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Iran's Raisi Talks About Upcoming Hard Economic Decisions

Iran International Newsroom
May 22, 2022, 11:29 GMT+1Updated: 17:36 GMT+1
President Ebrahim Raisi speaking about the economy on May 21, 2022
President Ebrahim Raisi speaking about the economy on May 21, 2022

President Ebrahim Raisi spoke at length about the economy first time after protests rocked parts of the country in response to government raising food prices.

The official news agency IRNA reported on Saturday, May 21, that “Hundreds of experts and businessmen took part in the gathering” the agency called “the first international privatization event in Iran.”

Speaking at the event, Raisi did not mention last week’s protests or the security forces violent treatment of protesters particularly in Iran’s western provinces. However, as economic journalist Maryam Shokrani has observed, he emphasized “hard decisions to be made which some people may not agree with.”

Raisi also focused on the controversial issue of privatization in Iran and opined that “Privatization does not mean abandoning industrial units. It is the beginning of the government’s supervision on privatized companies.”

The Islamic Republic’s government, religious institutions and the Revolutionary Guard (IRGC) directly or indirectly own 80 percent of the economy, amid nepotism and corruption which has led to paralyzing mismanagement.

For the past 15 years successive governments have talked about privatization, but with a fearsome security apparatus and with power concentrated in the hands of insiders, only they have been able to benefit from the sell-off of government assets.

During the past years, hundreds of workers of privatized companies, particularly in Khuzestan and in the Central Province, protested to the privatization process that has handed over many government companies to well-connected but often disinterested and non-expert individuals who only used the assets to take hefty loans from government banks with no intention to pay back.

Many of these companies including the Sugar Mill at Haft Tappeh and the Heavy Equipment Factory in Arak which used to be profitable in the past, are currently on the verge of bankruptcy according to their workers.

Post-revolution privatization during the past four decades has been criticized by the people, workers and businesses alike. Many believe that profitable businesses have been handed over to the IRGC which effectively owns the lion’s share of productive companies in Iran.

While Raisi said on Saturday that privatization empowers the private sector, many have often charged that the IRGC’s acquisition of companies has left little room for the private sector in Iran.

However, Raisi called for looking back and reviewing the privatization process that has taken place. He said, “fair and critical review of the past is essential and inevitable,” so that lessons could be learned, and corruption could be prevented.

Raisi spoke about motivating “non-government businesses” while the government’s intervention in the market has led to an increase in the price of essential commodities and inflation in Iran that led to protests, during which people called on Raisi and Supreme Leader Ali Khamenei to step down and chanted slogan in favor of a secular government.

In an interview published by Didban Iran website, Iranian sociologist Mohammad Reza Mahboobfar warned that the current economic situation, particularly the policy and eliminating food and fuel subsidies has already led to social problems such as an increase in crime including stealing food.

He said the protests last week raised the alarm for the statesmen that Iranian society is being divided into a majority of extremely poor people and a minority of super-rich individuals. Mahboobfar warned that what has been characterized by government officials as an “economic surgery” should be stopped at once as the widening gap between socio-economic classes has become cause for concern.

Mahboobfar warned: “Making the masses apprehensive is dangerous.”

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Iran, Oman Agree To Revive Gas Supply Deal Stalled For Two Decades

May 22, 2022, 09:55 GMT+1

Iran and Oman have agreed to revive a gas supply deal that dates back to two decades ago while Oil Minister Javad Owji is on a visit to Muscat.

According to a report by Iran’s official news agency IRNA on Saturday, Owji and his Omani counterpart Mohammed Al Rumhi agreed in a meeting to start laying the gas pipeline that will enable Iran to pump natural gas to the Arab Sultanate.

Describing the project as one of the biggest regional energy projects, the report said the initial agreement was signed in 2004 between their oil ministers but has been stalled since then.

According to the contract, Iran committed to start supplying 30 million cubic meters (mcm) per day of natural gas to Oman by 2008 and then increase the volume to 70 mcm per day by 2012.

The two countries also reached another agreement in 2013 according to which Iran was expected to pump 28 mcm a day of gas to Oman for 15 years through a pipeline laid on the bed of the Persian Gulf. The project, which had been estimated to earn Iran more than $1 billion annually, never became operational.

