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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: 102 - (27/05/10)

A breakthrough?
Finally the five permanent Security Council members reached in May an agreement on a draft UN resolution to expand sanctions against Iran. These would include an expanded arms embargo, measures against Iran's banking sector, a ban from mining uranium abroad as well as on getting help in developing ballistic missiles. The proposed sanctions will have to be approved by the Security Council to become effective, but is significant that Russia and China seem to be on board. The Russiansís trust of the Iranians seems to be gone as the latter have lied to them over their nuclear programme and have moved to open paths to export Turkmen gas through its territory, breaking Russian monopoly over it. The Chinese also are not impressed with Iranian brinkmanship, as they would like stability in the region in order to protect their growing economic interests. Moreover, the Iranians have been slow in signing oil deals with the Chinese, despite great expectations, raising the suspicion that Teheran might just want to lure Bejing into supporting them diplomatically.

Or a little tightening?
The sanctions are actually quite moderate and they do not target crucial Iranian vulnerabilities such as gasoline imports, an option which Washington has long ventilated. A number of existing deals or deals in the making will not be affected: Pakistan continues to push for a gas pipeline from Iran and is now even inviting India to join the project. Opinion is divided over how impactful the new sanctions might be. Banks are being targeted because previous sanctions affecting the sector had a degree of effectiveness and a further tightening would not affect the interests of either Russia or China. Iranian traders acknowledge that banking sanctions have negatively affected their business, but also believe that the damage is done and that a further tightening will have little additional impact. Teheran in the meanwhile is trying to pre-empt the sanctions by signing a new nuclear deal with Turkey and Brazil, where Iran would hand over 50% of its enriched uranium stockpile. The deal is similar to a previous one approved by Washington, but comes several months later and with a larger Iranian stockpile. In this case, Teheran would hold on to a substantial amount of uranium, while continuing to enrich it. While the previous deal was meant to delay Iranís march towards an atomic bomb by a year or more, the new deal would only delay progress in that direction by a few months. Moreover, Iran is threatening to withdraw from the deal if sanctions will be approved. Unsurprisingly many see this move as little more than another Iranian manipulation.

Deal done on subsidies
The downward trend of the Iranian inflation rate seems to have stopped in April, with the monthly rate standing at 10.3% compared to 10.4% in March. The expectation is that from September inflation will start growing again, because Ahmadinejad and the parliament seem to have reached an agreement on the size of the first stage of subsidy cuts. Supreme Leader Khamenei intervened to support the parliamentís view that cuts should be moderate initially, at US$20 billion in the first year rather than US$40 billion as advocated by Ahmadinejad. Some Iranian analysts believe that inflation might jump to 50% even with the more moderate US$20 billion cuts. The Supreme Council of Labour has agreed to increase the minimum wage by 14% in order to soften the impact of the cuts, but it might turn out not to be enough. Certainly the combined impact of increased fuel costs and increased wages might push several businesses under.

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