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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: 107 - (26/10/10)

Sanctions tug-of-war continues
Teheran and Washington are busy as usual trying to either undermine on the one hand, or tighten the net of sanctions around Iran. The Americans are trying to pressure the Turks into respecting the sanctions regime, but these days Ankara is not very keen to listen to Washington. Turkey voted against the sanctions at the time of their approval by the Security Council and says it does not feel bound by them; indeed Turkish Prime Minister Erdogan went on record saying that he plans to triple trade with Iran in the near future. Turkish banks are becoming hesitant in getting involved in trade with Iran, but the government does not want to get involved and leaves the decision of whether to participate or not to them; several Turkish banks are exposed to US retaliations. Other companies as well are beginning to feel US pressure and are giving up trade with Iran. The Americans believe that the Iranians are trying to circumvent the tightening net by setting up banks abroad under other flags, or joint ventures, in places like Bahrain, Azerbaijan etc. Few observers however believe that Iran can set up more than small scale operations in this way and will not be able to offset losses incurred through the sanctions, or only to a limited extent. Even the UAE, where Iranian business is strong, is now applying the sanctions against Iran, which is looking to Malaysia as a possible alternative financial hub. But Malaysia has already moved to suspend the operations of the Iranian Bank Milli. The US authorities have already fined international banking giants like Barclays, Lloyds and Credit Suisse for continuing to process payments originating in Iran, setting an example for banks worldwide. The Americans have also finally succeeded in getting all the main oil companies to agree stopping trade with Iran; the situation got to the point where Iran Air planes have problems in refuelling whenever they land in Europe. Washington has even sent an envoy to Bejing to protest the fact that some Chinese companies continue to trade with Iran, despite China’s official support for the sanctions.

Diplomatically, however, Teheran’s situation cannot be said to look desperate. In recent weeks Teheran scored some successes, including Ahmadinejad’s successful trip to Lebanon, Washington’s acknowledgement of its potential role in stabilising Afghanistan and Iraqi Prime Minister Maliki’s visit to Iran, which seems to be leading Iraq closer to the formation of a (pro-Iranian) government. Significant have also been the strengthening of ties to Latin American countries such as Venezuela and Brazil, as well as the selection of Iran for the Presidency of OPEC, the first time since 1979.

Ahmadinejad under conservative poressure
Supreme Leader Khamenei’s unrelenting support for Ahmadinejad appears to have weakened his position. He was recently in Qom, seemingly trying to shore up his standing with the clergy, increasingly upset with the President for his efforts to promote Iranian nationalism at the expense of Islam, as a source of legitimisation. Clerics are warning Ahmaninejad about a possible backlash to cut fuel and other subsidies. Perhaps related to this, Ahmadinejad seems to have turned slightly more cautious in recent weeks. The beginning of the cuts to the fuel subsidies has been postponed again by one month and the extent of the cuts will initially be limited, with 60 litres of subsidised fuel per month per family still being available and additional purchases being possible at semi-subsidised prices. The government now talks about a plan to replace the subsidies with benefits worth US$74 a month per family, which is probably not enough to offset the loss deriving from the cuts. The government now claims that fuel refining has reached 17.5 million gallons per year, enough to meet internal consumption after an earlier, modest round of subsidy cuts as implemented.


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