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Iran Nuclear Talks: The Final Month

            Iran and the world’s six major powers have less than a month to reach a deal that will ensure Tehran’s controversial nuclear program will be exclusively peaceful. Both sides are now intensifying their efforts to meet the November 24 deadline for an agreement. Leaders on both sides have noted that there has been progress on key issues and remain hopeful that a deal can be reached before the deadline.
           
Both Iranian and U.S. officials, however, have claimed that each other’s governments will be at fault if a deal is not reached. “If [a deal] does not happen, the responsibility will be seen by all to rest with Iran,” Undersecretary of State Wendy Sherman warned on October 23. “It is not clear if negotiations will reach a conclusion within the specified time frame” unless the other side gives up its “illogical excessive demands,” Deputy Foreign Minister Seyed Abbas Araqchi said on October 27 (click here for the latest remarks by U.S. and Iranian officials).
            
The following is a schedule for the next three weeks of diplomacy and a rundown of the three possible outcomes of the November talks — a deal, no deal or an extension.

November 7: E.U. foreign policy chief Catherine Ashton is scheduled to meet with political directors from the P5+1 countries — Britain, China, France, Germany, Russia and the United States.
 
November 9 and 10: Secretary of State John Kerry and Ashton are slated to meet with Iranian Foreign Minister Mohammad Javad Zarif in Muscat, Oman.
 
November 11: Political directors from the P5+1 and Iran are scheduled to meet in Muscat, Oman.
 
November 18: The final round of talks between Iran and the P5+1 is set to commence in Vienna. Kerry has suggested that he and Zarif will both be in Vienna for the last few days of negotiations.
 
A Deal:
 
            The temporary Joint Plan of Action states that goal of the negotiations “is to reach a mutually-agreed long-term comprehensive solution that would ensure Iran’s nuclear program will be exclusively peaceful.” The following are excerpts from an article by Joe Cirincione on six issues pivotal to an accord. 
 
1. Limiting Uranium Enrichment
 
      Iran’s ability to enrich uranium is at the heart of the international controversy. The process can fuel both peaceful nuclear energy and the world’s deadliest weapon. Since 2002, Iran’s has gradually built an independent capability to enrich uranium, which it claims is only for medical research and to fuel an energy program. But the outside world has long been suspicious of Tehran’s intentions because its program exceeds its current needs. 
 
 
A deal may generally have to include:
 
      •reducing the number of Iran’s centrifuges,
      •limiting uranium enrichment to no more than five percent.  
      •capping centrifuge capabilities at current levels.
 
2. Preventing a Plutonium Path
 
      Iran’s heavy water reactor in Arak, which is unfinished, is another big issue. Construction of this small research reactor began in the 1990s; the stated goal was producing medical isotopes and up to 40 megawatts of thermal power for civilian use. But the “reactor design appears much better suited for producing bomb-grade plutonium than for civilian uses,” warned former Secretary of Defense William Perry and former Los Alamos Laboratory Director Siegfried Hecker.
 
            In early February, Iranian officials announced they would be willing to modify the design plans of the reactor to allay Western concerns, although they provided no details. 
 
3. Verification
 
      The temporary Joint Plan allows more extensive and intrusive inspections of Iran’s nuclear facilities. U.N. inspectors now have daily access to Iran’s primary enrichment facilities at the Natanz and Fordow plants, the Arak heavy water reactor, and the centrifuge assembly facilities. Inspectors are now also allowed into Iran’s uranium mines.
 
 
           A final deal will have to further expand inspections to new sites. The most sensitive issue may be access to sites suspected of holding evidence of Iran’s past efforts to build an atomic bomb. The IAEA suspects, for example, that Iran tested explosive components needed for a nuclear bomb at Parchin military base.
 
4. Clarifying the Past  
 
The issue is not just Iran’s current program and future potential. Several troubling questions from the past must also be answered. The temporary deal created a Joint Commission to work with the IAEA on past issues, including suspected research on nuclear weapon technologies. Iran denies that it ever worked on nuclear weapons, but the circumstantial evidence about past Iranian experiments is quite strong.
 
