beginning that their path to winning the presidency was a difficult one dependent on their ability to mobilize a large sector of iran's silent voting -- which constitutes iranian specialists inside iran suggests up to 40% of the election. they entered the race highly skeptical of mr. mir hossein mousavi's ability to expand the participation but they did assume wrongly, as it turned out, if he did manage to mobilize that block of silent voters he could overcome the figures, five to seven-million vote deficit he had to contend with because of the ability to marshal votes, supporters, ballots, the kinds of things they have done in past elections in iran.

once he withdrew his candidacy they did not take into account security forces loyal to the office of the leader, to the system, reacting the way they did to a presidency particularly since he had made his commitment to the them very clear. he made clear efforts to bring in forces into his campaign, talked about those forces as essentially being the backbone of the revolution. the model they still operated, the reformists still operated on was the 1997 model when close to 80% participation pressured the highest authorities of the country to assure a fair election out of the concern for popular election. in 1997 the sermon on the friday before the election was given, he came out and said and he

assured the public that there is not going to be a praud fraud and remember he was also the president of iran at that time. on wednesday before the election ayatollah came out and assured the public there was not going to be fraud. so, the reformists, once they had mobilized the population, they assume the same pressures would be at play and the shock expressed by mir hossein mousavi along with the population was a direct result of the miscalculation. now on the conservative side, the miscalculation occurred in the opposite direction. what they underestimated was first, the ability of the reformist candidates, particularly the largely uncharismatic mir hossein mousavi at the time of the election, to energize what was

considered to be a cynical electorate. the conservatives in iran are very happy because they can say more iranians vote than united states and then at the same time because of the split, because of the support they have among the good chunk of the population they can bring their base and are with a little bit of fiddling and manipulation win the elections with 60% participation. they knew with a 60% participation rate that mr. mahmoud ahmadinejad is popular in the countryside and the rural areas and is a man of the people, it would not be a difficult argument to sell that he really did get 60% of the vote because he has been passing around the oil money. he has been good to the poor and so on and in fact, has bought the votes. that really didn't matter to them that people would think that way.

what they really thought is important for everyone to agree that people actually went into the voting station and voting for the man. so -- voted for the man. secondly that underestimated the impact of the debates energizing the population and seeing the election as a contest between real alternatives. having confidence in their man's aggressiveness and debating capabilities they simply did not grasp the impact of mahmoud ahmadinejad's comfort with telling lies on national television and furthermore the impact of other candidates standing their grounds and engaging in a pushback. thirdly, and this is the most contentious part of my argument. they did not feel the necessity to adjust their model of mahmoud ahmadinejad receiving 2/3 of the

world at once participation threatened to become 80%. i'm making an argument that they were planning to cheat. somewhere in the process, you know, the ground under them shifted and rather than adjusting to that shifting ground and making their scenario more viable, like for example, reducing saying mr. mahmoud ahmadinejad won by 52% they still maintained the 2/3s scenario. why they must have known that the additional voters beyond 60% have historically voted for change and never entered the fray in order to vote for status quo, they simply chose to ignore this reality probably because, and this was their fourth miscalculation. they underestimated the role of pre-election rallies. the role that these rallies had in creating networks and links

among people of different backgrounds that could be mobilized. theeds rallies inside iran were extremely important not only because you had people from all over -- every strata of the society, the reality was for the first time they were meeting each other in the streets and telling each other, yeah, i'm a mir hossein mousavi supporter too. people, there was a bonding in the street that broke down that narrative that has been created in iran that is only the north tehranees that are opposed to the islamic regime. this was an election and people saw on the streets that they were on the same side and they connected and this was underestimated. at the end, like their reformist counterparts, the conservatives also assumed certain similarities to that the advance

