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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: 045 - (25/08/05)
A cabinet of hard-liners
As expected, the new president, Ahmadinejad, has filled his cabinet with
hardliners, among whom quite a few have a background in the Revolutionary
Guards. Not a single reformer has been appointed. A lonely centrist is Mohammad
Rahmati, who stayed on as Transport Minister from the previous Khatami
government. Among the key players Manouchehr Mottaki is the Foreign Minister,
who has in past issued statements in favour of a tougher position in the
negotiations on Iran's nuclear programme. Ali Saeedlou is the new Oil Minister,
while the economy minister is Davud Danesh-Jafari and the commerce minister
Masud Mir-Kazemi.
Not only no reformer figure in the new cabinet, but many even within the ranks
of the right wing faction in the parliament were disappointed. The appointees
are largely from the "new right" tendency, which leaves the
traditional right with little power. In the Teheran Council, a formal split
between the two tendencies has already occurred and 15 conservative councillors
have decided to form their own group. Observers now wonder whether the rift will
develop further.
The ranks of the reformers, on the other hand, are increasingly in disarray.
Former president Khatami is now taking up the leadership of the clerical
reformist party, Militant Clerics Association, but the former leader of the
party Karrubi has announced that he will form yet another reformist party.
Purge of oil ministry still a possibility
The appointment of Saeedlou as Oil Minister came as a partial surprise. He
did figure on the alleged short list of candidates discussed in the press before
the appointment, but not as one of the top options. He has no previous
experience in the industry and is personally very close to Ahmadinejad, having
served as his deputy in the Teheran administration. The oil industry was hoping
for the appointment of Beheshtian, a former official in the oil ministry who
left after clashing with the previous reformist oil minister. At least he would
have known the industry and would have been less likely to start a large scale
purge, now feared by many.
These fears are unlikely to help in a situation where oil multinationals already
feel under pressure from the US to quit the Iranian market. In August Royal
Dutch Shell disclosed that it faces US sanctions because of its operations in
Iran.
Nonetheless, August was a month of good news on the oil front. Among them was
the resumption of talks with Turkey about the prices of the gas that Iran has
been supplying. The suspension of the deliveries last winter caused serious
problems in Turkey, which however is also receiving gas from Russia. Moreover,
during August, outgoing Oil Minister Zanganeh revealed that Iran's oil
production has recently increased to 4.2 million bpd, as a result of the
investment of US$50 billion over the 1998-2004 period. This contradicted the
expectations of oil industry analysts in the West, who had predicted a decrease
in Iran's oil production due to the exhaustion of existing fields. Zanganeh
admitted that capacity is falling at the rate of 300-350,000 bpd, but also said
that investment was sufficient to more then offset those losses.
During August the debate about Iran's industries continued. The extent of waste
taking place was highlighted by an industry official, who pointed out that far
too many textile industries have been created, which now can only work at 60% of
their capacity because Iranian production costs are 30% higher than
international standards, therefore preventing significant exports. There is also
growing criticism against the planned privatization of state industries, because
the government refuses to privatize profit-making companies and is ready to give
up only those which are not profitable. The plan to sell shares of state
companies is scheduled to start next March. The more general uneasiness about
the future of the economy under a conservative president led to the Teheran
stock exchange's steady decline after the elections.
Brinkmanship past the brink?
As repeatedly announced, in August Iran restarted the uranium conversion
that it had suspended as requested by a group of European countries. The move
was widely denounced and led President Bush to declare that the military option
was not excluded in dealing with Iran. If Iran does not back down, in the second
half of September the IAEA will have to refer it to the Security Council of the
UN, where sanctions may be proposed against Iran. Teheran might be counting on a
veto from Russia and China, which however is far from certain. Russia for one
has condemned the Iranian move. Iran probably also counts on the difficulties
that the Security Council would experience trying to agree on sanctions against
Iran, hoping that this would buy time. Moreover, once approved such sanctions
might prove rather mild or ineffective in the short term, giving Iran even more
time to develop its program further. After all, experience shows that once a
country has affectively developed nuclear weapons, there is little choice but to
accept the fait accompli.
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ENERGY
Iran to become key exporter of LNG in world
Iran will turn into one of the world's largest LNG - liquefied natural gas -
exporters within the next 10 years, noted managing director of Islamic Republic
of Iran Shipping Lines (IRISL), Ali Ashraf Afkhami.
Iran's LNG exports hit 34 million tonnes per year and it is expected that
exports of the condensates would reach 25 million tonnes next year, he said.
Elaborating on the IRISL performance, he stated, "International activities
of the IRISL increased from 5 per cent in 2000 to 45 per cent in 2004; however,
it is expected that the figure will go up by 60 per cent in the near
future."
Commenting on the capabilities of the national shipping line, he added that 24
vessels were added to the IRISL last year, elaborating, "Iran's national
fleet capacity currently stands at 9.7 million tons, and we hope to see the
figure of 16 million tons in the near future."
The official also explained that the IRISL, enjoying 115 active vessels, has a
total of 6900 employees at its 110 representative offices.
Iran to retain OPEC ranking in oil production, export
Organisation of Petroleum Exporting Countries (OPEC) recently announced that
Iran will retain second place in OPEC in terms of oil production and
exportation, Tehran Times reported.
The OPEC secretariat in Vienna has issued a 20-year development plan for Iran
under which the country will retain no less than 7 percent of crude oil
production and export on world energy markets, behind Saudi Arabia. According to
the plan, from 2010 Iran will produce seven million barrels of crude oil,
liquefied gas and gas condensate and some 1.5 billion cubic metres of natural
gas, daily.
Georgia to transport Iranian gas to Europe
Georgia will facilitate projects proposed by Ukraine and the European Union to
transport Iranian gas to Europe, Georgian Energy Minister, Nika Gilauri, said,
Interfax News Agency reported on August 8th.
Gilauri said the package of proposals that Britain, France and Germany submitted
to Georgia on the EU's behalf on August 5 included the construction of a trunk
pipeline to ship Iranian gas to Europe, provided that Tehran discontinues its
nuclear programmes.
Ukraine submitted two options to Iran for transporting Iranian gas to Europe at
the start of July. Ukraine's proposals, like the EU's, involve routing the gas
via Georgia, using either an Iran-Armenia-Georgia-Russia-Ukraine-Europe pipeline
or an Iran-Armenia-Georgia-Black Sea-Ukraine-Europe route. "We'd welcome
any of these projects and do all we can to facilitate them," Gilauri said.
"This would be an additional source of gas for Georgia and bolster the
country's energy security," he added. Asked whether the United States might
respond negatively to these projects, Gilauri said the US government had not yet
made any comment. "If a question arises, we will definitely consider
it," he said.
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FOREIGN LOANS
IDB offers a US$62m loan to Iran
The Board of Directors of the Islamic Development Bank (IDB) ratified the
bank's decision to grant a loan of US$62,600,000 to Iran.
The decision was made during the bank's 31st session, in which, the Board okayed
allocation of a development loan worth US$36,600,000 to the Bandar Abbas
Shipbuilding Plant (Iran Shipbuilding and Offshore Industries Complex Company (ISOICO)).
IDB, in the same session, also approved a loan of US$26m to Iran Saipa Diesel
Company to promote its spare parts purchases.
The total loans allocated to the IDB member countries during the bank's recent
session amounted to US$437m.
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