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Turkish financial crisis adds to region’s chaos

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More than coincidence accounts for the visit to Iran by Turkish Prime Minister Recep Tayyip Erdogan on January 28, the same day that his economic policy collapsed in a most humiliating way.

As the Turkish lira collapsed to levels that threatened to bankrupt many Turkish companies, the country’s central bank raised interest rates, ignoring Erdogan’s longstanding pledge to keep interest rates low and his almost-daily denunciation of an “interest rate lobby” that sought to bring down the Turkish economy. Erdogan’s prestige was founded on Turkey’s supposed economic miracle.

Hailed as”the next superpower” by John Feffer of the Institute for Policy Studies, and as “Europe’s BRIC” by The Economist, Turkey has become the Sick Man of the Middle East. It now appears as a stock character in the comic-opera of Third World economics: a corrupt dictatorship that bought popularity through debt accumulation and cronyism, and now is suffering the same kind of economic hangover that hit Latin America during the 1980s.

That is not how Erdogan sees the matter, to be sure: for months he has denounced the “interest rate lobby”. Writes the Hurriyet Daily News columnist Emre Deliveli, “He did not specify who the members of this lobby were, so I had to resort to pro-government newspapers. According to articles in a daily owned by the conglomerate where the PM’s son-in-law is CEO, the lobby is a coalition of Jewish financiers associated with both Opus Dei and Illuminati. It seems the two sworn enemies have put aside their differences to ruin Turkey.”

US President Barack Obama told an interviewer in 2012 that Erdogan was one of his five closest overseas friends, on par with the leaders of Britain, Germany, South Korea and India. Full disclosure: as the Jewish banker who has been most aggressive in forecasting Turkey’s crisis during the past two years, I have had no contact with Opus Dei on this matter, much less the mythical Illuminati.

Erdogan was always a loose cannon. Now he has become unmoored. Paranoia is endemic in Turkish politics because so much of it is founded on conspiracy. The expression “paranoid Turk” is a pleonasm. Islamist followers of the self-styled prophet Fetullah Gulen infiltrated the security services and helped Erdogan jail some of the country’s top military commanders on dubious allegations of a coup plot. Last August a Turkish court sentenced some 275 alleged members of the “Ergenekon” coup plot, including dozens of military officers, journalists, and secular leaders of civil society.

Now Gulen has broken with Erdogan and his security apparatus has uncovered massive documentation of corruption in the Erdogan administration. Erdogan is firing police and security officials as fast as they arrest his cronies.

There is a world difference, though, between a prosperous paranoid and an impecunious one. Turkey cannot fund its enormous current borrowing needs without offering interest rates so high that they will pop the construction-and-consumer bubble that masqueraded for a Turkish economic miracle during the past few years.

The conspiracy of international bankers, Opus Dei and Illuminati that rages in Erdogan’s Anatolian imagination has triumphed, and the aggrieved prime minister will not go quietly. As Erdogan abhors old allies who in his imagined betrayed him and seeks new ones, the situation will get worse.

One of the worst ideas that ever occurred to Western planners was the hope that Turkey would provide a pillar of stability in an otherwise chaotic region, a prosperous Muslim democracy that would set an example to anti-authoritarian movements. The opposite has occurred: Erdogan’s Turkey is not a source of stability but a spoiler allied to the most destructive and anti-Western forces in the region.

It seems unlikely that the central bank’s belated rate increase will forestall further devaluation of the lira. With inflation at 7.4% and rising, the central bank’s 10% reference rate offers only a modest premium above the inflation rate. About two-fifths of Turkey’s corporate debt is denominated in foreign currency, and the lira’s decline translates into higher debt service costs. Turkey is likely to get the worst of both worlds, namely higher local interest rate and a weaker currency.

Now Erdogan’s Cave of Wonders has sunk back into the sand. Few analysts asked how Turkey managed to sustain a current account deficit that ranged between 8% and 10% of gross domestic product during the past three years, as bad as the Greek deficit during the years before its financial collapse in 2011.

The likely answer is that Turkey drew on vast amounts of credit from Saudi and other Gulf state banks, with strategic as well as financial motives. Data from the Bank for International Settlements show that Turkey financed a large part of its enormous deficit through the interbank market, that is, through short-term loans to Turkish banks from other banks.

