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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: 059 - (26/10/06)
Nuclear program: defiance and smiles
The Iranian leadership seems to feel that it occupies a strong position and
is less and less inclined to make serious concessions on its nuclear program. At
the beginning of October Iran once again tried to break the European-US front by
proposing that France lead a consortium to enrich uranium in Iran. This attempt
is unlikely to succeed and in fact a couple of weeks later the European Union
announced that it supports gradual sanctions against Iran. Nonetheless, Teheran
can still count of the diplomatic support of Russia and China to avoid the
imposition of sanctions from the Security Council. The Bush administration and
the Israelis are actively lobbying Moscow, but it is not clear whether the US
are ready to offer anything substantial to Moscow, such as clearance for its
demand to accede to the WTO. Even if the Russians were to be convinced of some
form of sanctions, it is likely that these will concern military sales and
technologies rather than commercial sanctions, at least initially. Condoleeza
Rice herself has ruled out sanctions on Iran's import of refined fuel, widely
seen as Iran's most vulnerable spot. As a result, the impact on the economic
conditions or Iran and on the regime would be minimal.
In any case the government is hedging its bets and announced in October that it
will start rationing fuel distribution in March, following the adoption of a new
smart card which is just reaching the final stage of development.
Reforms and authoritarianism
Some initiatives of President Ahmadinejad can be read as surprisingly
reform-oriented. One such move was the reform of the state budgeting body, whose
provincial offices on Ahmadinejad's order will be merged with the governatorates.
The move is presented as an attempt to decentralise the administration and
weaken central economic
planning and budget allocation, although some critics argue that much of the
power is rather transferred to the Ministry of Interior. One step in the
direction of a partial privatisation of Iran's economy was the launch in October
of the first private mobile telephone network, with a delay of one year over the
initial schedule due to the collapse of the original deal with Turkish company
Turkcell. Although initially Irancell will only represent a small fraction of
Iran's 10.6 million mobile phone subscribers, it plans to distribute over 2
million sim cards by March 2007.
In any case, Ahmadinejad's reforms go hand in hand with a tightening of the
authoritarian character of the regime. Not only more and more insufficiently
pliable newspapers are being banned, but journalists in general are being told
that they are only authorised to utilise reliable agencies and sources for their
work and that they cannot deal with topics judged inappropriate by the
government.
Investment keeps coming
According to UNCTAD, foreign investment in Iran is increasing in 2006, with
US$7 billion expected to be invested, up from US$5.5 billion last year. However,
foreign direct investment not only remains negligible but is probably even
declining. Last year it fell to just US$30 million, from US$100 million in 2004
and US$482 million in 2003. Most foreign investment remains concentrated in oil
industry, where it normally takes the shape of buy-back contracts, which do not
allow the foreign investor to establish any degree of control over the business,
contrary to direct investment. The UAE remain the main investors in the country,
as they were last year.
A TURN ABOUT?
Despite initial expectations that the new president and his entourage would
press for a revision of the country's policies with regard to gas exports,
recent declarations from Oil Ministry officials seem to confirm that a massive
increase in gas exports remains planned. While 70 million cubic meters were
exported in 2005, 200 million are expected to be exported in 2006 and to 250
million in 2007. The increase should continue in the following years at the rate
of 50 million per year.
Iran is cooperating with other OPEC countries in an effort to maintain oil
prices at high levels and cut its production levels slightly this summer. It is
estimated that Iran, Kuwait and UAE altogether reduced production by 200,000
bpd, while Saudi Arabia cut production by another 200,000, Nigeria by at least
120,000 and Venezuela by 50,000. However, this has had little effect on oil
prices, due to slowing US demand.
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ENERGY
Iran resumes gas exports to Turkey
Iran resumed exports of natural gas to Turkey recently after evacuating gas from
a pipeline damaged by an explosion on September 28th, Tehran Times reported.
The explosion occurred in a remote mountainous area near the Iranian border town
of Bazargan, some 853km northwest of the capital Tehran, disrupting gas exports
to Turkey.
Following the explosion, certain problems arose with respect to the quality of
the exported gas. Iranian technicians have sucked out the gas from the damaged
pipeline and after repairing the damaged portion gas exports to Turkey have
resumed.
During the brief period of suspension of exports of Iranian gas, Turkey imported
huge amounts from Russia.
The blast damaged the Iran-Turkey gas pipeline two kilometres from the gas
transfer station on the Bazargan border point and five kilometres inside Iranian
territory.
The English-language paper 'Iran Daily', quoting the commander of the West
Azerbaijan Police Department, said that elements linked to the terrorist group
'Free Life of Kurdistan PJAK' (Iranian wing of the PKK) carried out the bombing.
Ankara blames PKK rebels for the deaths of more than 30,000 people since the
group launched its armed campaign for an independent Kurdish homeland in
southeastern Turkey in 1984.
PKK is listed as a terrorist group by Turkey, the United States and the European
Union.
Iran has accused the PJAK of killing dozens of its armed forces in insurgent
attacks in areas bordering Turkey, wrote the daily.
Iran pushes Russia on starting 1st phase of nuclear power plant
Iran has once again pushed Russia to start the first phase of the nuclear power
plant in the Persian Gulf port of Bushehr in southern Iran, the news agency ISNA
reported on September 18th.
The head of the Iranian Atomic Energy Organisation, Gholam-Reza Aqazadeh, met
his Russian counterpart, Sergei Kiriyenko, at the International Atomic Energy
Agency (IAEA) in Vienna and pushed him to clarify when Russia intended to start
the Bushehr plant. Iranian Atomic Energy Organization deputy, Mohammad Saeidi,
told ISNA that Aqazadeh expressed Iran's dissatisfaction with the developments
in Bushehr. Russia had initially promised Iran to start the first 1000- megawatt
unit of the plant in the Persian Gulf port by the beginning of 2000, but since
then the start has been delayed several times for different reasons. The first
reactor of the station is almost 90 per cent ready, according to the Russian
Atomstroieksport company that is carrying out the work. Construction was due to
be finished by the end of this year. Kiriyenko, the head of Russia's nuclear
power agency, Rosatom, said deliveries of Russian fuel to the plant would take
place six months before the unit is powered up. Aqazadeh will visit Moscow again
to discuss fuel deliveries to the Bushehr plant and a final date for its
physical launch, Saeedi said adding that Moscow has promised to fix the date in
that meeting.
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