Among the issues:
 
•research on polonium-210, which can be used as a neutron trigger for a nuclear bomb,
•research on a missile re-entry vehicle, which could be used to deliver a nuclear weapon, and
•suspected high-explosives testing, which could be used to compress a bomb core to critical mass.
 
      “Iran needs to clarify issues related to possible military dimension and implement the additional protocol [to prove its nuclear program is entirely peaceful],” the head of the U.N. nuclear watchdog, Yukiya Amano, said on October 31 at the Brookings Institution.
 
5. Sanctions Relief
 
           Iran’s primary goal is to get access to some $100 billion in funds frozen in foreign banks and to end the many sanctions that have crippled the Iranian economy. Since the toughest U.S. sanctions were imposed in mid-2012, Iran’s currency and oil exports have both plummeted by some 60 percent.
 
           The temporary Joint Plan of Action says a final agreement will “comprehensively lift UN Security Council, multilateral and national nuclear-related sanctions…on a schedule to be agreed upon.” (It does not, however, address sanctions imposed on other issues, such as support for extremist groups or human rights abuses.) The United States and the Europeans may want to keep some sanctions in place until they are assured that Iran is meeting new obligations.
 
6. The Long and Winding Road
 
            The final but critical issue is timing: How long is a long-term deal? It will clearly require years to prove Iran is fully compliant. But estimates vary widely from five to 20 years. Another alternative is a series of shorter agreements that build incrementally on one another.
 
Click here for Joe Cirincione's full article on these six issues.
 
No Deal:
 
            Undersecretary of State Wendy Sherman has warned that “escalation will be the name of the game, on all sides,” if the talks collapse. Tehran’s resumption of work on the most sensitive aspects of its nuclear program could raise prospects for military action. President Barack Obama has warned that he would seek to impose new sanctions on Iran in an agreement cannot be brokered. But enforcing sanctions could become much more difficult if European and Asian countries, especially Russia and China, blame the failure of talks on U.S. unwillingness to compromise on Iran’s uranium enrichment capacity.
 
Extension:
 
            The previous extension pushed the due date for a deal back by four months to November 24. Neither side wants the talks to last any longer than necessary. But they may again opt for more time to negotiate if the alternative is a total collapse of the talks. Even if a general consensus is, however, reached on the major issues, experts may need additional time to hammer out the technical details. An extension could again allow for additional repatriation of frozen funds outside of Iran, perhaps in return for Iran taking more steps to roll back its nuclear program.
 

Photo credits: NuclearEnergy.ir, Amano and Zarif by Mueller / MSC [CC-BY-3.0-de (http://creativecommons.org/licenses/by/3.0/de/deed.en)], via Wikimedia Commons

 

U.N. Nuclear Watchdog Chief on Iran

             International Atomic Energy Agency (IAEA) Director General Yukiya Amano called on Iran to take concrete measures to resolve outstanding issues with the U.N. nuclear watchdog during an address at the Brookings Institution on October 31. He discussed the IAEA’s role in the verification and monitoring of Iran’s nuclear program and noted that Tehran has been hesitant to disclose the potential military aspects of its program. Amano stated that “Iran’s nuclear material under IAEA safeguards is in peaceful purposes, but we cannot provide assurance that all material in Iran is in peaceful purposes.” But in a comment to Al-Monitor after the event, Amano also said that Iran's faltering cooperation “should not be an impediment” to reaching a comprehensive nuclear deal. The following is a video from the event with excerpts from Amano’s remarks.

 

           
            The main safeguards issues on the agenda in recent years have concerned Iran, North Korea, and Syria. These are very different cases. What they have in common is the fact that these countries have failed to fully implement their safeguard agreements with IAEA and other relevant obligations. This makes it very difficult for us to do our job effectively. As far as the IAEA is concerned the Iran story began in August 2002 when media reported that Iran was building a large underground nuclear related facility in Natanz which had been declared to the Agency previously. Iran subsequently acknowledged its existence and put it under IAEA safeguards. Let me say at this point that it is vitally important that the IAEA and this Director General should be impartial. That means applying the same principles to all country. For me the fundamental principle is that all of the safeguards agreements which we conclude with our member states should be implemented fully, so should other relevant obligations such as resolutions of the United Nations Security Council.
 
