Daily Sources 7/16

1. CHINESE MONEY SUPPLY GROWTH 28.5% YOY IN JUNE, CHINA PUBLISHES DATA CLAIMING 7.9% GDP GROWTH, REVISITS "MADE IN CHINA" CAMPAIGN

Yesterday, Macro Man called out Prime Minister of China, Wen Jiabao, for having spurred China's M2 growth to 28.5% year over year, asked whether he deserves the moniker "Helicopter Wen" more than Ben does. He asks:

"Unfortunately, in an act reminiscent of Gordon Brown Stalin, the early 90's data has been wiped from the historical record. A cynic might suggest that this is because China's leadership doesn't want to remind people that one upon a time, money growth was this high and it didn't end well. Judge for yourselves."

Today, the National Statistics Bureau published new figures showing that Chinese GDP growth was 7.9% in the second quarter from the year previous, up from the growth of 6.1% in the first quarter, per Terence Poon and Andrew Batson at the Wall Street Journal.

"Also Thursday, the finance and economic committee of the National People's Congress, China's legislature, warned that the government must prevent the "extraordinary growth" of credit that could lead to inflation risks and problems for the financial system. It said China should strengthen credit checks and prevent a rebound in bad loans. The committee includes influential members but doesn't have a role in setting economic policy.

The People's Bank of China has already started to take some measures to fine-tune the rapid flow of credit. On Thursday, the central bank used its weekly sale of three-month bills to continue to guide money-market interest rates higher for the third straight week."

The Economist notes:

"In the year to June fixed investment surged by 35%, car sales rose by 48%, and purchases of homes by more than 80%. After falling last year, home prices are now rising briskly in some big cities, and share prices have soared by 80% from their November low. Domestic spending has been spurred partly by the government’s stimulus package, but probably even more important was the scrapping of restrictions on bank lending late last year. In June new lending was more than four times larger than a year earlier."

The Economist notes that the importance of property to domestic demand means it is unlikely that Beijing will clamp down too hard on the lending. In the meantime, Carlos Tejada at the China Journal reports that China is revisiting plans to launch a "Made in China" campaign.

2. WORLD BANK WARNS OF DEFLATION ON EXCESS INDUSTRIAL PRODUCTION

Ambrose Evans-Pritchard at the UK Telegraph reports that the chief economist at the World Bank, Justin Lin, in Cape Town recently warned that excess industrial capacity will cause a deflationary spiral unless it is addressed.

"Mr Lin said capacity use had fallen to 72% in Germany, 69% in the US, 65% in Japan, and as low as 50% in some developing countries, mostly touching lows not seen in modern times."

Lin suggests that competitive devaluation will have little productive effect in this environment, saying:

"No country can count on currency depreciation and exports as a way out of recession. Unless we deal with excess capacity, it will wreak havoc on all countries. There is urgent need for global, co-ordinated fiscal stimulus."

(h/t Yves Smith at naked capitalism.)

3. UK SETS GOAL OF 40% RENEWABLE SOURCE FOR ELECTRICITY GENERATION BY 2020

Selina Williams at the Wall Street Journal reports that the UK has set as its goal sourcing 40% of its electricity generation from low carbon energy sources by 2020, with fully 30% to come from wind power, wave and tidal energy and other renewables. The other 10% is to be from coal-powered plants with carbon capture technology and nuclear. (As of 2006, per the IEA, nuclear power generation accounted for 18.6% of total electricity supply in the UK. Coal accounted for 37.5%. All renewables accounted for 6.1%.)

"'Renewables, nuclear, clean fossil fuels, as this plan sets out, are the trinity of low carbon and the future of energy in Britain,' [Energy and Climate Change Secretary Ed] Miliband said yesterdat. 'All of them should be part of our future energy mix.'

The government wants the power sector to be almost completely free of carbon emissions by 2050 as it strives to meet a commitment to cut overall emissions by 80% by 2050. The UK has already cut its emissions by 21% since 1990."

4. TURKEY INCREASES FUEL AND RESTAURANT TAXES, REDUCES BENCHMARK INTEREST RATE TO 8.25%

Delphine Strauss at the Financial Times reports that Ankara yesterday announced that it would raise taxes on petroleum products and restaurants with immediate effect. The new taxes will add roughly 8% to prices at the pump and between 8 and 18% at high end hotels and restaurants.

"'The government is speeding up its efforts to tighten fiscal policy,' said Yakin Cebeci, economist at JPMorgan, estimating the measures could improve budget performance by 0.8% of GDP within 12 months.

Stimulus packages and a spending splurge before local elections in the spring have led to a rapidly widening budget deficit. Figures published on Wednesday by the finance ministry showed a deficit of 23.2bn lira ($15.2bn) in the first half of the year, compared with a surplus of 1.9bn lira in the same period of 2008."

Effective tax collection has been a point of dispute at the IMF in terms of approving a new financing package for Ankara. Meanwhile, Steve Bryant at Bloomberg reports that the Turkish central bank today cut its benchmark interest rate by half a point to 8.25%, it's ninth consecutive monthly cut, indicating that further cuts may be in the works.

"The inflation rate reached a 39-year low of 5.2% in May, before rising to 5.7% last month, a pick-up the central bank says will prove temporary. The bank’s target for this year is 7.5% and its most recent survey of economists and businessmen forecast a year-end rate of 6%.

'Inflation will remain at low levels for a long time,' the bank said in today’s statement."

"Industrial output fell 17.4% in May, extending a decline that drove a record 13.8% contraction in gross domestic product in the first three months of the year."

5. PRESIDENT OF ABKHAZIA SPEAKS OF RELATIONSHIP WITH RUSSIAN RAILWAYS JUST AFTER EBRD LOAN

In light of the EBRD's recent decision to make a $500 investment in Russian Railways, the following portion of a Der Spiegel interview of the President of Abkhazia, Sergei Bagapsh, might be of some interest:

"SPIEGEL ONLINE: There are Russian military bases in Abkhazia, Russian troops guard your external borders, and your currency is the ruble. And, then, you want the Russians to manage your railways for 10 years. Is it possible that you're getting just a little too dependent on Russia?

Bagapsch: We are dealing with the Russian railways because we have to modernize our own. We would be equally pleased to deal with the German railways if they were interested. In any case, there are no completely independent nations in this world. Liechtenstein is dependent on Switzerland, Luxembourg on France. We are all dependent on one another. Georgia is dependent on America; we are on Russia."

6. LOCKHEED MARTIN INDIA CEO STEPS DOWN AMIDST ESPIONAGE SCANDAL, WILL US, AUSTRALIA, INDIA AND JAPAN JOINTLY OPERATE AIR CRAFT CARRIERS IN RESPONSE TO CHINESE CONSTRUCTION OF 6?, INDIA SELECTS 2 SITES FOR US COS TO BUILD NUCLEAR POWER PLANTS

Ajai Shukla at the Business Standard reported on Monday that

"Ambassador Douglas A Hartwick, Lockheed Martin India’s CEO, who was spearheading the world’s largest defense manufacturer’s campaign to sell India the F-16 IN medium fighter aircraft, was withdrawn from India in an unusual hurry."

According to Indian Defense Ministry sources, Hartwick was removed as CEO of Indian operations after the company was discovered to be in possession of classified information regarding defense purchases. Meanwhile, Manu Sood at 8ak recently interviewed US historian Jason Verdugo on the possibility of the Quadrilateral Initiative (or Quad) countries (the US, Australia, India, and Japan) jointly operating the recently decommissioned US aircraft carrier--the USS Kitty Hawk--on the recent news that China has been secretly constructing six aircraft carriers. (I am indebted to Galrahn at Informed Comment for both of these items.) Meanwhile, Amol Sharma at the Wall Street Journal reports that India has selected two sites on which US companies could build nuclear power plants, which will be announced when Secretary Clinton arrives in the country next week.

"The two countries may also use Mrs. Clinton's trip to announce completion of an agreement for the US to track sales of defense equipment and ensure it is used for its stated intent, according to people familiar with the matter. That 'end-use monitoring' agreement will be crucial, experts say, as US companies compete for major contracts such as India's plans to purchase 126 fighter jets at an estimated cost of $11 billion.

A spokesman for India's Ministry of External Affairs said that some agreements will 'naturally' be finalized between the US and India during Mrs. Clinton's trip but declined to elaborate."

7. INDIA AND PAKISTAN AGREE TO INTELLIGENCE SHARING ON BACK OF AL QAEDA CALL FOR GENERAL REVOLT AGAINST ISLAMABAD

Rama Lakshmi at the Washington Post reports that the prime ministers of India and Pakistan met for two hours on the sidelines of a Non-Aligned Movement meeting in Cairo after which released a joint statement in which they agreed to share "real-time, credible and actionable" information on terrorist activities.

