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Rouhani: To Hell with Critics of Diplomacy

           In an annual address to Iranian ambassadors, President Hassan Rouhani called critics of his approach to nuclear talks cowards. “As soon as there is talk of negotiations they say 'we are trembling,'” said Rouhani in comments broadcast live on state television. “Well, to hell! Go and find a warm place for yourselves,” he added.

      Rouhani has faced resistance from hardliners on the nuclear issue, even though Supreme Leader Ayatollah Ali Khamenei has repeatedly expressed confidence in his administration and negotiating team. In May, more than 100 lawmakers, students, academics held a conference entitled “We’re Worried” – advertised as “the great gathering of critics of a weak [interim nuclear] deal.” Iran and the world’s six major powers failed to meet the July 20 deadline for a comprehensive agreement. But they have extended talks until November 24.

            The following are excerpted remarks from Rouhani’s address to Iranian diplomats translated by various news agencies.
            “The Iranian administration is resolved to have constructive interaction with the world.
            “Some people deliver slogans but they are political cowards and as soon as there is talk of negotiations they say 'we are trembling.’ Well, to hell! Go and find a warm place for yourselves. What should we do? God has made you fearful and trembling.
            “It is wrong to fear from interaction, negotiation and mutual understanding. Even it is wrong to fear from the heroic flexibility initiated by the Supreme Leader Ayatollah Ali Khamenei.
            “The administration has done something big. One of these examples is the Geneva [interim nuclear] agreement and if some are not thankful for these efforts, sooner or later they will be and history will have its own judgment.
            The nuclear dispute is an “artificial crisis,” and Iran is “not in a hurry in the nuclear discussions, but we do not see a delay as advisable.”
            “The foundations of sanctions have broken and I have no doubt in this and we should know that the previous situation will not return. In the negotiations with the P5+1, we are in the process of breaking the sanctions, and they know how we break the sanctions.
            “We know the sanctions to be oppressive and inhumane and we told them that your sanctions were wrong and inhumane. You sanctioned our medicine, and this will remain in history.
            “Whether the [U.N. atomic energy] agency is there or not, the Islamic Republic has not, is not and will not be after weapons of mass [destruction].
            “Ententephobia is a mistake. We want closer relations with the world but we will defend our rights and our national interests.
            “The world has to accept the present reality and know that we have a serious intention to resolve this issue and we will not retreat from our rights.
            “This administration is not an administration that will retreat from the rights of the people. It is an administration that has the highest and best support of the people and in the best situation, in unity with the leaders of other branches.
            “The other branches of government are also with us and all of us are next to the guidance of the supreme leader and we are a single unit in the country and we will not give permission for anyone to create differences between the branches of the government and, God forbid — God be praised this doesn’t exist — that there would be an insult to the supreme leader.”


US and Iran: New Nuclear Talks

      On August 7, a high-level U.S. delegation led by Deputy Secretary of State William J. Burns (left) met with Iranian officials in Geneva. It was the first meeting of officials from the two sides since the world’s six major powers and Iran failed to produce a final nuclear agreement in mid-July. “These bilateral consultations will take place in the context of the P5+1 nuclear negotiations led by E.U. High Representative Cathy Ashton,” according to a State Department media note released late on August 6. After the meeting, Iran's deputy foreign minister, Abbas Araqchi, said the talks were "good and useful." But another deputy foreign minister, Majid Takht-Ravanchi, warned that Iran won't cut its centrifuge capacity down to a "toy enrichment" program. The following is a list of U.S. officials who participated in the consultations and tweets on the talks by Iran's quasi-official nuclear program website. 

The Honorable William J. Burns
Deputy Secretary of State
The Honorable Wendy R. Sherman
Under Secretary of State for Political Affairs
Mr. Jacob J. Sullivan
Deputy Assistant to the President and National Security Advisor to the Vice President
Mr. Robert Malley
Senior Director for Iran, Iraq, and the Gulf States, National Security Council
Mr. James Timbie
Senior Advisor to the Under Secretary of State for Arms Control and International Security
Mr. Paul Irwin
Director for Nonproliferation, National Security Council


US Negotiator Warns Against New Sanctions

            On July 29, Under Secretary of State Wendy Sherman testified before the Senate Foreign Relations Committee on the status of nuclear talks between Iran and the world’s six major powers. “We believe strongly that it is worth taking additional time to pursue these very complicated and technical negotiations,” Sherman said regarding the four-month extension.
