|
Books on Iran
|
Update No: 063 - (22/02/07)
Khamenei steps in to take Iran away from the brink
Analysts are detecting signs that Iran might be preparing a move towards
appeasing international pressure concerning its nuclear program. Iran might be
moving towards accepting IAEA's proposal to freeze its uranium enrichment
proposal in exchange for a freeze of UN sanctions against Iran. It would likely
be a temporary freeze which could be interpreted as a goodwill gesture. Some
argue that pressure towards some appeasement comes from Supreme Leader Khamenei,
whose relationship with Ahmadinejad might be getting somewhat strained. Khamenei
might just be worried of the strengthening American rhetoric concerning Iran's
involvement in Iraq and might be thinking that it is time to restrain the
President. Accusations against Iran of transferring weapons to Iraqi armed
groups are becoming more frequent and detailed. Indeed, the evidence is now
overwhelming that supplies do come from Iran, although it remains to be
established whether it is financially motivated smuggling of Iranian equipment
or whether some state agency is involved. The Americans are building up their
military forces in the Gulf region, including through the despatch of a second
aircraft carrier and a naval task force. Reports published in the international
press suggest that US plans envisage not just limited strikes against the
nuclear infrastructure, but also the destruction of much of Iran's military
power. Certainly their airforce, missile batteries and naval forces would be
targeted - this reducing their capability of retaliation.
Ahmadinejad under fire
Despite Ahmadinejad's worsening relationship with other conservatives, many
believe that his decline in popularity should not be overstated and that he
remains more popular than any other Iranian politician. However, since
Ahmadinejad's own support never reached 30% of the active electorate, he clearly
can ill afford to isolate himself from the rest of an increasingly divided
conservative front. Ahmadinejad is under fire not only because of his handling
of international relations, but also because of his economic policies. 150 MPs
signed a petition against Ahmadinejad's inflationary policies. His subsidy and
handouts policies are reportedly driving up food prices in particular,
endangering his base of popular support among the lower classes. Low-cost
government loans instead had allegedly the effect of driving up house prices,
but Ahmadinejad plans measures to further drive down the cost of loans to
consumers in order to facilitate the acquisition of a house for the 20% of
Iranians who do not own one. In his forthcoming budget, he also wants to
distribute shares of state sector companies to specific groups of the
population, among which pensioners, teachers and nurses. He also plans major
investments to build up infrastructure in neglected provinces, such as roads.
Developments in the oil industry
In recent months Iran has cut its oil production from just over 4 million
bpd to 3.75 million, within the context of an OPEC decision to contain
production in order to push up prices. This is a somewhat rational choice given
Iran's difficulties in maintaining oil production. However, Iran continues to
desperately need to expand its revenue base, which suffers from
under-investment. It is estimated that just 30 per cent of Iran's oil revenues
are used for development, the bulk being spent on current expenditures and
subsidies. Only in the gas sector something seems to be moving. In February the
state oil company announced that an agreement has finally been reached with
India and Pakistan about the pricing of Iranian gas, after years of
negotiations. Iran is also concerned about the potential impact of sanctions and
in an effort to proof its economy against them it is trying to move away from
the dollar and shift its currency reserves towards the euro. For example, it has
recently asked its clients to pay euros for oil deliveries.
« Top
|