of late 1990's. when student demonstrations were prevented from -- as robin pointed out from spreading across the population through the use of sporadic but very effective kind of violence, which i can't -- i like to describe as -- violence. the indiscriminate views of plain clothes club weerlsd attacking a small portion of the population, usually the student dornl toris. before the -- dormitories. they went immediately into the student dorm toirs, started beating up the students in order to cause fear and send everybody home. that has been the method of control in the islamic republic for the past 20 years. now, it was the failure of this system of crowd control to put a

quick end to demonstrators that ultimately forced the hand of the leader to enter the fray with full force, use the card that he had not been forced to use and probably shouldn't have been used. should not have used until later to effectively take the responsibility for the fraud and violence that began to take place. and ultimately, effectively identifying g himself with the part of the government in iran that has always been in the shadows. and willing to impose violence on the iranian population. it is important to understand what he did in his friday prayer speech. he not only threatened violence. he also made clear that the fight about the future of the country in that id logical fight he stands with mahmoud

ahmadinejad and not the other icon of islamic republic. he made clear that in the months and years to come, it is really his office that will be the last standing against compromise with popular sentiments for less austere political systems. in one quick step, in effect it made mahmoud ahmadinejad look very small and insignificant in comparison to the titans who are fighting for the future of the country. now we will probably never know what led mr. khomeni, ases the -- as it is said in persian, most politically polarizing in a political figure, and as i said, it is significant that in this

friday prayer, he went farther than he really needed to go and not only did he threaten violence but also revealed that the deep id logical features that have myered the islamic republic but revealed that his office as mandated by the constitution is not the -- but partisan fueling instead of dampening, inciting schisms rather than alleviating them. of course this is something that many people suspected. and whispered about it but to publicly outline his office with the hardline security stats of the country in the minds of many in iran who in the minds of many in iran are responsible for mahmoud ahmadinejad's presidency was the line that the leader had not tried to cross before.

and throughout the election tried to suggest that he was not going to try to cross and in fact, a mir hossein mousavi presidency or an mahmoud ahmadinejad presidency would be fine with him so as far as i'm concerned, the big question is why the change? in retrospect it was probably the extensive mobilization of the electorate that must have find are the office of fleered particular. i use the language of fear intentionally here because the only explanation that i think i can think of in timing to understand mr. khomeni's costly move was the extreme threat this is made more odd when one considers the fact that this sense of threat, as is rereflected in the constant refrain about the british

involvement in iran, this sense of threat occurred precisely at the moment when iran was at its strongest in relation to upcoming negotiations with the united states and mr. khomeni by giving support to a popularly elected president could have made his name lasting in iran's history not as the leader of iran's anti-democratic forces, that's how his name will go down in history at this time, at least, but as the leader that was effective in his pushback of aggressive u.s. policies that were implemented during the bush administration. it is now become a common wisdom in washington to suggests that what has happened in iran is an effective takeover of the revolutionary guards over the iranian political system and it is indeed possible that this election was an attempt at -- of a process that has been going on

for a while. an attempt to take over the islamic state by the security establishment whose public face is now mahmoud ahmadinejad and perhaps mr. khomeni himself. it should warn us against any such common wisdoms the reality of iranian politics seems that once a lot more complicated and yet more simple. if, indeed, this was an attempted coup, because of the way it was conducted, and despite the fact that it can probably be as robin suggested can -- some people for a period of time to accept a new arrangement, it has exposed deeper -- in iran and iran's place in the world and the contours of state society relations that cut across all institutions and strata in the society. it is a fact that as we see here

today and for example, talk about revolutionary guards in iran, and their takeover of the iranian political system, none of us have any sense of the structure of the revolutionry guard and who actually runs them and yet we feel free to make comments about this reality that presumably an institution -- there has been a military coup in iran. what i suggest is that the deep rifts that have been exposed in iran in the past couple of weeks suggests that these rifts cut across both the society and values institutions of the iranian republic and the ability of those contending visions to fight it out in a peaceful way, win or lose, a game that is not rigged and takes everyone's