           Sherman and some of the committee members seemed to disagree about the executive branch’s authority to make a deal with Iran. Both Republicans and Democrats have insisted that a final agreement be put to a vote. “If you are asking if [we will] come to Congress for action to affirm the comprehensive deal, we believe the executive branch [has the authority],” said Sherman. But she assured the committee that President Obama would not neutralize sanctions by executive order without consulting with Congress.
During the session, Sherman also warned Congress against imposing new sanctions on Iran. “The administration believes quite strongly that at this moment in [the] negotiations, additional legislative action would potentially derail negotiations,” she said. The following are Sherman’s opening remarks to the committee.

            President Obama, Secretary Kerry, and the entire administration understand how vital a role Congress and this Committee play in shaping U.S. policy towards Iran. We remain committed to regular consultations, to hearing from you, and to sharing ideas. We all have the same goal, which is to make the world a safer place both in the near future and for generations to come.
            To that end, we seek to negotiate a comprehensive plan of action that, when implemented, will ensure that Iran cannot acquire a nuclear weapon and that Iran’s nuclear program is exclusively peaceful. A good deal will be one that cuts off the various pathways Iran could take to obtain a nuclear weapon: a uranium pathway, through its activities at Natanz and Fordow; a plutonium pathway, through the Arak heavy water reactor; and a covert pathway. It will therefore need to include tight constraints and strict curbs on Iran’s program, and enhanced monitoring and transparency measures to ensure that any attempt to break out will detected as quickly as possible.
            In Vienna, two weeks ago, we decided to continue our work towards our goal by extending the terms of the previously-negotiated Joint Plan of Action for four more months – until November 24. I will have more to say about that decision in a minute, but first let me review how we arrived at this juncture.
Rallying the International Community
            In 1968, Iran signed the Nuclear Non-Proliferation Treaty, which required it to allow International Atomic Energy Agency (IAEA) inspections and to develop nuclear power only for peaceful purposes. However, over the past 20 years, it became apparent that Iran’s government had engaged in a variety of undeclared nuclear activities. As detailed in numerous IAEA reports, these activities covered the full spectrum of the nuclear fuel cycle and suggested an intent that was far from peaceful. Iran also built a secret enrichment facility at Fordow and, in Arak, a heavy water reactor ideal for producing weapons-grade plutonium. Meanwhile, Iran was conducting research of a type that could facilitate the eventual construction of a bomb. These actions placed Iran in clear violation of its international nonproliferation obligations.
            In 2009, when President Obama took office, he indicated America’s willingness to engage directly with Iran to find a diplomatic solution, but Iran failed to respond positively, thus demonstrating clearly that the obstacle to a comprehensive resolution was in Tehran, not in Washington. Working together, the administration and Congress then constructed a much tougher bilateral and multilateral sanctions regime, even as we continued to offer Iran a diplomatic pathway to resolve our concerns about its nuclear program. The international community, having witnessed our decision to give diplomacy a chance, was increasingly supportive, and their efforts to comply with – and amplify – our sanctions have proved crucial in ramping up the pressure on Iran.
            In June 2010, the Security Council approved stricter curbs on Iran’s nuclear and shipping activities and barred Tehran from purchasing heavy weapons such as attack helicopters and missiles. In July of that year, the European Union (EU) prohibited joint ventures with Iran’s petroleum sector and banned the sale of equipment used in natural gas production. In subsequent months, the EU tightened sanctions on banking, energy, and trade; outlawed transactions involving Iran’s financial institutions; and embargoed the purchase of Iranian oil.
            These stiffer multilateral sanctions were complemented by additional bilateral measures – imposed by the United States and a number of other countries – that targeted Iran’s economy in general and its financial and energy industries in particular. The cumulative weight of these restrictions contributed in Iran to more than halving oil exports, rising inflation, a sharp decline in the value of the local currency, and higher unemployment.
            Sanctions, however, are a means, not an end. The key question was what impact they would have on Iran’s decision makers and whether they would choose to engage.
The Joint Plan of Action
            In June 2013, Hassan Rouhani was elected president of the Islamic Republic with a popular mandate to fix the economy, a goal that will only be fully achievable if nuclear-related sanctions are lifted. Last September, a telephone conversation between Presidents Obama and Rouhani – spurred in part by earlier and direct diplomatic contacts at a lower level – set the stage for a restart of formal negotiations between Iran and the P5+1.
