Qaeda, with its militant Sunni ideology that despises Shiites as worse than apostates, is hardly a natural ally for the world's only Shiite theocracy. Iranian officials indignantly denied the Treasury Department's allegations; one official, speaking on condition of anonymity, noted that Iran opposes al Qaeda adherents in Iraq, Afghanistan, and Pakistan. Iran's leaders, however, share al Qaeda's hatred of the United States and Israel, and both have a long history of grievances against the West.

Their tactical ties were forged in Khartoum, when the Sudanese capital was a virtual resort for Islamist militants and agents of rogue states, including bin Laden; members of Hezbollah, Iran's Lebanese protégé; and Iran's Quds Force, the external arm of the Revolutionary Guards. According to the 9/11 Commission, in the 1990s the Iranians and al Qaeda reached an "informal agreement to cooperate in providing support -- even if only training -- for actions carried out primarily against Israel and the United States. Not long afterward, senior al Qaeda operatives and trainers traveled to Iran to receive training in explosives."

Al Qaeda recruits also went to Lebanon's Bekaa Valley, where they "showed particular interest in learning how to use truck bombs" from Hezbollah trainers, the report found. The commission goes on to say that eight of the 10 Arab "muscle hijackers" who took control of the planes on 9/11 crossed Iran en route to Afghanistan between October 2000 and February 2001. The commission, however, "found no evidence that Iran or Hezbollah was aware of the planning for what later became the 9/11 attack."

That attack provoked a sympathetic response in Iran, in contrast with other Middle Eastern countries. The Iranian government, then under President Mohammad Khatami, saw an opportunity to improve relations with the United States and defeat a shared enemy -- al Qaeda's hosts, the Taliban, with which Iran had nearly gone to war in 1998. Iran's Quds Force indirectly helped U.S. forces topple the Taliban in 2001 by working with Afghanistan's Northern Alliance. Iranian security officials also caught and deported scores of al Qaeda members who fled into Iran from Afghanistan. Iran, however, held on to several of bin Laden's children and senior figures, including Saif al-Adel, then al Qaeda's No. 3. Iranian officials said they were under "hotel arrest."

Roberto Toscano, Italy's ambassador in Iran from 2003 to 2008, said an Iranian diplomat told him that Tehran hoped to use the al Qaeda figures as bargaining chips and also as insurance to prevent al Qaeda from attacking targets in Iran. Tehran's main hope, Toscano told me in an email, was that it could trade the detainees for leaders of the Mujahedin-e Khalq (MEK), an anti-Iranian regime group that Saddam Hussein had harbored and that had several thousand adherents at a base in Iraq called Camp Ashraf. After the United States invaded Iraq in 2003, Iran offered to swap its al Qaeda "guests" for MEK leaders. George W. Bush's administration refused, according to then Deputy Secretary of State Richard Armitage, because Pentagon hawks Paul Wolfowitz and Douglas Feith wanted to retain MEK members as possible agents against Iran. Around the same time, Washington also rejected an Iranian offer for comprehensive negotiations that included on its agenda "decisive action against any terrorists (above all Al Qaida) on Iranian territory."

The MEK, on the State Department's list of terrorist organizations since 1997, is a Marxist-Islamist group that attacked Americans in Iran before the 1979 revolution and Iranian officials afterward. It has scant support within Iran because it sided with Iraq during the 1980-1988 Iran-Iraq War. Although Barack Obama's administration has so far kept the MEK on the terrorist list -- despite lobbying by a number of former senior U.S. officials paid to speak on the group's behalf -- Iran has not forgiven Washington for going back on a commitment to declare the MEK members in Iraq as enemy combatants. Instead, the United States put Camp Ashraf's inhabitants under its protection. Responsibility for them passed to Iraq as part of the 2008 Status of Forces Agreement. U.S. diplomats have been trying to arrange new homes for camp residents, but have been frustrated because the MEK refuses to allow its members to accept refugee status.