            When I became Director General in late 2009 I applied this principle to Iran. I felt that spelling out the issues with clarity was an essential first step towards resolving the problem. My quarterly reports from February 2010 almost stated that nuclear material declared by Iran was not being diverted from peaceful purposes. But I also stated that Iran was not providing sufficient cooperation to enable the Agency to conclude that all nuclear material in Iran was in peaceful activities. I urged Iran to implement the additional protocol and clarify the issues related to what had become known as possibly military dimensions to its nuclear program. The next important question was how to approach these possible military dimensions. Our technical experts has spent years painstakingly and objectively analyzing a huge quantify of information about theft program from the wide variety of independent sources including form the Agency's own efforts and from interim information provided by Iran itself, as well as from a number of member states. After carefully reviewing the issue I decided to present the detailed report in November 2011. In that report I stated that the information assembled by the Agency was overall credible. It was consistent in terms of technical content, individuals, and organizations involved and timeframes. The information indicated that Iran had carried out activities relevant to the development of a nuclear explosive device. The information also indicated that prior to the end of 2003 these activities took place under structured program in that some activities might still be ongoing.
           
            I would like to be very clear on this issue because there have been some misunderstandings. The IAEA has not said that Iran has nuclear weapons; we have not drawn conclusions from the information at our disposal about possible military dimension to the Iranian nuclear program. What we have said is that Iran has to clarify these issues because there is broadly credible information indicating that it engaged in activities of this nature. In other words Iran has a case to answer. In response to my report both the IAEA Board of Governors and the United Nations Security Council adopted resolutions asking Iran to cooperate and to clarify their issues relating to possible military dimension in order to restore international confidence in an exclusively peaceful nature of its nuclear program. On the basis of these resolutions the Agency had talks with Iran over the next two years; however, virtually no progress was made. At times we were going around in circles.
 
            Last year we started to see some movement. In November I when to Tehran and signed the framework for cooperation with Iran under which it agreed to resolve all the outstanding issues, past and present. We agreed to take a step-by-step approach. Initially Iran implemented the practical measures which is agreed with the Agency under the framework for cooperation fairly well. However, since the summer of 2014 progress on implementing agreed measures has been limited. Two important practical measures which should have been implemented two months ago have still not been implemented. The Agency invited Iran to propose new practical measures for the next step of our cooperation, but it has not done so. Clarifying issues to possible military dimensions is not an endless process. It could be done within a reasonable timeline, but how far and how fast we can go depends very much on Iran's cooperation. I have made clear that Agency will provide an assessment to our Board of Governors after it obtains a good understanding of the whole picture concerning issues with possibly military dimensions. It is then up to the Board to decide the future course of action.
 
            As you may know there are two tracks of negotiation on the Iran nuclear issue. One is the IAEA Iran track, the other is the other so-called P5+1 and Iran track in which the IAEA is also involved. These six countries, China, France, Germany, Russia, Britain, and United States, agreed on a joint plan of action with Iran in November 2013. The aim was to achieve a mutually agreed long-term comprehensive solution that would ensure Iran's nuclear program will be exclusively peaceful. All seven countries asked the IAEA to undertake monitoring and the verification of voluntary measure to be implemented by Iran which we are doing. The P5+1 negotiations with Iran are continuing. I should mention that Iran is still not implementing their additional protocol. This is contrary to the resolution of the Board of Governors and under Security Council. Implementation of additional protocol by Iran is essential for the Agency to provide credible assurance about the absence of undeclared nuclear material and activities in the country. The current status of affairs is that Iran's nuclear material under IAEA safeguards is in peaceful purposes, but we cannot provide assurance that all material in Iran is in peaceful purposes. In order to provide that assurance Iran has to clarify the issues relating to possible military dimensions and implement the additional protocol.
 