            On November 24, 2013, after several rounds of intensive negotiations with Iran, we reached consensus on a Joint Plan of Action (JPOA), a mutual set of commitments that halted the advance and even rolled back parts of Iran’s nuclear program. The implementation of the JPOA started in January and was originally scheduled to last six months. In that time, Tehran pledged to cap its stockpile of low-enriched uranium. It agreed to stop enriching uranium to 20 percent and to convert or dilute its stockpile of uranium that had already been enriched to that level. It promised not to fuel or install remaining components at the research reactor in Arak. It consented to increase its transparency by providing additional information and managed access to key sites by the IAEA. And it allowed inspectors to have daily access at the Natanz enrichment facility and the underground plant at Fordow. In these past six months, the IAEA has verified that Iran has complied with its commitments; it has done what it promised to do. In addition, the JPOA has provided time and space to negotiate a more comprehensive, long-term solution by keeping Iran’s program from making more progress during that period.
            Meanwhile, from January to July, the negotiating teams were hard at work in search of a durable and comprehensive settlement. Based primarily in Vienna, our discussions on all issues were serious and exhaustive. Our experts spent hundreds of hours engaged in dialogue about the technical details. We made tangible progress in key areas, including Fordow, Arak, and IAEA access. However, critical gaps still exist on these and a number of other important elements – including the pivotal issue of uranium enrichment capacity – that must be part of a comprehensive plan.
            Under the current four month extension, the commitments under the JPOA will remain in effect. And, in fact, Iran has agreed in the time ahead to substantially increase the pace at which it is turning its stockpile of 20 percent enriched uranium oxide into fuel plates, including 25 kilograms over the next four months. That will make it much harder for that material ever to be used for a weapon. Iran will also mix depleted uranium with its inventory of up to two percent enriched uranium. The result is essentially a dilution of approximately three metric tons of material to its natural state and a step further away from the kind of highly enriched uranium that could be employed in a nuclear weapon.
            In return, the P5+1 and EU will continue to suspend the narrow group of sanctions that we committed to suspend when the JPOA was negotiated and will allow Iran access to $2.8 billion dollars of its restricted assets, the four-month prorated amount of the JPOA.
To sum up, under the JPOA, instead of becoming more dangerous over time, Iran’s nuclear activities have been more constrained, more closely inspected, and more transparent. This is the first true freeze in Iran’s nuclear program in nearly a decade.
            Meanwhile, sanctions relief for Iran will continue to be targeted and limited to amounts that will do little, if anything, to heal Iran’s deep-seated economic ills.
            From the perspective of international investors, Iran will remain closed for business. The overall sanctions regime will still be in place. Iran will continue to be cut off from the global financial system. Iran’s oil sector will still be negatively affected by sanctions, as will Iran’s currency. All told, we have sanctioned nearly 680 Iranian individuals and entities under our Iran sanctions authorities. And as we have demonstrated in the past few months, and throughout the past half dozen years, the Obama Administration will continue to enforce sanctions rigorously and thoroughly.
            We will also not hesitate to put pressure on Iran when that is warranted -- whether in relation to the government’s abysmal human rights record, its support for terrorism, its hostility towards Israel, or its detention of political prisoners.
            Engagement on one issue does not require – and will not lead to – silence on others. As I have noted repeatedly, we continue to press Iran to allow U.S. citizens
            Amir Hekmati and Saeed Abedini to return to their families as soon as possible, and to help us locate Robert Levinson, who went missing in Iran in 2007. We are also concerned about reports of Washington Post reporter Jason Rezaian’s detention in Iran, along with two other U.S. citizens and the non-U.S. citizen spouse of one of the three. We call on the Iranian government to immediately release Mr. Rezaian and the other three individuals as soon as possible.
            Let me emphasize that the decision to extend the nuclear negotiations was taken only after careful thought. Each of the countries represented in Vienna, when weighing both sides of the issue, believed that it continues to be in our interest to identify a mutually acceptable framework. We did not want to allow impatience to prevent us from doing all we could to contribute to the future security and safety of the Middle East.
America’s Commitment
            I stress that these negotiations are fully in keeping with the administration’s fundamental position. As President Obama has affirmed on numerous occasions, the United States will not allow Iran to obtain a nuclear weapon. That policy was in place prior to this negotiation; it is in place now; and it remains our solemn commitment. Because of the manner in which these negotiations have been structured and the pressure Iran continues to feel, Iran’s leaders have a strong and ongoing incentive to reach a comprehensive resolution. If they cannot do that, then we will respond with greater pressure and with greater backing from the international community to do so because of our consistent and good faith efforts to resolve this situation diplomatically.