In light of this tangled history -- as well as mounting U.S. economic sanctions against Iran over its nuclear program -- it is hardly surprising that Iran would not sever all ties to al Qaeda. Iran lives in a dangerous neighborhood where the enemy of my enemy can be a tool, if not a friend. Even though it failed to swap the detainees for MEK leaders, Iran appears to have used its al Qaeda chips to obtain the release in March 2010 of an Iranian diplomat kidnapped 15 months earlier in Pakistan by Sunni jihadists. According to the Associated Press, Iran agreed to give more freedom of movement to Adel, allowing him to travel from Iran to Pakistan and resume contacts with al Qaeda leaders based there. Around the same time, the Iranians also allowed one of bin Laden's daughters, Iman, to join her mother in Damascus.

In announcing the designation on July 28, U.S. Treasury Undersecretary David Cohen said, "By exposing Iran's secret deal with al Qaeda allowing it to funnel funds and operatives through its territory, we are illuminating yet another aspect of Iran's unmatched support for terrorism."

Intelligence experts say it's quite possible that al Qaeda is moving money and personnel between the Middle East and Afghanistan and Pakistan through Iran, but that does not amount to a formal alliance and the Obama administration should not overstate the links.

"When the undersecretary talked about a 'secret deal,' that was probably an inappropriate phrase," said Paul Pillar, a retired veteran CIA analyst who served as national intelligence officer for the Near East and South Asia under the Bush administration. He called this a "tendentious way" of describing al Qaeda-Iran ties.

The use of such language -- besides providing grist for headline writers -- may reflect U.S. frustration at its inability to resolve the nuclear issue as well as anger at recent attacks on U.S. troops in Iraq that Washington has blamed on militants armed with Iranian weapons. The United States is also seeking to cut off funding for al Qaeda from Kuwait and Qatar. Two of the alleged al Qaeda members designated by the Treasury Department last week are based in Qatar and one is in Kuwait.

Assuming the White House approved Cohen's comments, Pillar said it could have also meant to placate Iran hawks who have been lobbying for more aggressive action, including military attacks. With a presidential election approaching, "the administration doesn't want to be seen as soft on Iran," Pillar said.

There is, however, a danger that such rhetoric will only give new ammunition to the hawks and increase pressure on the administration to take military action -- or risk looking weak if it does not. After all, the Bush administration made the case for war in Iraq using the same three issues Obama has raised against Iran -- weapons of mass destruction, support for terrorism, and abuse of human rights.

"You get enough of the mood music out there and it can't help but affect some people," Pillar warned. "Even if you think you are buying time [for a diplomatic solution], it can come back to haunt you later."



The End of the Roman Holiday

With their economy teetering on the brink, Italians are going to have to make major changes to save La Dolce Vita.

The month of August derives both its name and its spirit from the ancient Roman Empire of Augustus, when the month was declared a sacred time of rest and relaxation for the Italian nation. A visitor to Rome in the middle of August will normally see a capital city shut down for all official business. This year, alas, things are different. Italians still crave their respite, but increasingly they can no longer afford it -- neither psychologically, nor economically.

Italy's borrowing costs rose dramatically to an 11-year high at a bond auction this Thursday, July 28th, a signal that the markets aren't content with the latest eurozone bailout package or the austerity measures recently passed by the Italian Parliament. The Bank of Italy has admitted that if the interest rates on Italian bonds don't lower sometime soon, it will pose a "substantial" problem for the Italian economy, perhaps pushing the country back into recession -- and perhaps, in the worst case scenario, out of the eurozone.

Rome's rumor mills are now working overtime. Will Italy default? Will speculators bleed the country dry before Aug. 15? Will Prime Minister Silvio Berlusconi still be in office when the Campionato, the Italian professional soccer league, begins on Aug. 29? If not, who will replace him? Will his finance minister, the cerebral Giulio Tremonti, stay on? Has the opposition, at long last, concocted a decent alternative strategy, summoning a viable candidate for prime minister? At the restaurants of the political elite, conspiracy theories are sprinkled with more gusto than Parmigiano on their fresh tomato and basil pasta.