Western banks report no such exposure to Turkey; the Gulf banks do not report regional exposure, and anecdotal evidence suggests that Sunni solidarity had something to do with the Gulf states’ willingness to take on Turkish exposure.

Relations between Turkey and the Gulf States are now in shambles. Saudi Arabia abhors the Muslim Brotherhood, which wants to replace the old Arab monarchies with Islamist regimes founded on modern totalitarian parties, while Erdogan embraced the Brotherhood. The Saudis are the main source of financial support for Egypt’s military government, while Ankara has denounced the military’s suppression of the Muslim Brotherhood.

Whether the Gulf States simply ran out of patience or resources to support Erdogan’s credit binge, or whether their displeasure at Turkey’s misbehavior persuaded them to withdraw support, is hard to discern. Both factors probably were at work. In either case, Erdogan’s rancor at Saudi Arabia has brought him closer to Teheran.

Turkey should have restricted credit growth and raised interest rates to reduce its current account deficit while it still had time. Erdogan, though, did the opposite: Turkish banks increased their rate of lending while reducing interest rates to businesses and consumers.

Given the country’s enormous current account deficit, this constituted irresponsibility in the extreme. Erdogan evidently thought that his mandate depended on cheap and abundant credit. The credit bubble fed construction, where employment nearly doubled between 2009 and 2013. Construction jobs increased through 2013, after manufacturing and retail employment already had begun to shrink.

I predicted the end of Erdogan’s supposed economic miracle in the Winter 2012 edition of Middle East Quarterly, comparing Erdogan’s boomlet to the Latin American blowouts of the 1990s:

In some respects, Erdogan’s bubble recalls the experiences of Argentina in 2000 and Mexico in 1994 where surging external debt produced short-lived bubbles of prosperity, followed by currency devaluations and deep slumps. Both Latin American governments bought popularity by providing cheap consumer credit as did Erdogan in the months leading up to the June 2011 national election. Argentina defaulted on its $132 billion public debt, and its economy contracted by 10 percent in real terms in 2002. Mexico ran a current account deficit equal to 8 percent of GDP in 1993, framing the 1994 peso devaluation and a subsequent 10 percent decline in consumption.

In the meantime, Turkey has entered a perfect storm. As its currency plunges, import costs soar, which means that a current account of 8% of GDP will shortly turn into 10% to 12% of GDP – unless the country stops importing, which means a drastic fall in economic activity. As its currency falls, its cost of borrowing jumps, which means that the cost of servicing existing debt will compound its current financing requirements. The only cure for Erdogan’s debt addiction, to borrow a phrase, is cold turkey.

The vicious cycle will end when valuations are sufficiently low and the government is sufficiently cooperative to sell assets at low prices to foreign investors, and when Turkish workers accept lower wages to produce products for export.

One might envision a viable economic future for Turkey as the terminus on the “New Silk Road” that China proposes to build across Central Asia, with high-speed rail stretching from Beijing to Istanbul. Chinese manufacturers might ship container loads of components to Turkey for assembly and transshipment to the European and Middle Eastern markets, and European as well as Asian firms might build better factors in Turkey for export to China. Contrary to conventional wisdom, Turkey’s path to Europe lies not through Brussels but through Beijing.

That is Turkey’s future, but as the old joke goes, it can’t get there from here.

Turkey has a small but highly competent professional class trained at a handful of good universities, but the Erdogan regime – the so-called “Anatolian tigers” – have disenfranchised them in favor of Third World corruption and cronyism. The secular parties that bear the faded inheritance of Kemal Ataturk lack credibility. They are tainted by years of dirty war against the Kurds, of collusion with military repression, and their own proclivity towards a paranoid form of nationalism.

Erdogan’s AKP is a patronage organization that has run out of cash and credit, and its fate is unclear. The highly influential Gulen organization has a big voice, including the Zaman media chain, but no political network on the ground.

No replacement for Erdogan stands in the wings, and the embattled prime minister will flail in all directions until the local elections on March 30.

The last thing to expect from Erdogan is a coherent policy response. On the contrary, the former Anatolian villager thrives on contradiction, the better to keep his adversaries guessing.