Looking Ahead
            Mr. Chairman, our purpose in entering these negotiations was to test Iran’s unambiguously stated and often repeated commitment to an exclusively peaceful nuclear program. Accordingly, we have proposed a number of pathways whose elements would, in fact, give the world confidence that Iran’s program is and will continue to be exactly that. As we have said from the beginning, this is a negotiation where every element of a resolution must come together in order for any aspect to work. It would not make sense to foreclose one route to a nuclear weapon and leave a second avenue untouched; nor would it be sensible – given
            Iran’s history of illicit conduct – to equate Iran’s promises with actions. We need far-reaching and tangible commitments on all fronts. That is the only way.
Final Thoughts
            The next four months will allow us to determine whether a diplomatic solution is possible. As we have said many times, from the perspective of the United States, no deal is better than a bad deal. And yet, let us not forget that a comprehensive resolution, if we are able to arrive at one, will benefit people everywhere. It will ease anxiety and enhance security throughout the Middle East. It will reduce the likelihood of a nuclear arms race in the region. It will eliminate the potential threat of nuclear blackmail. It will contribute to the security of Israel, the Gulf states, and our partners throughout the region. Compared to any alternative, it will provide a more comprehensive, lasting, and peaceful solution to the concerns generated by Iran’s nuclear activities.
            Mr. Chairman and members of the committee, after our intense deliberations in
Vienna these past six months, we believe strongly that it is worth taking additional time to pursue these very complicated and technical negotiations. We wouldn’t have agreed to an extension if we did not have an honest expectation that we have a credible path forward; but we would have finished long ago if the task were simple. We still have work to do. We still have time to determine whether we can close the gap between what Iran has said it intends and what it is willing to do.
            From the outset, these negotiations have been about a choice for Iran’s leaders.
Officials in Tehran can agree to the steps necessary to assure the world that their country’s nuclear program will be exclusively peaceful, or they can squander a historic opportunity to end Iran’s economic and diplomatic isolation and improve the lives of their people.
Meanwhile, all of our options remain, as does our determination to resolve one of the most pressing national security issues for America, for the region, and for the world.
            In closing, I want to say to you on behalf of the entire administration that we welcome your thoughts, thank you for giving diplomacy a chance to succeed, respectfully solicit your support, and will be pleased to respond to any questions you might have.
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US Treasury: Iran Remains in Economic Hole

     On July 29, Treasury Under Secretary for Terrorism and Financial Intelligence David S. Cohen testified before the Senate Foreign Relations Committee on Iran’s economy. The following are excerpts with a link to the full text.

The State of the Iranian Economy
           When we announced the JPOA (Joint Plan of Action) last year, we said that we did not expect the relief package in the JPOA to materially improve the Iranian economy. And it has not. The depths of Iran’s economic distress – distress that resulted in large measure from the collaborative efforts of Congress, the Administration, and our international partners – dwarfed the limited relief in the JPOA. And so today, as we start to implement the short-term extension of the JPOA, Iran remains in a deep economic hole.
           It is useful to focus on three key indicators of Iran’s economy, the rial (Iran’s currency), its revenues, and its reserves. Judging by these three measures, the Iranian economy is doing worse today than it was at the outset of the JPOA.
Rial: Iran's currency, the rial, has depreciated by about 50 percent since January 2012 and has declined by about 7 percent since the JPOA was announced last November. Iran's central bank governor earlier this year bemoaned the fluctuations in the value of the rial in light of persistent costs and delays in obtaining hard currency and the limited tools available to intervene effectively in the currency market. In this regard, I would note that it remains sanctionable to provide U.S. dollar banknotes to the Iranian government.
Revenue: The cumulative impact of our sanctions since 2011 has caused Iran to lose about $120 billion in oil revenues – the key driver of Iran's economic growth. Iran will forego an additional $15 billion in oil revenues during the next four months alone as the sustained impact of our oil sanctions, which took effect in early 2012, continue to exact their toll on Iranian earnings. Moreover, Iran will only be able to use a small fraction of the revenue it earns from crude oil sales during the extended JPOA period, because its oil revenue continues to go into overseas accounts restricted by our sanctions.