citizenship seriously and does not try to purge the other side out of the political system. this election once again confirmed that a large sector of the iranian population and elite yearn and have been yearning for deck aced, robin said a century, to have a say in the policy direction of the country. 30 years ago it came out into the street and made a revolution in order to make the same point. on june 12, 1517 and began came out to out to make the same point to an election. let me end by saying on june 11, i was marveling at the fact that iran had come a long way since 1979. the population was no longer wishing to reshape the structure of the state, was no longer revolutionary but insisting, still, on its way -- on its say in the policy direction of the country, it was making a choice between two candidates that in

the process of election had convinced the electorate rightly or wrongly that they would lead the country in different policy directions. by june 13 and -- it is clear that their century-old yearning to end arbitrary rule that could manage and moderate conflicts and competition has yet again not been fulfilled. yet the reaction to what has happened suggests to us that there is still a lot to go so the islamic republic remains in limbo sail trying to find a compromised solution to the fundamental -- of a pop list and imperialist revolution. both social forces as well as political forces.

that all want to have a say in the direction of the country but cannot get along. as such, it keeps itself open for periodic and unpredictable outpinehurst bursts unless it -- outbursts. unless it can resolve the conflict. >> thank you. excellent. our third comment is by a senior advisor at the center for strategic and international studies here in washington and in an academic vein is the director of ath the center for global and business studies. he will focus on the economy in iran. >> thank you, very much. can you hear me in the back?

yes? great. what i'm going to look at this afternoon is really going to look at the economic condition in iran and what really brought about the dissatisfaction, if it was, in fact rs an economic dissatisfaction, and it partially was. i'm going to look at the economy in two ways. robin mentioned unity vulnerability. i wrote that down. that was very important because that has implications in the economic point of view. she also mentioned the role of -- i'm going to tie that in there. i think he is going to play a role in that situation and she was kind enough to bring up the revolutionary guard and i think there is going to be some influence in that on the economic front but what i'm going to try do first is look at the economy in total and the first chart that i have really looks at iranian oil exports and i want you to notice two things and we'll come back to that again. prior to the islamic revolution

we were running around five or six million barrels a day of which close to five was exported. the economic crisis that followed, in 1979, the drop to 3.3 and in 1980 it dropped to about 1.3. they have managed to bring it up to four but at this stage, it is running around four to four and a half million barrels a day but they are only able to exports 2.45 because local consumption has risen very rapidly. the director of the international division was interviewed yesterday in dubai and he said he thought he was under the impression the oil exports had not been hurt. i don't know what that means but i suspect we're still running somewhere around that thr. now, so this is the consumption. this is the export, crude oil export . you can see it is sort of stabilized around two. if you look at oil exports over

production, again, it is going down. the other thing that people talk about is the gas sector. iran is the second largest gas reserve holder in the world. yet, it is actually a gas importer. a natural gas importer. now the line is very, very close and depending on which statistic you look at, they cross each other but in terms of dollar amounts, even though it may be self-sufficient in natural gas, it is exporting some to turkey and importing at a higher price. it is a drain on the economy. you can see a drop right after the islamic revolution and surprisingly despite the fact that oil prices have been quite high in the past two or three years, the grothse rate has been around 4% or 5% or 6% and recently has actually dropped.

this despite the fact that oil revenue has gone through the roof. so the question then becomes you know, what is going on? and you have to look at the fundamentals of the iranian economy. and we have a lot of experts in the room that are probably more expert than i am. when we look at it right now, we have an economy where the government is really around 30%, 35%, maybe 38% of the economy add to that the role of the foundation, which are again another 30%. so you have a private sector that is maybe 35%. despite that, i think that is a disstorted number because the projects that are given to the private sector end up being given to senior members of the revolutionary guard. in fact, three huge probables were just in the past year given

out. one was a $1.3 billion project for gas to be shipped from southern iran to the border and pipelines to be drawn from the southern gas fields oftorian the border of pakistan. the contract has been given out to again a leader of the revolutionary guard and an upgrade and expansion of the metro system in tehran which is about $2.3 billion was also given to the same revolutionary guard person and the gas field upgrade, which was another $2.5 billion given to the same group. if you follow the money, which is what we do at the business school, you basically say look, you got 30%, 35% directly controlled by the government and if you look at what mahmoud ahmadinejad did after he became president within the first year he changed 10,000 people in various levels of the organization. that is a huge number.

