Folks, thank you for making the effort to get mere on this snow day in washington. Its not really a snow day, but half an inch on the ground. That qualifies as a snow day here in washington. Needless to say, i dont think any of us expected that here in the first week of 2018 the iran story we would be focused on would be this story, a story of protests, domestic unrest, really, in the sort of biggest demonstrations weve seen since 2009. On the contrary, i think that what everybody expected to be talking about this week and next week was the question of sanctions, waivers, decertification of the jcpoa and efforts in congress to amend the legislation. And that obviously, all still is in play, but its now been cast in i think a quite different light by whats happening inside iran. And so, we have convened a panel of our experts to discuss this issue, the protests in iran and their implications for not just the region, not just iran, but also for u. S. Policy. From a lot of different angles. Im going to introduce folks in the order ill call on them. Well start with patrick clawson. Patrick is the morningstar senior fellow and director of research here at the institute. And hes going to look at the background to these protests. Where are they coming from, what are the causes and whats been happening inside iran, especially economically that can explain the unrest were seeing and then well turn via video to our colleague, one of washingtons most skillful interpreters of domestic events in iran and hell look where the protests are now and where they might be going in the future. And then well turn to mike eisensta eisenstadt. Mike is the director of our military studies program at the institute. Hell look at the role of Security Services in these protests and also, what the protests might mean again for the what it will mean. And ill turn to hanin ghaddar, hes going to look at how the protests might reverberate in lebanon, outside of irans borders, certainly in places where iran is spending the billions of dollars that the protesters have cited at one of their grievances and throughout all of this, as is our practice here at the washington institute, we will talk about what u. S. Policy makers should be doing about all of this. I think so far, ill just give you my sort of one minute of personal take here. So far, i think the Trump Administration has tried to demonstrate its support for the protesters through the president s twitter feed, through statements by u. S. Officials, and its tried to rally some sort of international response, International Pressure to complement the u. S. Statement. I would say so far International Statements have been relatively mild especially compared to american statements, so that effort is still underway. Im sure that well see this effort develop as the days and weeks unfold. We may see some more sanctions on iran for human rights abuses, and of course, i think it will inevitably play into the Big Decisions next week regarding sanctions waivers, and certification or decertification of the jcp 0. A, butle but ill leave my contribution from that. We can speak from here or the table, patrick. Its up to you. So my former colleagues at the International Monetary fund may report about irans economy say what we macro economists would say about irans Economic Situation, namely that its pretty good, that irans gdp to grow this year more than the u. S. Gdp. Irans budget deficit is going to be smaller relative to the size of the economy than that of the United States. Iran is running a healthy current account surplus in its international trade, unlike the United States, which runs a large deficit. And so that the picture looks pretty decent. Well, i thought that it was telling that when the New York Times ran a very nice article the other day by about irans Economic Situation, it was written by a novelist, who got the Economic Situation much better than my imf colleagues did. While the macroeconomic numbers may be pretty good, the situation for ordinary iranians has not been. That it hasnt been at all a trickle down, that in fact, the annual survey that iran does of the Living Standards of people has shown that those standards are still 10 or a little more than 10 below where they were a decade ago and that unemployment is rising. Its at 12 1 2 . And, in fact, whats happening is that, as more jobs are being created in iran, that more people are coming into the labor force. We discovered that there are a lot of iranians that always wanted to have jobs and just got en discouraged and dropped out of the labor force and are now coming back in and in particular, inflation is back up again. Thats one of the accomplishments of rouhanis first term, he was able to bring inflation down from 43 down into single digits, well, its back up again. Furthermore, the price increases are heavily concentrated on items consumed by ordinary working people. So, bread prices rose for the first time in three years by 15 a couple of weeks ago. Iranians, by the way, eat 353 pounds of bread a year, think about that. Thats impressive. And famously, egg prices and chicken prices are up sharply. Furthermore, as pointed out, the rich in iran are flaunting their wealth. I recommend the Instagram Account that has well over a quarter of a million followers called rich kids of tehran. You can see the life styles that truly ostentatious. If youre in the market for a nice maserati, you can see a good selection of them and the parties that they throw, the clothes that they wear, i know enough things to my significant other, about clothing to say, thats expensive. And frankly, it looks like nothing so much, the feel of whats going