The truth is, nobody knows how Italy will get out of this mess. What's clear is that Berlusconi, whose term ends in 2013, is running on empty. He was first elected in 1994, and though he has been blessed with a center-left political opposition that has only managed to unseat him twice since then, it's obvious that he's now tired and no longer up to the challenges of the moment. It wasn't sex scandals that finally did him in -- it was bond markets. The financial crisis has irreversibly dampened the sunny, tanned optimism that "Silvio" has been offering the public for years. And judging from recent evidence, voters are craving any sort of alternative.

This spring, voters surprised nearly all Italian political analysts, including me, by ousting from office the once-popular mayor of Milan, Letizia Moratti, a Berlusconi ally. It was the first time the center-right had lost a mayoral election in the northern Italian city. Indeed, Berlusconi's party, the People of Freedom, had made a priority of winning the country's richest and most fashionable metropolitan areas -- the better to depict the center-left opposition as outmoded, backwater, communist relics. But the left's winning candidate, Giuliano Pisapia, a respected lawyer with deep local roots, belied those stereotypes. Right after Berlusconi's candidate lost Milan, voters inflicted another blow, in a series of referenda on a proposed law that would have shielded the prime minister from his judicial troubles, as well as in a number of other bills on nuclear power and public water rights.

Those defeats show how hollowed out much of Berlusconi's support is today. The prime minister's cabinet is now engaged in a civil war of slanders, suspicion, and blackmail, as those who once protected the prime minister are now turning against him and each other. His respected chief of staff, Gianni Letta, has been linked in the media to a jailed lobbyist, accused of swapping bribes for powerful civil-service positions. Last week in Naples, Parliament member Alfonso Papa, a Berlusconi ally, was arrested on corruption charges, becoming the first Italian MP to be arrested in three decades. A former prosecutor, Papa is accused of illegally alerting people under investigation about whether their phones were being tapped by the judges. Luigi Bisignani, a person previously convicted of illegally lobbying for the Freemasons, is also under arrest for involvement in the scheme.

Even Tremonti, the man credited with steering Italy away from a Greek-like flirtation with default, is accused of illegally renting and failing to pay taxes on a luxury home in central Rome arranged by his right-hand man Marco Milanese. Milanese himself might soon be indicted for influence peddling. Tremonti, for his part, not only denies being a tax cheat, but claims he was discreetly living in Milanese's apartment in order "to protect myself" because he was being "followed and spied upon." Tremonti has not indicated yet who was out to get him or why, but off the record, members of his staff point to "people in our own political coalition," the die-hard Berlusconi loyalists.

Meanwhile, from his palace overlooking the capital, President Giorgio Napolitano, the only politician Italians still trust in polls, has been acting with caution and wisdom. Boldly utilizing the few powers entrusted to him by Italy's Constitution, he has managed -- together with Italy's Supreme Court -- to curb, if not eradicate, Berlusconi's conflict of interest. Napolitano has refused to sign a number of laws intended to further Parliament's personal interests, rather than the public good. And without the assurance of Napolitano's backing, Italy's Constitutional Court likely would not have felt confident enough to reject a number of laws granting Berlusconi immunity from prosecution. Napolitano also successfully used personal diplomacy to convince Parliament's reluctant left and belligerent right to vote for Tremonti's austerity measures. (Tremonti's budget wasn't perfect -- it notably delayed most cuts until 2013 -- but it at least avoided a descent into an Athenian state of debt turmoil.)

Napolitano is a reflection of the Italian politicians' better nature and proof that there are limits to their cynicism. Indeed, once it senses the political abyss, the Italian establishment always pulls back from the brink. Ultimately, it's the establishment's instinct for self-preservation that should assure the international markets that Italy will manage its way out of its current crisis. In the 1990s, for example, Prime Minister Giuliano Amato saved the country from bankruptcy, paving the way for his successors to secure Italy's place in the eurozone, against all odds.

And, whatever its political troubles, the country's economic fundamentals are sound. The Financial Times' Martin Wolf has praised Italy's vibrant network of privately owned companies. Banks are -- in the European context, at least -- in good shape. Italians have a high personal savings rate, and when they're in need -- whether because of unemployment, old age, or even lack of funding for a business -- they tend to turn to one another, especially members of their family, rather than the welfare state or officially administered bureaucracies. The current turmoil in the bond markets is a result of rank speculation, not any careful assessment of the country's true economic fundamentals.