Turkish policy has flailed in every direction during recent weeks. Erdogan’s Iran visit reportedly focused on Syria, where Turkey has been engaged in a proxy war with Iran’s ally Basher al-Assad. Ankara’s support for Syrian rebels dominated by al-Qaeda jihadists appears to have increased; in early January Turkish police stopped a Turkish truck headed for Syria, and Turkish intelligence agents seized it from the police. Allegedly the truck contained weapons sent by the IHH Foundation, the same group that sent the Mavi Marmara to Gaza in 2010. The Turkish opposition claims that the regime is backing al-Qaeda in Syria. One can only imagine what Erdogan discussed with his Iranian hosts.

Some 4,500 Turks reportedly are fighting alongside 14,000 Chechnyans and a total of 75,000 foreign fighters on the al-Qaeda side in Syria. Ankara’s generosity to the Syrian jihadists is a threat to Russia, which has to contend with terrorists from the Caucasus, as well as Azerbaijan, where terrorists are infiltrating through Turkish territory from Syria. Russia’s generally cordial relations with Turkey were premised on Turkish help in suppressing Muslim terrorism in the Caucasus. There is a substantial Chechnyan Diaspora in Turkey, aided by Turkish Islamists, and Moscow has remonstrated with Turkey on occasion about its tolerance or even encouragement of Caucasian terrorists.

I doubt that Erdogan has any grand plan in the back of his mind. On the contrary: having attempted to manipulate everyone in the region, he has no friends left. But he is in a tight spot, and in full paranoid fury about perceived plots against him. The likelihood is that he will lean increasingly on his own hard core, that is, the most extreme elements in his own movement.

Erdogan has been in what might be called a pre-apocalyptic mood for some time. The long term has looked grim for some time, on demographic grounds: a generation from now, half of all military-age men in Turkey will hail from homes where Kurdish is the first language. “If we continue the existing [fertility] trend, 2038 will mark disaster for us,” he warned in a May 10, 2010, speech reported by the Daily Zaman.

But disaster already has arrived. In some ways Turkey’s decline is more dangerous than the Syrian civil war, or the low-intensity civil conflict in Iraq or Egypt. Turkey held the North Atlantic Treaty Organization’s eastern flank for more than six decades, and all parties in the region – including Russia – counted on Turkey to help maintain regional stability. Turkey no longer contributes to crisis management. It is another crisis to be managed.

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Middle East

The bitter truth for mullahs’ regime in Iran

Reza Shafiee

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Ali Khamenei, Iranian regime’s supreme leader finally broke his silence and spoke on August 13th on a number of hot political issues facing the nation. He was awfully quite these days. Yet the country is boiling in dissent. Listening to his speech leaves no doubt that he is desperate. He talked about problems his regime has no clue how to tackle. On the top of the list was the recent protests in cities like Tehran, Karaj, Shiraz, Esfahan, Mashhad, Ghahdarijan, and many other cities with such slogans as “Death to Khamenei” and “Death to Dictator.” He was off balance since people in the streets had him in their crosshair.

Khamenei wasted no time and took the bull by the horns. He called his cronies “cowards” and not trustworthy at hard times. Considering the recent unrests as the extension of January protests, Khamenei once again branded the protesters as agents of foreign powers such as the United States, Israel and Saudi Arabia. He said that “they had planned for years to disrupt the country’s security in January this year, but the people came out with admirable awareness, and stopped the enemies’ years-long plans.”

He added: “The enemies then set their hearts on this (Persian) year, with some US officials saying that there’ll be some news from Iran in the next six months. They were clearly pointing to the events earlier this month which turned out to be so limited despite the enemies’ huge financial and political investments.”

Iranian citizens have pushed the regime to the edge before. The difference this time is that the regime has gone too far in putting pressure on all citizens. The gap between rich and poor is at its highest level in 40 years. It is a recipe for disaster and the top officials of the regime publicly confirmed it.

He used his admission of the guilt as a temporary band aid and admits that he made a “mistake” in the nuclear deal.  “With regard to the nuclear deal, what I did was wrong, allowing some officials’ insistence to give a shot at nuclear talks, in which our red lines were not respected,” said Khamenei, according to regime’s official news agency.

He made it clear to his power base: the Revolutionary Guards and Bassij Forces that he has no intentions of taking the risk of going to war with the US. The mullahs’ supreme leader said: “There’ll definitely be no war. In Short, I have to inform the Iranian people that there’ll be no war and we will not negotiate, either.”

