Books on Iran
Update No: 057 - (25/08/06)
Yet another deadline looms
As the 31 August deadline for answering the European nuclear offer
approaches, most observers were convinced that Iran will give a negative or
non-committal answer, play for time and give no undertaking to abandon its
uranium enrichment program. The Lebanese events seem to point in that direction,
as one side issue of that affair is Teheran seems to have been intent on giving
a sample of what the US might have to face in Iraq, if they opted to impose
sanctions or worse on Iran. At the same time, aware of Bush's difficulties at
home, where experienced policy makers of both parties have been stepping up
their criticism of the Administration, Teheran probably also meant to strengthen
the feeling that the Bush Administration's policy of imposing by force a new
order in the Middle East is only dragging the region towards anarchy.
Vulnerable, not vulnerable?
The debate about just how vulnerable Iran is to sanctions continued in
August, with Teheran gathering its own experts in open seminars to state that
the potential for harming the Iranian economy is very limited. US and European
analysts are less convinced of Iran's impermeability to sanctions and identify
the huge imports of fuel as the main weak spot. Teheran seems to be aware of
this weakness, but its recent effort to limit consumption through rationing
faltered in August, when the government decided to allocate additional funds and
backtrack from its earlier decision to slash the amount spent on fuel subsidies.
Any plan to reduce consumption has been postponed till the next financial year,
with the government trying to save face alleging problems in printing ration
cards as the reason for postponement. The government now claims to be working to
improve public transport in order to prepare the ground for future measures.
However, the reason for Iran's vulnerability is not in low production levels,
but in the absurdly high and wasteful consumption, which in turn derives from
very low prices. It remains to be seen whether under duress (such as externally
imposed sanctions), Iranian citizens will accept the need to reduce consumption,
or whether they will 'rise' against the clerical regime, as the Bush
administration hopes, with their characteristic optimism in such matters. If the
former was the case, sanctions might actually do Teheran a favour.
Iran's worst enemy?
President Ahmadinejad's populist politics might in the end become the
Iranian economy's worst enemy. This year his most controversial decisions yet
have been an increase in foodstuff subsidies, the increase in minimum wages and
forcing banks to lower interest rates by two percentage points. Some economists
estimate now that as many as 100,000 jobs were lost after the increase in wages.
The increase of import tariffs by 5.2% has also attracted much criticism among
economists. Ahmadinejad's hostility to private and foreign investment has
already forced the more pragmatic Supreme Leader Khamanei to intervene.
Certainly, the business sector continues to show little love for Ahmadinejad'
policies. After having lost 25% of its value last year, the Teheran stock
exchange index is down 12% so far this year.
Oil and Gas
The oil industry also continues to suffer from Ahmadinejad's economic
nationalism. Since he came to power, the slow trickle of foreign investment in
the oil industry has come to a complete halt, with not a single new contract
signed. Although Ahmadinejad's circle pushes for do-it-yourself policies in
developing its oil fields, that seems in practice to translate as that the
development just doesn't happen. Some observers claim that Iran has not been
able to compensate for the gradual depletion of older fields and that it is
losing as much 40,000 bpd a month.
The only recent development in the oil and gas industry was the agreement with
Turkey in August. While uncertainty continues to surround Iran's plans
concerning gas exports, Teheran has decided that since a pipeline to Turkey is
already in place, it makes sense to use its residual capacity of 5 billion cubic
meters to export gas to Europe.
Iran, Kyrgyzstan vow broader economic cooperation
Visiting Kyrgyz Minister of Commerce and Economy, Akylbek Japarov, conferred
recnelty with Iran's Minister of Industries and Mines, Alireza Tahmasbi, on
expansion of economic cooperation between the two countries, the Tehran Times
According to the Public Relations Department of the Ministry of Industries and
Mines, at the meeting, Tahmasbi referred to President Ahmadinejad's remarks on
expansion of cooperation with Muslim states specially those having cultural and
historical commonalties with the Islamic Republic of Iran and underlined the
need for expansion of ties with Kyrgyzstan.
Given Iran's extensive experiences in various sectors, he voiced Iran's
readiness to set up car assembly lines, construct cement factories, electric
power plants, exploit minerals as well as construct diary firms and small scale
He said that the Iranian technical and engineering firms with valuable
experiences are ready to support the construction and implementation of various
projects as construction of dams, roads and power plants in Kyrgyzstan.
The Kyrgyz minister, for his part, appreciated the Iranian president for
providing the Iranian businessmen with a credit line to help promote their
businesses in Kyrgyzstan and lauded the country's invaluable experiences in
In the past 15 years ago, Kyrgyzstan was experiencing an industrial recession,
he said adding that the new Kyrgyz president has brought new plans to enhance
and promote the country's industrial sector, he said.
In conclusion, he called for active cooperation of Iranian state-run and private
sectors to help reconstruct the country's industrial sectors.
Iran, Azerbaijan begin mutual transfer of electricity
Electricity from Iran started flowing to the Republic of Azerbaijan via the
Astara border on August 20th, in accordance with an agreement entered into by
the two countries, the director of public relations of the Gilan Regional
Electricity Company said, IRNA reported.
Speaking to IRNA, Alireza Mozayyan, said a seven-kilometre, 230-kilowatt
electricity line has been constructed between the two countries to transfer a
maximum 50 megawatts of electricity from Iran to the Republic of Azerbaijan and
"According to an agreement concluded between the two countries, Azerbaijan
will provide the required electricity needs of Astara and Talesh (Iranian
cities) in summer while Iran will supply electricity to Azerbaijani cities in
winter," he said.
The exchange deal between the two countries is believed to cut investment costs.
Gilan Province is capable of generating 1,800 megawatts of electricity.