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IRAN


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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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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.

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