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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: 097 - (21/12/09)

Who will sell fuel?
In December the Americans went a step further in tightening the sanctions net around Iran, in response to the lack of any progress on the issue of the countryís nuclear programme. The Iran Refined Petroleum Sanctions Act expands existing US restrictions to companies that sell and insure refined oil shipments to Iran. Iran is in principle vulnerable to such sanctions, as it still imports 40% of its refined petroleum and 11% of its diesel. Most of Iranís imports have been coming from European firms, including Vitol, Total, Trafigura and BP. However, Iran has increasingly been switching to China for its refined petroleum import; given the burgeoning trade relations between the two countries, it seems unlikely that China will agree to abide by any sanctions. The Iranians claim not to be worried by the development and indeed have been showing their defiance by announcing the forthcoming deployment of a new model of more efficient centrifuges for the enrichment of uranium.

Too late to give up populism?
The internal political situation has not fully stabilised yet. The opposition remains defiant and continues to demonstrate occasionally. The government has been issuing warnings that its patience is running out. As the demonstrators become more radical and shift from demanding a recount of the votes towards challenging the legitimacy of the Islamic Republic, the likelihood of an escalation of the repression also increases. The fact that state censorship is not extending to conservative websites too is significant as it highlights the depth of the divisions and the growing isolation of Ahmadinejad. He is now facing opposition throughout the spectrum of his agenda. Sorting out the economic situation will not be easy if he continues to face high levels of resistance in the parliament. He would like to entirely phase out subsidies to food and fuel in five years. His plan to cut subsidies highlights how his economic plans have turned around. He talks of the need to reduce the size of government and of reducing waste.
The inflation rate continues to fall and in November it shrank to 15% from 16.7% for the previous 12 months. However, during the last month consumer prices rose 0.5% on the previous month, which might indicate that inflation is about to hit a plateau.

Industrial asphyxia
Iranís industry is now running well below its capacity at around 40%, according to some sources. Many businesses claim to be on the verge of bankruptcy as high interest rates are strangling them. Up to 40% of all businesses in the country are reported to be in trouble to some extent. The private sector in turn accounts for about 20% of Iranís economy. Businessmen complain that the Presidentís policy of conceding loans at low interest rates to small businesses and short-term projects has diverted loans away from more solid businesses and pushed up interest rates towards 20-25%. Ahmadinejad is trying to stimulate internal production in a number of ways. He recently appointed former Tehran prosecutor general Saeed Mortazavi to lead the effort against the smuggling of goods into the country, highlighting the importance of the problem. In the meanwhile the Revolutionary Guards have been expanding their control over the economy, replacing reluctant foreign companies in some oil projects, like South Pars phases 15 and 16. As foreign investments become less and less likely, the role of the Guards may expand further in the oil sector. In December Iran stopped its talks with Total over South Pars, phase 11, for example. The Guards are also expanding in other sectors of the economy: in September they bought a majority share in the state telecommunications company. 

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