Reserves: And the vast majority of Iran’s approximately $100 billion in foreign reserves remain inaccessible or restricted by sanctions. This money can only be used for permissible bilateral trade between oil-importing countries and Iran and for humanitarian trade.
           Iran’s economy is 25 percent smaller today than it would have been had it remained on its pre-2011 growth trajectory; it will not recover those losses for years to come. Meanwhile, Iran’s annual inflation rate, at about 26 percent, is likely to remain high, and is one of the highest in the world. Unemployment also remains high, and Iran is cut off from the foreign investment that it needs to promote job growth and infrastructure development.
           At the time we entered into the JPOA, some made dire predictions that our sanctions regime would crumble, and that Iran’s economy would rebound dramatically. It is now clear, that did not happen. To the contrary, Iran’s experience under the JPOA has reinforced its knowledge that real economic relief can come only if it obtains comprehensive sanctions relief, and that can only come about if it is prepared to enter into a comprehensive plan of action that ensures that Iran cannot acquire a nuclear weapon and that its nuclear program is exclusively peaceful.
Sanctions Relief in the Extended JPOA
           The P5+1 has committed in the JPOA extension period to continue the limited, temporary, and reversible sanctions relief of the JPOA, and to authorize the release to Iran of a small fraction of its restricted overseas assets in return for Iran’s commitment to continue to abide by the conditions on its nuclear program as set out in the JPOA, and to take a number of additional steps to constrain its nuclear program.
           Over the four-month period of the extended JPOA, and provided that it satisfies its commitments under the extension, Iran will be allowed to access, in tranches, $2.8 billion worth of restricted funds. This amount is the four-month prorated amount of funds made available under the original JPOA.
           Other aspects of the JPOA sanctions relief also will remain in effect for the next four months, including sanctions related to Iran’s petrochemical exports, its crude oil exports to current purchasers at current average levels, its automotive sector, the purchase or sale of gold or precious metals, the licensing of safety-related repairs and inspection for certain airlines in Iran’s civil aviation industry, and the facilitation of a financial channel for humanitarian trade, tuition payments, UN payments, and medical expenses incurred abroad.
           Altogether, we value the sanctions relief in the JPOA extension at about $3 to $4 billion. This is comprised of the $2.8 billion worth of restricted funds that Iran will be permitted to access plus the value that we assess the other elements of the sanctions relief are worth.
Extended Relief in Context
           We do not expect this minimal relief to alter the underlying negative fundamentals of Iran’s troubled economy. We are confident in this assessment for the same reasons that we were confident in December that the JPOA would not undermine our sanctions regime: Iran is in a deep economic hole and we will continue to enforce our sanctions to send a clear message that now is not the time for businesses to re-enter Iran.
           The value of this limited relief pales in comparison to the aggregate macroeconomic effects of our sanctions to date and Iran’s revenue losses, both of which will continue to accumulate during the next four months. Even with the diminished value of Iran's gross domestic product – valued at about $360 billion today using the open market exchange rate – the $3 to $4 billion or so in relief over the next four months pales in comparison.
           In short, Iran’s economy will remain under great stress. Remaining sanctions and their substantial structural problems will undercut key industries and contribute to persistent budget deficits and sustained high unemployment. Moreover, until a comprehensive solution is reached, we anticipate that most foreign firms will decline to re-enter Iran, as was the case during the first six months of the JPOA.
The International Sanctions Regime Remains Robust
           Firms have good reason to remain reluctant about doing business in Iran. The overwhelming majority of our sanctions remain in place, and we firmly intend to continue enforcing our sanctions vigorously.
           Iran continues to be cut off from the international financial system with its most significant banks subject to sanctions, including its central bank. All the Iranian banks designated by the EU remain cut off from specialized financial messaging services, denying them access to critical networks connecting the rest of the international financial sector. And the fact remains that any foreign bank that transacts with any designated Iranian bank can lose its access to the U.S. financial system.
           Investment and support to Iran’s oil and petrochemical sectors also is still subject to sanctions. And there are severe restrictions on providing technical goods and services to the Iranian energy sector.
           Broad limitations on U.S. trade with Iran remain in place, meaning that Iran continues to be shut out of the world's largest and most vibrant economy and precluded from transacting in the dollar.
