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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: 065 - (26/04/07)

Is Ahmadinejad bluffing?
The nuclear diatribe continued in April with the UN Security Council’s demand that Iran halts its nuclear enrichment program by May, unless it wants to incur an extension of the tensions. President Ahmadinejad responded by threatening a further acceleration of the nuclear program, although quite a few experts believe that he is bluffing and that Iran does not really have the capability to accelerate the program. In fact, some argue that Iran is experiencing serious problems in running its centrifuges. The Bush administration in the meanwhile continues to raise the stakes in the confrontation with Iran over its alleged role in destabilising Iran. During April, specific allegations were made that Iran trains Sadrist militiamen to fight against American troops, while it was even claimed that an arms shipment from Iran was seized in Afghanistan on its route to the Taliban insurgents. Worried about sanctions, Teheran is trying to turn to the euro for its oil transactions. They are now putting pressure on the Chinese to pay in euros, while European clients are already largely paying in euros. Just 20% of Iranian foreign reserves are currently in dollars, a figure which will likely not be reduced much further as the country will need dollars for specific purposes in the future.

Just propaganda?
The Iranian government continues to divulge figures aimed at showing that its economy is not at all faltering under the weight of the sanctions. Last non-oil exports are reported to have grown by 47% to US$16.3 billion, although much of this increase was due to the rising prices of petrochemical products. It also claimed that during the last year investment in the oil industry increased to US$14 billion, from US$13 billion in the previous year. The government is also making a big issue of the reduced role of foreign investors to the advantage of Iranian companies, as in the case of the Azadegan oil field, where the 75% share initially assigned to the Japanese state oil company was reduced to 10% in order to make space for Iranian companies. The project was divided in smaller projects in order to allow the comparatively small Iranians to take them over. Certainly, Teheran still hopes to sign a lot of new oil contracts over the next few years. Contracts worth US$38 billion have been signed over the last 18 months and contracts for another US$250 billion are expected to be signed over the next 20 years. The government also claims that unemployment is declining. The latest official estimates put it at 11.1%, down from 12.1% two years ago. 

Concerns nonetheless
In any case, the government itself admits a number of problems. For example it admits that domestic gas consumption is increasing far too fast and that low prices are leading to ‘extravagant’ consumption levels. Households are consuming 54% of Iran’s production, with industries taking another 13%, leaving just 33% for exports. Fuel prices are unlikely to see much greater increases, but rationing seems to be the preferred option of the government. Iranian drivers are being allocated a certain quantity at low prices and will be allowed to buy extras but at much higher prices, according to the most recent plans. The latest figures about consumption show a further, strong increase in the months preceding the imposition of rationing. Finally overdependence on oil revenues is causing a rapid increase in liquidity, whose growth rate was up to 41.2% in 2006-7, from 37.4% in 2005-6, when it had already grown from the 34.3% in 2004-5 fiscal year. Sensing that Ahmadinejad is running into trouble, the reformists are now putting considerable effort in preparing a unified list for the February 2008 parliamentary elections. 

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