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Key Economic Data 
  2003 2002 2001 Ranking(2003)
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


Area (
1.648 million




Iranian rials

Mohammad Khatami-Ardakani

Update No: 052 - (24/03/06)

Time to slow down?
As the end of March approached, President Ahmadinejad found himself increasingly isolated in his confrontation with the US over the Iranian nuclear programme. Iran definitely abandoned negotiations with the Russians over having them in charge of uranium enrichment, after the Russians bowed to US and European pressure to drop their earlier proposal to let the Iranians continue some "nuclear research". Much of the Iranian isolation appears to be due to the lack of skills of the President and of the diplomats whom he chose to handle the issue, one of who even threatened EU countries with the prospect of losing the Iranian market for their goods, but Ahmadinejad is also clearly using foreign policy as a tool to strengthen his position at home, where he is under attack from reformers and conservatives alike. Nonetheless, neither the Russians nor the Chinese appeared any keener to allow the Security Council a bigger role in dealing with the crisis, contrary to US/European proposals, despite the Bush Administration once again using belligerent language during February and March - Condoleeza Rice accused Iran of being a "central banker to terrorism". Supreme Leader Khamenei and other moderate members of the Iranian establishment are trying to engage in damage limitation by conveying an image of Iran where Ahmadinejad represents only a faction within the ruling elite. For example, recently former President Khatami featured in a leading newspaper criticising Ahmadinejad's remarks on the Holocaust. At the same time, Khamenei seems intent in putting Ahmadinejad to good use to demonstrate to the world that Iran cannot be ignored and that the US were wrong not to make a deal when that was possible (i.e. under Rafsanjani and Khatami). More significantly, on 16 March Iran announced that it accepted the offer of the Bush Administration, made several months earlier, to hold talks about Iraq. This is a clear sign that the Iranians have realised that they cannot increase pressure any further at this stage and that the time for some easing of the tension has come. The Americans too sent what was seen a signal of détente, when President Bush in person dropped his opposition to the gas pipeline project between Iran, India and Pakistan during his state visit to the latter country.

Ahmadinejad plays hard at home too
For all the role-playing in Iranian foreign policy, the clash of interests in internal politics is real enough. Khamenei and his circle appear to be thinking that Ahmadinejad would like to bring as many of his supporters as possible to the Council of Experts, which will be elected by the end of the summer. That could weaken Khamenei's position, since the Council of Experts is the only institution in the country which is entitled to remove him from the job. More in general, Ahmadinejad's persistence in appointing cronies from the Revolutionary Guards and intelligence services in the state administration is upsetting even many rightists MPs. After filling gubernatorial positions with such people, he is now proceeding to replace all governor-generals too. 

International investment prospects in oil industry get dimmer and dimmer
The new Oil Minister Vaziri-Hamaneh confirmed for the first time in public that new plans have been developed for the oil industry. The plan is now to increase production from the current 4 million plus bpd to over 5 million by 2010, in part through the modernization of installation and pipelines, but also using gas injection and other technologies. The stress on using gas injection is what is new compared to previous policies and might affect Iran's ability to expand his presence on the world gas market. In any case, if Iran's oil production has to increase, it does not seem likely at present that this will be thanks to foreign investment. Until the end of February it appeared that at least the oil-hungry Asian countries would not alter their relations with Iran, with the Japanese promising to help Iran avoid international isolation. It was a real surprise, therefore, when in March Nippon Oil, Japan's largest refiner, announced its intention of cutting purchases from Iran by 15% this year, in order to reduce the risk coming from the possibility of an interruption of supplies. This is not the first sign that the nuclear dispute is harming Iran's prospects of attracting foreign investment. Some oil and gas companies had already shelved their Iranian plans in wait of better times, as in the case of British Gas and Sasol (South Africa), both of which had been talking to Iran about gas liquefaction projects. This however must not have been seen as a major blow by the Iranians, given their intention to scale down gas export plans. Although it is expected that other countries will step in to replace Nippon Oil, the latter's move is a more serious signal and sources within the international oil industry confirm that many buyers are beginning to see Iran as an unreliable supplier. As a result of Nippon Oil's decision, Iran's share in Japan's imports will fall by 4 percentage points. 

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