The report said that Owji and Rumhi also reached agreements on the joint development project for the shared Hengam oil and gas field, located within their maritime boundaries in the Strait of Hormuz.

President Ebrahim Raeisi is scheduled to travel to Oman on Monday for an official visit, while Muscat has traditionally played a mediating role between Tehran and Washington.

Russian Companies Shun Iran, Prefer UAE, Tehran Official Says

May 21, 2022, 16:50 GMT+1
•
Iran International Newsroom

A member of Russia-Iran chamber of commerce in Tehran has said that Russian investors prefer the United Arab Emirates and other countries to Iran for investments.

Jalil Jalaifar, who is a member of the board at Russia-Iran chamber of commerce told ILNA in Tehran that Iran has not been able “to attract even one investor.” He explained that Russian investors study the internal conditions in Iran and conclude that it is not a hospitable environment. He added that “investors realize…they will face a wall” in Iran.

Instead, Jalalifar argued that 50-60 Russian companies register in the UAE daily, while in Iran bureaucratic impediments dissuade foreigners from opening any office or subsidiary. A large bureaucracy is in charge of approving names that owners select for their companies, and this in itself is enough to drive away any foreign investor.

Iranian media, former politicians and pundits in recent days have been highlighting the fact that Russia is taking oil and steel export market share from Iran, while the hardliner government in Tehran has been advertising the benefits of expanded ties with Moscow and Beijing.

Ironically, China is said to have shifted its oil imports from Iran to purchases of heavily discounted Russian crude. This is an alarming turn of events for Tehran, which amid US oil export sanctions heavily depends on China as a buyer.

Reuters reported on Friday that Iran's crude exports to China have fallen sharply since the start of the Ukraine war as Beijing favored heavily discounted Russian oil, leaving almost 40 million barrels of Iranian oil stored on tankers at sea in Asia and seeking buyers.

Some tankers have been anchored since February but the number storing Iranian oil climbed swiftly since April, trading and shipping sources told Reuters, as more Russian oil headed east.

Jalalifar also said that since the invasion of Ukraine trade between Russia and Iran has probably doubled, but he emphasized that the volume is negligible compared to Russia’s overall trade.

The latest figures released a few months ago showed 3-4 billion dollars in annual bilateral trade between the two counties with an upward trajectory.

Jalalifar explained that Iranian ports and bureaucracy are not ready to assist an expansion in trade with Russia. “Red-tape takes up to a week to clear” at the northern Caspian Sea ports, he argued.

In land transport he argued that the border crossing point to the Republic of Azerbaijan at Astara 400 trucks can clear custom, but daily interruption in Internet access shuts down Iranian customs and exports must wait for days.

He explained that companies expediting exports are few and weak and the government ha to allow the private sector to compete in this sector.

The chamber of commerce member said that the Iranian government demands a host of documents for transiting goods from one free economic zone to another in the country. This red tape is completely unnecessary since the goods are not destined for Iran’s domestic market. It hinders the country’s proclaimed goal of becoming a transit hub in the region, especially for Russia amid the war in Ukraine.

“We need a revolutionary action and judicial authorities have to intervene” to stop red tape that stops Iran’s economic development, Jalalifar argued.

Iranian Cleric Tells Government: ‘Wake Up! Revolution Is Over!’

May 20, 2022, 11:28 GMT+1
•
Iran International Newsroom

A former reformist lawmaker says criticizing Iran’s current situation and telling the truth about the government might land him in jail as a man in his 70s.

Lashing out at the new generation of ultra conservatives who currently dominate the government and the parliament in Iran, Nasser Ghavami said in an interview with Didban Iran website: “They call themselves revolutionaries. But who are they revolting against? The People?”

Ghavami, a former member of the Iranian parliament’s legal committee suggested that those currently in power in Iran have already started a revolution against the poor people of Iran. Addressing the “revolutionaries,” Ghavami said: “Wake up! The revolution is over!”

After years of a declining economy, a recent government decision to stop subsidizing food imports has led to a sudden rise in prices, impoverishing millions of people.

