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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: - (26/11/13)

Summary: The negotiations over Iran’s nuclear programme proceed, but substantial differences between the west and the Iranians remain. The optimism that welcomed the November Geneva talks might therefore have been premature. But Teheran seems genuinely keen on a deal, as its sounding out of western oil companies for investment in Iran seems to suggest.

Like a rainbow
The negotiations for an interim agreement on Iran’s nuclear programme look like a rainbow – the closer one seems to get, the farther away it looks. The latest round of talks in Geneva seemed at one point to be close to a deal, where Iran would see some of the sanctions against its economy withdrawn, in exchange for slowing its nuclear enrichment programme and allowing more inspections. But then the Iranian position seemed to be hardening on the third day of the talks.

A negotiating tactic, aimed at extracting as many concessions as possible from the west? An attempt to damp down criticism from the conservatives on the Iranian home front?

Difficult to say at this stage, but the hawks in the American Congress have been emboldened and now want to push through a new wave of additional sanctions. The two remaining contentious points concern

1. the heavy-water reactor at Arak, which the Iranians say they will not load fuel into during the six-month interim period, while western governments want to construction of the site to be suspended;

2. the Iranian demand that the US recognise that in any case Iran will maintain the right to enrich uranium, at the end of negotiation.

The Iranians are under pressure even from the Chinese to not allow this opportunity of resolving the matter go. The talks have also created great expectations inside Iran, and if the Iranian government failed to achieve a breakthrough it could face a major domestic backlash. The Teheran stock exchange rose by 25% in the first 100 days of Rowhani’s presidency. For now the rial is stable against the dollar, even if the government is running a 30% budget deficit.

Thinking beyond
In fact the Iranian government itself seems to be preparing for an end to the sanctions. In recent weeks Teheran has contacted major oil companies about investing again in Iran and some of the officials appointed at the head of Iran’s state oil company are already known to the west as pragmatists. The government is seeking to develop a plan to attract investors, replacing the old and unpopular buyback schemes with new schemes more tailored to what oil majors want. The oil ministry reportedly wants to attract US$100 billion in investment, to invert a trend of declining productivity in the Iranians fields. Currently Iran uses 20% of its natural gas production to boost oil output, a wasteful and backward technology.

In the meanwhile the national gas company has been forced to declare bankruptcy, crushed under a $4 billion debt. The sanctions have blocked LNG exports, forcing Iran to rely exclusively on pipeline exports, which account for just a fraction of natural gas sales. In addition, foreign investors have pulled out of key natural gas projects like South Pars, blocking their development. The government will probably have to intervene and rescue the company, but the most significant thing is perhaps that the news was widely reported and discussed in the media, an indicator of the new climate, that reminds of the early years of Glasnost in Russia.

The government has revealed that Iran has 3.5 million unemployed and that unemployment is expected to rise by another 5 million if the economy is not turned around. Unemployment is particularly high among graduates (40%), while overall youth unemployment is 26%. Considering that for the moment being the economy is still on a diving path, the challenge appears huge. Not surprisingly perhaps Rowhani seems to think that loosening up the political repression might be a little premature. So far Rowhani’s government has only released a dozen political prisoners, out of some 800.

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