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IRAN

 

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REPUBLICAN REFERENCE

Area (sq.km)
1.648 million

Population
66,128,965

Capital
Teheran

Currency
Iranian rials

President
Mohammad Khatami-Ardakani

Update No: 040 - (21/03/05)

Electoral campaign begins
Even if the presidential elections are still far off, the first signs of the campaign starting could be seen in March. One reformist candidate Mustafa Moin, started his tour, while the first opinion polls were released. Most political groups have not decided which candidate to endorse, although some have begun to make up their minds. The fundamentalists, for example, have chosen Larjani as their candidate. According to one poll, Hashemi Rafsanjani has 17% support, followed by reformist candidate Moin at 15%, but other polls put Mehdi Kharrubi as the favourite reformist candidate. Among the conservatives, former foreign minister Velayati is the favourite. The polls strengthened the feeling that the conservatives are lagging behind and that their chances of electing one of their own will be virtually negligible if the current three-way split is not healed. The conservative-dominated parliament showed its awareness of the forthcoming elections by modifying the budget proposal of the government, increasing allocations for education, health and rehabilitation activities. The conservatives, on the other hand, did not renounce their rearguard fight against economic reforms. The Guardian Council rejected at the end of February a bill aimed at establishing special economic (free trade) zones, despite the fact that the bill had already been amended to please the Council. Another clash occurred again in February when the government decided to reduce the custom duties on imported cars from 130% to 100% and the parliament opposed the move. 

US pressure still up
Between February and March US policy towards Iran took an important turn, even if the ultimate aims are unlikely to have changed. The Bush Administration aligned its position with that of the European countries, declaring its readiness to offer incentives to Teheran in exchange for the abandonment of the nuclear program. Clearly Washington was not ready to go it alone (without even the support of the UK) against Iran and is now hoping that a failure of the European initiative will convince the Europeans to endorse sanctions against Iran. In other terms, Washington is giving a chance to the Europeans, hoping that in exchange they will agree to impose sanctions once the ongoing attempt will have failed. The US are convinced that the Iranians will soon get caught cheating on their deal with the Europeans. In the meanwhile the attempt to harm the Iranian economy by putting pressure on present and potential partners continues. In March the US Ambassador to New Delhi even conveyed to the Indian government its displeasure with the prospect of a US$4 billion deal to build a pipeline between Iran and India. 

The lure of Iran's oil and gas still works
However, Iran's economic attractions are such that not many will be discouraged. India itself does not seem to have any intention of renouncing its plans concerning the pipeline and there are also other plans for joint ventures between small and medium-size companies of the two countries. Shell will be commissioning two new offshore fields for Iran over the next few years and is planning new investments. Even a country as close to the US as Kuwait just signed an agreement with Iran for importing gas starting from 2007, despite the long-standing dispute between the two countries over the Arash gas field. Iran itself is planning to invest US$100 billion in its oil industry over the next five years, of which US$12 billion will go towards downstream oil industry projects, hoping to turn around stagnant production levels. This is badly needed, as imports of gasoline continue spinning out of control, to the extent that in February it was even proposed to ration petrol.
The only neighbour of Iran in whose case friendly relations have been sorely tested in recent months is Turkey. The recent case of Turkcell mobile company, whose agreement with Iran was subjected to revision due to a decision of the parliament, is only the latest one. Turkey is still trying to renegotiate the price of its gas imports from Iran. During the unusually harsh winter Iran had even interrupted gas exports to Turkey, further complicating the issue as some sources claimed that the interruption was due to divergences between the two countries.

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