- Iran acknowledges it has been funding Afghanistan for years, says money is for reconstruction

TEHRAN, Iran — Iran acknowledged Tuesday it has been sending funds to neighbouring Afghanistan for years, but said the money was intended to aid reconstruction, not to buy influence in the office of Afghan President Hamid Karzai.

Karzai said Monday he receives millions of dollars in cash from Iran, adding that Washington gives him "bags of money" too because his office lacks funds. U.S. officials asserted the money flowing from Tehran was proof that Iran is playing a double game in Afghanistan — wooing the government while helping Taliban insurgents fighting U.S. and NATO forces. Iran denies that.

"Iran has provided the country with plenty of help," Foreign Ministry spokesman Ramin Mehmanparast said Tuesday in his weekly news briefing in Tehran. "Iran has helped construction of Afghanistan and the preparation of its economic infrastructure and it will pursue it in the future, too."

Mehmanparast said Iran's help began years ago. He said peace and stability in Afghanistan is important for Iran.

The acknowledgment prompted a challenge from seven Iranian lawmakers who demanded that Foreign Minister Manouchehr Mottaki appear before parliament to clarify the payments, according to the news website www.Khabaronline.ir.

The call indicated that lawmakers — who have the power to impeach ministers — were unaware of the payments. Under Iran's constitution, government funds sent abroad, including aid donations and loans, must get parliamentary approval.

In a letter, the lawmakers demanded to know the amount of money sent over the past five years, where it came from, the way it was transferred and the legal basis for the payments.

On Saturday, The New York Times reported that Iran was giving bags of cash to President Karzai's chief of staff, Umar Daudzai, to buy his loyalty and promote Iranian interests in Afghanistan. The Times quoted unidentified sources as saying the cash amounted to a slush fund that Karzai and Daudzai used to pay lawmakers, tribal elders — and even Taliban commanders — to secure their loyalty.

Karzai told reporters Monday that he had instructed Daudzai, a former ambassador to Iran, to accept the money from Tehran.

Before Karzai spoke, the Iranian Embassy in Afghanistan dismissed the allegations that the Iranian government was making cash payments to Daudzai, calling them "ridiculous and insulting."

Iran publicly opposed the U.S.-led offensive that toppled the Taliban after the Sept. 11, 2001, terrorist attacks in the United States, though its relations with the Taliban regime had been frosty.

Iran is believed to not want the Taliban to return to power. But it remains wary of a long-term U.S. military presence on its doorstep in both Iraq and Afghanistan.

Copyright © 2010 The Canadian Press. All rights reserved.

- Afghan president confirms large cash payments by Iranian officials

Hamid Karzai says, yes, he receives about $2 million annually from Iran, but the cash is a donation and covers governmental operating costs. The U.S. makes such payments, he says.

Reporting from Kabul, Afghanistan —

Afghanistan President Hamid Karzai on Monday acknowledged that his office regularly received large cash sums from Iranian officials but insisted there was nothing untoward about the payments.

The New York Times, in an article in Monday's editions, described the periodic transfer of bulging sacks of currency to a senior Karzai aide and strongly suggested that the money was meant to curry favor on behalf of the Tehran government in policy matters.

At a news conference in the capital, the Afghan leader acknowledged receiving semiregular cash payments totaling around $2 million annually from Iran but said the sums were meant to defray governmental operating costs. Other countries, including the United States, make such donations as well, he told reporters.

"The government of Iran assists [the presidential] office," Karzai said. "Nothing is hidden. … Cash payments are done by various friendly countries to help the presidential office — to help expenses in various ways."

Hours before Karzai's disclosure, Iranian authorities in Kabul dismissed the allegations with gusto.

"Such baseless rumors by certain Western media are raised to create anxiety in the public opinion and impair the expanding relations between the two friendly and neighboring countries," the embassy said in the statement released early Monday, according to the pro-government Fars news agency.

But the revelations also could serve Iran's interests, underscoring its continued influence in the region even as Washington attempts to isolate Tehran over its continued pursuit of sensitive nuclear technology.

The episode illustrated the complex regional politics at play in Afghanistan. Karzai, who has spoken publicly of the possibility of the West abandoning Afghanistan, has openly courted neighbors such as China and Iran, as an apparent counterweight to the influence of the United States and other allies.

The incident also comes at a time when Karzai and his administration are under intense pressure to clean up graft and corruption in public life. Although Karzai's Western backers have been struggling to establish transparency in financial transactions involving his government, it is not unusual in Afghanistan for large sums of money to be disbursed in a much more informal manner.

American military officers in the field, for example, are sometimes given a considerable cash stockpile to be distributed to local tribal elders for projects at what is more or less their on-the-spot discretion. Such spending, intended as a bulwark against the insurgency, is sometimes referred to as using cash as a weapon.

The flap over Iranian money also comes as Karzai is locked in confrontation with the Western diplomatic community over his plans to suspend use of private contractors to safeguard humanitarian and development projects before the end of the year.

Western governments have expressed agreement that such security firms should be phased out eventually but argue that the Afghan security forces are not yet ready to step into the role such companies fill.

Karzai spent much of the weekend in negotiations with senior U.S. and Western officials over the issue and fielded a phone call from Secretary of State Hillary Clinton. The Afghan administration has indicated willingness to sign off on individual aid projects requiring private protection, but the West has balked at the effective granting of veto power to Karzai for development and humanitarian assistance.

Also at issue is whether the money that would have been paid to private security firms -- a multibillion-dollar business -- would be funneled instead to the Afghan security forces, by way of Afghanistan's Interior Ministry. Western officials have informed the Karzai administration there is no such plan in place.

Iran's President Has Much at Stake in Gaza Outcome

As Israel gambles on a potentially messy ground invasion of Hamas-controlled Gaza, Iranian President Mahmoud Ahmadinejad also has a lot at stake in the outcome of the fighting.

