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Books on Iran
REPUBLICAN REFERENCE
Area (sq.km)
1.648 million
Population
66,128,965
Capital
Teheran
Currency
Iranian rials
President
Mohammad Khatami-Ardakani
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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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