Books on Iran
Update No: 047 - (28/10/05)
Defeat at IAEA
Contrary to the expectations of many, Iran suffered a defeat at the October
IAEA meeting, which decide to refer it to the Security Council over alleged
violations of the non-proliferation treaty. Iran was certainly disappointed at
the abstention of Russia and China, whose contrary vote it expected, but was
especially angry at India for having voted in favour of Iran's referral. The
only country which voted against was in the end Venezuela. Iran's foreign
affairs spokesman hinted that Iran might reconsider its flourishing economic
relations with India because of that vote. In fact, India's stance was a major
development for that country, the first instance in which it moved away from its
traditional policy of non-alignment. It is disputable whether this was dictated
by any genuine apprehension over Iran's nuclear programme, or by the desire to
get closer to the United States, a country known to be reconsidering its
long-term partnerships in South Asia, probably at the expense of Pakistan.
Iran's diplomats quickly had to make clear that no economic retaliation would be
considered - that in any case would have damaged Iran more than India. Later
Iran's president Ahmadinejad even threatened to withhold oil supplies if its
country was referred to the Security Council and again had to backtrack. These
two episodes show that the Iranian leadership was seriously taken aback by the
development. Since then Russian diplomatic activity has intensified and appears
to have somewhat reassured the Iranians that Moscow will not allow sanctions to
be imposed on Iran, but the fact remains that Teheran suffered its first defeat
in the nuclear row with the US. Pressure on Iran remained high throughout
October also because of British allegations that the Iranians are supporting the
insurgency in Iraq. By mid-October, Iran was signalling a softening of its
position, hinting that it may grant access to observers interested in its
nuclear program, which is one of a number of IAEA demands.
Khamenei seeks counter-balance to the new right
At the beginning of October Supreme Guide Khamenei surprised many by
extending the powers of the Expediency Council, headed by Akbar Hashemi
Rafsanjani, the defeated presidential candidate. This body will now supervise
the implementation by the government and the parliament of a 20 year development
plan drafted by the Council itself. It would appear that Khamenei, worried at
the assertiveness of the new right now in control of both parliament and
presidency, is now trying to counter-balance its power by extending that of
other institutional bodies. Within the parliament too more rumbles are being
heard, especially about the Interior Minister, who is rapidly becoming unpopular
because of his failure to consult parliament over the appointment of governors.
The new government definitely has a security-focused agenda, as the reported
expansion of the Basij voluntary force shows, but its agenda also does seem to
include a genuine intention of making the regime more efficient. The Minister of
Interior Purmohammadi hinted in October that more powers might be devolved to
the provinces and municipalities. He also raised the issue of improving Iran's
economic productivity, which remains low even by the standards of the developing
world. President Ahmadinejad himself complained about the inefficiency of the
banking sector, but in typical fashion continued to express hostility towards
private banks and identified the solution in "better supervision".
Foreign investment figures released
According to UNCTAD, Iran received foreign investment worth almost US$5
billion in 2004, a big increase over the previous year's US$1.5 billion. On the
other hand, UNCTAD was rather negative about Iran's innovation capability, where
it ranked it 75th of 117 countries, and about its human capital, where it ranked
81st. The increase in foreign investment, however modest in terms of the needs,
is nonetheless remarkable given the constraints that still exist in Iran.
Foreign investors, for example, can only buy up to 10% of the value of any
company listed on the stock exchange. This might have contributed to the
negative performance of the Teheran stock exchange since May 2005, although the
main reasons were others. Concerns over Iran's foreign policy and the apparently
negative attitude of President Ahmadinejad towards the stock exchange conspired
to create a climate of uncertainty around it. Since 80% of the market value of
the stock exchange is owned by state institutions and only about 200 companies
trade regularly, manipulation of stock prices is relatively easy, another factor
which might be deterring investors.
Statoil to develop oil activities in Iran
The Statoil Iran company's newly appointed Managing Director, Olave Hieger,
recently stated that Statoil Iran is currently implementing several development
projects of phases 6-8 of the South Pars gas field.
Hieger expressed hope that the company would make new contracts with National
Iranian Oil Company (NIOC), after the negotiations presently underway with the
NIOC subsidiaries, Iranmania recently reported.
Commenting on the cooperation between his company and Petropars Co in developing
phase 12 of the giant gas field, Hieger noted that the officials of both
companies have held several meetings on this issue and so far the discussions
have progressed well.
Speaking on the progress made in the phases 6-8 of the South Pars, he said that
certain parts of the project, such as installation of the offshore platforms and
drilling the production wells have witnessed good progress.
Hieger concluded that domestic and foreign oil companies working in Iran are
waiting for appointment of the new oil minister and the probable change of the
He added that when plans of the government and the new minister are determined,
the implementation of the projects could be accelerated.