That said, Italy has to acknowledge it has lived far beyond its means. That won't be easy for three generations groomed in la dolce vita -- long vacations, early retirement, low hours, and absolute job security. The influential Mario Draghi, governor of the Bank of Italy and soon-to-be chairman of the European Central Bank, has dictated the necessary reforms in his farewell speech to his colleagues at the bank. The government will have to impose structural reforms, end political patronage and pork, improve schools, and develop a strategic plan for infrastructure. It will need to dismantle the guilds, which stifle competition and discourage innovation not only among blue-collar workers, but professionals, too. Taxes are too high, and tax dodging is much too common, as the penalty is not enough to scare off the practice. The prescription is clear. The only question is whether Italy will administer its own medicine or wait until the bitter pills are forced on it by outsiders.

Cooler heads are already talking of ousting Berlusconi and setting up a transitional government until a new election can be held. Mario Monti, the former EU antitrust commissioner and current president of Bocconi University, is frequently mentioned as a possible new prime minister. In that scenario, the moderates in Berlusconi's coalition, Sen. Beppe Pisanu among them, would join with former center-right allies, like Pier Ferdinando Casini of the Christian Democrats and Speaker of the House Gianfranco Fini, to form a new cabinet.

Meanwhile, on the center-left, Pier Luigi Bersani is doing better than predicted as leader of Partito Democratico, using his self-deprecating wit on television talk shows to win new support and nurture back to life his agenda to liberalize the economy, stifled in 2006. (His case has not been helped by the fact that members of his party have recently been accused of accepting bribes; Bersani will soon have to use his charms to defend his colleagues, rather than promote his platform.) Other members of the left, like Nichi Vendola, governor of Apulia and one of the few openly gay leaders in stuffy Italian politics, and Antonio Di Pietro, an ebullient former prosecutor, have to decide whether they will stay on the sidelines and feed the populist rage or join the efforts to revitalize the country. The popular mayor of Turin, Piero Fassino, and the former mayor of Rome, Francesco Rutelli, could, for their part, act as veteran brokers between the country's usually belligerent factions.

The only luxury Italy does not have is time. Europe in general, and Italy in particular, are in too fragile a political condition to consider waiting much longer for a solution. Europe is presently divided into two tribes: the Strong Euro tribe, consisting of Germany, France, and the Netherlands, and the Weak Euro tribe, comprising Greece, Spain, Portugal, and Ireland.

And then there is Italy. Italy is itself divided into strong and weak regions. From the Alps to Rome, the country fits perfectly as one of the best-performing members of the Strong Euro clan. Southern Italy, however, would find it difficult to survive even in the Weak Euro clan. This divide fuels resentment and populism throughout Italy. The Northern League, a regional party with a large following in the north, has continued to support Berlusconi, but it might soon break away from its alliances, as it did in 1994, and is already talking of moving the country's capital from Rome to Monza, in the north, at least symbolically. Meanwhile in the south, Gianfranco Micciché, a Berlusconi protégé, is working on a Sicilian breakaway party, while the new mayor of Naples, a former prosecutor, already acts as an independent local chieftain. Berlusconi has managed to build a north-south coalition by leveraging his large media empire, but it could easily come undone, unhinging the entire nation.

If this catastrophe is to be avoided, Berlusconi should step aside. This will give an interim cabinet time to fix the economy and write a decent new electoral law. Then a reformed opposition will have its opportunity to steer the country, rather than just cast insults from the sidelines while the right finds a new leader. Italy's reputation has taken a beating on the international stage in recent years -- not the least of the reasons why it is suffering on the credit markets. But sometimes a reshuffling of the political establishment and a thorough scrub and polish of the national pride can do wonders. Packing Berlusconi off does not mean, alas, a true vacation for all of Italy. The hard work to rebuild a political and moral cohesion will start then: It will not be an easy job.