            What is needed now is concrete actions on the part of Iran to resolve all outstanding issues. I remain committed to working with Iran to restore international confidence in the peaceful nature of its nuclear program. But I repeat, this is not a never ending process; it is very important that Iran fully implement the framework for cooperation sooner than later. The IAEA can make a unique contribution to resolving the Iran nuclear issue, but we cannot do this on our own. The sustained influence of the international community are needed, as is Iran's full cooperation to resolve all outstanding issues.
 
Click here to access the full transcript
 
Tags: IAEA, Nuclear

World Bank: Easier to Do Business in Iran

            Iran was ranked 130 out of 189 economies by the World Bank in its new Doing Business report, two positions higher than last year. The report measures regulations affecting 11 areas of the life of a business. Iran ranked 62 for starting a business, 89 for acquiring credit and 172 for obtaining a construction permit. The following are excerpts from the report.

Starting a business
 
The Islamic Republic of Iran made starting a business easier by stream-lining the name reservation and company registration procedures.The Islamic Republic of Iran combined name reservation with company registration at a single window.
 
Getting electricity
 
The Islamic Republic of Iran made getting electricity easier by eliminating the need for customers to obtain an excavation permit for electricity connection works.
 
 
Data from World Bank
 
Difficulty of hiring
 
Fixed-term contracts prohibited for permanent tasks?
No
Maximum length of fixed-term contracts (months)
No limit
Minimum wage for a full-time worker (US$/month)
466.63
Ratio of minimum wage to value added per worker
.69
 
Rigidity of hours
 
50-hour workweek allowed?
Yes
Maximum working days per week
6.0
Premium for night work (% of hourly pay)
35
Premium for work on weekly rest day (% of hourly pay)
40
Major restrictions on night work?
No
Major restrictions on night work?
No
Paid annual leave (working days)
24
 
Difficulty of redundancy
 
Maximum length of probationary
period (months)
1.0
Dismissal due to redundancy allowed by law?
Yes
Third-party notification if worker is dismissed?
Yes
Third-party approval if worker is dismissed?
Yes
Third-party notification if workers are dismissed?
Yes
Third-party approval if workers are dismissed?
Yes
Retraining or reassignment?
No
Priority rules for redundancies?
No
Priority rules for reemployment?
No
 
Redundancy Cost
 
Notice period for redundancy dismissal (weeks of salary)
0
Severance pay for redundancy dismissal (weeks of salary)
23.1
 
Research questions
 
Unemployment protection scheme?
Yes
Health insurance for permanent employees?
Yes

 

Click here for the full report.

 

Iran's Logic in Iraq War vs. Nuclear Talks

            A comprehensive nuclear deal between Iran and the P5+1 may be possible prior to the November 24 deadline, despite widespread pessimism among analysts. In a new briefing, Seyedamir Hossein Mahdavi, a researcher at the Crown Center for Middle East Studies at Brandeis University from 2013 to 2014, draws parallels between the conditions surrounding today’s nuclear negotiations and the conditions in 1988 when Iran agreed to accept a UN resolution to end the Iran-Iraq war. By examining the economic, religious, and ideological similarities between the two cases, Mahdavi concludes that Iranian leaders will likely be compelled to accept a nuclear deal. Just as the end of the Iran-Iraq war paved the way for renewed economic development, choosing the path of compromise in the nuclear negotiations would relieve sanctions and allow leaders to address the mounting economic crisis. Supreme Leader Ayatollah Ali Khamenei has referred to this as "heroic flexibility." The following are excerpts from the brief.