The leader of theocratic regime in Iran admits the deadly state of the country’s economy. But he makes sure to leave out his own massive financial conglomerate feeding off Iran’s poor economy. There is a rough estimate that Khamenei is sitting on top of a 95 billion dollars trust found. He is not the only one; there are other sharks in the tank related to his powerhouse that are taking their lion’s share of dying Iranian market.

Khamenei in his speech pictured himself as the champion of fighting corruption. A claim hardly anyone in his right-mind would take it seriously. He said: “The main cause of such problems is not sanctions, but domestic policies. This is what many officials and experts alike have confirmed. That however doesn’t mean that the sanctions have nothing to do with this situation. Of course they do, but the main factor is rooted in our performance. Among the measures that must definitely be taken into account is fighting against corruption. This was also reflected in the letter that the reverend head of judiciary wrote to me two days ago, in response to which I underlined that the proposed measures are an important and positive step toward fighting against corruption and punishing those who are involved.”

Fighting crime has never been a priority for the regime because the top criminals are well connected individuals with strong ties to Khamenei. To make it somewhat believable the security forces targeted some small-time currency dealers in the midst of currency crisis driven by a sharp decline in the value of Rial (the official currency). Khamenei and top Revolutionary Guards know better that Iranian citizens will not easily fall for their theatrics anymore and some heads needed to roll. The first to be sacked was the head of Iran’s Central Bank, Valiollah Seif.

Alarmed by public frustration with the way economy is run in Iran, Khamenei tried in his address to pour some cold water on the matter. He promised swift actions against fat cats. But people know full well that he is not willing to clip former Revolutionary Guards turned businessmen. They are running the country in a mafia style gang.

The bitter truth for the theocratic regime in Iran is plain and simple; the people are fed up with the mullahs and the regime is no longer able to force itself on them. This is the story of all dictators toward the end and Iran is no exception.

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Trump to Netanyahu: Palestinians Must Be Completely Conquered

Eric Zuesse

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The Washington correspondent of Israel’s Haaretz newspaper, Amir Tibon, headlined on the night of Tuesday, August 14, “Trump Administration Wants to See a Gaza Cease-fire ‘With or Without the Palestinian Authority’,” and he reported that, “The Trump administration wants to see a long-term cease-fire in Gaza, with or without the support of the Palestinian Authority, a spokesperson for the White House’s National Security Council told Haaretz on Monday.”

In other words: U.S. President Donald Trump is not angling for Palestinians to become ruled by the more moderate of the two political entities that are contesting for control over Palestine — he’s not favoring The Palestinain Authority, Mahmoud Abbas, over Hamas, Ismail Haniya. He is, instead, aiming for Jews inside Israel to conquer completely the non-Jews, not only inside Israel, but also in the adjoining areas, Palestine.

Trump has now officially placed the United States on the side of Israel’s Jews, for them to conquer and subdue Palestine, for Jews to rule over Palestinians, and for the residents in Palestine not to be allowed to participate in Israel’s elections.

This will be very good for American firms such as Lockheed Martin, Northrop Grumman, Boeing, and General Dynamics, which depend wholly or primarily upon sales to the U.S. Government and to its allied governments, including Israel, for their profits and their net worths, their stock-market valuations. More war is essential for these firms, which sell only to these governments — governments which seek to control more land, regardless of what the residents there want, and which need to buy more weapons in order to do it.

Trump’s foreign policies have been very effective.

Trump’s biggest success, thus far into his Presidency, has been his sale of $400 billion (originally $350 billion) of U.S.-made weapons to the Saudi Arabian Government, which is owned by its royal family, after whom that nation is named. This sale alone is big enough to be called Trump’s “jobs plan” for Americans. It is also the biggest weapons-sale in all of history. It’s 400 billion dollars, not 400 million dollars; it is gigantic, and, by far, unprecedented in world-history. Consequently, anyone who would allege that he has been anything other than an extraordinary success for his constituency, the people who will be funding his 2020 re-election campaign, would be wrong. America is controlled by dollars, not by people; everything is geared to maximizing the return on investment, for the people who have invested in Trump. Increasing their net worths is his goal, and he has been stunningly successful at achieving it.

