I'm watching this on Al Jazirah outside the US but didn't see it posted yet on Daily Kos. Al Jazirah is reporting that the FBI has arrested an Iranian-American and indicted a leading Iranian intelligence official for a plot in which Iran transferred $1 million to an FBI-controlled bank account, thinking that they were hiring the Mexican Zetas drug gang to blow up the Saudi Ambassador inside the US. It seems they approached a DEA agent instead, who played along with them. God only knows the back story to all this, but it does seem at minimum to be really embarrassing for the Iranian government. If it's actually true, it is both hugely stupid and provocative, and illegal under any sort of international law.
One of the people involved in the plot, Manssor Arbabsiar, has apparently confessed and is cooperating:
The current plot was infiltrated by a Drug Enforcement Agency informant posing as a member of a Mexican drug cartel, officials said. The plotters planned to pay a member of the Zetas cartel $1.5 million to carry out the attack, and two advance payments of nearly $50,000 each were wired to an FBI-controlled bank account in August, they said.
An Iranian American, Manssor Arbabsiar, 56, has been arrested in the case. An Iran-based member of the secret Quds Force unit of that country's Revolutionary Guard, Gholam Shakuri, was also charged but is not in custody, officials said
Some speculation... The Iranian government does not always work as a unified whole, and this extends to the security and intelligence services. It remains to be seen whether this was one faction of the Al Quds brigade, associated with one part of the leadership, or whether this really represents a thought-out comprehensive Iranian government policy to start carrying out assassinations. I hope that if true, this was yet another extreme overreach on the part of Ahmadinejad, and that internal opponents will take the initiative on this to try to curtail more of his power. Ahmadinejad has gradually extended more and more control over the revolutionary guards and security services, to the alarm of the clerical leadership. A stupid move like this, exposed, could undermine Ahmadinejad internally, even driving a wedge between him and Ayatollah Khamenei. Let's hope so...
It could also be a case of semi-entrapment, with some uncharacteristically naive and stupid Iranians falling into a trap. Persian culture invented chess - it's almost incredible to me to believe that they would be this stupid, but it is possible. This sounds like the plot to a John Le Carre novel, setting up an elaborate sting like this. Either way, even here in the Middle East, the Iranians look very foolish. I'm no great fan of the Saudis, but I can only imagine the way they are receiving this information.
Anyway, kudos to the Obama Administration and the Department of Justice. They either foiled a plot, or they won a serious chess match with the Iranians. This is not playing well in the Arab world, at least in Libya and Egypt, who are somewhat suspicious of Iran - and the al-Jazirah coverage has been balanced on this. I am currently in Libya and heard about this in a tea shop while talking with Libyans, who could only shake their heads and wonder at the naivete or stupidity of Iran to get caught up in this.