"[T]he text of the jointly agreed statement on Thursday said that 'action on terror should not be linked to the composite dialogue process and these should not be bracketed' and that 'terrorism is the main threat to both countries.'"

The statement follows the call by Al-Zawahiri, a key figure in al-Qaeda, for cooperation in its attacks on Pakistani interests, suggesting that the current government is actually in the employ of the US Ambassador. Juan Cole at Informed Comment posts the entire text per the Open Source Center's translation--note that it includes the nationalist refrain that "the West" seeks to break the country up:

"In Pakistan in particular, the Crusade aims at eradicating the growing jihadi nucleus in order to break up this nuclear-capable country, and transform it into tiny fragments, loyal to and dependent on the neo-Crusaders."

This seems increasingly desperate to me and that this particular band of extremists have worn out their welcome in Pakistan.

8. IRAN'S 12 YR CHIEF OF ATOMIC ENERGY ORGANIZATION--FORMERLY 12 YRS AS OIL MINISTER--LINKED TO MOUSAVI STEPS DOWN

BBC News reports that Gholam Reza Aghazadeh, the head of Iran's Atomic Energy Organization, has resigned.

"Mr Aghazadeh is a veteran official who served in the 1980s as a deputy to Mir Hossein Mousavi--the defeated candidate in Iran's disputed presidential elections last month.

In 1985 he began a 12-year stint as oil minister, staying in the post during the presidency of Ali Akbar Hashemi Rafsanjani.

He then moved to his job at the head of the atomic agency in 1997 under the reformist former president, Mohammad Khatami.

He continued in the post when Mr Ahmadinejad was first elected in 2005."

9. IRAQ'S OIL EXPORTS UP ON INCREASED NORTHERN PRODUCTION (STILL SIGNIFICANTLY BELOW PRE WAR PRODUCTION)

Faleh al-Khayat at Platts reports that Iraq's total oil exports rose by 19 kb/d in June to 1.925 mb/d.

"Exports from northern fields rose to 528 kb/d in June, a post-war record and 7 kb/d higher than May exports.

The ministry did not say if the figure for the north included exports from the Tawke and Taq Taq fields in Iraqi Kurdistan, which began exporting crude oil on June 1."

"Production from southern oil fields rose slightly to 1.794 mb/d from 1.759 mb/d in May.

Although this increase is a continuation of the recent improvement in production from the south, the rate achieved is still 161 kb/d below the 1.955 mb/d produced in July last year.

The steep decline in production from southern fields since last July lies behind recent escalation in criticism of oil minister Hussein al-Shahristani and led to his summons by parliament to answer questions about oil policy."

10. VIOLENT CLASH BETWEEN STATE GOVT BACKERS AND NATIONAL GUARD IN TOWN EAST OF CARACAS

Christopher Toothaker at the Associated Press reported yesterday that hundreds locals in a small town east of Caracas by the name of Curiepe reacted to the National Guard seizing a police station controlled by an elected figure from the opposition by massing outside it and hurling rocks, bottles and Molotov cocktails at the troops.

"The conflict began shortly before dawn when about 40 soldiers from the National Guard tossed tear gas canisters at the police post, forced officers to leave and took over the building, said Elisio Guzman, director of the Miranda state police. He contended the troops were following orders from the mayor."

"As the conflict wound down later Wednesday, Adriana D'Elia, a Miranda state government representative, said state authorities agreed to move their police to another building after meeting with the municipality's pro-Chávez mayor, Liliana Gonzalez."

11. FORECLOSURES UP 15% YOY IN 1H 2009, INITIAL UNEMPLOYMENT INSURANCE CLAIMS AT HALF MILLION

Barry Ritholtz at the Big Picture links to RealtyTrac's country-wide county foreclosure map, noting that

"1,905,723 foreclosure filings were reported on 1,528,364 US properties in the first six months of 2009, a 9% increase in total properties from the previous six months and a nearly 15% increase in total properties from the first six months of 2008."

Meanwhile, Reuters reports that initial jobless claims for state unemployment were a seasonally-adjusted 522,000 in the week ended July 11, 47,000 fewer than what was seen in the previous week, per the Labor Department.

"Continued claims of people still on jobless aid after an initial week of benefits fell to 6.273 million in the week ending July 4, the latest for which data is available.

It was the lowest reading since April and the largest one-week decline on record. Analysts had forecast continued claims would decline to 6.85 million."

12. US OIL IMPORTS DOWN 7.6% IN 1H 2009 YOY, JET FUEL IMPORTS HALVED

Robert DiNardo at Platts reports that US imports of crude oil and petroleum products fell in the first half of 2009 by 7.6% from the first half of 2008 to 12.048 mb/d, per the American Petroleum Institute's monthly statistical review.

"Crude oil imports in June were down by 12.2% at 8.754 mb/d from 9.974 mb/d in June 2008. For the January-June period, crude imports were down by 6.2% at 9.191 mb/d versus 9.801 mb/d in the prior period, according to API's estimate.

Product imports in June were also mostly lower. For instance, imports of gasoline fell by 27.5% from a year earlier to 981 kb/d from 1.353 mb/d."

Jet fuel imports collapsed, falling 57% to 39 kb/d in June from 91 kb/d in June 2008.

Daily Sources 7/14

1. CHINA CALLS ON ERDOGAN TO WITHDRAW REMARKS ON UIGHURS, ONLY GULF STATE TO PUBLICLY CRITICIZE BEIJING IS IRAN

China Daily, a state owned newspaper, published an editorial today entitled "Don't Twist Facts" which states that Turkish Prime Minister Recep Tayyip Erdogan would be "well advised" to withdraw his statement saying that the events in Xinjiang amount to "a kind of genocide." The piece notes that China's one child policy applies only to Han Chinese and not to ethnic minorities, arguing that the immigration policy in the region cannot, therefore, be seen as colonization or a drowning out of the ethnic Uighurs in a sea of Han. It concludes:

"Mr Erdogan's remarks, which constitute interference in China's internal affairs, are the last thing the Uighur and Han Chinese would find helpful when they are looking forward to lasting peace."

Josef Federman at the Associated Press reports that much of the Arab Muslim world has remained mute on the question of the Uighurs, but that senior official in (Persian) Iran criticized Beijing openly:

"Iran has been one of the few Muslim countries to speak out on the crackdown. On Sunday, the official IRNA news agency reported that Foreign Minister Manouchehr Mottaki had discussed the ethnic clashes in a phone conversation with his Chinese counterpart and 'reflected concerns among Islamic countries.'

High-ranking clerics also condemned the crackdown and urged the government to complain to China.

'Silence and indifference toward such oppressions on the people is an unforgivable vice,' said Grand Ayatollah Youssef Saanei, a major religious figure who has criticized his own government's violent response to mass protests over the disputed June 12 election."

Iran has a very close relationship with Beijing, it's original oil sales to the country were conducted with a military organization solely incorporated to conduct the exchanges.

2. CHINA'S PROPERTY INDEX CLIMBS 0.61%

Xinhua reports that China's national property climate index rose 0.61% to 96.55 last month per an announcement by the National Bureau of Statistics.

"Real estate investment nationwide rose by 9.9% in the first half from the same period last year, and the growth rate was 3.1 percentage points higher than the January-May level, said NBS."

3. CHINA SURPASSES US AS WORLD'S LARGEST MARKET FOR WIND POWER

Keith Bradsher at the New York Times reports that China surpasses the US this year as the world's largest market for wind energy,

"now building 6 wind farms with a capacity of 10,000 to 20,000 megawatts apiece, using extensive low-interest loans from state-owned banks."

In May, Joerg Wuttke, president of the European Union Chamber of Commerce in China, accused Beijing of deliberately locking out foreign corporations from stimulus-related projects, specifically addressing a package of wind turbine orders worth €5 billion (~ $6.98 billion)--see Daily Sources 5/28 #3.

4. MÜNCHAU'S ANALYSIS OF THE GERMAN HIGH COURT'S RULING ON THE LISBON TREATY--THOSE IN MONETARY UNION SHOULD BE AFRAID

Wolfgang Münchau had an opinion piece in yesterday's Financial Times which examines the consequences of Germany's recent high court ruling on the Lisbon Treaty--see Daily Sources 6/30 #2. He makes three main points about the ruling:

"First, Germany’s constitutional court takes a clear stance on sovereignty. Ultimate authority always has to rest in a single place--and that is the member state for now. If you wanted to transfer sovereignty to the EU, you would have to dump your national constitution and adopt a European version in its place. As this is not going to happen, the court, in effect, ruled that all sovereignty in the EU is national. Power may be shared, but sovereignty may not."

