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Key Economic Data 
  2003 2002 2001 Ranking(2003)
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)

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Iranian rials

Mohammad Khatami-Ardakani


Update No: 038 - (27/01/05)

Too many candidates
As the end of January approached, both the reformist and the conservative fronts remained split with regard to the choice of a candidate for the presidential elections of mid-2005. There are two official reformist candidates, Mehdi Kharrubi, who is supported by the clerical wing of the reformist front, and Mustafa Moin, who has the support of the more secular components of the front. However, many younger reformists also favour the candidacy of former president Hashemi Rafsanjani, despite the fact that originally he was considered a more likely candidate of the moderate conservatives. Rafsanjani's advantage would be that his chances of winning are much higher and that he will not be disqualified from running by the Guardians Council. Indeed the relationship between Rafsanjani and the conservatives seem to be worsening, as they appear to be trying to push him towards renouncing the idea of a candidacy in favour of somebody more ideologically committed to their cause. 
On the conservative fronts there are already five candidates who have announced their candidature and are enlisting support. Of the two leading candidates, former foreign minister Velayati is a mainstream conservative who appeals to the middle aged right wing, while Mahmud Ahmadinejad, Teheran's major, attracts the sympathy of the new generation of conservatives, who currently dominate the parliament. Mohsen Rezai, Ahmad Tavakoli and Ali Larjani appear to have weaker chances of emerging as joint candidates of the conservative front, or to score well if several conservative candidates should run. Of the several other individuals who are also considering whether to run, the majority is from the conservative side. The conservatives, therefore, might experience greater difficulties then the reformists in uniting behind a single candidate. Moreover, Mohsen Rezai has already stated that if he is not selected as a joint candidate, he will run anyway on his own. The task of the reformists might be made easier if Moin's candidacy is rejected by the Guardians Council, a rather likely event. He is seen by most as the potential candidate with the greatest appeal. 

Relentless US pressure on elusive Iran
On the international scenes there were few surprises in January. Dick Cheney's identification of Iran as the top potential trouble spot in the world re-ignited speculation about a future military intervention in Iran. The saga of the Iranian nuclear programme continued to develop with various twists in January, but Iran ended the month in a somewhat stronger position than a month earlier. Western intelligence sources admitted that accusations against Iran of having imported large quantities of substances suitable for producing atomic bombs were unfounded, while the Europeans continued to present a united front against any idea of military intervention. Moreover, for what it is worth the Russians expressed their support for the European plan, aimed at offering Iran benefits in exchange for dropping parts of its nuclear program which are susceptible of leading to the production of military equipment. The fact that Iran's application to join the WTO has now been rejected also strengthens Teheran hands against the Europeans, who had promised to actively support Iran's effort to join the WTO. Now the Iranians think that the Europeans owe them one. 

Are sanctions not the same for everybody?
On 22 January German giant ThyssenKrupp announced that due to US pressure it was forced to drop the representative of the Ministry of Economic Affairs from its board (Iran owns a 4.5% share in ThyssenKrupp). On the other hand, US sanctions notwithstanding, Halliburton managed in January to win a US$310 million contract to drill for gas in Iran, through its associate Oriental Kish. Halliburton performed the same 'exclusion miracle,' during the long sanctions years in Libya, then through a German subsidiary. In the corporate world, as viewed through the prism of Washington, it appears, some are always going to be more equal than others! 
On the whole US sanctions are making little impact on Asian countries, though. In January the Indian government signed a deal with Iran's national oil company to import at least 5 million tonnes natural gas a year over a 25-year period. The contract is worth US$40 billion and gives India the right to develop two Iranian oil fields and a gas field. 

Oil bonanza does not prevent heated debate behind scenes
In January the Minister of Economic Affairs and Finance, Safdar Hosseini, attacked the parliamentary majority because of its failure to cooperate with the government in a constructive way. The main bone of contention is the decision of the parliament to keep subsidies on consumer goods unchanged, at a high cost to the state, and to try pushing profit rates in the banking system down rapidly. Another ongoing debate concerns import tariffs. According to the chief of Iran's police force, Baqer Qalibaf, high tariffs give an incentive to smugglers. Apart from narcotics, the value of goods smuggled into Iran is estimated at US$5.5-6 billion. As a result, rather than stimulating domestic production, high tariffs undermine and the state does not even earn any custom revenue from smuggled goods. Attempts to prevent the smuggling are being frustrated by widespread corruption, including within the police force. The fate of the oil stabilization fund is also a matter of discussion. The government proposed to spend US$1.3 billion from the Fund (worth a total of US$8 billion now, but likely to rise significantly due to high international oil prices) to pay for the cost of importing petrol, which Iran cannot manufacture in quantities large enough. The conservative majority in the parliament, however, cut the figure to US$825 million and wants to spend the rest on its own constituencies in the countryside and in the Islamic Foundations. More debate is likely to arise after President Khatami introduced the 2005/2006 budget to the parliament on 9 January. The budget is 30% larger then the previous one and is based on expected GDP growth of 7.1% and inflation at 14.5%. 
The conservative parliament made its weight felt again in January, when it rejected the appointment of the new Roads and Transport Minister, Ahmad Sadeq Bonab. Although some members of parliament mentioned Bonab's lack of specialized education as a reason for the rejection, it is more likely that his bad relationship with the conservative lobby within the ministry was the actual reason for his failure to be confirmed. His predecessor, Ahmad Khoram, had received a vote of no confidence in October.

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