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IRAN


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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

REPUBLICAN REFERENCE

Area (sq.km)
1.648 million

Population

66,128,965

Capital
Teheran

Currency
Iranian rials

President
Mohammad Khatami-Ardakani





Update No: 055 - (27/06/06)

A crossroad ahead
With the joint EU-US offer now on the table, Iran's diplomacy may have reached the time of final decision. The package offers nuclear assistance, but most importantly trade and economic incentives, in exchange for abandoning the military component of Iran's nuclear program. The trade incentives include among other an end to the US ban on the sale of aircraft and aircraft parts, which are badly needed given the Iranian ageing aircraft fleet, but even more noteworthy because it is the first important step in the direction of what Iran has always been asking, i.e. the abolition of the trade embargo. Also, the Bush Administration has for the first time hinted that it might consider allowing Iran to continue its own uranium enrichment program, on certain conditions. The alternative would be UN sanctions against Iran. There are signs that part at least of the Iranian leadership is tempted to accept the package or at least not to flatly reject it, possibly also because of pressure coming from Russia and China, which want to safeguard their trade relations with the West while building a political-military bloc of their own, the Shanghai Cooperation Organization (SCO). Iran's President Ahmadinejad has been invited to attend the forthcoming meeting of the SCO, a sign that Russia and China might be considering to invite Iran to join as a permanent member. 
In the meanwhile, Iran has been sending signals that the bargaining process will continue for a while. In mid-June it once again reiterated that it is no longer interested in talks with the US on Iraq, despite US hints that the talks might have addressed other issues too, of greater interest to the Iranians. 


Financial world begins to turn against iran
Another source of pressure on the Iranians is the US campaign to turn financial institutions against the 'rogue state'. In May the OECD downgraded Iran as a credit risk, consequently raising insurance premiums on Iranian export credits. UBS and Credit Suisse had already halted operations in Iran in January, worried about the ongoing political developments, but now several other European banks, including ABN AMRO and HSBC, are downscaling their involvement in Iran, not least because some European governments have also been cautioning banks about the rising risks. This will lead to higher trading costs particularly for small Iranian businesses, which need letters of credit in order to import machinery and components from abroad. Some observers believe that some of the trouble being incurred by the Iranian economy is due to the psychological pressure deriving from the feeling of isolation and incumbent disaster: the 20% fall in the Teheran stock exchange last year, the decline in investment and construction activities, the outflow of cash or its conversion into gold. Others, however, believe that as long as the price of oil will be this high, in order to hurt the Iranian economy, sanctions should target imports of gasoline, for which Iran is 40% dependent from its neighbours. 


Good news, murky plans
One positive piece of news in June was that the inflation rate seems to be coming down, being estimated at 10.5% in May on the previous year, compared to 11.1% in April and 12.1% in March. However, uncertainty about the economic plans of the government contributes to discourage investment. According to sources within the state customs authority, the government plans to raise import duties on many goods, ranging from electrical appliances to mobile phones, to textiles and foodstuff. In some cases, such as silk, the plan is to increase duties tenfold. The purpose seems clearly to support national manufacturers, in line with the nationalist leanings of President Ahmadinejad, but many traders and businessmen are unhappy, not least because such plans are at odds with
Iran's stated ambition to join the WTO. 

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