"Second, the court does not recognize the European parliament as a genuine legislature, representing the will of a single European people, but as a representative body of member states. ... As a result, Germany will be able to ratify the Lisbon treaty only after a change in a domestic power-sharing law."

"Third, and perhaps most important, the court has given an explicit opinion on the question of European integration. Where does it end? The answer is: right here. The court said member states must have sovereignty in the following areas: criminal law, police, military operations, fiscal policy, social policy, education, culture, media, and relations with religious groups. In other words, European integration ends with the Lisbon treaty."

He concludes that anyone in a monetary union with Germany ought, therefore, to be worried. Well worth reading.

5. ITALY CALLS FOR EUROPEAN OIL FUTURES MARKET & GLOBAL REGS

Lorenzo Totaro at Bloomberg reports that the Italian Electricity and Gas Authority Chairman Alessandro Ortis said in a presentation in Rome today that a European oil market should be established in order to quell price volatility. He argued that the situation requires "A real, regulated European oil bourse open to selected operators" which would trade "long or very long term products, with delivery within Europe and guaranteed by a reliable central European counterpart." Ortis also joined the chorus of politicos who blame "speculation" for the price volatility, calling for global "governance agreements and international rules."

6. RELIANCE WANTS TO SELL DIRECTLY INTO US AS PROSPECTS OF LIFTING SUBSIDIES ON GASOLINE IN INDIA GET BETTER

Rakteem Katakey at Bloomberg reports that Reliance is seeking to sell petroleum products directly into the US--minus an intermediary.

"Reliance is currently selling fuel through Hess Corp. ... . Mumbai-based Reliance has leased storage space from Hess, [an anonymous company executive] said, without giving capacity details."

In April, Platts reported that in March Reliance had taken 1.3 million barrels of clean storage from Hess in the New York Harbor area--see Daily Sources 4/13. (The reason given for Reliance exporting in the story is extremely misleading--the Jamnagar refinery was always slated to be an export refinery--excess refining capacity is a strategy endorsed by New Delhi, though Reliance is private, and based on precedents set in Singapore and South Korea.) In June, Reliance halted exports of gasoline to Iran under pressure from the US, perhaps this (odd) story is more about that--see Daily Sources 6/4 #8--and the following. Vandana Hari at The Barrel reports that the Congress Party, having won a larger share of the vote in the recent elections, may press ahead with the liberalization of gasoline prices. Diesel is unlikely to be fully de-subsidized because of its role in agriculture and power generation, but it appears there is some likelihood that gasoline prices will become completely deregulated and unsubsidized.

"LPG and kerosene subsidies look likely to be left undisturbed for now. While kerosene is used by the poorest for cooking and home lighting, the consumers of LPG do not necessarily need state help to pay the market price of a cylinder. LPG could be taken down the same route as gasoil, with government help kicking in when prices cross a pain threshold.

As fuel price liberalization eases the subsidy burden of state-owned refiners and marketers Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp., as well as their upstream peers Oil and Natural Gas Corp. and GAIL, it would free up cash for their business growth and expansion."

There have been several stories recently about how Chinese state corporations have been making successful bids for overseas resources, often beating out competing Indian bids.

7. PAKISTAN LIFTS RESTRICTIONS ON PEOPLE RETURNING TO THE SWAT VALLEY

Izaz Mohmand at Reuters reports that Pakistan has lifted restriction on displaced people returning to the Swat Valley.

8. PHOTOS OF A DRY EUPHRATES, SECURITY TIGHTENED AROUND CHRISTIAN CHURCHES ON LAST WEEK'S SPREE OF ATTACKS

The New York Times carries a photo essay by Moises Saman of the ongoing agricultural crisis in Iraq as the country watches its rivers go dry as Turkey and Syria withhold water via dam projects at their source--see Daily Sources 6/8 #10. The accompanying story has the following anecdote:

"The Sunni areas upriver seem to have enough water, Mr Joda [a man who resides near Karbala] observed, a comment heavy with implication."

That said,

"Recently, the Water Ministry announced that Turkey had doubled the water flow into the Euphrates, salvaging the planting phase of the rice season in some areas."

Meanwhile, Nada Bakri at the Washington Post reports that security has been tightened around Christian churches in Baghdad and the northern province of Nineveh after a string of attacks last week.

"Iraq's Christians were the target of Islamist extremists after the U.S.-led invasion of Iraq in 2003 that toppled Saddam Hussein. Many have fled the country despite improved security. But fears of renewed attacks have mounted. In past weeks, devastating bombings also have struck Iraq's Turkmen and Shabak minorities in the north, which remains one of Iraq's most diverse regions."

9. RAFSANJANI TO MAKE FRIDAY'S WEEKLY KEYNOTE SERMON

Borzou Daragahi at the LA Times reports that Ayatollah Ali Akbar Hashemi Rafsanjani will deliver the nation's weekly keynote religious sermon, after having stayed away--for reasons which are the source of much speculation--for two months. Mousavi and Khatami will reportedly also attend the sermon.

"News of the return of reformists and moderates to the official Friday prayer ceremony could serve as a challenge to hard-liners, led by supreme leader Ali Khamenei, on their home turf. Alternately, it could be a sign that the two sides have brokered a truce in their continuing political conflict."

Iason Athanasiadis at the Christian Science Monitor reports that reformists are organizing to flood the prayer hall. (For some reason the CSM site appears to be down for me completely, here is an abstract at Iranian.com.) (h/t Juan Cole at informed comment.)

10. OPEC SAYS FUNDAMENTALS UNLIKELY TO PUT UPWARD PRESSURE ON PRICE IN 2010

OPEC published its monthly report today, which I have not had time to read, but which Platts reports it forecasts that fundamentals are unlikely to push oil prices up significantly in 2010.

"Although OPEC sees world oil demand growing by 500 kb/d in 2010, it expects this to be satisfied by non-OPEC producers and sees demand for its own crude falling by 400 kb/d next year on top of the 2.3 mb/d drop in demand between 2008 and 2009.

With current crude production--estimated at 28.44 mb/d in June--more than 300 kb/d than the 28.1 mb/d projected 2010 call on OPEC crude, the cartel will have food for thought at its next meeting, scheduled for September 9 in Vienna."

11. BRAZILIAN RETAIL SALES CLIMB FOR SECOND STRAIGHT MONTH, UNEMPLOYMENT DECLINES

Joshua Goodman and Andre Soliani at Bloomberg report that Brazil's retail sales rose by 0.8% in May from April and 4% from a year previous, according to the national statistics agency. April's year on year sales increase was revised upward to 7.1%.

"Unemployment fell for the second straight month in May, to 8.8%, while companies added jobs for the fourth month, cementing expectations that the economic recovery gained pace in the second quarter."

(Apparently in this case unemployment is not a lagging indicator.) Analysts see the rebound in sales as evidence that consumer demand is driving the Brazilian recovery.

12. US RETAIL SALES UP 0.6% IN JUNE FROM MAY, MOSTLY ON GASOLINE PRICES, THOUGH SALES OF AUTOS AND PARTS UP TOO; ZUCKERMAN PESSIMISTIC ON ECONOMY GIVEN UNEMPLOYMENT PICTURE

Shobhana Chandra at Bloomberg reports that retail sales rose 0.6% in June from May, the largest gain since January.

"Excluding autos and gas, purchases dropped for a fourth consecutive month. The Labor Department’s producer-price index gained 1.8%, twice as much as anticipated."

Sales at auto dealers and parts shops grew by 2.3%. Gasoline and diesel prices represent the largest share of the gain. However, the EIA yesterday reported that the average price of gasoline nationally fell 8¢ to $2.528/gallon in the week ended July 13 per Platts, just inside the price range ($2.50-3.00/gallon where driving starts to fall off). On the other hand, Mortimer Zuckerman has an opinion piece in the Wall Street Journal today where he argues that the economy is worse than we think, mostly because the average length of unemployment has grown sharply.

"Unemployment has doubled to 9.5% from 4.8% in only 16 months, a rate so fast it may influence future economic behavior and outlook."

Worth reading in full.

Mousavi's Statement Saturday 6/20

Mousavi issued a formal statement yesterday regarding the dispute, in which he argued that:

a) the LOTR has undermined the Republic by allowing the elections to be manipulated,
b) that the rallies on his behalf represent a renaissance of the 1979 Revolution and is directed at how the Republic should be,
c) that by repressing the rallies and allowing the vote to be rigged, the LOTR will prove forever that Islam and Republican government are incompatible,
d) that the request for the annulment of the election is a right guaranteed by the Constitution (and Islam),
e) that it is not directed against the Basiji, Revolutionary Guards, or Army, saying that they are all brothers, and
f) invokes Article 27 of the Constitution to emphasize the fundamental legality of the rallies.

