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Iran's economic strengths come back into focus

AMEinfofn
Monday, November 03 - 2003 at 19:01

Gill James and Daniel Hanna

Iran's agreement with the UN Nuclear Watchdog, the IAEA, was an important positive step. It removed a potential obstacle to foreign investment and should also allow attention to shift from politics to economics, and Iran's impressive recent growth performance. Daniel Hanna and Gill James examine an economy that is on track to grow by 6% in 2003.

Iran is expected this week to confirm when it will sign the Additional Protocol of the Nuclear Non Proliferation Treaty. This marks a remarkable turnaround from a month ago where it seemed that Iran could ignore an October 31st deadline imposed by the International Atomic Energy Agency (IAEA) and be subject to UN economic and political sanctions. Iran's disclosure of documents last week detailing its nuclear programme has lifted a major political risk that had been overhanging the country.

Uncertainties remain. Iran's declaration needs to be verified by the IAEA as being comprehensive and comments over the weekend highlight that some senior Iranian officials remain uncomfortable with some of the IAEA's demands. Nonetheless the progress has been positive and the agreement with the IAEA is an important step forward. It also potentially removes a major obstacle to foreign investment. Several large deals, particularly in the oil and gas sector, had been postponed and these should now be revived. Indeed a positive response from the IAEA at its next board meeting on November 20th would allow attention to shift to Iran's economic position, rather than its political one, and the strong performance of the economy in 2003.

The non-oil sector is booming and the dominant oil sector (it accounts for close to 50% of government revenues and 80% of export earnings) is benefiting from the twin effects of increased output and high international crude oil prices. We now expect real GDP growth to reach around 6% in the current Iranian year ending March 2004. Although below the 6.8% growth reported by Bank Markazi for the year ended March 2003, this is well above recent trend growth.

Non-oil sector activity is once again driving the economy. Iran's non-oil sector has benefited tremendously from the gradual easing in import restrictions (imposed to protect foreign exchange reserves and allow Iran to meet external debt obligations in the 1990s) that has accompanied the steady build up in foreign exchange reserves since 2000. Combined with exceptionally low interest rates and increased liquidity, industrial and manufacturing activity has soared. Services are also booming. The Tehran stock exchange is on a roll. Share prices have rocketed and market capitalisation has gone through the roof. The outlook for non-oil sector activity remains positive with non-oil GDP expected to build on last year's strong performance (7.5% in the year ended March 2003). There are suggestions that some import restrictions may be re-imposed if oil revenues slump, but if so they will be limited.

Currently the near term outlook for oil is reasonably encouraging. Supply disruptions and low inventory levels suggest prices will remain firm through the northern-hemisphere winter months. The big test is likely to be Q2 2004, when seasonally oil demand traditionally softens. Oil market fundamentals imply that OPEC members, including Iran, will need to cut production to defend the cartel's target price band. Iranian crude output has been running at an average 3.7mn barrels a day (mbd) so far this year, 7.5% up on average output in 2002.

Annual growth has averaged 6% since 1999 but further economic reforms are needed if Iran's economy is to reach its full potential. Efforts to diversify the economy away from oil and gas need to be accelerated, trade liberalisation enhanced and the role of the state in the economy scaled back. The IAEA's approval on November 20th would lift a major geopolitical risk surrounding Iran and should help support the reform process.

Gill James is Standard Chartered's Chief Economist for the Middle East and South Asia. Daniel Hanna is the Regional Economist for the Middle East.

"Flag burning" Marks Iran-US Hostage Anniversary

November 04, 2003
AFP
IranMania

TEHRAN -- Some 10,000 Iranian hardliners gathered outside the former US embassy here Tuesday for the 24th anniversary of the storming of the compound, with the annual letting off of steam featuring the habitual chanting of "Death to America".

After being driven by specially-arranged buses to the city centre compound -- now a Revolutionary Guards base -- the crowd waved anti-US banners and chanted "Death to America", "Death to Britain" and "Death to the Zionists".

Other slogans included "Martyrdom is our dream, this is the response to our enemies". US and Israeli flags and effigies of Uncle Sam were also set ablaze in the festivities.

Flags were also laid out on the road so drivers could enjoy taking a spin over the stars and stripes.

On November 4, 1979, in the wake of Iran's Islamic revolutions, a group of Islamist students stormed the US embassy in Tehran and held its staff hostage there for 444 days. The crisis led to the suspension of diplomatic ties between Washington and Tehran.

http://www.iranmania.com/News/ArticleView/Default.asp?NewsCode=19360&NewsKind=Current%20Affairs

UN Rights "Rapporteur" in Iran For Key Probe

November 04, 2003
IranMania
AFP

TEHRAN -- A top United Nations human rights official began a week-long visit to Iran Tuesday to conduct a key probe focusing on press freedoms and freedom of expression, UN officials here said.