            To answer the myriad of questions surrounding the prospects of reaching a comprehensive agreement by the November deadline—or soon thereafter—requires insight into the Iranian regime’s decision-making process, insight that, for the most part, has eluded analysts due to the opaqueness of the Iranian political system. This Brief argues that a deeper insight is possible by comparing the circumstances and mechanisms that led to the Islamic Republic’s decision to end the war with Iraq in 1988 with those prevailing today.
            Using documents made public since 1988, this Brief demonstrates that although the political players have changed in the past two decades, there are important similarities between the conditions that prevailed and the logic that led to Iran’s decision to accept the UN proposal to end the war with Iraq and the conditions and logic that now affect its nuclear negotiations with the P5+1. The Brief makes this argument by comparing these two crises along three common dimensions: economic, religious, and ideological.
 
The Economic Dimension
 
            Iran’s economic crisis in 2012-13, when growth plunged to a low of negative 5.6 percent under crushing international sanctions, most resembles that of the final years of the Iran-Iraq war. Lack of resources during the second half of the 1980s had pushed the Iranian economy to an unmanageable brink. According to official Iranian reports, the dual necessity of fighting a prolonged war and providing for the population in the first decade after the 1979 revolution had created an unsustainable situation. According to former President Ali Akbar Hashemi Rafsanjani, Iranian experts then estimated that in order to win the war against Iraq, several more years of fighting plus nuclear weapons were needed.
            Khomeini, who favored the prolongation of the war, suddenly shifted positions based on the warnings issued by economic experts, even though he never publicly acknowledged the economic constraints as reasons for accepting the ceasefire. Specifically, what seemed to have changed his mind was a letter he received from the head of the Budgeting and Planning Organization, which in addition to enumerating the myriad of economic problems the country was facing, claimed that the Islamic Republic had no choice now but to choose between “expanding the revolution” and “holding on to power.”
            Economic dilemmas have played the same role in the nuclear case as they did in forging the decision to accept peace with Iraq. To a large extent, Rouhani’s election reflected Khamenei’s acceptance of the need to deal with Iran’s deteriorating economy. In mid-2012, as the country experienced crippling recession and skyrocketing inflation three ministers from former President Mohammad Khatami’s reformist government (1997-2005) met with Khamenei and impressed upon him the dire state of Iran’s economic situation. This meeting seems to have set in motion a series of developments that eventually led Khamenei to support holding a competitive election in 2013 and to permit explicit criticism of the government’s nuclear policy—a subject which until then had been off-limits for public debate—that in turn set the stage for Rouhani’s success in the election.
            The strategy adopted by Khamenei echoes Khomeini’s historic phrase that “safeguarding the Islamic Republic is more obligatory than any religious duty.” The actions of both supreme leaders suggest that despite some of Iran’s ideologically motivated foreign policy maneuvers, macro foreign policy decisions are rooted in their economic ramifications and are based on practical considerations, namely the longevity of the regime.

The Religious Dimension
 
            As a Shi’a source of emulation (marja’), Khomeini combined his religious and political authority to reject the peace treaty signed by Imam Hassan. But the pro-peace camp in the government and parliament used the same Shi’a literature to sway Khomeini to accept the need to end the war. As debates and conflict over war or peace became more intense, Rafsanjani proposed a middle ground that was also predicated upon Shi’a teachings. At its core was the idea of peace after a victorious offensive on the enemy, a peace that was the result of triumph in the war followed by compromise—a combination of the different methods adopted by the two Imams. Fittingly, the last offensive in the Iran-Iraq war was called Karbala, in remembrance of Imam Hussein’s last battle.
            Khamenei has also used similar religious language to navigate between his own uncompromising rhetoric over the nuclear issue and the practical necessities of Iran’s economic situation. In 1996, in one of his most famous speeches titled “Lessons from Ashura,” Khamenei explicitly endorsed Imam Hussein’s policy of no-negotiations by stating that one was obliged to fight evil and that regardless of winning or losing, the outcome was victory. However, in 2013 when the economic conditions of the country had deteriorated in a fashion similar to that experienced during the final years of the Iran-Iraq war, Khamenei resorted to Imam Hassan’s peace, dubbing the new negotiating strategy of Iran as “heroic flexibility.”
 