"Article 27
Unarmed assemblies and marches may be freely organized, provided that no violation of the foundations of Islam is involved."

The following translation is by someone at Rooz Online, an Iranian on line daily made up of independent and reformist journalists, and published by Iran Gooya media group, which is registered in France. You can access the translation, side by side with the Farsi, and with links to the source and some definitions here.

"Date: June 20, 2009

In the Name of God, the Compassionate, the Merciful

God commands you to return what you've been entrusted with to its owners, and to judge in justice when you judge among the people. [Koranic quote]

Honorable and intelligent people of Iran,

These days and nights a turning point is being forged in the history of our nation. People are asking each other and also me, when amongst them, what should be done and in which direction we should go. I consider myself responsible to share what I believe with you, to talk to you and learn from you. Let us hope that we will not forget our historical mission and will not shirk from the burden of duty put on our shoulders by the destiny of generations and ages.

Thirty years ago a revolution succeeded in our country in the name of Islam; a revolution for freedom, a revolution for the rekindling of the compassion of human beings, a revolution for truth and honesty. During this period, and especially during the life of our perspicacious Imam, vast investments of life, property, and honor were made to consolidate this blessed monument, and precious achievements were attained. An illumination, never experienced before, encompassed our society and people arrived at a new life that was sweet for them, in spite of most difficult hardships. I am confident that people who have seen those days will not consent to anything less.

Have we people become unworthy, resulting in our not experiencing that exhilarating atmosphere anymore? I had come to say that is not the case; it is not too late yet and our path is not far from that illuminated atmosphere. I had come to show that you can live spiritually within today's world. I had come to retell the warnings of our Imam about ossification. I had come to say that bypassing the law results in tyranny; to remind that attention to human beings' generosity does not weaken the foundation of the regime, but strengthens them. I had come to say that people expect truth and honesty from their servants [a government dedicated to serving the people] and a lot of our troubles have arisen from lies. I had come to say that backwardness, poverty, corruption, and injustice is not our destiny. I had come to invite to the Islamic Revolution as it was, and to the Islamic Republic as it should be.

I was not eloquent in this invitation, but the noble message of [original 1979] Revolution was so pleasant, even coming from my inadequate expressions, that it excited the younger generation, a generation that had not seen those times and felt a distance between themselves and this great inheritance, and reconstructed scenes only seen during in the times of the [Iranian Revolution] movement and the Holy Defense [the Iran-Iraq war]. The spontaneous movement of the people chose the color green as its symbol. I confess that I followed them in this matter. And the generation that was accused of being far from religious roots, arrived at Takbir among its slogans and leaned against "Victory Comes from God and an Opening is Around", "O Husayn" and the name of Khomeini to prove that this fine tree brings similar fruit whenever it bears fruit. Nobody had taught them these slogans except the Innate Teacher [God]. So unfair are those whose little interests makes them call this miracle of the Islamic Revolution fabricated by foreigners and a "velvet revolution".

But as you know, all of us were confronted with lies and fraud in the way of renewing the life of the nation and realizing the ideals that have roots in the heart and soul of our old and young, and our prediction of the consequences of lawlessness materialized in the most explicit shape possible and in the shortest time.

The great participation in this election was, in the first degree, indebted to the efforts for creating hope and trust among the people, to obtain a befitting response to the existing administrative crises and the widespread social dissatisfaction, whose accumulation can target the bedrock of the Revolution and the Regime. If this good faith and trust coming from the people is not answered by protecting their votes, or the people can not react in a civil and peaceful way to defend their rights, there will be dangerous pathways ahead, responsibility for which lies with those who can't stand peaceful behaviors.

If the high volume of cheating and vote manipulation, that has put a fire to the foundations of people's trust, is itself introduced as the proof and evidence of the lack of fraud, the republicanism of the regime will be slaughtered and the idea of incompatibility of Islam and republicanism would be practically proven. Such a fate will make two groups happy; one group being those who arrayed their troops against the Imam [Khomeini] from the beginning of the Revolution and assumed that the Islamic government is the same as Tyranny of the Rightful and, in their false surmise, want to bring people to Heaven by force, and the other group being those who, by claiming to defend the rights of the people, basically consider religion and Islam to be blockers for realization of republicanism. The wondrous craft of the Imam was rendering the witchcraft of these dualisms null and void. I had come to neutralize the efforts of the witches who have found a new life.

Now by endorsing what happened in the elections, the government officials have taken responsibility for it, and have set limits on the results of any further investigation and auditing, in such a way that such an investigation should not annul the election or change its results, even while the number of votes cast in 170 voting centers has exceeded the number of people eligible to vote there. In this situation, we are being told to follow up on our objection with the Guardian Council, but this council have proven their lack of neutrality in their acts, before, during, and after the election. But a prerequisite for any fair arbitration is observing impartiality.

I still strongly believe that the request for annulment of this election and a renewed election is a given right and it should be investigated impartially by a board trusted nationally, instead of rejecting the possibility of any positive results from the investigation beforehand; or propose the possibility of bloodshed in order to keep people from rallying and demonstrating; or the National Security Council, instead of answering the righteous question about the role of plainclothes in attacking people and public property, and inflaming public movements, resolves to [pyschological projection] and blaming others for the tragedies that have happened.

As I look at the scene, I see that it has been set to achieve more than just forcing an unwanted government on the nation, it is set to achieve a new type of political life in the country. As a companion who has seen the beauty of your green wave of participation, I will never allow anybody’s life to be endangered because of my actions. At the same time, I stand by my firm belief of this election being null and void, and insist on reclaiming people’s rights, and in spite of the little power I possess, I believe that your motivation and creativity can still result in following up your legitimate rights in new and civil guises. Be confident that I will stand by your side at all times. What this brother of yours advises for finding these new solutions, especially to the beloved youth, is: Don’t let the liars and fraudsters steal the flag of defending the Islamic regime from you; Don’t let "the delinquents and the strangers" [quote from Ayatollah Khomeini, quotation marks ours] confiscate from you the precious heritage of the Islamic Revolution, which is built from the blood of your honest fathers. With trust in God and hope for the future and relying on your capabilities, continue your social movements based on freedoms explicitly stated in the constitution and stay away from violence, as you have been doing. In this road, we are not up against the Basij members; Basiji's are our brothers. In this road, we are not up against the Revolutionary Guard members; they are protectors of our Revolution and regime. We are not up against the military; they are the protectors of our [country's] borders. We are not up against our sacred regime and its legal structures; this structure guards our Independence, Freedom, and Islamic Republic. We are up against the deviations and deceptions and we want to reform them; a reformation that returns us to the pure principles of the Islamic Revolution.

We recommend those involved [the office-holders] to, in accordance with Article 27 of the constitution, not only facilitate non-violent gatherings in order to achieve peace in the streets, but also encourage such gatherings and release radio and television from the shackle of ill-speaking and biased behavior. They should let the voices, before becoming cries, to get corrected and balanced in this flowing media in the shape of good argumentation and disputation. They should let the press criticize, report the news as it is, and in short provide a free space for people to express their agreements and disagreements. Let us let those who like to say Takbir's say them, and let us not treat them as opposing us. It is perfectly clear that in this case, there won't be a need for the presence of military and regulatory forces in the streets, and we won't come face to face with scenes that upon watching them or hearing about them brings pain to the heart of everyone interested in the Revolution and the country.

Your brother and companion, Mir-Hossein Mousavi"

Iranian Election Protests Erupting

Mousavi didn't blink.

Parisa Hafezi at Reuters reports that Mousavi has said that he is "ready for martyrdom" and called for a national strike if he is arrested. He reiterated his demand that the elections be annulled and new elections carried out in a letter to the Guardian Council:

"These disgusting measures (election rigging) were planned months ahead of the vote ... considering all the violations ... the election should be annulled.,"

Further, it is reported that neither he nor Karrubi decided to attend the meeting with the Guardian Council today to discuss their disputes, per PressTV. That seems to leave little room for compromise--either the elections are nullified or conflict has been chosen.

Whether or not Mousavi endorsed the rallies today, they took place. The security forces were out in force, though it is reported that neither the Revolutionary Guards nor the Army have been committed, only the Basij and the Law Enforcement Forces. From the Tazahorate Ma blog:



More images can be found there.

70% of the population is in urban areas in Iran ... and the urban areas appear to have erupted in some violent clashes with the security forces:









Possible images of protests today in Tehran, though the date of the footage has not been confirmed.



Powerful footage of clashes in Shiraz can be found here.

Very graphic and extremely upsetting footage of a woman shot down in the streets of Tehran:



Footage and coverage from CNN:



Reuters reports that a suicide bomber blew up the shrine of Ayatollah Khomenei.

