"We know where you live"

Working for a western magazine in Iran, Maziar Bahari finds that he has acquired some surprisingly c

I'm not supposed to tell you this, but I met Mr Mohammadi. In fact I met three Mr Mohammadis in four days. Mohammadi is the nickname of choice for the agents of Iran's ministry of intelligence - the country's equivalent of the CIA. They have other nicknames as well, most of which are variations on the names of Shia imams such as Alavi, Hassani and Hosseini. I guess the names don't indicate a rank or anything (I have to guess, because Mr Mohammadi doesn't tell you much. He asks the questions).

Mr Mohammadi is responsible for the security of Iran. That includes protecting the values of its government. It's a tough job. It's like being in charge of Britney Spears's public image. The values change so often that the officials who put former colleagues on trial today are careful not to be incarcerated by the same people tomorrow (who may well have jailed them in the past). Mr Mohammadi's job is to keep the integrity of the regime intact and to stop those who plan to undermine the holy system of the Islamic Republic. But what does undermining mean? And what if it is the government that is doing the undermining (as it does constantly)? These questions seem to puzzle Mr Mohammadi. So he is more than a little paranoid and edgy these days. When he calls you for questioning, you don't know if he's going to charge you with something or seek your advice.

These days, Mr Mohammadi's main concern is that the American fifth column, disguised as civil rights activists, scholars and journalists, is destabilising the Islamic Republic. The US government has, after all, allocated $75m to promote "democracy" in Iran. It is also giving $63bn in military aid to Saudi Arabia, Egypt and Israel to "counter Iran". The US would love to have agents in the country to take the money and spend it wisely. There are so many social and economic problems in Iran, that if someone wanted to exploit them to create dissent it wouldn't be difficult to do so. But most activists I know inside Iran wouldn't touch the money with a bargepole and resent the American government much more than their own. In the meantime, the Iranian government tries to find foreign perpetrators and domestic accomplices instead of solving the root causes of dissent, such as mismanagement of the country's economy, poverty, internal migration and drug addiction.

In the 1980s and 1990s, intelligence agents were rough and scary, but nowadays they politely call you for tea at some fancy hotel or other to question you. I never understood their fascination with hotels. Why can't you just meet them in their offices? Or why don't they come to your office? Anyway, when you enter the hotel room you are offered a range of non-alcoholic drinks. Mr Mohammadi is very generous with his beverages. As soon as you finish your tea you are offered Nescafé, then some kind of juice, then Fanta, Pepsi, etc. But he never offers anything solid. Why can you drink tea while being asked about plots against the government but not have a biscuit? Does an interrogation over a kebab lunch make it less trustworthy?

Hotels and beverages

These questions pop into your head while you're enjoying the comfort of not being in Mr Mohammadi's presence. He has killed many people in the past. And you know that he is capable of violence again if he thinks it necessary. Mr Mohammadi's counterparts in the numerous parallel security apparatuses (intelligence units of the judiciary, Revolutionary Guard and the police) still have not caught up with his methods. Recently a number of students and labour activists were arrested and instead of being offered tea or Nescafé they spent days in solitary confinement and were beaten with electric cables and batons. But Mr Mohammadi's ministry of intelligence is supposed to be the main agency. It is certainly the most professional, and polite.

I met the three different Mr Mohammadis while on assignment for Newsweek magazine. I was writing an article about the suppression of civil society and civil rights activists in Iran.

Day one: I've set up an appointment with a teachers' union leader at a cafe. I am supposed to meet him after an exam at the high school where he teaches. The teacher doesn't show up on time. I wait for an hour. Even by Iranian standards he is late. I call him on his mobile but it is off. Strange. He was so keen to talk the day before, so what has happened? I then get a call from his mobile.

"Who is that?" the caller asks. It is not the teacher. "I'm Bahari from Newsweek." "News what?" "Week." "So you're a journalist. Will call later." I learn that the teacher was arrested during the exam and sent to prison. An hour later I get a call from a "private number". It is a new voice. He is much more pleasant. "Could you come to the . . . Hotel at three this afternoon?" asks Mr Mohammadi. It's been a while since I've been summoned. Naturally I oblige.

Mr Mohammadi has become more polite, cordial and strangely reassuring. He sneaks a smile when I ask him, "Why am I summoned here?" He used to give me an angry look that would mean he was the one in charge. He begins by asking simple questions about me and my work: who am I? How long have I worked for News week? Why did I want to meet the teacher? Have I ever met him before? What is the angle of my story? Easy questions to answer. Mr Mohammadi is quite relaxed. He scribbles in his notebook while I talk and every now and then exchanges a smile with me. There's nothing remotely amusing about what I'm saying, but Mr Mohammadi keeps smiling. That makes me think: what is so interesting about the banality I'm spewing here? Is he really taking notes or is he doodling a fish? Is it a dead fish? When is he going to let me out of here? Is he going to let me out of here?

I get tired of talking after a while. Then, like Muhammad Ali in the seventh round of his fight with George Foreman, Mr Mohammadi snaps and starts to challenge me. He keeps on smiling. I wish he wouldn't. Why do I think an American publication is interested in talking to Iranian dissidents? Was I given a list of questions by American paymasters to ask the dissidents? Have I ever been to any conferences in the US or Europe? Have I ever met any dissidents in Europe or the US? How did I come to be chosen as Newsweek's correspondent in Iran and not someone else? Mr Mohammadi is now targeting my integrity as a journalist, explicitly trying to make a connection between me and a dissident, suggesting that we both work as agents of the Great Satan and that we are part of a bigger plot to topple the Islamic government.