The Ideological Dimension
 
            In today’s Iran, the political elite is roughly divided into two camps—representing the two poles of reconciliation and resistance—the “Worried” and the “Valiant.” By the end of the war with Iraq, the political elite was similarly divided between those favoring peace and those favoring the continuation of the war. The dominant inclination among the IRGC was to continue the war until victory, which was defined as capturing Karbala and toppling Saddam Hussein’s Ba’ath regime. By contrast, most members of the executive branch and especially the Ministry of Foreign Affairs defended the pursuit of a peace based on preserving national sovereignty.
            Despite the obvious differences between the two camps over the continuation of the war, it was Khomeini’s maneuvers that actually prevented either side from completely eliminating the other. As mentioned earlier, until the last year of the war, Khomeini explicitly defended the war’s continuation to the degree that even to this day, the Iranian public continues to believe that while Khomeini wanted to continue the war, politicians such as Rafsanjani imposed the ceasefire on him.
            This dual approach is being repeated today by the second Supreme Leader of the Islamic Republic with regard to the nuclear negotiations. Much like Khomeini, Khamenei consistently defines himself publicly as a supporter of “resistance” over the nuclear issue, while giving Rouhani’s moderate foreign policy team permission to actively engage in negotiations.
 
Conclusion
 
            Today in the public mind, Rouhani is identified with peace much like Rafsanjani was in the late 1980s. If reaching peace with Iraq had failed and the war continued, it would not have been possible to advance Rafsanjani’s plans for economic development during the second decade of the Islamic Republic. Iran’s power would have depreciated, the economy would have deteriorated, and those advocating for war would have been emboldened enough to outmaneuver Rafsanjani and his pragmatic allies. Now it is Rouhani who hopes to save Iran by achieving a nuclear agreement and resolving the deep economic crisis brought upon by sanctions. Should a nuclear agreement be concluded, the government will likely be able to bring the economy out of recession in time for the 2015 parliamentary campaigns. By improving the standard of living of Iranians, Rouhani can become powerful enough to push back against his extremist opponents. But if the negotiations fail, and subsequently the hardliners win a majority in the 2015 elections, Rouhani’s government will not be able to fulfill its economic promises or implement its political and cultural agenda as both will be blocked by the new parliament.
 
Click here for the full briefing
 
 
Tags: Nuclear

Economic Trends: Month of October

Garrett Nada

            The biggest news in October was President Hassan Rouhani’s announcement that oil revenues have been slashed 30 percent. The cut is due in part to the falling oil price, now at about $85 a barrel, the lowest since 2012. Iran is largely dependent on crude oil exports, which account for nearly 80 percent of Iran’s foreign revenue. So the fall in price has placed even more pressure on Rouhani’s government to secure a nuclear deal that will lift wide-ranging economic sanctions on Iran. 
           
The economy, however, is still projected to grow 2.2 percent in 2015, according to a new report released by International Monetary Fund. The interim nuclear deal, which was implemented in January, has enabled Iran to repatriate foreign oil revenues held overseas. In October, India transferred a $400 million oil payment to Iran’s central bank.
            Also in October, a flurry of statistics was released due to the close of the first half of the Iranian calendar year (March 21 to September 22). Some findings suggested that sectors of the economy are slowly recovering. For example, 400,000 Iranians reportedly found jobs and 520,000 vehicles were produced, nearly a 75 percent increase compared to last year. Iran’s oil and non-oil exports were also up compared to last year. 
            But many people are still struggling to make a living. Seven million Iranians, about eight percent of the population, are living in extreme poverty, according to Minister of Labor, Cooperatives and Social Welfare Ali Rabiei.
            Another significant development was Boeing’s sale of aircraft manuals, drawings, navigation charts and data to Iran Air —the first acknowledged deal between U.S. and Iranian aerospace companies since the 1979 U.S. hostage crisis. The sales, however, only generated $120,000 in revenue and $12,000 in net profit in the quarter. The following is a run-down of the top economic stories with links.