CNN reports that security forces used tear gas, helicopters sprayed acid on protesters, and that efforts were made to prevent people from congregating. So it is to be conflict. Everyone in Iran knows they have the right to peaceful assembly per the Constitution.

"Article 27
Unarmed assemblies and marches may be freely organized, provided that no violation of the foundations of Islam is involved."

Also, the right to a representative form of government is guaranteed:

"Article 6
In the Islamic Republic of Iran, the affairs of the country must be administered on the basis of public opinion expressed by the means of elections, including the election of the President, the representatives of the Islamic Consultative Assembly, and the members of councils, or by means of referenda in matters specified in other articles of this Constitution."

It appears that the contest is open, will be violent, and is about those who believe that the representative elements of the government serve their interests best and those who want to eliminate whatever vestiges of representation remain.

An Iranian rap video of unknown provenance calling on the soldiers to back to protesters:



Translation at the youtube hosted site.

The President's statement:

"Statement from the President on Iran

The Iranian government must understand that the world is watching. We mourn each and every innocent life that is lost. We call on the Iranian government to stop all violent and unjust actions against its own people. The universal rights to assembly and free speech must be respected, and the United States stands with all who seek to exercise those rights.

As I said in Cairo, suppressing ideas never succeeds in making them go away. The Iranian people will ultimately judge the actions of their own government. If the Iranian government seeks the respect of the international community, it must respect the dignity of its own people and govern through consent, not coercion.

Martin Luther King once said - 'The arc of the moral universe is long, but it bends toward justice.' I believe that. The international community believes that. And right now, we are bearing witness to the Iranian peoples’ belief in that truth, and we will continue to bear witness."

His statements calling for people to respect the rule of law notwithstanding, it seems that the LOTR has given up whatever legitimacy he had under the Constitution.

I have no idea how things will unfold, but just now it looks very ugly. If various elements of the armed forces take the side of the protesters, the government of Khamenei and Amahdinejad is probably done for--like I said, 70% of the people in Iran live in the cities.

Still no sign of Rafsanjani.

Iran -- Constitutional Crisis?

I was wrong in thinking that the Leader of the Revolution [LOTR], Ayatollah Khamenei, would make some concessions in his sermon yesterday, and only wondering whether they would be enough or too much to put the genie back in the bottle. It does appear from the speech that he clearly sees the opposition's claims as a direct attack on the legitimacy of the government--a means of undermining it.

"This is what they want. They want to undermine trust to weaken participation to deprive the Islamic Republic of legitimacy. The harm inflicted by this is far worse than setting fire to buses and banks. This cannot be compared with any other loss. The enemy wants to see the people come forward in such a move and participate so enthusiastically in elections and then get told that they have made a mistake in trusting the system, the system is not trustworthy. This is what the enemy wants. They started this line (of attack) before the elections."

I suspect that Khamenei saw the question of concessions in the light of what happened after Louis XVI's concessions to the Estates-General. (Some might think this a stretch, but Khamenei was a key participant in the 1979 Revolution and the Constitution which came out of that was strongly influenced by the French Constitution for the Fifth Republic. The revolutionary leaders of the Iranian Revolution were and are students of revolutions past.)

In any case, it seems that he has calculated that he is both in the position not to make any concessions and that it is not in his interests to do so. This is interesting to me, because he seems to be doing precisely what it is he says in the quote above he fears--undermining trust in the system. Insofar as the opposition has been marching, they have been marching to have a new vote, not to change the system. Now they will be marching, it seems, to, at the very least, overturn this last directive, have a new vote, perhaps to replace the LOTR, and perhaps even to eliminate the role established for the LOTR in the Constitution.

Now Mousavi's call for a nullification of the election results altogether and a new election have been seconded by opposition candidate, Mehdi Karrubi, per Press TV. Both are scheduled to meet with the Guardian Council to present their evidence of vote tampering today. Earlier there were reports that Mousavi supporters were arranging for another rally today, but Parisa Hafezi at Reuters reports that an ally of Mousavi's said yesterday,

"Mousavi has no plans to hold a rally tomorrow or the day after tomorrow and if he decides to hold a rally it will be announced on his website."

However, folks might decide to march without official approval.

Which leads to the question of what forces are available to the LOTR should he decide to use force, as he appears to threaten in his speech. To wit:

"If after every election, those who do not win start street rallies and mobilize their supporters in the streets, then those who have won start street rallies in response, then, what is the purpose of holding elections? What is the fault of the people? The people, who have businesses on the street, commute on the streets and live there. What is their sin to witness you wanting to show off your supporters, one side like this and the other side like that. For the infiltrated terrorist, the individual who intends to deal a terrorist blow, the issue is not the political aspect of the matter. What is better for him than to hide among the people, who want to hold gatherings and rallies? If such gatherings provide a cover for him, then who is responsible? Who is accountable for the death of the few people from the public and the Basij in these incidents? There will be reactions and sentiments after they (agitators) exploit the chaos and assassinate members of the Basij or the Law Enforcement Force. Who is accountable for these reactions? One's heart is torn apart when one sees such events, when one sees that they raid university dormitories and harm young students, not rioting students but the pious students, and then chant slogans in support of the leader too. One's heart is torn apart by such events. (Crowd chanting)

Street challenges after the elections are not the right thing to do. This is, in fact, challenging the principle of elections and democracy. I want everyone to end this sort of action. If they do not end it then the consequences of this lie with them (street protesters).

It is a wrong perception, please note, a wrong impression that through their street presence they will be creating a lever of pressure against the system. It is wrong to think that the officials of the system will concede out of expediency."

Also, PressTV reports that the Supreme National Security Council has warned Mousavi against rallies in a statement which reads in part:

"It is your responsibility to prevent the public from attending such rallies instead of making accusations against the law enforcement. [Mousavi wrote a letter to the council complaining of abuses by law enforcement. All of the candidates have submitted hundreds of complaints to the Guardian Council.] We believe this is an organized network which is most probably affiliated to foreign-related groups and deliberately disturbs the peace and security of the public. Of course we have already ordered the law enforcement forces to deal with the issue."

On Friday, the spokesman for the Guardian Council, Abbas-Ali Kadkhodaei, warned opposition candidate Mohsen Rezai against agitating public opinion. (Rezai was the chief commander of the Revolutionary Guards for 16 years and serves as the Secretary of the Expediency Discernment Council--which resolves disputes between the Guardian Council and the Majlis, or Iranian Parliament.)

Michael Eisenstadt at the Washington Institute has an extremely useful analysis of the various military forces involved. Key excerpt:

"Film and television footage of the protests show that this time the Basij are in the lead in dealing with the unrest, with the Law Enforcement Forces [LEF] playing a supporting role. Iranian Revolutionary Guard Corps [IRGC] units have not yet been committed. This is consistent with the growing role assigned the Basij since 2003 as the first line of defense against possible US regime-change attempts--whether through an invasion or a color revolution. It is not clear, however, that this apparent confidence in the Basij is justified.

While the recruitment base of the Basij is much narrower than that of the IRGC (which draws on conscripts from all sectors of Iranian society), it is a volunteer force that many join for opportunistic reasons--for a paycheck, a scholarship, or a bit of authority. And while the Basij is probably more thoroughly vetted than other mass organizations (due to the role of local clerics and mosques in the recruitment process), it is hard to believe that its membership is insulated from the broader political forces at work in Iranian society today. Accordingly, some units might experience significant desertions if employed to violently suppress the protests."

Well worth reading in full. As I have noted before, if there are millions in the streets, orders to shoot protesters may not be obeyed ... in part because there is a high likelihood of there being relatives in the crowd.

Perhaps the Guardian Council will decide enough votes are questionable so that a second round could be arranged. If not, my guess is that the protests will be continue, in defense of the Constitutional right to having their vote count. Where Rafsanjani happens to be and whether an emergency meeting of the Assembly of Experts in Qom has been assembled remains an open question. If it is, and if the LOTR is ordered to stand down and he resists there will be a full blown Constitutional crisis in Iran ... likely followed by shows of force. We shall see.

Photos of signs in the protest in Tehran yesterday, with helpful translations, by Syma Sayyah at Payvand Iran News, one sample:

Translation: "Why would I want to die? Seeking truth has forced me to. I'm going into the grave happily, to bring out the corpse of freedom from the depth of darkness."

Another set of photos of the protest in Tehran yesterday by Syma Sayyah at Payvand Iran News. One sample:



And yet more images of the Tehran protest yesterday from Syma Sayyah at Payvand Iran News:



Very much worth looking through.

Khamene'i's Friday Sermon -- Few if any Concessions

I thought that the Leader of the Revolution [LOTR], Ayatollah Khamenei would use the highly anticipated sermon today to make some concessions to the opposition campaigns.

