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Iranian President Mahmoud Ahmadinejad stopped off in Syria for consultations with his ally, Syrian President Bashar al-Asad, this weekend, on his way to New York for the United Nations General Assembly session. Ahmadinejad will make an appearance on Larry King Live on Tuesday.

Although his fate seemed up in the air only a little over a year ago, Ahmadinejad comes to New York with a substantially strengthened position.

It is no accident that Ahmadinejad has even revived a discourse of Iranian imperial greatness by referring to Cyrus the Great. He was asked about the Cyrus Cylinder in the British Museum, which Iran wants back is now exhibiting after an initial tiff.

‘ As for the Cyrus Cylinder… What is the story behind this? 2500 years ago, there was a dictatorship in Iraq that imprisoned people, maimed them, and tortured them. The religion of these people was the divine religion of Moses. The disciples of this prophet were a minority. The minority was imprisoned by this brutal, murderous dictatorship, and they were enslaved. So they were in total desperation. One of our kings replaced that dictatorship with a just regime. His name was Cyrus. People in the Babylon of that time wanted assistance from Cyrus. They said, “You preach justice, come and help us out. The dictator won’t let us pray, he won’t let us do anything.” I want to make a historical parallel here. Cyrus conquered Babylon and freed people from the brutal regime of Babylon. However, while going there to free the people, he did not hurt a soul. He does it in a way that the dictatorship in Babylon falls apart. And then he issues the Declaration of Human Rights.’

This discourse met with a firestorm of protest from clerical critics, who insist on rooting Iran’s identity solely in Islamic sources. But the ingredients are there for a new Iranian nationalism reflecting Iran’s influence in places like Shiite Iraq after the fall of the Baath Party and Saddam Hussein (likened here to Nebuchadnezzar), and Ahmadinejad is positioning himself as its champion. Of course, he is very much subordinate to Supreme Leader Ali Khamenei, but you couldn’t tell it by his speeches.

While Ahmadinejad’s enemies in the US Congress, especially those closest to the Israel lobbies, had hoped to pressure Iran by cutting off its gasoline imports, it turns out that the regime is not in fact vulnerable on that score. The government imported no gasoline last month, having simply used its petrochemical facilities as refineries and imposed some rationing. While some observers exulted that this move by Iran was a sign that sanctions were working, that sentiment seems ridiculous to me. If gasoline sanctions were supposed to hurt Iran, and Tehran showed that they could not, how is that a victory? It is like a boxer boasting he can knock out the heavy weight champion, and then when the champ just puts up his gloves and consistently blocks the feeble blows, boasts that he put the fighter on his guard.

In fact, Iran is building up refinery capacity over the next five years, with an expectation of doubling gasoline production. It has a huge cushion domestically, since at the moment gasoline is heavily subsidized and just costs pennies up to a certain amount per month. But prices are being raised on consumption beyond the ration, which limits growth in consumption. It is not sure that raising prices further would even hurt the regime with the public, since it can so obviously be blamed on the United States and so borne as a price of national independence.

One source of regime strength has been continued strong pricing for petroleum. Iran nowadays produces about 3.6 million barrels a day of oil, of which it typically exports about 2.3 mn. b/d (it is the world’s second largest exporter). As a result of the global economic near-depression, prices fell to as low as $33 a barrel at some points early in 2009, and as late as July 2009 they were $56 /b. But in late 2009 and through 2010, demand soared again, as China and India turned in impressive growth. Asian demand has sent the price back up to around $70 a barrel. The price of Iran’s heavy crude was $74 a barrel in the first two quarters of 2010, but had only been about $54 a barrel in the same period in 2009.

At anything over $50 a barrel, the regime is sitting pretty. $70 is a great cushion for the Islamic Republic, and if Germany’s recent growth spurt is a harbinger for Europe this coming year, prices could firm further. Any US or Israeli military action toward Iran would only cause prices to skyrocket, ironically strengthening Iran further.