During his visit, UN Special Rapporteur on Freedom of Opinion and Expression Ambeyi Ligabo is lined up for talks with senior Iranian government officials and magistrates as well as members of the media and academics.

In a statement, the UN said he would be "gathering relevant information on, among other issues, discrimination and threats or use of violence and harassment directed at persons, including professionals in the field of information, seeking to exercise or to promote the exercise of the right to freedom of opinion and expression."

Ligabo had initially been due to visit the country in July, but Tehran postponed the trip in June at the height of anti-regime protests accompanied by arrests of journalists, student leaders and dissidents.

The intervening period has seen the spotlight focus on more on Iran's human rights record, following the death in custody of Canadian-Iranian photographer Zahra Kazemi and the Nobel Peace Prize win of women's rights activist and lawyer Shirin Ebadi.

During his visit, UN sources said Ligabo was expected to meet with Ebadi -- a woman loathed by Iranian hardliners for her defence of dissidents.

The French-based press rights watchdog Reporters Without Bordersurged Iranian authorities to use the visit to unconditionally free 11 jailed journalists and lift bans on a number of newspapers.

It also said the rapporteur should be permitted to meet the detained writers, especially those being held in solitary confinement

More than 100 Iranian newspapers have been shut down since 2000, amid a crackdown on the reformist press carried out by the hardline-controlled judiciary.

RSF has branded Iran "the biggest prison for journalists in the Middle East".

http://www.iranmania.com/News/ArticleView/Default.asp?NewsCode=19356&NewsKind=CurrentAffairs

Sharon Leaving Moscow with Russia's Sympathy

November 04, 2003
The Associated Press
The International Herald Tribune

MOSCOW -- Israeli Prime Minister Ariel Sharon held a second day of meetings in Moscow Tuesday after raising concerns about Iran’s nuclear program and a Russian-backed U.N. resolution on a Mideast peace plan.

In a Kremlin meeting on Monday with President Vladimir Putin, Sharon failed to win any guarantees that Russia would meet his requests to drop a U.N. resolution on the ‘‘road map’’ plan or act against what Israelis say is a covert Iranian nuclear arms program.

Nor did he get any firm pledge from Putin that Russia would pressure Syria to rein in the radical Islamic Hezbollah group in Lebanon, a senior Israeli official said.

The official added that Hezbollah currently has 11,000 Syrian and Iranian-supplied missiles deployed in southern Lebanon with ranges of up to about 50 miles and the ability to hit many northern Israeli cities and towns.

On Tuesday morning, Sharon met Russian Foreign Minister Igor Ivanov. He was due to meet Prime Minister Mikhail Kasyanov, then fly home Tuesday evening.

Israel sees the United Nations as a hostile body, skewed in favor of the Palestinians, and objects to Russia’s move to have the Security Council formally endorse the ‘‘road map’’ Mideast peace plan, which lays out steps for the end of the Israeli-Palestinian conflict and the creation of a Palestinian state.

The Israeli official said Sharon told Putin the road map was aimed at forging a bilateral agreement between Israel and the Palestinians and could not work if imposed by outsiders.

‘‘The agreement we accepted was between two sides and needs to be resolved between two sides, not by coercion from the Security Council,’’ the official said, speaking on condition of anonymity.

Israel only reluctantly accepted the road map, attaching a list of reservations making its implementation dependent on the Palestinians’ disarming and disbanding militant groups and stipulating that any monitoring be under U.S. control.

‘‘Russia’s position in this (U.N.) forum does not help strengthen our relations,’’ the official quoted Sharon as telling Putin.

A major part of the one-on-one portion of Monday’s summit was devoted to Israel’s fears that Iran is covertly trying to develop nuclear weapons, the official said.

Sharon told Putin that a nuclear-armed Iran would pose a threat not only to Israel but to world peace. The official said Putin and Sharon agreed to keep up consultations on the issue.

Asked if Sharon carried any American message on the perceived Iranian threat, the official said only that Jerusalem and Washington were in very close contact on developments in Iran.

Russia’s relations with Israel have seen a dramatic improvement since the Soviet collapse, and Moscow has played a role in peace efforts as part of the international quartet also including the United States, the United Nations and the European Union.

http://www.iht.com/articles/116255.html

Set My People Free

November 04, 2003
The Wall Street Journal
Reza Pahlavi

The U.S. blessing for the joint trip by the foreign ministers of Britain, France and Germany to Tehran demonstrates a spirit of unity absent in their recent past. It is understandable that the specter of the foremost state sponsor of terrorism acquiring nuclear weapons should unite the EU and the U.S. in great fear.

But which is the greater component of that fear: Is it the nuclear state or the terrorist regime? In Iran's immediate neighborhood, in one of the least technologically advanced regimes, the Taliban's allies demonstrated that all they need is box cutters to use the free world's own resources against it. Yet nuclear-armed Pakistan is frequently praised as an ally in the war against terror. So it is the character of the regime, rather than the technology it possesses, that constitutes the greater part of the threat.