I was wrong.

A concession by the LOTR was to go out of his way to praise Ayatollah Rafsajani and to say that he was not corrupt, explicitly rejecting Ahmadinejad's accusation which led to the unprecedented public epistolatory complaint to the LOTR. Rafsanjani is an old colleague of the LOTR whose relationship dates back from the 1979 Revolution. Rafsanjani was, IIRC, a member of the Assembly of Experts which elected him LOTR. Rafsanjani was not at the sermon, which is widely regarded as an ominous sign (of some sort). Nor was Mousavi, Karrubi, or Ayatollah Khatami (former President and reformist cleric).

I have no confirmation of the rumor that Ayatollah Rafsanjani convened an emergency meeting of the Assembly of Experts in Qom ... which could, possibly, explain his absence ... but then so could his arrest ... or his decision to back down ... or to boycott the sermon ... or his death. The Assembly of Experts has the power under the IRI's Constitution to remove the LOTR (Article 111).

Also, a small concession might be here:

"I have told the esteemed Guardian Council that if they need to recount the ballot boxes, they should do so in the presence of the representatives of candidates. They (representatives) should be present to register and sign. Therefore there are no problems in this respect. That was my point regarding the election that I wanted to tell the nation."

I am of the understanding that there were not enough representatives at ballot boxes--and none at mobile ballot boxes--for there to be sufficient evidence to present the Guardian Council to plausibly overturn the election, or even force a second round. But a second round could be a possible route out of the dilemma facing the LOTR.

Here is the full translation of the Friday sermon by Leader of the Revolution Ayatollah Khamenei, provided by the Open Source Center (a US Government organization) via Juan Cole.

Islamic Republic of Iran News Network Television (IRINN)
Friday, June 19, 2009
Document Type: OSC Translated Text

"In the name of God, the Merciful, the Compassionate. (Introductory prayers in Arabic) In this sermon I call on all dear brothers and sisters who are participating in the prayers to observe piety.

The issue which I would like to raise in this sermon concerns the (presidential) election which is currently the issue of the day in our country. I will mention three points to three groups. I am going to address our dear people. I would like to mention a few points to our dear nation wherever they may be. Another point concerns the political elite, presidential candidates, and the election officials. I will also mention a point to the leaders of the arrogant powers, a number of Western governments and the media that they control.

The first point that concerns you dear people is a world of praise, admiration and appreciation. In my speeches, I do not like to address my audience using flattery (tamaloq), however in the issue of election I will tell you dear people that whatever I say, even if it sounds like flattery it is fine because you have accomplished a great deal.

The 22 Khordad (12 June) election was a massive display of our nation's responsibility in determining the country's destiny. It was a huge display of the spirit of cooperation among the people in managing their country. It was a great display of the people's fondness for their system.

Indeed, a similar event to what happened in this country I have not seen in the world, in various democracies, be they pretend, false democracies or democracies based on people's votes.

(Chants of: "God is great, Khamene'i is the leader, other indistinct slogans)

Last Friday's elections were unprecedented in the Islamic Republic apart from the referendum which was held in Farvardin 1358 (March 1980) [on having an Islamic Republic]. Around 85 percent (of eligible voters), around 40 million people, (took part in election). One can see the auspicious hand of the Lord of the Age (12th imam) behind such great events. That is a sign of the blessing of God.

I deem it necessary to pay my respect and tell you of my humbleness towards you dear people in the entire country from the bottom of my heart. That is indeed befitting.

Our young generation particularly showed that it still possesses the same political enthusiasm, awareness, and commitment that we saw in the first generation of the revolution. However, with one difference, that the hot furnace of the revolution created emotions in the hearts of people, later during the war in a different manner, but today those (emotions) do not exist and we still see such commitment, feeling of responsibility, and enthusiasm in our present generation. Those are not small things.

Of course people have differences of opinion and tastes. Some accept a certain person, a theory, others accept someone else and have a different theory. Such things exist and it is natural for them to exist. However, one feels a collective commitment among all these individuals despite their differences of opinion. A collective commitment aimed at protecting their country and to protect their system.

Everyone participated in cities, in villages, in small towns, in big towns, from different ethnic groups, different religions, men, women, old, young all entered the arena. All took part in this massive move.

This election, my dear ones, was as a political earthquake for your enemies and a real and historic celebration for your friends in different parts of the world.
As the revolution is experiencing its 30 years of age, the manner in which the people expressed their commitment towards the system, the revolution and the honorable imam (Khomeyni) was a general and popular movement aimed at repeating their allegiance with the imam and the martyrs. It was a breath of fresh air for the Islamic Republic, a fresh movement, a great opportunity.

These elections showed our religious democracy to the entire world. All those people who are ill-wishers towards the system witnessed what religious democracy really is.

This is a third way different from dictatorships and tyrannical systems on the one hand and democracies removed from spirituality and religion on the other. This is religious democracy. This is what attracts the hearts of people and brings them to the center of the arena, and it just passed its test. That was one point about the election.

The second point about the elections is that the 22 Khordad elections showed that the people live in an atmosphere of trust, hope, and enthusiasm in this country.

This was a response to many of your enemies' remarks expressed in their biased propaganda. If the people have no hope for the future they would not take part in elections. If they do not trust their own system they would not take part in elections. If they do not feel free, they would not welcome the elections. Trust in the Islamic Republic became evident in these elections. I will tell you later that the enemies have targeted this very trust. The enemies of the Iranian nation intend to undermine this trust. This trust is the biggest asset of the Islamic Republic and they want to take it away. They want to create doubt about elections. They want to cast doubt on the trust of the people.

The enemies of the Iranian nation know that when trust is gone, participation will weaken. When participation and presence on the scene is weakened, the legitimacy of the system will be questioned. This is what they want. They want to undermine trust to weaken participation to deprive the Islamic Republic of legitimacy. The harm inflicted by this is far worse than setting fire to buses and banks. This cannot be compared with any other loss. The enemy wants to see the people come forward in such a move and participate so enthusiastically in elections and then get told that they have made a mistake in trusting the system, the system is not trustworthy. This is what the enemy wants. They started this line (of attack) before the elections. Two to three months ago, I said in Mashhad in early Farvardin (month beginning 23 March 2009) that they (the enemy) kept repeating and drumming it in that the elections were going to be rigged. They were preparing the ground. I cautioned our good friends inside the country not to repeat the enemies' propaganda.

People trust the Islamic Republic system. This trust has not been achieved easily. The Islamic Republic, by its officials, performance and immense efforts has been able to deepen this trust in the hearts of people over the past 30 years. The enemy wants to take the trust away and dishearten people. That was another point.

The third point is about the (election) race. The race between the candidates was completely free, serious, and transparent. Everyone has witnessed that. The race, dialogues, and debates were so transparent and open that some individuals complained against that. As I will mention, they were somehow right to do so. It created some anxiety whose outcome we are witnessing.

Let me tell you something. My assumption was and is that the race between the four candidates was the race between the individuals and trends affiliated to the Islamic system. The enemies in various media, which mostly belong to the malicious and evil Zionists, tried to portray that the disputes were between the advocates and opponents of the system. No, that was not the case. How dare they say such things. It is not true. The four candidates who stepped in the field of the serious election were and are all members of the system and affiliated to it.

One of them was the president (Mahmud Ahmadinezhad) of our country, who is assiduous, deserving, and trustworthy. Another one was the prime minister for eight years (Mir-Hoseyn Musavi) during my tenure as the president. He was my prime minister for eight years. Another one was the commander of the Guards Corps (Mohsen Reza'i) for many years, and was one of the main commanders during the Holy Defense (Iran-Iraq war, 1981-1988). Another one has served as the head of the legislative pillar and the Islamic Consultative Majles (Mehdi Karrubi) for two terms. They are the members of the system. All of them belong to the system.

Of course, they have different opinions. They have different plans. They have a range of differences in their various political stances. But all of them belong to the system. All of these four people are members of the system. This race took place within the system. Despite what the Zionist radio and the radio of America and the evil Britain and others are trying to portray, it was not a race between the insiders and outsiders of the system. It was a race inside the system between the members affiliated to the system, who have such records. I know all of them closely. I am familiar with their thoughts, ideas, and traits. I have worked with them closely. I know all of them.

