Executive Summary

BMI's Iran Defence & Security Report examines the country’s strategic position in the Middle East and

the wider world. It provides an overview of the contemporary geopolitical challenges facing the Islamic

Republic and the challenges it may face in the future.

The report examines the trends occurring in the country’s current and future defence procurement, and the

order of battle across its armed forces. The report’s general conclusion is that Iran faces ever-deeper

isolation from the international community, as well as a range of severe security threats, both internal and

external. Internally, Islamist hardliners have cemented their grip on power even as the country’s economy

runs deeper into crisis: social unrest and an Arab Spring-style uprising cannot be discounted. Iranian oil

revenues have been hit hard by sanctions and also by the falling oil price; this is piling added pressure

onto the country’s already-struggling economy.

Externally, the US and Israel continue to weigh up the pros and cons of attacking Iran in order to try to

halt its nuclear programme. An attack during 2012 now appears unlikely; however, the build-up of US

forces in the Persian Gulf means that Washington is now in a position to strike, should the Iranians follow

through with their threats to block the Strait of Hormuz.

Iran also faces the possibility of losing one of its few regional allies, the Assad regime in Syria. Its

relations with the Gulf Co-operation Council (GCC) of Arab states, led by Saudi Arabia, are extremely

tense, while Tehran’s relations with Turkey also stand to suffer over its continuing support for the Assad

regime, which Ankara strongly opposes.

Over the last quarter BMI has revised the following forecasts/views:

The latest military and diplomatic developments concerning Iran are discussed in detail. Though

negotiations between Iran and the P5+1 countries have continued in Istanbul, the prospect of a

diplomatic solution appears extremely remote. Iran’s military moves have garnered far more

attention: it has threatened to block the Strait of Hormuz to any oil tanker destined for a country

that abides by the sanctions against Iran; it also staged a series of ballistic missile tests in July,

and warned the US that all its bases in the region would be destroyed ‘within minutes’ of any

attack on Iran.

Military developments include: the launching of a new Iranian reconnaissance satellite; the

relaunching of one of the navy’s three Kilo-class submarines following an extensive refit; and

the reported entry into service of a first Iranian-built version of the AH-1 Cobra attack


Iran Defence & Security Report Q4 2012

Business Monitor International Ltd Page 6

The US has also continued to build up its forces in the Middle East. This has included the

deployment of additional F-22 and F-15 fighter aircraft, minesweepers and the amphibious dock

ship USS Ponce. Two carrier battle groups remain in the region, with a third on standby.

A powerful new spyware program, called Flame, has attacked Iranian computer systems (as well

as those of other countries in the region). This followed the disclosure that the Stuxnet virus,

which attacked computer systems relating to Iran’s nuclear programme, was of US/Israeli origin

and that US President Barack Obama personally ordered the cyberattacks to continue, despite

growing concerns about the virus infecting non-Iranian systems.