Hopes that global economic sanctions would harm Iranian banking and so make it harder for Iran to export petroleum seem to me completely forlorn. There is every reason to expect oil-thirsty Asia to ignore the US and UNSC sanctions if the alternative is slowed growth or disgruntled drivers. Petroleum is easily smuggled, especially if it is refined into gasoline, and easily turned into cash. The Baath regime in Iraq faced among the strictest sanctions ever visited on a country, and which probably killed 500,000 children, but the Baath party was unfazed and managed to sock away billions from gasoline smuggling. The regime was in no danger of falling spontaneously even after a decade of such treatment, such that Bush had to invade to overthrow it. Iran has more friends than Iraq did and a more favorable political and geographical position.

Iran’s exports to Japan jumped in August, and it has also increased exports to China. So those two countries are finding ways of paying for the oil despite US pressure on banks. Even supposed US allies such as Afghanistan and Iraq are doing a booming business with Iran (and ironically, the US sort of needs them to, if they are to be stabilized.) Afghanistan seems increasingly dependent on Iran for its internet services, and, indeed, dependent on an internet firm owned by the Iranian Revolutionary Guards. (Bad for me– Iran blocks this blog, and it cannot be received in those parts of Pakistan and Afghanistan that get internet service from Iran).

I suppose US and UN sanctions can keep Iran from getting as rich as it otherwise might, but if oil prices rise over the coming years, the West is highly unlikely to be able to stop Iran from benefitting substantially from the increased revenue.

Ahmadinejad only a little over a year ago faced massive and repeated protests in the streets of Tehran, his capital, over the obvious irregularities in the announced voting results of the June, 2009, elections. Observers wondered if his regime might be toppled. But for the government to fall would have required a split in the security forces, which never took place. Other sections of the Iranian elite, including the ranks of the grand ayatollahs and the high civilian politicians, did split. But the opposition leaders, Mirhossain Mousavi and Mehdi Karroubi, ultimately proved unwilling to lead a genuine political revolution, nor could they attract the loyalty of enough military officers and ordinary people to do so. The security forces stood firm with Ahmadinejad and the popular ferment on the streets has subsided into a behind-the-scenes human rights movement that seems to have little prospect of early success, though it could be significant over the medium term.

Regionally, Iran is sitting pretty. Iran benefits from the good will generated for it in the Muslim world by its strong support for the Palestinians (especially Hamas in Gaza). Reckless Israeli moves, including the Gaza War, the attack on the Mavi Marmara civilian aid ship, and continued colonization of Palestinian land, have increased Iran’s stature in the region.

Iran’s other client, Hizbullah of Lebanon, is part of that country’s national unity government. The Sunni Prime Minister of Lebanon, Saad Hariri, moved closer to Syria in recent weeks after long years in which he blamed Damascus for the 2005 assassination of his father, a stance that split Lebanon into pro-Syrian and anti-Syrian factions. Even if Hariri’s motives might be to facilitate a break between Syria and Iran, backed by Saudi Arabia, the step could backfire. With Beirut making up with Damascus, Hizbullah may be strengthened, and a Tehran-Damascus-Beirut-Ankara sphere of friendship and economic exchange emerge.

Iran has excellent relations with Hamid Karzai of Afghanistan, in contrast to the security problems it had faced from the Taliban in the 1990s. Indeed, it allegedly has many high Afghan officials on its payroll. The US has proved so far unable to unseat the Shiite-dominated government in Iraq in favor of ex-Baathist Iyad Allawi. Pro-Iranian Shiites are likely to play an important role in any government that is formed. Turkey has stood with Iran, declining to support increased sanctions and running interference for Tehran with regard to its civilian nuclear energy research program. Iran is still close to Syria. The Arab street has decided that it is not afraid of an Iranian nuclear warhead.

The US has been reduced to arming Saudi Arabia to the teeth, with a $60 billion arms deal, as its main way of responding to the powerful Iranian diplomatic position in the region. That is, after a period of direct US intervention in the Gulf region during the past 20 years, the US appears to be moving back to the proxy strategy of Nixon-Kissinger in the 1970s– a sign of relative weakness in the region.

Ahmadinejad comes to New York, not as a wounded leader under internal and external siege, but as the confident representative of a fiercely independent Iran, the hydrocarbon treasures of which allow it to withstand Washington’s mere sanctions and opprobrium. Mahmoud the Great?