           Our sweeping set of designated Iran-related actors – developed in concert with partners around the world, including in the EU, Canada, Australia, Japan, South Korea, and Singapore – remains in place. We have used our Iran-related authorities to sanction nearly 680 persons, a number that is complemented by the hundreds of Iranian individuals and entities against which our partners have also taken action. This multilateral effort to target those involved in Iran’s illicit conduct remains the cornerstone of the unprecedented sanctions regime that we have built in recent years.
           Finally, we remain vigilant in our efforts to counter Iran’s support for terrorism, its abuse of human rights, and its destabilizing activities in the region. We are committed to maintaining those sanctions and have an active diplomatic campaign aimed at persuading other jurisdictions and financial institutions to cut them off as well. Nothing in the JPOA, the extended JPOA, or in a comprehensive deal that may come, will affect our efforts to address Iran’s malign activities in these areas.
Vigorous Enforcement of Existing Sanctions
           Throughout the JPOA, we have demonstrated vigorous sanctions enforcement, recognizing the essential role that financial pressure played in the lead-up to, and now during, the JPOA, and how important maintaining that pressure will continue to be during this extended JPOA period.
           We are determined to continue to respond to Iran’s evasion efforts, wherever they may occur. Since the JPOA was negotiated, we have imposed sanctions on more than 60 entities and individuals around the world for evading U.S. sanctions against Iran, aiding Iranian nuclear and missile proliferation, supporting terrorism, and for carrying out human rights abuses. This amounts to nearly 10 percent of all of our Iran-related designations and listings since we first took action against Iran’s Atomic Energy Organization in 2005. We have also continued to enforce our sanctions against entities and individuals that violate Iran-related prohibitions, resulting in penalties and settlements for violations of the regulations enforced by the Office of Foreign Assets Control of more than $350 million during the past six months. We have been very clear to both our international partners and to Iran that these targeting and enforcement efforts will continue throughout the next four months of the JPOA extension.
           In addition to our designations and enforcement actions during the JPOA, my colleagues and I have made clear to banks, businesses, and governments around the world that the sanctions relief provided to Iran is limited, temporary, and reversible, and that the overwhelming majority of our sanctions remain in place. The simple fact remains that foreign banks and companies still have to decide whether to do business with Iran, or with the United States. They can’t do both.
           Nothing in this respect has changed.
           These actions have sent a resounding message to the international business and financial communities: Iran is not open for business today, nor will it be until it ensures the international community of the exclusively peaceful nature of its nuclear program.
           Throughout this short-term extension of the JPOA, I can assure you that we will continue to make certain that businesses and governments around the world understand this. I personally plan to travel to several countries in the coming weeks to meet with government and private sector counterparts to explain the continued limitations of the sanctions relief under the JPOA extension. And I know my colleagues within Treasury, at the State Department and elsewhere in the administration will do so as well. We will all echo President Obama’s clear and firm message – namely, that we will come down “like a ton of bricks” on those who evade or otherwise facilitate the circumvention of our sanctions.
           While this four-month extension will provide additional time and space for the negotiations to proceed, it will not change the basic facts and numbers on the ground. The Iranian economy is in deep distress and an additional four months of limited sanctions relief will not change that. In the meantime, we will not let up one iota in our sanctions enforcement efforts, and we are prepared to take action against anyone, anywhere who violates, or attempts to violate, our sanctions.
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Economic Trends: June and July

            The most important developments in June and July were India’s payments of two more installments of $550 million to Iran for previous oil purchases. The interim nuclear deal enabled the repatriation of $4.2 billion in oil revenues to Tehran. India forwarded its first of payment in May. The three total $1.65 billion.
The Statistics Center of Iran and several government officials announced promising figures suggesting improvements in the economy. The inflation rate fell 24.2 percent at the end of July from 26.2 percent at the end of June. The unemployment rate in the first quarter of 2014 was 10.5 percent, about 1.8 percent less than during the same period in 2013.
Some international companies also showed renewed interest in Iran. Boeing, under a special license from the U.S. government, agreed to sell Iran airplane parts for the first time since 1979. Iran’s largest auto maker, Khodro Industrial Group, restarted exporting to Russia for the first time in five years. Khodro also met with international auto makers Renault and Peugeot.
But these improvements may only be marginal or anecdotal. On July 29, U.S. Treasury Under Secretary for Terrorism and Financial Intelligence David S. Cohen told a Congressional committee that “Iran remains in a deep economic hole” and that its economy “is doing worse today” than it was at the outset of the interim nuclear deal in January.
The following is a run-down of the top economic stories from June and July with links.