The individuals who control those corporations are also in control of those governments, via political corruption, such as the “revolving doors” between ‘government service’ and the private sector. If they can’t control those governments, then they can’t control their own finances. But if they do control those governments — and especially their own Government, the U.S. Government — then they control the very source of their own wealth. They are totally dependent upon the U.S. Government. Trump has, regarding U.S. military and diplomatic policies — the Pentagon and the State Department, and the intelligence agencies — been just as effective as the neoconservatives, the people who actually run both Parties on behalf of those firms, for those firms’ owners, could have hoped. This does not mean that they won’t in 2020 back an opponent of Trump, but only that Trump is issuing as many IOUs to these people as he can, and as fast as he can, and that he has been remarkably successful (unprecedented, actually) at doing that. Whereas Democrats such as Joe Biden and Eric Swalwell might contest against him for their support, no one can reasonably say that Trump has been a disappointment to the proponents of American conquest and control over the entire world — the people commonly called “neoconservatives,” and all other agents of what Dwight Eisenhower called “the military-industrial complex.” While those people might criticize him in order to push him even farther to the right on foreign affairs than he has been, he has been very effective for them, and he clearly is hoping that, at least regarding military policies, in America’s militarized economy, those people will be satisfied for him to remain in power. That’s his hope. That’s his goal. It’s shown by his actions, not by his mere words.

America’s alliance with Israel is almost as important as America’s alliance with the owners of Saudi Arabia, the Saud family. Both of those allies want the Palestinians to be conquered. And so does Trump. And, of course, so too do the people who are rotating constantly through those revolving doors, the other agents for America’s rulers.

On August 9th, as reported by Amjad Jaghi of 972 Magazine, “the Israeli Air Force bombed Al-Meshal, one of the Gaza Strip’s most important cultural facilities. They claim that the building — which comprises two theaters, three large halls, and a department serving the Egyptian community living in the Strip — was being used by Hamas.”

On August 14th, Reuters headlined “Israeli minister confirms Netanyahu met Sisi over Gaza” and reported that “The two leaders discussed the easing of an Israeli-Egyptian blockade of Gaza, rehabilitation of its infrastructure and terms for a ceasefire.” Israel said that “everything that will happen in Gaza will be done with Egyptian mediation and involvement.” This means that the setting-up of Israel’s control over Gaza will “be done with Egyptian mediation and involvement,” but the operation of Israel’s control over Gaza won’t be — it’ll be 100% Israeli.

For example, Sisi might be able to get Netanyahu to agree to increase the current, 85 truckloads of food daily into Gaza so as to raise Gazans’ food-intake above its current “subsistence” level. Although he might try, Israel’s record of violating its international agreements is even stronger than America’s record for that is. But to serve PR purposes, Sisi might try. Ever since 2007, when Israel was allowing into Gaza 106 truckloads daily, that number was reduced down to this “subsistence” level.

On 1 January 2008, was secretly issued from Israel’s Ministry of Defense, a document “Food Consumption in the Gaza Strip – Red Lines”, in which the Ministry of Health informed them that the then-current 106 trucks daily was too much for “subsistence”:

“The Ministry of Health is conducting work for calculating the minimal subsistence basket based on the Arab sector in Israel. The ‘minimum basket’ allows nutrition that is sufficient for subsistence without the development of malnutrition.”

“The Ministry of Health estimates that the new basket will be 20% lower than the current basket [85 trucks instead of 106].”

And so it was, until 2010, when “Israel has not imposed any restrictions on the entrance of food to the Gaza Strip.” And, after that, as of at least 2012, “the current policy remains shrouded in secrecy.” However, (as shown at that link, where is printed a “Table 1. Entrance of trucks into Gaza”), the actual count of trucks, during the second half of 2010, was around 150 per day.

A U.N. publication “Gaza Ten Years Later”, issued in July 2017, reported that: Import of goods to Gaza also dropped significantly with the imposition of the blockade in mid-2007. By 2008, the monthly average of truckloads entering Gaza had decreased by 75%17. The amount of imports slowly increased as import restrictions were gradually relaxed, with the number of trucks entering in 2015 and 2016 reaching levels similar to those prior to 2007. It is difficult to draw a parallel between 2015/2016 and 2007 however, given that due to the vast needs for post-hostilities reconstruction as well as recovery of Gaza’s deteriorating infrastructure, coupled with rapid population growth, demand for import into Gaza was much higher in 2015/16 than it was prior to 2007.