on in iran at the moment is nothing so much like what happened in the shahs days where the shah in 1971 organized a coronation ceremony, bringing thousands of foreign guests, chefs from france, they drank over 2000 bottles of wine. I mean, it was ostentatious wealth and the shahs government shifted from concentrating on National Economic development and concentrating on the good times for the select few. And that is increasingly what the Islamic Republic feels like. So, thats the overall picture behind these protests. Now, let me focus on two specific issues though, one is the cost of irans destabilizing foreign activities. We often say that, oh, well, theres support for these various terrorist movements and their Nuclear Programs, really not that expensive. Well, that may be true in absolute numbers if you compare it to the u. S. Economy, but its not particularly true compared to the size of irans economy. Now, we dont have precise numbers, obviously on how much they spend on supporting the syrian government, various terrorist groups, the u. S. Government often likes to use its internal thinking, the number 7 billion a year, which i think is a bit high, but if we throw in the Nuclear Program and the Missile Program, its certainly in the billions of dollars, i think it would be very hard to make the argument that the expenditures are less than about 4 or 5 billion a year, roughly half of that going to the syrian government, a big chunk going to hezbollah, that nuclear and Missile Program is not cheap either. And at 4 to 5 billion dollars, thats 1 of the gdp. Well, by comparison 1 in the United States it would be 180 billion dollars. Now, i dont think anybody would say that 180 billion is a small amount of money. Well, 1 of gdp is real money. And thats a minimal estimate. As i say, what the u. S. Government usually uses is the estimate twice that and furthermore, thats just for the direct cost. If we throw in indirect costs we get a lot higher number. So, for instance, the new budget that was proposed by president rouhani for the next fiscal year in iran says that military expenditures are going to be 12 billion. Well, much of thats frankly, not necessary, except because of irans adventurous foreign policies. And so, certainly theres another, at least 1 of gdp that is due to the adventurous foreign policy. By the way, that 12 billion estimate, some people have said, oh, hes trying to inflate it in order to embarrass the revolutionary guards. Actually, thats finally brought the iranian government estimate of what it spends on the military close to that of International Institutions like the usual arbiter of these things, the Stockholm InternationalPeace Institute which says irans spending is 12 billion a year. My first would be irans destabilizing activities are, in fact, real money. Indeed, its instructive that the amount that iran is spending on these activities, minimal estimates, 1 of gdp, that is more than the budget cuts that rouhani proposed. He proposed cutting in half the expenditure and cash money to be given to the ordinary iranians, and that would not have been necessary, except for the expenditure on these destabilizing activities. Well, my second point would be things could get a whole lot worse. The the Banking System in iran is there has been explosion of Credit Institutions. Theyre kind of like Credit Unions in the United States that hold 25 of deposits and many of them are connected with the revolutionary guards and many are prominent clerks, claiming theyre collecting islamic taxes. And these Credit Institutions have paid little attention to the central bank of iran, and theyve been paying outrageous deposit rates and charging outrageous loans. When youre charging 35 a year for loans, i tell you, theres not a whole lot of legitimate Economic Activities that can pay that kind of interest rate. And several of them failed in november, and we saw street protests in tehran, the first time weve seen chants of death during those protests, theres no system of deposit insurance, if the Credit Institution fails, you lose your money. The banks are not much better shape. They are desperate for liquidity. Theyve been borrowing from Credit Institutions. The central bank of iran has put a cap on the amount that institutions can pay in interest. 90 of the institutions were violating that cap as of last june. And the central bank has been trying to get irans banks to report under irans generally accepted accounting practices, not the international accepted practices, but irans accepted practices and the fewest banks that have done that have gone from reporting the profits to massive losses. The government has spent two years dithering about the situation. Theres been no action on proposals to modify the Central Bank Law to allow it to regulate the Credit Institutions and this is a classic recipe for disaster. If you think that im exaggerating, let me just quote from rouhanis speech, in which he was introduced with the budget. He said, quote, 25 of the money market is in the hands of fixed fraudulent institution. When they want they interfere with the money market, the gold market, and i raise this with great urgency with the Supreme Court leader, discuss how 3 or 4 Million People are having their lives totally ruined by the actions of these fraudulent institutions. Ive gotten pressure from all sides. You will not believe the pressure letters that i started to get from different institutions at the state. Frankly, the Banking System in iran could collapse. And as i say, theres no deposit insurance. This, by the way, is what keeps irans banks isolated in the International Financial system. Independent