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IRAN


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 136,833 107,522 114,100 34
         
GNI per capita
 US $ 2,000 1,710 1,680 110
Ranking is given out of 208 nations - (data from the World Bank)

Books on Iran

REPUBLICAN REFERENCE

Area (sq.km)
1.648 million

Population

66,128,965

Capital
Teheran

Currency
Iranian rials

President
Mohammad Khatami-Ardakani





Update No: 043 - (27/06/05)

A surprise from the conservative side!
Contrary to all forecasts, the Iranian presidential elections were won by one of the most conservative candidates, Teheran Mayor Ahmadinejad. The first round of the Iranian presidential elections ended as foreseen with Hashemi-Rafsanjani in the lead, although his score (21%) was not as high as many had imagined. What was unexpected was however his challenger, Ahmadinejad, the mayor of Teheran, who came very close with 19.5%. The surprise was two-fold: not only it was not a reformist candidate to make it to the second round, but it was Qalibaf who had emerged as the favourite conservative in the June opinion polls. Qalibaf ended fourth with 13.9%. Another surprise was the fact that Mehdi Kharrubi emerged as the strongest reformist candidate, with 17.3%. He ranked third in the race. Erstwhile favourite Moin, rather to the left of Kharrubi, took only 13.9% and arrived fifth. The relatively high turnout (62%) had led to speculations on voting day that the reformists might have delivered a surprise, but they had missed their chance when Moin had been barred from running by the Guardian Council. It would have been a good occasion to unify behind the sole reformist candidate still running, Kharrubi, and mobilise voters, but Supreme Leader Khamenei smartly asked for Moin's reinstatement, a shrewd move following the protests of the reformist camp, thereby ensuring that they run divided.
In any case, with around 36% of the votes, split among three candidates, the reformists as a whole did rather badly. The conservative candidates gathered among themselves 43%. It appears obvious that the campaign run by the Bush administration against Iran's nuclear program ended up favouring the conservatives. 
During the short campaign leading to the second round, Ahmadinejad was able to deliver his message more effectively to the mass of the electorate, as the attention was now focused on him and Rafsanjani. Despite most of the political establishment, including moderate conservatives, rushing to support Rafsanjani, Ahmadinejad won by a large margin, with 62% of the votes. In fact, he took votes away from Rafsanjani and the reformist candidates who did not make it to the second round. This suggests that much reformist vote was anti-establishment and expressed frustration for the slow improvement in living standards after the end of the war against Iraq. Rafsanjani, very much an establishment candidate, was snubbed by many who had voted for the reformists just a few days earlier. Ahmadinejad appears to have won not so much because of his conservative message, but because of his targeting of the poorest strata of the population, whereas the reformists had focused on the middle class. The economic reforms about which both Rafsanjani and the reformists agree leave the rural population and the urban poor cool at best, as in the short term they would suffer from their implementation. Moreover, radical reformers boycotted the election in large numbers, causing a division in the reformist ranks which was a key reason for their defeat, together with having fielded as many as three candidates. 

Business backed Rafsanjani
It is pretty clear where the heart of Iranian business and the financial world beat. Teheran's stock exchange made significant gains in the run up to the election, betting on Rafsanjani. As the news about Ahmadinejad's surprise performance came through, those gains were completely wiped off. Ahmadinejad, the son of a carpenter, is seen as the candidate of Iran's pious poor and the business community fears that he would roll back the market reforms of recent years. The hostility of hard-line conservatives towards foreign investment is showed by the Turkcell case, which had won the contract for Iran's second mobile network and is now being forced by the conservative-dominated parliament to relinquish it. Although the contract will still be offered to foreign investors, the attitude of the parliament shows an unwillingness to play by the rules which will not please investors. 

Economy does well, but not well enough
The latest in reforms has been the announcement that a plan is ready for the privatisation of the railways. According to the plan, the infrastructure will remain under state control, while services and wagons will come under the control of private companies. Although the participation of private companies was already allowed in the railways, fares are so low that none ever tried to invest in the sector. It is likely, therefore, that in order to make the privatisation feasible fares will have to be substantially increased.
Final figures show that Iran's GDP grew by 6.7% in 2004/2005. Growth was stronger in the agriculture, mining and industry sectors and weaker in the services. Although this is higher than previous estimates, it still fall short of what Iran needs to absorb an expanding workforce. One key area of future development remains the gas sector. In the short term, the target is represented by neighbouring countries like UAE and Oman, in which case projects can be implemented in a couple of years, but a number of European countries including Bulgaria, Romania, Slovenia and Austria completed feasibility studies in June and the technical lead time for them starting to receive gas is five years from the signature of the contract. Not withstanding the delays, each of these countries, along with Japan, China and India, now have a vested interest in opposing any US moves to sanction Iran's oil and gas industries, if agreement cannot be reached about Iran's nuclear activities.

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AVIATION

Iran mulls joint production of Ukraine passenger jet

Iran is considering joint production of a Ukraine-designed passenger jet, Interfax News Agency reported recently. 
Abbas Fallakh, director of the Iranian government aerospace company NESA, made the announcement during a visit to the Ukrainian city Kharkiv. The twin-engine Antonov-148, a short-range aircraft designed for fuel economy and low-cost operation, is a good fit for Iran's aerospace industry, Fallakh said. Iran already manufactures under licence the twin-engine turboprop An-140 wholly designed by Antonov. "We are very much looking forward to this new airplane," Fallakh said. "We would very much like to make it in Iran." Antonov's manufacturing headquarters, and the centre of Ukraine's aircraft-building industry, are in Kharkiv. The An-148 is a leading-edge technology airplane aimed at the international market. The plane at US$17m a copy will be 25 to 30% cheaper to operate than competing aircraft currently produced, its designers claim. Ukrainian Antonov is heading up the An-148 project, with more than 200 subcontractors including companies in Russia, the US, Germany, and France providing parts and operating systems. The first serial production An-148 is planned for 2006.

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ENERGY

Iran and Armenia to build two power stations

Iran and Armenia concluded an agreement to build 2 power stations at the common border of the 2 countries, Interfax News Agency reported recently. 
This decision was adopted on May 14th at the 7th meeting of the joint technical commission that was attended by the deputy head of Iran's Water and Energy Resources Company for development projects, Nasser Nemati, and Armenian Deputy Minister of Energy Karen Sarkisian, according to Interfax. "Given the 40km Iran-Armenia common border across the Aras river, the 2 sides decided to use the relevant hydroelectric potential," Nemati said at the meeting. A report released by the public relations department of Iran's Water and Energy Resources Company quoted Nemati as saying that based on the agreement, the first power station with a production capacity of 130m watt will be established in Armenia by building an 18.3km tunnel. "The second one with a capacity of 140MWs will be constructed in Iran. A 17.5km tunnel is required to be set up for the second power station," the report added. It said the preliminary studies on the first phase of the second project are currently underway. The report concluded that so far 5 documents have already been mutually signed and necessary talks on expediting the settlement of the current problems have been held.

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