As inflation, estimated at more than 40 percent last year kept climbing in 2022, many current and former politicians began criticizing the government’s performance.

The cleric-politician told the website: “If I begin to tell you about the root-cause of Iran’s current chronic problems, neither I am brave enough to tell you all there is, nor you are allowed to publish it. Talking about the causes of country’s economic problems is a security issue and the government’s treatment of its critics is violent.”

The funeral of a protester killed earlier this week. May 18, 2022
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The funeral of a protester killed earlier this week. May 18, 2022

Ghavami added, it is natural that some leaders even in the United States fail to meet all the promises they make during their election campaigns, but if a reporter writes about President Ebrahim Raisi’s broken promises, he or she might find himself in jail like many others. He added that “We cannot tell the truth about the government’s performance as long as people get arrested without any prior notice and no one knows where they are kept.”

Ghavami was probably referring to the detention of Kayvan Samimi, the editor of Iran Farda magazine who was arrested on Wednesday, May 18. Samimi was released from jail recently, but his new detention came after a new interview.

Ghavami explained: “Activists and reporters know about the problems and their causes, but they often cannot say anything because they fear detention and torture.”

Ghavami claimed that Raisi wishes to solve the problems but individuals such as his Vice President Mohammad Mokhber obstruct any solution. “Why they do not say what are they doing with the oil revenues while they say they are selling oil at $100 per barrel?” he asked.

Speaking about recent protests, Ghavami tried not to appear as a rabble-rouser, saying that “not all problems can be solved by taking to the streets.”

He also suggested, like many other critics, that “Iran should maintain acceptable relations with other countries if problems are to be solved.”

Other Iranian politicians, including former Vice President Mostafa Hashemitaba have also been criticizing the government’s economic policies as protests have taken place in many provinces. Hashemitaba said in an interview published on Thursday that a major economic plan such as doing away with food subsidies “should not have been implemented before seeking the people’s views.”

Meanwhile, he criticized the government for cutting off Internet access as a way of controlling the protests to rising prices. He also lashed out at the government for preventing freedom of speech.

Hashemitaba went on to say that instead of seeking public approval for its policies, “the Raisi administration’s actions and words were uncoordinated and wrong news dissemination at times leads to chaos and unrest.”

Iran’s Detention Of Foreigners Frightens Investors, Says Former Diplomat

May 19, 2022, 18:00 GMT+1
•
Iran International Newsroom

Hossein Mousavian, a former Iranian ambassador and now a research fellow at Princeton University, says foreign investors find Iran insecure country for capital.

In an interview with the reformist Ensaf News website in Tehran Mousavian said that politics, ideological biases, and obstacles created by certain interest groups in Iran not only hinder foreign investment, but also dissuade Iranian expats from investing in the country.

The former Iranian official also insisted that Iran can never attract foreign capital as long as it refuses to solve its problems with the United States. While lack of coordination among various institutions inside Iran has paralyzed the system, Tehran’s enmity with Washington has led to devastating US sanctions and all this has made Iran an insecure and high-risk country for investment.

Mousavian recalled that once he invited a prominent German industrialist to Iran, but officials refused to meet him. Speaking of another problem that hinders foreign investment, Mousavian said that despite rich natural and human resources in Iran, the misery index, which was around 14 percent before the Islamic Revolution, has reached 50 percent. This is an index directly linked to corruption, inflation, unemployment, crime and insecurity, he explained.

Mousavian’s remarks are a noteworthy admission by a former Iranian diplomat and operative that the Islamic Republic has failed in many respects.

Mousavian, currently a research fellow at Princeton, has been accused of lobbying for the Islamic Republic in the United States. He has also been implicated in court cases in Europe following the assassination of Kurdish leaders by Iranian and Lebanese terrorists in Germany in 1992. However, he has defended himself in several interviews since then. His explanations have not been convincing for Iranian activists and human rights defenders abroad.