The needs today are even higher than that.

Sisi might be able to win some voters if he can brag to them that he has gotten Israel to increase that number above whatever it currently has been, but it will be only for show, anyway.

Egypt is heavily committed both to the Saudi regime and to the American regime. To say that the fate of the Gazans is in the hands of Israel and of Egypt, would be to say that it’s in the hands of the rulers of America and of the rulers of Saudi Arabia (the Saud family, who own that country). The rulers of Israel won’t have any international backing, at all, if they don’t have America’s rulers supporting them. For Donald Trump to tell Benjamin Netanyahu that not only will Israel be allowed to ignore Hamas but it will even be allowed to ignore the Palestinian Authority, means that Netanyahu now has America’s support no matter what Israel might do to the Gazans — and to the non-Jewish inhabitants of the West Bank.

This is excellent news for the holders of U.S. ‘Defense’ stocks. The more that America’s ‘enemies’ suffer, the better it is for America’s owners. This is how capitalism actually functions. Inequality is natural. That’s true not only between nations, but within nations. In the natural world, losers get eaten. Justice doesn’t naturally occur anywhere. To the extent that it exists anywhere, it is imposed, by the public, against the aristocracy. Within nations, justice is almost non-existent. Between nations, it is entirely non-existent. For examples: were George W. Bush and Tony Blair executed for invading and destroying Iraq in 2003? Of course not. Neither of them was even imprisoned. Nor were Obama and Sarkozy and Cameron executed for invading and destroying Libya in 2011. Those are only examples, of the basic reality.

This news-report is written so as to place a news-event into its actual context, not divorced from that, as is normal. In other words: it’s news instead of propaganda (the latter of which, avoids the relevant context behind the reported event).

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Amid ethnic protests, Iran warns of foreign meddling

Dr. James M. Dorsey

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Iran has raised the spectre of a US-Saudi effort to destabilize the country by exploiting economic grievances against the backdrop of circumstantial evidence that Washington and Riyadh are playing with scenarios for stirring unrest among the Islamic republic’s ethnic minorities.

Iran witnessed this weekend minority Azeri and Iranian Arab protests in soccer stadiums while the country’s Revolutionary Guards Corps reported clashes with Iraq-based Iranian Kurdish insurgents.

State-run television warned in a primetime broadcast that foreign agents could turn legitimate protests stemming from domestic anger at the government’s mismanagement of the economy and corruption into “incendiary calls for regime change” by inciting violence that would provoke a crackdown by security forces and give the United States fodder to tackle Iran.

“The ordinary protesting worker would be hapless in the face of such schemes, uncertain how to stop his protest from spiralling into something bigger, more radical, that he wasn’t calling for,” journalist Azadeh Moaveni quoted in a series of tweets the broadcast as saying.

The warning stroked with the Trump administration’s strategy to escalate the protests that have been continuing for months and generate the kind of domestic pressure that would force Iran to concede by squeezing it economically with the imposition of harsh sanctions.

US officials, including President Donald J. Trump’s national security advisor John Bolton, a long-time proponent of Iranian regime change, have shied away from declaring that they were seeking a change of government, but have indicated that they hoped sanctions would fuel economic discontent.

The Trump administration, after withdrawing in May from the 2015 international agreement that curbed Iran’s nuclear program, this month targeted Iranian access to US dollars, trade in gold and other precious metals, and the sale to Iran of auto parts, commercial passenger aircraft, and related parts and services. A second round of sanctions in November is scheduled to restrict oil and petrochemical products.

“The pressure on the Iranian economy is significant… We continue to see demonstrations and riots in cities and towns all around Iran showing the dissatisfaction the people feel because of the strained economy.” Mr. Bolton said as the first round of sanctions took effect.

Mr. Bolton insisted that US policy was to put “unprecedented pressure” on Iran to change its behaviour”, not change the regime.

The implication of his remarks resembled Israeli attitudes three decades ago when officials argued that if the Palestine Liberation Organization were to recognize Israel it would no longer be the PLO but the PPLO, Part of the Palestine Liberation Organization.