 
Domestic Developments
 
Inflation: President Hassan Rouhani said inflation will fall below 20 percent by the end of the current Iranian calendar year (March 20, 2015). “Iran’s average monthly inflation increase was around 3 percent in the last year of the previous administration. But now the average monthly rise is around one percent,” he noted in a live television interview. Inflation is now at about 21 percent. “We are containing the inflation, and simultaneously snapping economy out of recession,” said Rouhani.
Economic Projections: Iran’s economy is projected to grow 2.2 percent in terms of real gross domestic product in 2015, according to The International Monetary Fund’s World Economic Outlook for October. In April, the group had predicted a growth rate of 2.3 percent.
Iran’s economy is projected to grow by three percent this year, according to the governor of Iran’s Central Bank, Valiollah Seif. “The economic situation in Iran is on the mend,” he said in an interview with Bloomberg. “The economic program we have right now is based on the fact the sanctions will continue, so this is a given assumption,” said Seif. “Naturally, if sanctions are removed, we would experience much better results.”
 
Employment: Some 400,000 jobseekers found employment during the first six months of the current Iranian year (March 21 to September 22), according to President Rouhani’s advisor for supervision and strategic affairs, Mohammad-Baqer Nobakht.
 
Iran needs to create 8 million new jobs in the near future to employ those currently out of work, according to Iranian Minister of Economic Affairs and Finance Ali Tayebnia. The workforce is expected to grow from 22 million to 25 million within seven years, which will require the creation of 13 million new jobs, according to the Ministry of Labor, Cooperatives, and Social Welfare.
 
Poverty: Some seven million Iranians, about eight percent of the population, are living in extreme poverty, according to Minister of Labor, Cooperatives and Social Welfare Ali Rabiei. “The poverty is linked to gender too, such that women breadwinners are twice more likely to live in poverty compared to men,” he said at a conference on development and education equality. Rabiei warned that urban poverty has been on the rise for the past decade. He also announced that the government will introduce programs for eradicating illiteracy, one for people under age 30 and one for older adults.
 
Living costs: The prices of some staple foods in Iran have risen significantly since last year, despite the Rouhani administration’s efforts to stabilize inflation. The price of milk has risen 28 percent and the price of eggs has risen 24 percent, according to one Tehran resident interviewed by the Financial Times. Official statistics show that food prices have generally risen 6-12 percent since last year.
 
The living cost of an urban household in Iran was about $18 million rials or $560 per month during the first quarter of the year, according to a survey conducted by the Statistical Center of Iran. The living cost for a rural household averaged about $340 per month.
 
Banking: International banks are still avoiding dealing with Iran for fear of violating U.S. and E.U. sanctions. They are even shying away from processing humanitarian deals, according to Tehran-based Middle East Bank’s chief executive, Parviz Aghili. "Going through a very simple process of opening letters of credit for the importation of goods, even humanitarian goods, has become much more difficult and a hassle," Aghili told Reuters.
 
Tourism:
Automobiles: Iranian automakers produced more than 520,000 vehicles in the first half of the Iranian year, a 74.3 percent rise compared to the same period last year, according to the Financial Tribune.
 
Steel:  Iran’s steel production during the first nine months of 2014, 12.1 million tons, increased by six percent compared to the same period in 2013, according to state news.
 
International News
                                                   
Foreign Trade: Iran’s foreign trade volume grew 22 percent to more than $53 billion during the first six months of the Iranian calendar year, according to the head of the Trade Promotion Organization of Iran, Valiollah Afkhami-Rad. In an interview, he projected foreign trade to reach $110 billion by March 2015. So far, Iran’s major exports included propane, methanol and bitumen. The main destinations for goods, in descending order, were China, Iraq, the United Arab Emirates, Afghanistan and Turkey.
 
Oil, Petrochemicals and Natural Gas: Crude oil revenues have been cut by about 30 percent, according to President Rouhani. “We have to deal with the new conditions and the global economic conditions. In the issue of oil, the economy has not been the sole important factor and international politics and plots have been also involved,” he told parliament, likely referring to the drop in oil prices worldwide.
Iran exported 7.8 million tons of petrochemical products worth some $5.1 billion during the first half of the Iranian calendar year, according to the National Petrochemical Company’s production manager, Ali Mohammad Bosaqzadeh. The value of the exported products increased by seven percent compared to last year.
 
