Books on Iran
Update No: 054 - (30/05/06)
Dialogue of the deaf
During April and May the diatribe between Iran and the international community
continued to show no sign of resolution. In March the news that Iran's
establishment had accepted to hold talks with the US over Iraq had caused some
excitement, as it appeared to have some potential to break the deadlock.
However, quite typically President Ahmadinejad intervened to deny that there was
any need to hold talks on Iraq, now that a new government was being established.
Ahmadinejad also won the headlines with his statement that the latest European
proposal, to offer Iran a nuclear rector in exchange for giving up nuclear
enrichment, was "laughable". The Europeans had been convinced of the
need to offer something more substantial to the Iranians by the refusal of the
Russians to agree to a referral to the Security Council. In reality, the
European offer never stood much of a chance, since it is clear that what the
Iranian establishment wants is the abolition of the US embargo, without which it
is unlikely to make any concession concerning the nuclear programme.
The Bush administration seems not to be seeking new ways to put pressure on
Iran. It has announced that it will step up the use of Security Council
Resolution 1540, which allows to target financial institutions which cooperated
with countries in breach of the non-proliferation treaty. The resolution was
used with some success against North Korea and will now be used against Iran, at
least in the intentions of the Bush Administration. Some US companies, such as
General Electric and Aon, have already decided to revise their attitude towards
Iran. There are also plans to force the revision of the risk appraisal for doing
business with Teheran, which would lead to higher costs of loans and guarantees.
These are seen as de facto sanctions which could replace UN-approved sanctions
if Russia's and China's opposition to any resolution sanctioning armed
intervention and Germany's opposition to a tight sanction regime were not
overcome. Germany, which is Iran's main trading partner, has signalled to the US
that it would not go for serious sanctions.
Growing infighting among the conservatives
Ahmadinejad's uncompromising stance on Iraq and the nuclear programme reflect
his need to mark his distance from the old-conservative establishment. His
announcement that women will be allowed to attend matches at the stadium also
clearly appears to have been thought to strengthen his neo-conservative
credentials, while at the same time upsetting the conservative clergy. His
supporters also do not seem too averse to allowing non-clerical individuals, who
have expertise in certain fields, to be candidates in the elections to the
Council of Experts, as this might have the effect of weakening the hold of the
old-conservatives on the Council, for example allowing military personnel to be
The reformists are in the meanwhile reported to be planning a comeback,
strengthening relations with the clergy and trying to pay greater respect to
traditional values, while at the same time exploiting worries among the public
that Ahmadinejad may be pushing the confrontation with the US too far.
A windfall to spend
The Oil Minister announced that 2005/06 was a record year in terms of Iranian
oil revenue, which reached US$45 billion. However, it is doubtful whether the
current administration in Teheran will be able to spend this windfall for the
best of the country. Populist measures such as the decision, taken in March by
the government, to raise the minimum wage by 25% are already backfiring, as
shown by a wave of job cuts which occurred in May, as many companies opted to
lay off workers rather then afford the sudden pay rise. In other cases, wages
have not been paid due to cash flow problems in a number of companies. It is
estimated that just in the textile industry 10,000 workers have already been
sacked since March.