In other words, the kind of policy changes the Trump administration is demanding, including an end to its ballistic program and support for regional proxies, by implication would have to involve regime change.

A string of recent, possibly unrelated incidents involving Iran’s ethnic minorities coupled with various other events could suggest that the United States and Saudi Arabia covertly are also playing with separate plans developed in Washington and Riyadh to destabilize Iran by stirring unrest among non-Persian segments of the Islamic republic’s population.

Mr. Bolton last year before assuming office drafted at the request of Mr. Trump’s then strategic advisor, Steve Bannon, a plan that envisioned US support “for the democratic Iranian opposition,” “Kurdish national aspirations in Iran, Iraq and Syria,” and assistance for Baloch in the Pakistani province of Balochistan and Iran’s neighbouring Sistan and Balochistan province as well as Iranian Arabs in the oil-rich Iranian province of Khuzestan.

A Saudi think tank, believed to be backed by Crown Prince Mohammed bin Salman, called in 2017 in a study for Saudi support for a low-level Baloch insurgency in Iran. Prince Mohammed vowed around the same time that “we will work so that the battle is for them in Iran, not in Saudi Arabia.”

Pakistani militants have claimed that Saudi Arabia has stepped up funding of militant madrassas or religious seminaries in Balochistan that allegedly serve as havens for anti-Iranian fighters.

The head of the State Department’s Office of Iranian Affairs met in Washington in June with Mustafa Hijri, head of the Kurdistan Democratic Party of Iran (KDPI), before assuming his new post as counsel general in Erbil in Iraqi Kurdistan.

Iran’s Revolutionary Guards said last weekend that they had killed ten militants near the Iranian border with Iraq. “A well-equipped terrorist group … intending to infiltrate the country from the border area of Oshnavieh to foment insecurity and carry out acts of sabotage was ambushed and at least 10 terrorists were killed in a heavy clash,” the Guards said.

The KDPI has recently stepped up its attacks in Iranian Kurdistan, killing nine people weeks before Mr. Hijri’s meeting with Mr. Fagin. Other Kurdish groups have reported similar attacks. Several Iranian Kurdish groups are discussing ways to coordinate efforts to confront the Iranian regime.

Similarly, this weekend’s ethnic soccer protests are rooted in a history of football unrest in the Iranian provinces of East Azerbaijan and Khuzestan that reflect long-standing economic and environmental grievances but also at times at least in oil-rich Khuzestan potentially had Saudi fingerprints on them.

Video clips of Azeri supporters of Tabriz-based Traktor Sazi FC chanting ‘Death to the Dictator” in Tehran’s Azadi stadium during a match against Esteghlal FC went viral on social media after a live broadcast on state television was muted to drown the protest out. A sports commentator blamed the loss of sound on a network disruption.

A day earlier, Iranian Arab fans clashed with security forces in a stadium in the Khuzestan capital of Ahwaz during a match between local team Foolad Khuzestan FC and Tehran’s Persepolis FC. The fans reportedly shouted slogans reaffirming their Arab identity.

Saudi Arabia and other Gulf Arabs have a long history of encouraging Iranian Arab opposition and troubling the minority’s relations with the government.

Iranian distrust of the country’s Arab minority has been further fuelled by the fact that the People’s Mujahedin Organization of Iran or Mujahedin-e-Khalq (MeK), a controversial exiled opposition group that enjoys the support of prominent serving and former Western officials, including some in the Trump administration, has taken credit for a number of the protests in Khuzestan. The group advocates the violent overthrow of the regime in Tehran.

Two of Mr. Trump’s closest associates, Rudy Giuliani, his personal lawyer, and former House speaker New Gingrich, attended in June a gathering in Paris of the Mujahedin-e-Khalq.

In past years, US participants, including Mr. Bolton, were joined by Saudi Prince Turki al-Faisal, the former head of the kingdom’s intelligence service and past ambassador to Britain and the United States, who is believed to often echo views that Crown Prince Mohammed bin Salman prefers not to voice himself.

“The mullahs must go, the ayatollah must go, and they must be replaced by a democratic government which Madam Rajavi represents. Freedom is right around the corner … Next year I want to have this convention in Tehran,” Mr. Giuliani told this year’s rally, referring to Maryam Rajavi, the leader of the Mujahedeen who is a cult figure to the group.

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