Domestic Developments
Inflation: Iran’s inflation rate fell to 24.2 percent at the end of July from 26.2 percent at the end of June, according to the Statistics Center of Iran. 
Unemployment: The unemployment rate among Iranians with a bachelor’s degree rose from 14.6 percent in 2005 to 20.1 percent in 2013, according to the head of the National Census Centre.
Iran’s Statistical Center reported that unemployment from January to March 2014 was 10.5 percent, about 1.8 percent less than during the same period in 2013.
Poverty: The overall poverty level during Ahmadinejad’s presidency rose dramatically from 21.9 percent in 2005 to 50 percent in 2013, according to Iran’s finance minister.
Income: President Rouhani’s economic advisor, Masoud Nili, candidly discussed the poor state of the economy in an interview with state television. “The national incomes have declined 20 per cent in recent 2 years; when compared to market exchange rate, monetary base, and price index in 2005, they show rises as 3.5, 5.5, and 4.5 times, respectively, in 2013; while at the same period, the production increased only 20 per cent, and the number of employed people declined as well,” he said.
Privatization: Iran has transferred about $776.3 million worth of shares of state-run companies to the private sector in spring 2014, according to Tasnim News Agency. Iran plans to privatize some 186 state-run companies by March 2015.
Gasoline: Gasoline in Iran, at an average of $1.52 a gallon, is fourth-cheapest among 61 countries with per capita daily incomes more than $3.50, according to a Bloomberg report. The Islamic Republic had the highest fossil-fuel subsidy in the world until 2010.
Iran began distributing Euro-4 premium gasoline, which meets European emission standards that are stricter than Iran's, in Tehran and Tabriz. Distribution is slated to expand to Shiraz, Bandar Abbas, Esfahan and Mashhad.  
Oil Minister Bijan Namdar Zanganeh said that Iranians are using more than $90 billion worth of liquid fuel and that the government is using subsidies to pay for $80 billion.  
Oil output: Iran has the capacity to produce more than 4 million barrels per day, according to Mohammad Baqer Nobakht, Rouhani’s adviser for supervision and strategic affairs.
Nuclear power plants: Iran announced that Russia’s state nuclear power company Rosatom will build two more nuclear reactors at the Bushehr power plant. Rosatom expects to start construction before the end of 2014. The announcement came as the company’s deputy director general, Nikolai Spassky, visited Tehran.
Tourism: Foreign tourist visits to Iran climbed 215 percent in spring 2014 compared to 2013, according to the deputy director of Iran’s Cultural Heritage, Tourism and Handicrafts Organization. “Over 23,600 foreign tourists visited Iran in the three-month period, compared with 7,500 last year,” said Morteza Rahmani-Movahed.
International Developments
U.S. sanctions: The cumulative impact of U.S. sanctions since 2011 has cost Iran some $120 billion in oil revenues, according to the Treasury Undersecretary for Terrorism and Financial Intelligence David S. Cohen. “Iran's currency, the rial, has depreciated by about 50 percent since January 2012 and has declined by about 7 percent since the JPOA was announced last November,” he told a Senate Committee on Foreign Relations hearing.
Indian payments: India made two more $550 million payments to Iran, one in June and one in July, for oil under the interim nuclear deal, which allows Tehran to repatriate $4.2 billion in blocked funds across the world. New Delhi is reportedly looking into implementing a mechanism that would allow Iran to use owed money to buy food, medicine and other humanitarian goods bought in third countries.
Nuclear talks: The four-month extension of nuclear talks will spare Iran “a 20 percent fall in its oil sales,” but nothing more, according to the international affairs director at the National Iranian Oil Company. “Short-term agreements have a no war-no peace nature. Such agreements make conditions for Iran's oil sales unclear because issues like shipping, banking and insurance are long-term matters and companies active in these sectors usually don't have any desire to change their activities in the short term,” said Mohsen Ghamsari.
Oil and Gas: China, Iran's biggest oil buyer, imported nearly 50 percent more in the first half of 2014 than in 2013, according to data collected by Reuters. Purchases by Japan and Korea were down compared to 2013. But the combined purchases of China, India, Japan and Korea were up nearly 25 percent from last year, at 1.2 million barrels per day versus 961,236.
India imported 281,000 bpd of Iranian crude oil from January to June, up by a third compared to the same period last year, according to Reuters. India is Iran’s second largest oil buyer after China.