However, I do not accept all of the viewpoints of these gentlemen. In my view, some of their viewpoints and performances can be undoubtedly criticized. I believe that some of them can serve the country better than others. However, the people are those who should make the choice. The people have opted so (by electing Ahmadinezhad). My wish and understanding was not told to the people and it was not necessary for the people to observe it. People, based on their own criteria, have decided, moved and acted in millions here and there. Therefore, it is a domestic issue. It will be a biased and malicious move if some want to change the appearance of the issue. The dispute is not between the system and outside the system. The dispute is not between the revolution and counter-revolution. The dispute and difference is between the members who are within the framework of the system. The people who have voted for these individuals, believed in the system. The people voted for him (Ahmadinezhad) since they recognized that it would be better for the country and he is more committed to the system. They voted for the person who they thought is more capable to serve the system. People have acted within the framework of the system.

Well. The campaigns and debates were good and interesting initiatives. The debates were very open, transparent and serious. The debates were a slap in the face of those who had tried to insinuate from outside that the campaign was a trumped-up show and unreal. They realized that the debates were real and serious. The candidates came face to face and debating with each other. The debates were positive from this respect. It had positive points as well as shortcomings. I will mention both of them.

The positive side was that during these televised debates and dialogues all of them (candidates) spoke their minds transparently. A flood of criticism started and everyone had to respond. Criticism was leveled against them and they had to respond and defend themselves. Without any vagueness and complication, the stances of individuals and groups were exposed before the eyes of people. They (the candidates) expressed their policies, plans, and commitments. These were exposed before the people and the people have been able to judge. The people felt that they are not considered as aliens in the Islamic system. The country's system does not have us and them. Everything is clear for the people. All ideas were expressed to the people. It was clarified that the people's vote results from such considerations and contemplations. People's votes are not for decorative (formality) purposes. People have certainly the right to choose. People want to elect vigilantly and prudently.

The debates revealed such things. Certainly, one of the reasons that ten million more votes were cast - as compared with the previous records during the past elections - was that the people and their ideas participated on the scene. They realized the reality and stepped forward. These debates were spread to street level and houses. Such things increase people's power of choice. These kinds of debates strengthen the minds of people and increase their ability to elect. It is an appropriate thins from the viewpoint of the Islamic Republic.

Of course, I would like to make a point from here. Such debates should not lead to hostility and grudges. If it happens, it will have an opposite impact. If they remain at that stage (during the election campaign), it would be good. But if such debates are extended afterward and turn into squabbles, it will lead to grudges.

It would of course be very good to continue such debates at managerial levels. However their deficiencies - that I will refer to - should be removed. Individuals should be exposed to criticism. They should be accountable and should respond to criticism. They should clarify issues.

In many instances, criticism provides an opportunity for an individual to clarify issues and facts. But the deficiencies that I will refer to should be removed. If such debates would continue in the course of four years, then at the time of elections, debates will not create such an explosive milieu.

All what is to be said has already been said and heard during the year. Criticisms, responses are all then heard. These were the positive aspects of the debates. There were some flaws in the debates too which need to be removed.

One sometimes could see that the logical aspect of the debates became weak. Emotions sometimes prevailed and ruined things. During the debates, some tried to portray the situation as worse than it is. They even tried to question the situation during previous governments. Both were unacceptable.

Certain accusations were leveled against individuals that have never been proved anywhere. They relied on rumors. There were certain unfair statements made both against the present government with the huge volume of its service, as well as against previous governments of the past 30 years.

The gentlemen became emotional during their statements. While they raised good things, they also mentioned issues that were not acceptable.

Similar to other people in the country, I watched the debates on the TV. I enjoyed the freedom of speech. I enjoyed seeing that the Islamic Republic state has come to the assistance of the people to make a better choice.

But the negative aspect of the debates depressed me. The negative aspects of the debates and the accusations leveled were distressful. Both sides made such accusations.

During the Friday prayer sermons and the sermons which are part of the prayers I should say the truth. Both sides unfortunately made similar mistake. On the one hand, the official president of the country was insulted in the worst manner. I was receiving copies of the speeches even two to three months before the debates. I used to see the text of the speeches and hear things. Sometimes, certain accusations were leveled and statements were made against the official president of the country - the individual who relies on the votes of the people.

They wrongly accused him. They accused the president of the country - who is being trusted by the people - of being a liar. Are these good things to do? They made fake records for the government and distributed them here and there. We - who are aware of issues - see and know that they are against the truth. They insulted the president and said that he was superstitious and a fortune-teller. They accused him of such shameless attributes. They trampled on ethics, law and fairness. This was done by one side.

On this (Ahmadinezhad) side similar things were done in another manner. The 30-year outstanding record of the revolution was questioned. The names of some individuals were mentioned.

It has never been my tradition that I name names in the course of Friday Prayers. But as names have been named (during the televised debate between Musavi and Ahmadinezhad) I am compelled to give names. Especially, I have to name Mr Rafsanjani and Mr Nateq-Nuri; I have to name names. Of course, nobody has accused these gentlemen of financial corruption. As for the next of kin, anyone who is making an accusation, he has to prove it through legal channels.

Before proof, one cannot publicize these issues. If it is proved, then there are no differences between individuals in society (before the law), but before it is proven one cannot air these and make a definite charge against anyone.
When such statements are made, wrong impressions are given to the people. The youngsters believe something else and have a different take on issues.
Everyone knows Mr Hashemi (Rafsanjani). My understanding of this gentleman is not limited to after the Revolution and the responsibilities after the revolution. I've known him personally since 1957, in other words, 52 years.

Mr Hashemi was one of key figures of the movement during our struggles. He was one of the most serious militants before the revolution and after the victory of the revolution; he was one of the most effective figures of the Islamic Republic next to Imam (Khomeyni). And after the Imam passed away, he continued to be by the side of the leadership up until today. He was almost martyred on many occasions. Before the revolution, he spent his belongings and properties for the revolution and militants. Our youth should know that. He has held many positions after the revolution. He was the president for eight years and was the Speaker before that. After his presidency, he held even more positions and during all those times, we have not seen even one instance of him amassing wealth for himself from the revolution.

These are the truths which should be known. In the most sensitive time, he has always been at the service of the revolution and the system.

Of course, Mr Hashemi and I have differences of opinion on various issues, which is natural. There are different issues (over which there are differences). However, people should not harbor any illusions and think otherwise.

Of course, since the 1384 (2005) elections, there have been differences between Mr Hashemi and Mr President. The differences still continue. They have differences of opinion on foreign issues, on how to implement social justice and on certain cultural issues. The viewpoints of the President are closer to those of mine.

(Chants of slogan, God is great).

The same goes for Mr Nateq-Nuri. He is one of the sincere servants of the revolution. He, too, has rendered a great deal of services and there is no doubting his love for this system and the revolution.

Well, live TV debates are good but such damages should be avoided. At that time, after the debate, I gave a notice to the president because I knew he would listen.

As for financial corruption, the system's position is clear. Similarly, the position of the state is clear regarding social justice. We should fight corruption wherever it is. (Chants of slogan, God is great)

I want to say that we do not claim that financial corruption does not exist in our system. Yes, it does, otherwise I would have never written that 8-article guideline to the heads of the branches of power a few years ago. I would never have insisted on the guideline otherwise. Yes there is corruption. But I want to say that the Islamic Republic system is one of the healthiest political and social systems in the world today.

It will not be right if we cite a report by some Zionist centers and accuse the system of corruption. This is not right at all. Accusing officials and figures of corruption unreasonably is not right either. Financial corruption is an important issue in the Islamic Republic system and we should seriously fight it at all levels of executive, legislative and judicial branches of powers. We are all duty-bound to fight it and if it is not contained, it will spread. Many countries of the world, including Western countries, that claim to fight corruption and money-laundering, are corrupt to their core. You have all heard about the (expenses scandals in the) British government and the parliament. The whole world heard the story and those were just parts of the story, it was a lot bigger (than what you have heard).

Well now I'd like to finish my address to the Iranian nation. My dear ones, the Iranian nation, 22 Khordad was an epic election and it was registered in history, although some enemies in the world tried to undermine this definite victory lower it to a dubious and doubtable victory.

Some of them even tried to portray it as a national defeat. They wanted to sour the sweet taste in your mouth. They wanted to stop the world from registering the biggest turnout in the world in your name. They wanted to do all that, but they failed. It was registered in your name. They cannot manipulate (the result). (Chants of slogan, God is great).

The rivalry has ended. All those who voted for the four candidates are rewarded by God, God-willing. They are all part of the revolution front and belong to the system. They have even worshipped God if they voted with sincerity. The path of revolution has 40 million votes, not 24.5 million who voted for the president-elect. Some 40 million voted for the path of revolution.

People know it and some supporters of some candidates should rest assured that the Islamic Republic does not betray votes of the people. (Chants of slogan, God is great)

The legal structures for elections in our country do not leave us room for vote-rigging. Anyone who is involved in elections will know this. And they talk about a difference of 11 million votes?

