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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: 060 - (28/11/06)
Iran might soon miss Bish
The prospects of a US success vis-à-vis Iran never looked so weak after
President Bush lost control of both houses of congress in the November
elections. The credibility of the Bush Administration's gung-ho approach is
nearing its nadir and Bush himself is now forced to make concessions to the
Russians, in a last ditch attempt to win a UN endorsement of his request for
sanctions against Iran. In mid-November Bush proposed to exclude the oil and gas
sector from sanctions against Iran, a move which would greatly weaken the impact
of the sanctions. It was indeed expected that eventually any sanctions would not
affect the hydrocarbon sector, but not that this would become the American
negotiating position. While initially the Russians and the Chinese might have
been genuinely worried about some American trick, which would impose sanctions
but leave the door open to a UN-legitimised military campaign, their enduring
hostility to any sanctions against Iran appears now rather determined by the
prospect of the possibility of a complete defeat of the US.
The Iranian leadership also seems to share the same feelings that American
efforts in the region are doomed and raised its flag even higher in November,
when it responded to accusations of supporting terrorist organisations by
announcing an increase of its support to Hamas in Palestine from US$50 million
to US$120 million. Clearly there is little sign that Teheran is being
intimidated. Quite the contrary, in Iran analysts and observers are now becoming
worried of an excessively fast decline of American presence in the region, in
particular concerning Iraq. Teheran's strategy of letting the American do the
dirty job of crushing the Sunni insurgency is beginning to appear outdated as
Washington is forced to seek a way out and chaos is spreading throughout Iraq,
including parts of the south. If the US indeed leaves, Teheran would inherit the
mess.
The internal threat
A more serious threat (than President Bush's thwarted hegemonic ambitions)
is for Iran the populist tendencies of President Ahmadinejad. His recent attack
on Iran's main private bank, Parsian, drove the bank's shares down to one eighth
of their previous value. He accuses private banks of profiteering rather then
investing in the productive economy and therefore of contributing to widen the
gap between rich and poor. Ahmadinejad and others within the establishment might
now be thinking that the bank has been growing too big and influential and might
therefore represent a threat to their monopoly of power. Earlier this year the
government pushed banks to lower their interest rates, in line with
Ahmadinejad's view that banks should not lend to the rich, but to the poor, so
that these can lift themselves out of poverty. Ahmadinejad also opposes interest
rates on Islamic grounds and most banks now offer interest-free accounts, as
well as small interest-free loans in order to please the government. But
Ahmadinejad wants to go further. The President is now trying to sack the chief
executive officer of the Parsian bank, Abdollah Talebi, for having privileged
big borrowers over small ones, but the case is being reviewed by the judiciary.
If the judged reversed Ahmadinejad's decision, it would be a significant blow to
his administration.
Ahmadinejad's previous decision to redistribute much of the power of the
planning agency to provincial governors is also causing a lot of turmoil,
including a wave of resignations, starting from that of the chief of the agency.
The resigning officials fear that the autonomy of the agency will be compromised
under the new system, to the advantage of Ahmadinejad (who appoints the
governors). In line with his populist ideas, the president seems to have the
intention of re-directing economic planning to benefit the poorer strata of the
population.
Gas back on the agenda
In November came the news that Iran and Austria are negotiating a deal for
the delivery of gas. This would be a further confirmation that the original
plans of Ahmadinejad's circle, to limit exports of gas and utilise it for
internal consumption, might have been shelved already. According to Iranian
commentators, Austria would only be the first European country (apart from
Turkey) to be become a client for Iran's gas. At the same time even negotiations
with India for the building of a gas pipeline seem to be approaching the final
phase, after Iran responded with a new price offer to India's complaints that
Iranian price demands were too high.
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