Mr. Ahmadinejad's history of criticizing Israel, and his recent strong condemnation of the Gaza assault, has helped garner a new measure of popular respect across the region. That comes as more moderate Arab states, especially Egypt, draw sharp rebuke for failing to act forcefully enough to stop the violence.

Condemnation of the Israeli offensive has also become a rallying cry for thousands of Iranians. If the ground invasion drags on, popular, anti-Israel outpourings in Tehran -- on display during a large demonstration Friday -- could serve Mr. Ahmadinejad as a convenient distraction. He faces mounting criticism of his economic policies ahead of presidential elections later this year.

Last week, Mr. Ahmadinejad introduced a series of economic reforms aimed at reducing expensive fuel and other subsidies. Economists say the move is necessary to relieve mounting fiscal pressure on Tehran amid sharply falling oil prices. But the measures, if they're enacted, are expected to be deeply unpopular among everyday Iranians.

Large demonstrations in Tehran, like the anti-Israel protests staged recently, are tightly controlled by the Iranian leadership. Some analysts also suggested recent demonstrations -- including the brief storming of the British diplomatic compound in Tehran Tuesday -- could be a subtle way for hard-line supporters of Mr. Ahmadinejad to send a message to more moderate politicians considering a presidential challenge to Mr. Ahmadinejad.

In Tehran on Friday, a crowd of about 6,000 marched from prayers at Tehran University to Palestine Square, chanting "Death to Israel" and "Death to America."

Hardliners "want to warn competitors" that they still command strong popular support, said Saeed Laylaz, a prominent Iranian economist in Tehran.

Region-wide, the fighting represents the latest chapter in a competition for influence in the Middle East between moderate, Western-aligned Arab leaders on one side, and Iran and Syria on the other. Key to Tehran's recent, regional ambitions is its backing of Hamas and the Lebanese political and militant group Hezbollah.

Earlier this year, Hezbollah took to the streets of Beirut in a show of force that ultimately won the group a bigger say in a new power-sharing government with Western-leaning politicians. The move boosted Tehran's standing considerably as a regional power broker, at the expense of the U.S., which designates Hezbollah and Hamas as terrorist organizations.

Western governments accuse Tehran of funneling cash and weapons to Hamas, which won Palestinian-wide elections in 2006 and took control of Gaza in a bloody sweep in 2007. Iran has denied arming Hamas.

With Gazan borders sealed by Egypt and Israel, Tehran can offer little real assistance to militants battling Israeli tanks and troops. But if Hamas manages to bog down Israeli troops during the invasion -- as Hezbollah fighters did in southern Lebanon in 2006 -- Tehran stands to gain once again.

Similarly, if Israel delivers a crushing blow to Hamas, Iranian officials could see one of their most effective irritants against Washington and Israel significantly degraded. Nine days of pounding aerial bombardments have already destroyed much of Hamas's governing infrastructure, including police stations and security posts.

"I don't think the Iranian government is happy with the situation," said one Tehran-based political analyst. "To them Hamas is one of their deterrents. This is one of the things they threaten the West with."

As Western officials conferred with Israeli officials in recent days about the terms of a possible ceasefire arrangement, Iranian officials met with Syrian counterparts and Hamas representatives. Saeed Jalili, secretary of Iran's powerful Supreme National Security Council, met Syrian president Bashar Assad Saturday, according to Syria's state news agency. He met the day before with Hamas's leader-in-exile, Khaled Meshal, who resides in Damascus

source:
Iran's President Has Much at Stake in Gaza Outcome
Wall Street Journal

Iranian president blames US for market collapse

UNITED NATIONS (AP) - Iran's president blamed U.S. military interventions around the world in part for the collapse of global financial markets ahead of his speech Tuesday to the U.N. General Assembly.

President Mahmoud Ahmadinejad also said the campaign against his country's nuclear program was solely due to the Bush administration ``and a couple of their European friends.''

``The U.S. government has made a series of mistakes in the past few decades,'' Ahmadinejad said an interview with the Los Angeles Times. ``The imposition on the U.S. economy of the years of heavy military engagement and involvement around the world ... the war in Iraq, for example. These are heavy costs imposed on the U.S. economy.

``The world economy can no longer tolerate the budgetary deficit and the financial pressures occurring from markets here in the United States, and by the U.S. government,'' he added.

full report here: Iranian president blames US for market collapse
guardian.co.uk

Russia may change Iran position due to U.S. support for Georgia

Russia may change its position on the U.S.-led effort to prevent Iran from building a nuclear bomb because of American military support for Georgia, Deputy Prime Minister Sergei Ivanov said.

"We'll think twice" about Iran, Ivanov said in an interview with Bloomberg Television in Moscow today. "We'll keep in mind how our partners acted in this period of crisis which Russia faced," he said. "So far we haven't vetoed UN resolutions" on Iran.

Russian and Georgian forces fought for five days in and around the breakaway Georgian region of South Ossetia before agreeing to a truce on Aug. 12. The U.S., which had more than 100 military advisers in Georgia before hostilities began, flew Georgian soldiers back from Iraq during the coflict, a move Russian Prime Minister Vladimir Putin criticized as "interference."

"Thousands of Russians were killed," said Ivanov, a longtime Putin ally who served with him in the KGB. "They were killed by the Georgian army with American weapons, American ammunition and American instructors preparing for this war. I want to make this loud and clear."

Georgia's U.S.-educated president, Mikheil Saakashvili, said Russia executed "a well-planned invasion," while his counterpart Dmitry Medvedev said action was needed to defend peacekeepers and citizens in South Ossetia, where most residents hold Russian passports. Both sides have accused the other of genocide.