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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: 108 - (22/11/10)

Once were friends
Teheran is finally coming under serious pressure from former ally Moscow on the issue of its nuclear programme. The November meeting between Medvedev and Ahmadinejad was marked by a cold display of unfriendliness on the Russian side. The Russians are clearly trying to position themselves as mediators between Teheran and Washington, but moving close to Washington all the same. The Iranians announced almost coinciding with the meeting, that their armed forces had developed an update of an older Russian anti-aircraft missile, which would allow them to offset the Russian decision not to deliver the modern S-300 missiles. American intelligence sources believe that a rift may be emerging between Supreme Leader Khamenei and Ahmadinejad over the actual impact of the sanctions on Iranís economy. The matter is still open to debate but the implementation of the sanctions is tighter and tighter. In November BP had to shut down one of its North Sea gas fields because it is a joint venture with Iranian oil and as such comes under the sanctions. The US government has also slapped sanctions on another 37 Iranian firms, mostly involved in shipping activities.

A fuel miracle?
Teheran claims that its countermeasures are reducing the vulnerability of Iran to the sanctions. The reduction of the subsidies is impacting on the consumption of fuel: after the price of gasoline was increased by 25% in November, consumption fell by 4.5%. At the same time the Iranian authorities have put together a massive emergency effort to increase the production of fuel. The plan involved switching production of petrochemical plant to refining fuel, a process which has so far allowed Teheran to increase fuel production by 16% to 26 million gallons and is planned to allow a further increase of 2.6 million gallons by early next year. However, it costs up to 15 times more to produce fuel this way and while it might make sense in the abstract to face sanctions, it can only be a temporary solution. The reduction in the subsidies is a long-term positive development for Iran, but in the short term is pushing inflation up again. In October the annual inflation rate grew to 9.2%, from 8.9% a month earlier.

Rising dragon or decaying autocracy?
It is difficult to evaluate Iranian claims that a number of relatively high technology industries are seeing their production increasing fast. Official data show that car production this year is approaching 1.6 million vehicles, up 18% on the previous year. This is a relatively high production level, but there are doubts about the quality of Iranian cars and exporting them is not easy. Is this the kind of economic achievement which socialist countries used to be proud of, or something more sustainable? Teheran also claims that with foreign technology it has been able to open recently 10 new gas wells in the gas fields shared with Qatar. More than that, it even claims that it is now in a position to export energy and resource development technology, with over 50 projects, worth about US$2.2 billion in different countries (mostly Iraq, Syria, and Tajikistan).

Whatever the truth, President Ahmadinejadís management of the Iranian economy is increasingly under fire. In November the Iranian parliament decided to remove the President from the post of chairman of the General Assembly of Iran's Central Bank, as well as to divest him of his power to appoint the Central Bank's governor and deputy governor. As a result, Iranís monetary policy becomes independent of the government's financial policies. This is a major defeat for Ahmadinejad in his struggle over economic management with the parliament. Just recently Ahmadinejad had called on the governor of the Central Bank to adjust the foreign currency rate.

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