Supreme Leader Ayatollah Ali Khamenei warned against relying on oil revenues. “Iran should be managed through reliance on its internal forces and the resources on the ground, meaning the youth's intelligence and talent, and production of science and knowledge and if so, no world power can turn the country's economy into a plaything,” he said on October 22.
Iran exported $6.5 billion worth of natural gas condensates during the first half of the current Iranian calendar year (March 21 to Sept 22). The amount represents an 85-percent increase compared to last year.
 
Non-Oil Exports: Iran exported $16.7 billion worth of non-oil goods during the first half of the current Iranian calendar year. Exports to Asia, which accounted for 93 percent of total exports, increased by nine percent in comparison to the same period last year. And exports to Europe increased by 33 percent.
 
The government plans to boost non-oil exports to $61 billion in value by March 2015, according to the deputy chairman of the Trade Promotion Organization of Iran, Yaghmour Gholizadeh. The Islamic Republic actually registered an overall trade surplus of some two billion dollars between March and September 2014.
 
Non-oil exports from Shahid Bahonar Port in Bandar Abbas increased by 231 percent during the first half of the Iranian year compared to the same period last year, according to an official from the ports and maritime organization.
 
European Union: The value of Iran’s exports to the European Union increased by 77 percent in August 2014 compared to August 2013. The value of the goods reached $102 million, according to Eurostat. The total trade turnover from January to August 2014 between Iran and the 28 E.U. member states totaled $5.8 billion.
 
Boeing: Boeing, a U.S.-based aerospace and defense company, announced that it sold aircraft manuals, drawings, navigation charts and data to Iran Air. The sale marked the first publically acknowledged transaction between U.S. and Iranian aerospace companies since the 1979 U.S. hostage crisis. The sales generated some $120,000 in revenue and $12,000 in net profit in the quarter.
 
Ease of Doing Business: Iran was ranked 130 out of 189 economies by the World Bank in its new Doing Business report, two positions higher than last year. The report measures regulations affecting 11 areas of the life of a business. Iran ranked 62 for starting a business, 89 for acquiring credit and 172 for obtaining a construction permit.
 
Data from World Bank
 
Iraq: Iran exported some $5.5 billion in technical and engineering services and other commodities to Iraq between March and September 2014, according to the head of the Iran-Iraq joint chamber of commerce, Jahanbakhsh Sanjabi Shirazi. Iran’s Export Development Bank allocated $300 million to further boost exports to Iraq.
 
India: India transferred a $400 million oil payment to Iran’s central bank via the United Arab Emirate’s central bank. Under the interim nuclear deal that took effect in January, Tehran received $4.2 billion in blocked funds across the world. Iran was later granted access to another $2.8 billion, of which some $1.4 billion has been repatriated.
 
Turkey: President Rouhani reiterated Iran’s determination to boost its trade with Turkey to $30 billion by 2015 in a meeting with Turkish Ambassador to Tehran Reza Hakan Tekin. Bilateral trade value in the first half of 2014 totaled $6.5 billion, according to the Turkish Statistical Institute.
 
Germany: Michael Tockus, chairman of the Germany-Iran Chamber of Commerce, pledged to continue enhancing trade relations between the two countries, irrespective of the outcome of nuclear talks between Iran and the world’s six major powers. “The present improving trend will continue even if there will be no change in the West's economic sanctions against Iran,” he told reporters in Berlin.
 
United Kingdom: A group of Iranian businessmen hosted a forum in London on E.U.-Iran trade relations. The purpose of the event, held in cooperation with the European Voice newspaper, was to “evaluate the post-sanctions trade framework and investment opportunities.” No current U.K. or E.U. officials participated. But former British Foreign Secretary Jack Straw and former French Foreign Minister Hubert Védrine attended. And U.K. and U.S. officials reportedly attended as observers, according to Asharq Al-Awsat.
Tags: Economy

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