Sometimes the difference is 100,000, 500,000 or even 1 million. In that case, one could say that there might have been vote-rigging, but how can they rig 11 million votes? (Chants of slogan, God is great)

At the same time, I said - and the Guardian Council agrees with me - that if there are some people who have doubts and have documents, those doubts should be investigated, of course through legal channels.

Investigations should be carried out only through legal channels. I do not submit to illegal precedents. (Chants of slogan, God is great)

Today, if legal frameworks are ignored today, there will be no guarantees for the health of the elections in the future. In every election there will be some who win and some who lose. No elections will be safe or trusted any longer (if the law is ignored). Therefore, everything should be processed and carried out based on the law. If there are really doubts, there are legal ways. The law is perfect in this respect and there are no flaws in the law, just as it has allowed the right for the candidates to supervise, complain and call for investigation. I have told the esteemed Guardian Council that if they need to recount the ballot boxes, they should do so in the presence of the representatives of candidates. They (representatives) should be present to register and sign. Therefore there are no problems in this respect. That was my point regarding the election that I wanted to tell the nation.

And now I would like to address politicians, candidates, and party leaders. I want to tell them that today marks a sensitive historic moment for the country. Take a look at the situation of the world, the Middle East, the economic situation and our neighboring countries like Iraq, Afghanistan, and Pakistan.

We are at a sensitive juncture. We are all duty-bound to be vigilant and careful at this historic juncture and make no mistakes.

In these elections the people truly performed their duty. Their duty was to come to the polls and this duty was performed in the best possible way. However, we and you have more serious duties to attend to. Those -- from politicians, heads of parties and directors of political currents -- who can exert some influence on the public and are listened to by some groups, should be very careful of their conduct. They should be very careful of what they say. If they show the slightest extremism, the repercussions will be felt by the body of the people and can lead to a very sensitive and dangerous situation which even they cannot control. We have seen examples of it. When extremism starts in a society, any extremist move can fuel other's extremism. If the political elite ignore the law, or cut off their noses to spite the face, whether they want or not, they will be responsible for the bloodshed, violence, and chaos (that will follow).

I urge old friends and brothers to be patient and keep control of yourselves. Please see the hands of the enemy. Please see the hungry wolves in ambush, who are gradually removing their mask of diplomacy and showing their true faces. Be aware of them. Today, senior diplomats of some Western countries, who addressed us diplomatically up until today, have now removed their masks. They are showing their true faces.

They are showing their enmity against the Islamic Republic system and the most evil of them is the British government. (Crowd chants "death to Britain")

I advise our brothers to think about their responsibilities before God. You are responsible before God. You will be questioned. Remember the last will and testament of the late Imam, law is the last word. We should consider law as the last word. What are the elections for? Elections are for resolving all differences at ballot boxes. It should be at the ballot boxes that it is determined what the people want and what they do not want -- not on the streets.

(Crowd chanting, God is great, Khamene'i is the leader, death to hypocrites, death to Israel).

If after every election, those who do not win start street rallies and mobilize their supporters in the streets, then those who have won start street rallies in response, then, what is the purpose of holding elections? What is the fault of the people? The people, who have businesses on the street, commute on the streets and live there. What is their sin to witness you wanting to show off your supporters, one side like this and the other side like that. For the infiltrated terrorist, the individual who intends to deal a terrorist blow, the issue is not the political aspect of the matter. What is better for him than to hide among the people, who want to hold gatherings and rallies? If such gatherings provide a cover for him, then who is responsible? Who is accountable for the death of the few people from the public and the Basij in these incidents? There will be reactions and sentiments after they (agitators) exploit the chaos and assassinate members of the Basij or the Law Enforcement Force. Who is accountable for these reactions? One's heart is torn apart when one sees such events, when one sees that they raid university dormitories and harm young students, not rioting students but the pious students, and then chant slogans in support of the leader too. One's heart is torn apart by such events. (Crowd chanting)

Street challenges after the elections are not the right thing to do. This is, in fact, challenging the principle of elections and democracy. I want everyone to end this sort of action. If they do not end it then the consequences of this lie with them (street protestors).

It is a wrong perception, please note, a wrong impression that through their street presence they will be creating a lever of pressure against the system. It is wrong to think that the officials of the system will concede out of expediency. (Chants in support from the congregants)

Giving in to demands under pressure is itself tantamount to the start of dictatorship. This calculation is wrong and if a precedent is set in this way, the behind-the-scenes commanders will also be affected. The people will come to recognize them when the opportunity presents itself. (Chants of support)

I am asking my friends and brothers to respect brotherhood, law and togetherness. The legal channels are open. The channels of love and friendship are open. You should use legal and friendly methods. I hope God helps them. They (all candidates) want the country to make progress. The 40 million-strong victory should be appreciated. Do not let the enemy come and spoil the party as indeed it is wont to do. Of course, if there are those who wish to choose a different path, then I will come and speak again to the nation but in a more explicit way.

(Crowd chanting: Dear leader, we are ready for your commands)

I am now addressing the heads of (global) arrogance and their media. In the past few weeks I have observed the behavior of the American and some European officials. I have studied their behavior before and after the election. Before the election they were questioning the election itself in order to reduce participation. However, both Europeans and Americans were able to predict the results. They still could not believe the magnitude of the turnout. They could not believe 85 percent turnout signifying some 40 million people. They were shocked. They realized what a big incident happened in Iran. They knew they had to adapt to this new situation. They were shocked at every instance, in international developments, in the Muslim world, in the nuclear issue. They knew that tables have turned. They have to accept the new realities. From here, through their agents, they continuously communicated and expressed their surprise. Those comments started from Friday (12 June) morning and we could see the feedback in the West.

But when they saw the complaints of some candidates, they realized that it could be an opportunity for them and used the opportunity to get a ride on the wave of the people. Their tone changed on Saturday and Sunday. Gradually, they saw a few popular protests, which were reportedly called by certain candidates. They started to remove their masks gradually and showed their true faces. Some foreign ministers and leaders of European states and America made some comments which revealed their true colors. The American president was quoted as saying that he expected the people of Iran to take to the streets. On the one hand, they write a letter to us to express their respect for the Islamic Republic and for re-establishment of ties and on the other hand they make these remarks. Which one of these remarks are we supposed to believe?

Inside the country, their agents were activated. Vandalism started. Sabotaging and setting fires on the streets started. Some shops were looted. They wanted to create chaos. Public security was violated. The violators are not the public or the supporters of the candidates. They are the ill-wishers, mercenaries and agents of the Western intelligence services and the Zionists.

(Crowd chanting death to America, death to Israel)

The amateurish behavior of some people inside the country made them (the West) greedy. They have mistaken Iran with Georgia. (Crowd laughing)

A Zionist-American millionaire claimed that he spent $10 million to change the regime in Georgia through a velvet revolution. This claim was published in the papers. Those fools thought the Islamic Republic is like Georgia. To which countries do you compare Iran to? The enemy's problem is that they do not yet understand the Iranian nation.

(Crowd chanting death to America, death to Israel)

The ugliest of all were the so-called caring comments of the American officials. They talked about leniency towards people. The Americans said they are worried about the mistreatment of people. (To Americans) Do you even believe in human rights? Who is responsible for all the bloodshed in Afghanistan? Who has humiliated Iraq under the boots of its military forces? Who was supporting the tyrant Zionist regime in Palestine? It is astonishing.

In the US, in a Democrat administration, when the husband of this lady who is making comments (Khamene'i refers to Bill Clinton) was in charge, more than 80 people, members of the [Branch] Davidian sect were burned alive. They cannot deny it. Democrats did it. The Davidian sect angered the American government for some reason. The followers of the Davidian sect were staging a sit-in protest in a house. The authorities asked them to come out. The Davidians refused. More than 80 men, women and children were burned alive in this house. The Americans have no understanding of human rights.

I think the American officials should take it upon themselves feel ashamed. The Islamic Republic is the flag-bearer of human rights. The way we defend the suppressed people of Palestine, Lebanon, Iraq and Afghanistan shows our commitment. It shows the human rights flag is flying high in Iran. We do not need the advice of others on human rights. That was my take on the election.Finally I want to pray for the hidden Imam.

(Crowd crying)

We will fulfil our duty. We said what had to be done and we would continue. All I have is my life. I am disabled also. I will sacrifice all I have for Islam and the revolution. Our master [Hidden Imam]! Please do pray for us . . . . You are the real owner of this country and the revolution. You are our true backer. We will continue this path strongly. Please do support us."

There is another translation, which I think likely less accurate, at Paste Bay, apparently made of the Press TV broadcast of the speech, and evidently in collaboration with the Pirate Party! It seems more literal, but has several ellipses, and leaves out parts. Still, worth checking out if you're of the mind to.