Petrochemical exports have increased 6.6 percent during the first quarter of the Iranian calendar year, which started on March 21, 2014. And domestic sales have risen 7.3 percent, according to Deputy Managing Director of Iran’s National Petrochemical Company (NPC) Mohammad Hassan Peivandi.
Iran could be ready to make up for a shortage in oil in the world markets within three months, according the managing director of the National Iranian Oil Company, Rokneddin Javadi.
Aviation: Boeing agreed to supply Iran Air with plane parts for the first time since the U.S. embargo on bilateral trade was implemented in 1979. In April, the U.S. government issued a license to Boeing allowing it to provide “spare parts that are for safety purposes” to Iran for a “limited period of time.”
Banking sanctions: Germany’s second largest bank, Commerzbank, is expected to pay $600 to $800 million for doing business with Iran and other countries under U.S. sanctions. New York’s top banking regulator, the Justice Department, the Treasury Department, the Federal Reserve and the Manhattan District Attorney are reportedly involved in talks.
Non-oil exports: Non-oil exports in the second quarter of 2014 have increased by about 20 percent compared to the same period in 2013, according to the Islamic Republic of Iran Customs Administration. Iran exported some $11.86 billion in goods in April, May and June. 
Iran’s carpet exports reached $57 million in the first quarter of the Iranian calendar year that began on March 20, 2014. Iran’s National Carpet Center said exports rose 23 percent compared to the same period last year. Iran exported 1,000 tons of hand-made carpets to nearly 80 countries. The U.S. reportedly imported $51,000 worth of carpets.
Auto industry: Iran started exporting cars to Russia for the first time in five years. Iran-Khodro, stopped shipping vehicles to Russia in 2009 when it adopted stricter Euro-5 emission standards. Iran’s largest auto manufacturer plans to export 10,000 cars to Russia by 2015.
Khodro also restarted talks with international companies Renault and Peugeot. “The Group has started to get back in touch with our past partners to get ready for a return of our activities there, if possible,” said a Peugeot spokeswoman, according to The Wall Street Journal.
Turkey: Iran and Turkey signed 10 cooperation agreements on tourism, joint ventures and customs cooperation during President Rouhani’s visit to Ankara. Turkey sought a discount on Iranian gas but the two sides failed to agree on a price.
E.U. sanctions : An E.U. court annulled sanctions on Tehran’s Sharif University of Technology because of lack of sufficient evidence linking it to the country’s nuclear program. But the asset freeze will remain in effect for two months, giving E.U. governments time to submit further evidence.
Germany: Germany’s exports to Iran increased by 20 percent in the first four months of 2014 compared to the period last year, according to Eurostat. They reached €797 million while Iran’s exports to Germany also increased to €107 million, up nine percent from 2013.
Humanitarian trade: Iran is reportedly lobbying to get HSBC, Europe’s largest bank, to process humanitarian trade transactions that have been frozen due to concerns about violating international sanctions on the Islamic Republic, according to Reuters.
Ports: India’s transport minister, Nitin Gadkari, said that two state-run ports are investing in Iran’s Chabahar port, now under construction. Chabahar, on Iran’s southeast coast, could enable Indian exports to Iran and landlocked Afghanistan to bypass Pakistan. Transporting goods between Iran, Afghanistan and India would be much shorter.
Foreign investment: Iran’s economy will need more foreign investment to thrive, according to Industry, Mines and Trade Minister Mohammad-Reza Nematzadeh. Foreign investors put some $783 million into Iran’s industrial marks between March 2013 and March 2014, which created more than 11,000 job opportunities, according to Deputy Director of Iran Small Industries and Industrial Parks Organization Qolamreza Soleimani. 
Bio-energy: A U.S. company signed a preliminary agreement to invest $1.175 billion in Iran. World Eco Energy plans to produce 250 megawatts of electricity daily by burning trash and processing algae, salt and waste water, according to AFP.
United Arab Emirates: The trade volume for 2013 between Iran and the United Arab Emirates totaled more than $15 billion in 2013, according to Iran’s ambassador to the UAE. And Some 50,000 Iranian companies are operating in Dubai alone, according to the head of the Dubai Chamber of Commerce.
Finance expo: More than 360 Iranian and foreign companies reportedly participated in the Seventh International Exhibition of Exchange, Bank and Insurance of Iran from June 8 to 11. Companies from England, Germany, Italy, Switzerland, Greece, Cyprus, Turkey and South Korea were present.
Tags: Economy

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