Then why doesn't the international community come together on the greater part of its fear, and declare its unambiguous opposition to a terrorist regime in such a strategic region? Why doesn't it unite with Iran's people, whose loudly demonstrated wish is to be rid of the only regime in the world whose theocratic constitution specifically rejects popular sovereignty?

Why the double talk from the West? Sometimes it is recognized that Iran is governed by an unelected few. But we also hear that Iran is democratic because it holds elections -- even though unelected cabals veto candidates; more journalists are in jail than in any other country; a self-styled judiciary is accountable to none; and, most importantly, the elected president, now in the second half of his last term, confesses that he never had the power to carry out his mandate.

The explanation may be the belief that the 50 theocrats who rule Iran are thuggish enough to keep Iranians enslaved for years to come, and so the world must content itself with damage limitation and containment. That belief is as wrong as it is cynical, and it is seen as such by my compatriots. It also means living in continuous fear of a catastrophe, possibly delayed by relying on "nuclear fact-finding" in a country four times Iraq's size, with deeper valleys and higher mountains than bin Laden's hideouts.

Even more ominous is Iran's approach to nuclear technology. Whereas with Saddam's paranoid compartmentalization, knowledge developed and resources accessed were confined to a tightly controlled few, Iran has a souk approach. There are mullahs who compete for public slush funds by developing networks for sourcing nuclear material and skills. No one knows who will use these networks in the future, or where and for what purpose. We only know that the theocrats have provided a safe haven and funds for nurturing these and other terror networks. But the world need not live in fear of a nuclear terrorist regime: I have no doubt that if it unites in support of democracy in Iran, it will unleash a popular force that will overwhelm the theocrats and sweep away their terrorist regime.

Mr. Pahlavi is the son of the late Shah of Iran.

http://www.rezapahlavi.org/articles/wsj110403.html

Kazemi's Son Rejects Nobel Winner's Help

November 04, 2003
myTELUS
mytelus.com

The son of slain Montreal photojournalist Zahra Kazemi is upset over reports that Nobel peace prize laureate Shirin Ebadi will appear in Iranian court on behalf of the Kazemi family.

Stephan Hachemi said that Ebadi can't represent him in court because he rejects the trial completely.

"She represents my grandmother," said Hachemi. "This is exactly what the Iranian government wants—for me to recognize the legitimacy of their justice—and that's exactly what I'm not going to do."

An Iranian intelligence ministry official is accused of what is called the "semi-premeditated" murder of Kazemi, who died in Iranian custody last July after she was detained for taking photographs outside a Tehran prison. INDEPTH: Zahra Kazemi

Hachemi said her death is a political issue, not one for the justice system in Iran.

He vowed to continue lobbying the federal government to apply political pressure to have his mother's remains returned to Canada.

http://www.mytelus.com/news/article.do?pageID=cbc/montreal_home&articleID=1450321

Islamic regime's Anti-American rallies turn into new fiascos

SMCCDI (Information Service)
Nov 4, 2003

The majority of Iranians and especially the Capital's residents boycotted the Islamic regime's sham show of force organized at the occasion of the 24th anniversary of the attack of the US embassy in Iran.

The Islamic regime was just able to gather a crowd estimated at under 15,000 indiduals in Tehran while the Capital has over 12 milions of habitants. The situation in most provincial cities was not better, for the regime, and turned into fiascos in Esfahan, Abadan, Mashad, Khorram-Abad and Oroomiah (former Rezai-e) where most residents stayed home or used their day to visit friends and relatives.

It's to note that the gathered "professional" demonstrators were mainly young school kids and members of military forces brought by buses to the scenes of what were supposed to become "Popular and National Gatherings Against the US Imperialism and the Sionism".

The regime had planned even to play the nationalistic feelings of Iranian students and had created a sham Student organization which had called on students to participate. But the Iranian Students, reaching 1.5 million of members, preferred to turn their backs to the falling theocracy.

The majority of Iranians are judging very severly the illegal action of the hostage takers and qualifying it as a criminal act against all international norms existing in 1979. They accuse the regime men and the hostage takers as bunch of lunatic terrorists who created many problems for the Iranians and undermined Iran's National Interests.

Massoumeh Ebtekar, the current aid to the Islamic president, and several other members of the so-called "reformist" clan were part of the Terrorist group which held 52 US diplomats as hostages for 444 days.

The war name of Ms. Ebtekar was "Sister Mary" and she was the english speaker of the Terrorist group. Most reporters remember of her as the young veiled girl holding an assault gun and threatening to kill the hostages.

http://www.daneshjoo.org/generalnews/article/publish/article_3385.shtml