Mousavian recalled, “Once when I was Iran’s ambassador in Germany, I found out that Hossein Sabet, an Iranian in Germany had made a big investment in Spain. I contacted him and urged him to invest in Iran. But as soon as he arrived in Iran security forces confiscated his passport. I chased his case for several days and officials found out that it was another Mr. Sabet with whom they had a problem. Nonetheless, terrified and worried, Sabet left Iran and did not look back again.”

Mousavian said, “The detention of foreigners and dual nationals in Iran is a familiar issue in international media. I invited many Iranian expats to invest in Iran when I was Iran’s ambassador to Germany, but most of them refused to have anything to do with Iran. Sabert was only one of therm.”

Mousavian said that some of Iran’s officials basically do not believe in the importance of foreign investment, others were not able to remove the obstacles.

According to Mousavian, there are around 6 million Iranians living abroad with a total wealth of around $3 trillion but the Iranian government’s policies and ideological biases deprive the country of this huge financial resource. He added that during the past 40 years Iran has been suffering from the adverse effects of brain drain and capital flight.

Meanwhile, Mousavian added that Iran’s poor and problematic foreign relations have pushed capital out of Iran to neighboring countries.

Mousavian, 65, was Iran’s ambassador to Germany (1990-1997). His latest position in Iran was the deputy director of the Presidential Office’s Strategic Research Center (2005-2007). He was briefly jailed in 2007 on charges of espionage but was soon cleared of the charges.

Russian Price Discounts Stifle Iranian Steel And Other Exports

May 19, 2022, 14:50 GMT+1
•
Mardo Soghom

Iranian steel industry officials say that several countries have shifted their orders to Russia, as Moscow offers lower prices, endangering Iran’s revenues.

Speaking with Sharq newspaper in Tehran, Reza Shahrestani, a member of Iran’s steel producers’ associationsaid that Iran’s steel exports have stopped in the past two months as China, Afghanistan, Thailand and South Korea, Iran’s biggest customers have shifted their orders to Russia. He emphasized that this development has deprived Iran of more than $5 billion in steel exports so far.

Shahrestani warned the same scenario is being repeated in case of other metals and could also endanger petrochemical exports, which provide larger export revenues.

Iranian media and analysts have voiced concern in recent weeks that following international sanctions against Moscow, Russian oil has become cheaper and specially China will be enticed to buy crude from Russia instead of Iran.

Despite United States sanctions on oil exports, Tehran has been able to boost crude shipments since the Biden Administration began nuclear talks with Tehran and less enforcement of Trump-era restrictions against third parties doing business with Iran.

Steel destined for customers being loaded in Iran. FILE
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Steel destined for customers being loaded in Iran

Iranian officials have been taking credit for the increase in crude deliveries and revenues, although it is not clear how much foreign currency has found its way into Tehran’s coffers. Some say China is paying Iran with deliveries of merchandise and not cash, which would not be easy with US banking sanctions in place against Iran.

In the four years since former president Donald Trump withdrew from the 2015 nuclear agreement and imposed oil export sanctions, Iran has tried to compensate for loss of oil revenue by boosting non-crude exports of petrochemicals and steel. In the last 12 months, Iran’s non-oil exports have reached close to $50 billion.

Shahrestani told Sharq that Russia is offering discounts of 15-20 percent on its steel and already the impact on Iran’s traditional markets is clear. Russia is reportedly also offering a $20 per barrel discount on its crude, which on world markets has climbed above $110 a barrel.

Iran’s steel industry also faces internal hurdles according to Reza Mohtashamipur, an official in the ministry of industry and mines, who told state television last month that a 17-22 percent tax on steel exports hurts the industry. He argued that the tax makes Iranian steel less competitive on international markets. While Iran had offered 15 percent cheaper steel to foreign buyers, Russia is now offering more discounts.

Another impediment for steel producers, according to Shahrestani is lack of electricity in peak seasons. With the approach of hot summer months, electricity is usually rationed, and steel mills receive less energy, which impedes production.

Reduction in export revenues come at a sensitive time for Iran as it has stopped food import subsidies to save foreign currency, triggering a sudden jump in prices. Many analysts and former politicians have been warning of mass protests as millions of people face hunger. Already sporadic anti-government protests have been taking place in smaller cities and towns, but large cities have not erupted.