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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: 106 - (26/09/10)

Sanctions: a delusion?
Although western diplomats have been claiming recently that sanctions against Iran have been working better than expected, few observers agree. The damage to the oil and gas industry is obvious, but will start hurting only in the long term. Sanctions are estimated to have increased the cost of trade to Iranian business by about 20%, which hurts but only up to a certain point. Moreover, the Iranians might be adapting to the sanction regime, to an extent at least. In September the Iranian government announced that it has stopped importing gasoline as the combination of reduced subsidies and increased internal production is now able to meet demand. According to official sources, production of gasoline is up 17.5 million gallons. The private sector, which accounts for a minority of the Iranian economy, is under particularly heavy pressure, because of the unfriendly attitude of President Ahmadinejad and his supporters, which see private businesses mainly as a source of revenue or of opportunities to extend their own economic activities. There are stories circulating of the Islamic Foundations forcing owners of successful businesses to sell to them. Then cheap Chinese imports are also hurting the small businesses, but Ahmadinejad might not be too displeased by this.

Factional clash shifts rightwards
The reformist movement seems definitely defunct at this point. There is still widespread discontent among the educated class, but not enough to ignite a revolution. A safety valve is the emigration of the educated, as about 150,000 Iranians leave the country every year, but this has obvious economic costs: it is estimated that 25% of Iranians holding a degree or above live abroad. Instead, the clash among conservative factions is intensifying. The clerical conservatives of the Tavakolli faction have come out in the open, accusing Ahmadinejad of anti-clericalism. Even Ayatollah Mohammad Taghi Mesbah-Yazdi , considered to be Ahmadinejadís clerical mentor, has recently distanced himself from the president after one of the latterís most controversial advisers made unacceptable comments on religious matters. Two other conservative factions, the principlists (strong in the parliament) and the pragmatists have also been intensifying their criticism of Ahmadinejad. Supreme Leader Khamenei is the one who holds the cards in this conflict: he still supports Ahmadinejad, but the existence of rival conservative factions also helps him to keep the President in check. Now many conservatives seemingly fear that Ahmadinejad might at some point become able to turn the Supreme Leader into his own puppet- then to assume total control of the Islamic Republic, although few commentators believe that this is really possible. Ahmadinejad has signalled however that he is going to court Iranian youth, which has little sympathy for the fundamentalist views of the clerics - and try to create a new social base for himself on the basis of an ideological mix where Iranian nationalism predominates. That is a possible formula to stoke up nationalism, particularly where youth believes that the world is against them, as it largely is.

Economic reforms: do they work?
For the moment being Khamenei appears to be still supportive of Ahmadinejadís range of policies. In September he finally approved the Presidentís ambitious plan to cut subsidies dramatically, despite objections from parliament which wanted to reduce the magnitude of the cuts. He clearly seems to think that Ahmadinejad is achieving something on this front. In August official statistics showed inflation falling further to 8.8%, although as always this figure is contested and some analysts claim that it might be as high as 20% and growing. The dynamic Ahmadinejad is also working at expanding gas export opportunities through Turkmenistan and Iraq. Iran finally has been receiving help from once unexpected quarters: Turkey is now accused of having allowed Iranian banks suspected of being involved in procurement for the Iranian nuclear programme to do business within the Turkish borders; allegedly the Turkish government resisted pressure to tighten controls over Iranian activities. However in the wake of the Turkish flotilla incident one has to expect a flow of Israeli sympathiser-inspired US propaganda, demonising Turkey.

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