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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: 100 - (26/03/10)

A siege but not too tight
As gasoline sanctions are beginning to be tightened around Iran, the Iranian government is fastening the pace of its efforts to reduce consumption. Some large traders have already stopped dealing with Iran and other may follow soon. The first measure announced by Teheran sees the reduction of the monthly discounted quota assigned to each driver to 15 gallons, down from the previous 21. The measure is cast as a temporary solution, but it is very likely that it will be renewed beyond the initial 3 months. In reality the Security Council is nowhere near a consensus on new sanctions; the Chinese are opposed and the Russians argue that US demands are too harsh. Apart from targeting gasoline, the new sanctions are also meant to limit Iran’s international trade finance and make it more difficult for it to export its oil. Some signals emerging from China do not bode well for ‘Iran tough’: Beijing has halved its imports of Iranian oil over the last year, presumably viewing reliance on Iran as high risk. In New York the well informed say that China, despite its hostility to sanctions, will not veto the proposal but will abstain, in order not to remain isolated. American diplomats reportedly reassured the Chinese that in the event of an embargo on Iranian oil exports, other Gulf Countries would step in to fulfil China’s energy needs, although the Chinese appear absolutely not keen to be left at the mercy of the Americans and their regional allies for any length of time. Insurers like Lloyds are also now refusing to insure oil cargos from Iran. Iran is increasingly importing its gasoline from China, Malaysia and a few other countries, but its reduced options are driving the price of imports up. All in all, the most likely short-term outcome is a somewhat cut-down plan which tightens the siege around Teheran but not too much. Teheran seems not to exclude a violent confrontation, even if probably it believes it will fall short of all-out war. Reports that the Americans have begun to stockpile bunker-buster bombs in Diego Garcia surely will have attracted the Iranians’ attention; maybe it is just a precautionary measure or an example of psychological pressure, but the Iranians cannot be sure. A new commander has been appointed to the ground forces of the Revolutionary Guards, a veteran with experience of Lebanon and therefore of asymmetric warfare. Now both the general commander and the commander of the ground forces are specialists in asymmetric warfare. Perhaps this too is a measure of psychological warfare more than of anything else; perhaps not.

Time to get creative
Further plans to scrap energy and food subsidies are becoming increasingly controversial and President Ahmadi-Nejad is now proposing to hold a referendum in order to decide over his plan of cuts. The parliament resists the plan and proposes to halve the planned cuts to US$20 billion, fearing among else a catastrophic inflation. Ahmadi-Nejad is adamant that he has the support of the economists and that the plan should go ahead unchanged, not least in order to avoid regional disparities. However the latest inflation figures for February show already inflation rebounding after many months of decline, with an increase of 1.1 percentage points on the previous month.
At the same time Teheran is experimenting with innovative ways of raising cash for investment in the oil and gas sector. The parliament authorised the issue of US$6.78 billion of energy bonds to be then invested in South Pars; the amount exceeds the expectations as Teheran had previously been talking of at least US$1 billion worth of bonds to be issued. Teheran is also courting Islamabad, which has dire energy needs of its own, and talks about the construction of a gas pipeline from Iran into Pakistan and maybe India are well advanced. Washington is displeased by Islamabad’s inclination to sign a deal with the Iranians, but Pakistan has few viable alternatives to resolve its energy shortages.


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