Half-hearted interrogation

If this session had been with previous Mr Mohammadis a few years ago, I would be scared of a pending trial and imprisonment for something I had never done - a destiny that befell many of my friends and colleagues. But what makes this Mr Mohammadi tolerable is his half-hearted approach to the whole thing. His expression is not a grin or a smirk. He almost feels sorry for himself and asks for your sympathy. He looks genuinely confused and somehow out of his depth. His bosses have come up with a conspiracy theory and asked Mr Mohammadi to validate it. He is a smart man and has been down this road many times since the 1979 Islamic Revolution. It's never worked in the past and he really doesn't think it will work now. Mr Mohammadi knows that he's wasting his time and mine. He knows that his government should reform itself if it wants to survive. As the former minister of intelligence, Ali Yunesi, (who was removed from office by the current president) put it the other day: "Transforming the opposition into our supporters should be the main security strategy of the government, but unfortunately these days we not only fail to do that, but change our supporters into the opposition."

But a job is a job. And Mr Mohammadi has to pay rent and put food on his family's table. He wraps up our session with a few farewell sentences that all other Mohammadis use: "I hope you don't think it's personal. There are people who want to take advantage of your good intentions. We just want to protect you." And then the punchline: "We know where you live."

Day two: I'm meeting a labour union activist. I've set up an appointment with him for 3pm. I'm supposed to see him after he's found out the nature of the charges against him in an upcoming trial at the Revolutionary Courts headquarters. The activist is late for our appointment. I try to contact him, with no success. I call a friend of his: the activist has been arrested.

When I get home, a friend calls me from London and says that I've been accused of being an intelligence agent. Earlier this year, I made a film for the BBC about the MEK, an Iranian terrorist group that opposes the Islamic government. The film exposed the group's cult-like aspects and its collaboration with Saddam Hussein and the Americans. In the film, we also showed how the Iranian ministry of intelligence deals with MEK prisoners relatively humanely - not torturing or killing them as they did in the 1980s, but treating them as cult members rather than terrorists. This progressive approach is converting former MEK members into supporters of the government. As a result, the MEK now accuses me of being an agent of the mullahs. I should tell this story to Mr Mohammadi if he calls me again.

Day three: another Mr Mohammadi calls: "The . . . Hotel at 11am." Mr Mohammadi likes my MEK story but wonders what the reasons were behind making the film. "When you make a film or write an article you do it because you think it's an important story. I really don't need ulterior motives for doing my job, sir." He doesn't look convinced.

"But . . ." and he goes on asking me the same questions as Day one's Mr Mohammadi. And he smiles the smile as I start answering him. I give the same answers: "There is nothing surreptitious about what I do, sir. I'm just a journalist doing my job. I just report what I see around me. If there's poverty, I report that. If there are terrorists, I write about them. And now when you arrest all these people, wouldn't it be strange if I didn't talk about them? Don't you find it bizarre that the MEK calls me an agent in your pay and you question me as if I'm a guerrilla fighter?"

Mr Mohammadi says that he is sorry for the trouble. He then gives me a modified farewell spiel. The conclusion remains the same: we know where you live.

Day four: I've been meeting feminist activists to find out why 15 of them were sent to jail and how they were treated in Tehran's Evin Prison. Apparently, their Mr Mohammadi was not that different from mine. He smiled and tried to find a connection between them and the government of the US. Less than an hour after I leave the house of my last interviewee, I am invited to tea at a hotel. This time it's different, more upscale.

Finally, Mr Mohammadi's smile is gone. "There is one thing that you forget in your mature government theory." I feel that he is finally coming out of his bureaucratic shell. "I've heard that you've studied in Canada." "Yes." "Good. Now imagine if Iran has 250,000 soldiers in Canada and Mexico [roughly the number of US soldiers in Iraq and Afghanistan] and then allocates a budget to help civil rights movements in the US, let's say to the Black Panthers or a Native American movement, wouldn't Americans be paranoid? We know our problems much better than anyone and we do our best to tell those who are responsible about the social maladies you just talked about. But this is Iran. It takes ages for anything to happen. In the meantime we have a vicious enemy to deal with: the US. It's determined to topple our government by any means necessary. As Tom Clancy says, the US is: A Clear and Present Danger."

The Islamic regime change

I don't know how Mr Mohammadi will react to my writing about these encounters. Not too happily, I guess. He strongly advised me not to talk about them with anyone. But it's important to know that Mr Mohammadi has changed. And if he can change, the Islamic regime can change. I'm still not convinced by his point about the American threat. Throughout its history, the Islamic Republic has looked for foreign enemies and has usually found them in abundance. Yet on many occasions it has undermined its own legitimacy by linking genuine domestic opposition to its foreign enemies. It's time for the international community, especially the US, to accept that the Islamic Republic is a force to be reckoned with and deserves as much respect as any other sovereign nation. But it is equally important for the Islamic Republic to realise its own maturity and act responsibly. Maybe instead of a conference on the myth of the Holocaust, our president could organise a conference entitled "Islamic Republic of Iran: 28 Years of Trials and Tribulations".

On a more personal note, the change can start with the government treating its citizens with respect. I know Mr Mohammadi knows where I live. He doesn't have to brag about it.

Maziar Bahari is an Iranian journalist and film-maker. This article first appeared in Index on Censorship, volume 36, number 3

This article first appeared in the 12 November 2007 issue of the New Statesman, 3 easy steps to save the planet

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

***

The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

***

In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt