State Department’s Iran Democracy Fund Shrouded in Secrecy

Since 2006, Congress has poured tens of millions of dollars into a State Department program aimed at promoting regime change in Iran.

The “Democracy Program” initiative has been shrouded in secrecy since its inception and many critics of the initiative (who are also outspoken critics of the Iranian government) believe that it is directly linked to a spate of arrests of dozens of Iranian dissidents suspected of working secretly with the Bush administration to topple the Iranian government.

Up until last November, the program was operated by the State Department’s Bureau of Near Eastern Affairs and overseen by David Denehy, the bureau’s senior adviser. The program was reportedly moved last November to the State Department’s Bureau of Iranian Affairs. Denehy did not return calls for comment.

One of the influential figures who helped launch the democracy program was Elizabeth Cheney, the daughter of Vice President Dick Cheney, who as Principal Deputy Assistant Secretary of State for Near Eastern Affairs, headed the Iran-Syria Policy and Operations Group and, with the financial help of a prominent Republican foundation, the International Republican Institute, financed efforts of dozens of Iranian and Syrian exiles to promote a campaign to overthrow their government leaders. Elizabeth Cheney left the State Department last year to work on Fred Thompson’s presidential campaign.

An aggressive effort by the State Department to fund regime change in Iran is ongoing, but the State Department has refused to provide lawmakers with specific details of the program other than to say that the core mission of the initiative is to assist “those inside Iran who desire basic civil liberties such as freedom of expression, greater rights for women, more open political process, and broader freedom of the press.”

Congress has appropriated more than $120 million to fund the project. The State Department has spent most of the money on the U.S.-backed Radio Farda, Voice of America (VOA), Radio Free Europe, and to broadcast Persian programs into Iran via VOA satellite television.

Some funds, according to State Department sources familiar with the how the program is run, have also been secretly funneled to exile Iranian organizations, and politically connected individuals in order to help the U.S. establish contacts with Iranian opposition groups.

In June of 2007, the State Department said it would spend $16 million on democracy promotion projects that extends beyond broadcasting. However, to date the State Department has not released details on how it intends to obligate or expend those funds.

A State Department spokesman declined to comment for this story.

Carah Ong, an Iran Policy Analyst at the Center for Arms Control and Non-Proliferation, said in an interview that because the State Department operates the program under a veil of secrecy “we don’t know where the money is going.”

“There is no reporting requirement to Congress,” Ong said. “There’s absolutely no accountability at all with this money.”

Next Wednesday, the House Appropriations Subcommittee on State and Foreign Operations will consider the fiscal year 2009 budget that calls for setting aside $65 million for additional regime change and democracy promotion efforts inside Iran.

The State Department has said it intends to spend $1.2 million of those funds to launch Radio Free Europe/Radio Liberty Azerbaijani in an effort to address the lack of objective and comprehensive news and information for Azerbaijanis, the largest ethnic minority group in Iran.

The $65 million requested by the State Department “is more than three times the amount appropriated for FY 2008, which is estimated to be $21.623 million,” Ong said of the $65 million in democracy promotion funds for Iran. “This tripling in Economic Support Funds is the result of several developments. First, some restructuring recently occurred in the State Department and its Iran desk.

“Second, the FY 2008 Foreign Operations bill appropriated $60 million (under Section 693) for so-called “Programs to Promote Democracy, Rule of Law and Governance in Iran.” It has been unclear since Section 693 was originally added as an amendment introduced by Rep. Ander Crenshaw (R-FL) to the House Foreign Operations Appropriations bill for exactly which programs this funding was meant. Was it meant to increase funding for the Economic Support Fund or the Human Rights and Democracy Fund? Or was it meant to serve as an overall guideline for total spending on so-called “democracy promotion” programs? This is still a question that needs to be answered.”

The State Department has refused to provide specific details on the nuances of the democracy promotion project. The agency told lawmakers that the classified nature of the democracy promotion project serves to protect the identity of Iranian individuals and organizations that have received funding to promote a U.S. policy of regime change in Iran from being harassed or threatened by the Iranian government.

Yet that is exactly what has happened to some Iranian dissidents—even those who have publicly denounced the program.

A letter sent to lawmakers last October by Trita Parsi, the president of the National Iranian American Council, and more than a dozen other Middle East scholars all of whom are critics of the Iranian government, stated that the “secret State Department ‘democracy promotion’ funding has enabled Iranian authorities to label those supporting reforms or engagement with the West as foreign agents and traitors. Recent detentions of Iranian-American scholars, journalists, union leaders, student activists, and others are widely viewed as responses to threats posed by U.S.-funded efforts.”

“We believe this program, intended to aid the cause of democracy in Iran, has failed and has instead invigorated a campaign by conservative regime elements to harass and intimidate those seeking reform and greater openness in Iran,” the Oct. 11, 2007 letter says. “The intended beneficiaries of the funding, — human rights advocates, civil society activists and others — uniformly denounce the program,”

“Rather than promoting democracy, the U.S. funding has narrowed the space for the pro-democracy movement to operate,” Parsi said. “Today, the conditions for civil society have significantly deteriorated. Executions are at an all-time high. Many human rights workers have been imprisoned.”

Ong said most of the State Department funds have been doled out to organizations outside of Iran, such as Freedom House and Eurasia Foundation because “no one in Iran will take the money.”

But just the possibility that some Iranians may be linked to American led efforts to overthrow the Iranian government, or have accepted money from the Bush administration, has led to numerous arrests last year.

Emaddeddin Baghi, a human rights activist based in Tehran who was sent back to prison in September said, “it is neither wise nor morally justifiable for the U.S. to continue its path” of promoting regime change by trying to give money to dissidents.

Last year, Haleh Esfandiari, was arrested and sent to a prison in Tehran on charges of spying for the U.S. He was incarcerated for eight months, four of which were spent in solitary confinement.

Former Congressman Lee Hamilton told CNN last year that Esfandiari was likely captured because Iranians believed she was linked to the State Department’s campaign to promote regime change in Iran. Hamilton said Esfandiari did not receive any funds but he said the secrecy surrounding the State Department’s democracy program was causing more harm than good.

“If the policy of the United States government is to overthrow the government, then the Democracy Fund obviously would be viewed with a great deal of suspicion and hostility by the target government,” Hamilton said in May 2007, shortly after Esfandiari’s arrest.

In an October column published in The Chronicle of Higher Education, Esfandiari, the director of Woodrow Wilson Center’s Middle East program said “the fact that the identity of Iranian recipients of U.S. aid is regarded as classified information by the U.S. government feeds the regime’s paranoia and casts suspicion on all Iranian” non-government organizations.

Last September, Sen. Joseph Lieberman, (I-Conn.), introduced an amendment to the Senate Foreign Operations Bill, adopted by unanimous consent, that restored the democracy promotion funds to the $75 million requested by the State Department. An earlier version of the bill reduced the funding by less than half.

“This amendment would provide $75 million in funds, the amount requested by the administration; in fact, announced by Secretary of State [Condoleezza] Rice,” Lieberman said in a floor statement last September. “That announcement, I know from sources I have, was broadly heard and appreciated within the Iranian civil society dissident movement. The committee has recommended one-third of that amount of money. This $75 million would go to labor activists, women’s groups, journalists, human rights advocates, and other members of Iranian civil society. It provides Congress an opportunity to demonstrate that even as we condemn the behavior of the Iranian regime, we stand with the Iranian people, a people with a proud history who truly are, in my opinion, yearning to be free. That freedom is suppressed by the fanatical regime that dominates their lives today.”

But Shirin Ebadi, who was awarded the Nobel Peace prize in 2003, explained that “no truly nationalist and democratic group will accept” State Department funds to promote a policy of regime change because “Iranian reformists believe that democracy can’t be imported. It must be indigenous.”

“They believe that the best Washington can do for democracy in Iran is to leave them alone,” Ebadi wrote in a May 30, 2007 column published in the International Herald Tribune. Ebadi’s column was published as Congress approved emergency supplemental legislation to fund the Iraq war, which contained a $75 million earmark for the State Department’s Iran Democracy project.

“The secret dimension of the distribution of the $75 million has also created immense problems for Iranian reformists, democratic groups and human rights activists. Aware of their own deep unpopularity, the hard-liners in Iran are terrified by the prospects of a “velvet revolution” and have become obsessed with preventing contacts between Iranian scholars, artists, journalists and political activists and their American counterparts,” Ebadi added. “Thus, Washington’s policy of ‘helping’ the cause of democracy in Iran has backfired. It has made it more difficult for the more moderate factions within Iran’s power hierarchy to argue for an accommodation with the West.”

The final appropriation for 2008 was set at $60 million to be made available for “programs to promote democracy, the rule of law and governance in Iran.”

But a statement that was included with the bill cited only two numbers related to Iran: $21.8 million for Economic Support Funds (ESF) and $8 million for the Democracy Fund. It is unknown how the State Department intends to spend the remainder of the $60 million.

Ong and Parsi have called on the Government Accountability Office to conduct an investigation to examine the effectiveness of the program, which the GAO said it has initiated but could not say when the report would be complete.

Additionally, Ong said she has been trying to educate lawmakers for more than a year on how the program has backfired.

“It’s difficult to bring the voices of Iranian dissidents to the Hill to explain how the program is hurting their cause because if they speak out publicly they will be arrested when they return to Iran and accused of being spies,” Ong said in an interview. “I’ve tried to raise this issue with some members [of Congress] and some listen and some don’t.”

Jason Leopold is an investigative reporter and a two-time winner of the Project Censored award. He is the author of the National Bestseller, News Junkie, a memoir, and he has launched a new online investigative news magazine, The Public Record. Read other articles by Jason, or visit Jason's website.

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  1. Dave Kimble said on July 31st, 2009 at 11:06pm #

    Isn’t it naive to think that the people taking the Democracy Fund money would openly admit to it ? A bit of a give-away, surely ?

    Instead, a moments consideration would tell you that whoever it is who is getting the money would publicly deny they were getting it. In fact they would publicly say the whole program was wrong, and should be closed down, wouldn’t they ? And if they worked, say, for the Woodrow Wilson International Centre for Scholars’ Middle East Program out of a plush office at 1300 Pennsylvania Avenue, they would deny taking the the money, wouldn’t they ?

    So when Haleh Esfandiari (who is Director of the program) says publicly that she thinks the program is not good policy, and she doesn’t take the money, surely you wouldn’t believe her, would you ?
    “Is Haleh Esfandiari a CIA asset ?” collates information on this “diminutive 67-year old grandmother” (who wouldn’t hurt a fly) and you only have to read it to see that everything points to her being exactly what she claims she is not, and what the Iranian regime claims that she is.

    She doesn’t have to do anything other than what she proclaims she wants to do – have an open dialog with Iranian academics about women’s rights and human rights and freedom and democracy.
    She has written books on the Iranian dissident movement and how they subvert the regime’s agenda, and been given National Endowment for Democracy fellowship for it.

    She is paid (indirectly of course) by US Congress and Big Oil, and Big Banks and George Soros’ OSI to do exactly what she believes in. And when she was arrested in Iran and forced to make a “confession”, she only “confessed” to doing things she really did do. The Iranian Government thought that was enough to prove their point, and I agree.

    Let us please not just accept that she is not a CIA stooge simply because she and her boss says she isn’t.