just think the republicans, democrats don't remove 10,000 people. then the private secondor is basically biased towards the revolutionary guards. if you look at it from a sectoral point of view, if you look at the service sector what do they consist of? a telecom, publicly owned. transportation. railroads, publicly owned. you go through it. the economy is really a governmental/revolutionary guard economy. when i was in graduate school i read a book by one of my mentors that looked at iran and a dual economy. -- duel economy. i was always intrigued by that.

something interesting hit me. that is that temperature sis came about because the government -- democracies came about because the government taxed people. the french revolution occurred when the king was taxing the french at 11%. west africa at 10% and the chinese emperor at 9%. so it seems to be that 10% is about it. if you tax people more than 10% off with the king's head. now, if you're going to tax them more than that, then the people have to have a say in how you're going to it. yes, you can tax me more but you're going to have to build hospitals and give me security and give me education, etc. that, by the way, just a side note. my wife is lutheran.

i made a presentation to the lutheran brotherhood and they started laughing when i said that. they said don't you know god expects you to pay 10%. god has big figured out 10% is it. >> that's the going rate. >> the difficulty with oil exporters. gold exporters. diamond exporters is that the money goes into the central government and the central government then allocates that. then becomes a big hassle. people want the money under their control. now the situation in iran, is really -- well, this is gasoline imports. i may come back to that, too. so not only are they gas self-sufficient, 40% of the gasoline is imported. but what has happened is -- what

has happened is there is a debate on who gets the money. ok? are they getting the money? and if you look at the first debate and i looked at it and came over and debating mir hossein mousavi and the first thing he said i have the -- i'm not debating one person. i'm debating you and -- and then he said i've got these files. files in english sounds very neutral but in persian it is -- it means i've got something on you. this is not just a file. this is something that can take you to jail. that brouppingt the whole debate and all -- brought up the whole debate and all of a sudden we saw the unity break apart. this is really a debate between

him and his team and khomeni and mahmoud ahmadinejad as a team and how is the money going to be separated? that is my opinion. now what is the role of -- what is the role of the economy? well, look at what's happened to housing. this is housing in tehran. it hit a recession. it has gone from 500 to around 2,000 much, much faster than the inflation rate. wheat imports gone through the roof. they were more or less self-sufficient in food. now imports have gone through the roof. inflation has just gone through the roof. yes, the central government is giving them money but the salaries are not keeping up with inflation. so people are getting upset now. again, in the presentation, everybody shows numbers and you can see people with statistics but then there is some way you

take the inflation of this month and multipolite by 12 to look at the inflation for the year and this is the central bank of iran. it shows the inflation was running around 25% last year. it has dropped now because of the recession to around 15% or 16%. if you add unemployment and unemployment -- sorry, thank you. if you look at unemployment, it is kind of an interesting statistic too. because the government gives you all kind ofst of statistics. it is 15%, 16%, 17%. i have no way of judging this except to look at the agate of numbers. -- agregate of numbers. the ministry of labor says it is 25 million people in the workforce. what happened to the other 25? you say well, they are women.

well, that is not quite true, either because if you look at the 25 million people who are employed, eight million are women so roughly one out of every three in the workforce is a woman. ok? so if you take that out. take 25 million -- eight million are working. well, women can't work. i didn't say that. i'll get in trouble with my wife and daughters. if you assume the other women stay home and don't want to work, the unemployment is not an issue, of the 25 million remaining, there is a 33% unemployment. unemployment is running not around 15%, 16%, but something in the 20%. add that to the 20% inflation and as you get older, you'll remember we used to have a misery index. older people in the room might remember the misery