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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: 050 - (30/01/06)
Confused battle lines
While Iran's President Ahmadinejad seems to be doing his best to isolate Iran as
much as possible from the international community, the prospects of a referral
to the Security Council remain unclear. It is even less clear what would happen
if a referral was indeed decided. The Bush Administration was successful in its
strategy to send the Europeans ahead and try "soft power" strategies
and fail and now the relationship between the key European countries and Iran
have significantly worsened. It appears likely that the Europeans might support
a referral to the Security Council. The same applies to the IAEA, another loser
in the attempt to softly convince Iran to offer credible guarantees that it is
not after the atomic bomb. IAEA's director general El-Baradei says that the
agency will issue a final condemnation of Iran if it is not granted access to
key sites by the end of January. During January US officials once again voiced
the possibility of the use of force against Iran, but this appears more a ruse
to put pressure on Iran's friends, chiefly Russia and China, than a genuine
intention. At the same time the same officials have been blandishing the
Russians by describing their proposal of cooperation with Iran as a good plan.
However, even if the Bush Administration might have succeeded in driving a wedge
between the Russians and the Iranians, this might not have got far enough to
convince the Russians to accept a referral, even if they are clearly irritated
by Iran's cold reception of their plan. Russia's Foreign Minister Lavrov
maintains that sanctions are neither the best nor the only way to put pressure
on Iran. In any case, even if Iran was referred to the Security Council, there
seems to be little scope for sanctions. Iran would only be seriously hurt if
sanctions affected its oil exports, which is unthinkable in the current
predicament; besides, US ally Japan, Iran's largest customer, would be the
hardest hit. Oil sector analysts argue that the loss of Iran's oil could only be
partially offset by increased production in the few countries which have unused
production capacity, chiefly Saudi Arabia. As a result, oil prices would shoot
up further, hurting mainly Asian countries and among them China, a country whose
support is essential if sanctions have to be approved.
Ahmadinejad pushes Iran's foreign policy rightward
For all his seemingly extremist positions in foreign policy, Ahmadinejad appears
to be succeeding in dictating the terms to the Iranian leadership, including
supreme leader Khamenei, who recently dismissed the danger of sanctions,
recalling that in the past they actually helped to generate self-reliance among
Iranians, and Ahmadinejad's main rival, Hashemi Rafsanjani, who in January
hinted in a speech delivered in Teheran that the "enemy" wants to
prevent Iran from developing nuclear know-how in order to keep it weak. Support
for nuclear fuel production seems to be widespread among Iran's legislators too.
New plans for gas
While international attention is very much focused on Iran's foreign policy, the
new president and his circle have been reassessing Iran's policies concerning
the development of the oil and gas sector. While the Khatami presidency had
development grandiose plans to develop gas exports throughout the world, the
Ahmadinejad presidency appears to be siding with a faction within the Oil
Ministry which argues that Iran's best option is to use gas mainly for internal
consumption. In part, this line of thought maintains that given the declining
productivity of Iran's oil fields, massive injections of gas are needed to
maintain and improve the recovery rate. Some also argue that it would make
better economic sense to use gas to replace oil for internal consumption rather
than build a huge export infrastructure in order to export gas. While there
continue to be interest among all factions in exporting gas to India and China,
the plans to increase exports to Europe might be sacrificed if the attempt of
the Ahmadinejad circle to seize full control of the oil ministry succeeded. It
is important to point out than in the plans of Rafsanjani, the man who has been
indirectly controlling the oil ministry for many years, exports of gas were also
seen as a way to increase Iran's geopolitical influence, an aim which is not
shared by Ahmadinejad.
On the economic front a more pressing concern in January was the rapid rise of
currency liquidity, which is being stimulated by the increase in oil revenues
and by the inability of the Central Bank to exchange petrodollars for rials,
which in turn is due to the government's failure to clear its debts with the
Central Bank. The governor of the Central Bank estimates that for each US$1
billion that the Central Bank fails to exchange for rials, liquidity grows 5%
and inflation 3%.
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FOREIGN RELATIONS
Iran-Kyrgyzstan to expand ties
Recently a meeting was held between Iran's Majlis National Security and Foreign
Policy Commission chairman, Alaeddin Boroujerdi and Kyrgyz Ambassador to Tehran,
s Tairov. During the meeting, there were negotiations for expansion of political
and economic cooperation between the two states in tune with the current
potentials, Interfax News Agency reported.
At the meeting, it was reported that according to a report released by Majlis
Media Department, Boroujerdi declared Iran's support for closer economic and
trade ties between the two countries. He said that considering the importance of
the need for raising the regional status of both states, the economic growth and
multifaced development of countries of the region is necessary.
Boroujerdi even congratulated the re-election of President Nursultan Nazarbayev
and hoped that the scheduled visit of Nazarbayev to Iran in the coming year will
pave the way for further bolstering of mutual bonds.
Tairov is also pleased with broadening of bilateral relations and presented a
report on the latest economic and trade developments of his country. He called
for the support of the Iranian parliament for further expansion of ties in the
domain of politics and economy.
Tairov said that an official invitation will be sent to president Mahmoud
Ahmadinejad to attend president Nazarbayev's swearing-in ceremony. Meanwhile, he
appreciated Iran for sending observers to Kyrgyzstan to supervise the recent
presidential election in the country.
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