of what happens with u. S. Sanctions, independent of what happens with the Financial Action task force, which is meeting later this month in may will evaluate now irans action plan is going, it is this problem with the banks which keeps the banks away from the International Financial institutions. Finally, one last word of pessimism about we economists like to steal from other social scientists, so let me steal from demography. Demographers tell us its young people out for protest. Theres a general rule of thumb that revolutions are more likely to occur where the median age was under 26, which is where iran was in 1999. Irans population is rapidly aging. The median age in iran is exact same as globally. Slightly higher than the median age in israel and its eight higher than the median age in pakistan. Ten years higher than the median age in iraq and india and 11 years higher than afghanistan. With the average age in iran 31 and revolution rarely occurs when the age is over 26, within the decade the average age in iran will get to be 36. All right. Thank you, patrick. I feel like with everything thats happened in 2017 and 2018 so far, we all feel like were rapidly aging, not just the iranians, so were going to turn now to a video. And i see we have him right here. Now, take it away. Oh, we cannot hear him. Just one moment while we sort this out. [inaudible conversation] cory, should i move onto the next speaker, do you think . [inaudible conversation] all right. So while we sort out the technical issues, lets move to Mike Eisenstadt as our next speaker. Thank you. Let me just say that first, i think the first thing i would say is that the regime has been very effective in closing down information coming out of iran, and as a result, its been very hard to really read events there. As it is in any its hard enough even when there is a flow of information in these kind of developments to read events going on thousands of miles away during potentially violent and potentially revolutionary situations. But even the videos that have been getting out have been very low quality and its been very hard to judge which units are to judge and whats going on in the streets. That said my comments are somewhat tentative. There are things that are rooted in longterm trends in Iranian Society and in terms of the way the regime has responded to previous bouts of violence, which enable us to at least create a frame work of analysis here. So let me just say the first thing in talking about these kind of events in iran, is to understand that the founder, the founders of Islamic Republic are revolutionaries and theres nothing that revolutionaries fear more than counter revolution. Because, first of all, they know that revolutions can occur. They made a revolution once in their youth. Also, the political in iran, and its rooted in conspirat conspiratorial world view and see that arn the republic and some of these are true, there have been conspiracies in the past and that also kind of informs the regimes response. And then finally, what theyve seen is that in the past, many of the events of outbreaks of violence, whether it be in the 2009 or 1999, or in the mid 90s, 94, 95 period were in cities and were done by, in many cases, the urban middle and upper classes. Now we see a series of protests which involve the provincial working class and while the recent events have exposed deep class and regional cleavages in Iranian Society, it does not bode well for the future. One thing they said in 2009, if only the people in tehran and other large cities protesting from the urban middle and upper middle classes could get their rural working classes involved, the regime would really be in trouble. Well theyre involved now, but the urban middle class and upper middle class in tehran is more interested in evolutionary change and reform and not revolution, but this does not bode well for the future because the most important classes in the country are shown to be, at least elements of those classes, to be disaffected from the regime. Another thing that the regimes concerned about is, in the past theyve been concerned about invasion and rightfully so. Historically iran has been invaded a number of times. The arab invasion, the mongols, world war ii, the brits and the russians. And then you had iraq in 2003. But after 2003, with the u. S. Getting mired in insurgency, counterinsurgency campaigns in iraq and afghanistan, those fears have been diminished somewhat. Iran has been more concerned about soft warfare, efforts to subvert the regime. Now, iran has great strategic depth or geographic depth to deal with invasion. They have mountains around the perimeter of the country, but every iranian citizen is vulnerable to messages, subversive messages from outside the country brought in by satellite tv and internet, and the like. Thats why theyve put a lot of efforts in jamming Satellite Communications and controlling the internet and the like. Now, let me just say a few things about the lessons that the people who rule iran today drew from their experience in making the revolution against the shah. And these Lessons Learned have been modified by their own experiences in dealing with subsequent bouts of violence as i mentioned before in the mid 90s, and 1999 and 2009 and now most recently, the most recent round. First, the need for strong decisive leadership by the political echelon. The shah was constantly driven by doubts about first of all, he was suffering from health problems, with cancer, he was on medications, he was constantly fearful that the United States would abandon him and throw him under the bus and was conspiring with the opposition aga