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IRAN

 

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REPUBLICAN REFERENCE

Area (sq.km)
1.648 million

Population
66,128,965

Capital
Teheran

Currency
Iranian rials

President
Mohammad Khatami-Ardakani

Towards an Iranian victory?
The Iranian nuclear saga continued in November with the release of an IAEA report, saying that Iran has provided "limited cooperation" in the agency's efforts to investigate its nuclear program. The Iranian establishment was divided in its assessment of the report. Some noted that this report sounded more positive towards Iran than previous ones, making a referral to the Security Council less likely. Others, including the spokesman of the Foreign Ministry, Assefi, were less enthusiastic in their endorsement. A few days later the decision of IAEA not to refer Iran to the UN Security Council showed that the optimists were right. Former President Rafsanjani, who has been leading behind the scenes negotiations with the US, was the keenest in welcoming the statement. Russia was given time to negotiate with Iran on behalf of the IAEA, despite some reservations among EU representatives. After another few days, it appeared that Iran was not too keen to negotiate with the Russians either, having set conditions which will be difficult to meet for the other side. EU diplomats are becoming increasingly nervous about Iran's attitude and even El-Baradei, the chief of the IAEA, began to criticize Iran's position openly. Despite these developments, or maybe because of them, a consensus seems to be emerging that Iran will have to be allowed to develop nuclear technology, including the production of uranium hezafluoride, probably leading to a military capability at some point. The Bush Administration appears to have realized that its threats were actually welcomed by Iranian hardliners, who were using them to build up consensus at home, while not taking them too seriously in the face of US military forces being bogged down in Iraq. Moreover, the Bush administration is desperate to get out of Iraq and now accepts that it will have to enlist Iranian help for that, maybe even accepting longer-term risks which in a different situation would have been deemed as unacceptable. In late November for the first time the Bush administration offered to the Iranians to hold bilateral public negotiations concerning Iraq, who are still thinking whether to accept or not. Even Israeli officials were reported by some sources as saying that their country might have to live with a nuclear Iran and are looking for ways to increase their own deterrent capacity. If this trend was to be confirmed, it could be said that Iran is winning its confrontation with the US. 
These developments surprise to some extent, given Ahmadinejad's habit to make controversial statements which attract negative publicity to the Islamic republic. Following his second remark on Israel, he was strongly rebuked by the foreign minister of Iran's main trade partner (Germany) and even by the usually friendly Chinese.

An oil minister, finally
Between November and December Ahmadinejad submitted two more candidates to the position of Oil Minister. The first, Seyyed Mohsen Tasaloti, was rejected like its two predecessors, despite having a background in the industry. He is director of the engineering design, construction, and building foundation of the National Petrochemical Industrial Company. This rejection was therefore not due to the candidate's alleged incompetence, but due to his perception by conservative members of parliament that he was too closely aligned with the existing interest groups in the Oil Ministry and that he had supported the reformists in the past. The next candidate, Kazem Vaziri-Hamaneh, was finally confirmed by parliament. He too has a background in the ministry and is seen by some as being close to the interest groups nicknamed the "oil mafia", but is considered to be politically closer to the conservatives. He is know to have criticized Iran's oil buy back schemes, but it is not clear what he proposes to do in this regard. 
In internal politics the focus is moving towards the forthcoming elections to the Council of Experts, which holds a lot of power in Iran, including the ability to elect the Supreme Leader. President Ahmadinejad and his supporters appear to be working to get their Ayatollah of choice, Ayatollah Mohammad Taqi Mesbah-Yazdi, as Supreme Leader, but it is likely that the results of the election will show continuity with the past and favour more traditional conservative characters. 

Need not worry about inflation
There has recently been a debate between economists and government officials about the prospects for inflation in the country. Inflation is around 15% currently, but the Central Bank of Iran has been under pressure to bring liquidity under control, lest inflation reach 20% or more. Some economists are also asking the cabinet to cut expenses. Central Bank officials argue that liquidity is already under control and that its growth will decline to 30% this year, compared to 32% last year. 
Recently released IMF estimates are even more optimistic than government officials and put current inflation at 13%, down from 15.2% last year. The IMF also forecasts solid GDP growth at 6% for the current year, which is not surprising given the high oil prices. Unemployment is given as 11%. 

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