United States Institute of Peace

The Iran Primer

Economic Trends : Month of April

Garrett Nada

      The biggest news in April was a gasoline price hike as President Rouhani began long-delayed subsidy reform. The cost of a liter jumped 75 percent; consumption reportedly declined by half within days. The move follows Supreme Leader Ayatollah Ali Khamenei’s warning that Iran will have to develop an “economy of resistance” to handle hardships. Additional cutbacks planned for food, water and electricity subsidies may have deep political and social impact—and potential opposition. But if consumption of water is not curbed, Iran could face water shortages this summer because of misuse or overuse of a dwindling resource.

            The International Monetary Fund reported that Rouhani’s government has taken effective steps toward economic stability. But economists also warned that more comprehensive reforms are needed to spark growth and create new jobs. The Statistical Center of Iran reported that youth unemployment averaged 24 percent during the previous Persian year, which ended on March 20. 
            Despite the uncertain outlook for Iran’s economy, several European delegations – from Austria, Britain, France and Switzerland—visited Tehran in April to strengthen bilateral ties and explore future trade. Iran’s non-oil exports actually rose by 10.4 percent compared to the same month in 2013. But oil exports fell for the second month in a row, down to 1.1 million barrels per day from 1.3 million in March. The following is a run-down of the top economic stories, with links, and videos of Rouhani’s comments in April.
Subsidies: 73 million citizens — some 95 percent of Iranians — signed up for cash handouts, despite government attempts to discourage affluent and middle-class families from registering for the $18 monthly payments. Tehran is projected to save some $482 million per month after some 2.4 million waived the handouts. Rouhani pledged to be transparent about how the money will be spent.


Gasoline: Subsidy cuts on gasoline raised the price of gasoline 75 percent to 7,000 rials for the first 60 liters, up from 4,000 rials. The price of each additional liter beyond 60 was raised to 10,000 rials from 7,000. Gasoline consumption was nearly halved in the days following the April 25 subsidy cut.
Natural gas: Iran is on course to become the world’s largest importer of natural gas by 2025 unless it controls rising consumption, according to the head of Iran’s Ministry of Petroleum Research Center.
Utilities: Electricity and water prices have risen by 20 percent on average since March.
IMF report: The International Monetary Fund reported that Rouhani’s administration has taken important steps to lower inflation. But economists warned that “Iran’s near-term economic outlook remains uncertain.”
Corruption: Iran’s judiciary has given Babak Zanjani until March 2015 to pay back his $2 billion debt to the National Iranian Oil Company. The businessman was allegedly involved in skirting oil sanctions and financial corruption. He never forwarded the oil revenue to the oil ministry, citing sanctions-related difficulties
Military’s role: Chief of Staff Genearl Hassan Firuzbadi claimed that the armed forces have “no economic mission” but will fully support Rouhani’s government with its workforce and resources.
Inflation: The Statistical Center of Iran reported that inflation dropped 5.7 percent during the second half of the previous Persian calendar year, which ended on March 20. By the end of the year, inflation was down to 34.7 percent.
Rouhani announced that serious steps will be taken to curb inflation this year and that price hikes would be minimal.
Unemployment: The Statistical Center of Iran reported that the average unemployment rate for the Persian year that ended on March 20 was 10.4 percent. Female unemployment was 19.8 percent, more than double the rate for men – 8.6 percent. Youth unemployment was even higher at 24 percent for those between ages 15 and 24.
Exchange: The official exchange rate hovered around 25,500 rials to the dollar for much of April. Vice President for Planning and Strategic Supervision Mohammad Baqer Nobakht announced that Iran will take a phased approach to unifying the multi-tier exchange rates.
Housing: Minister of Housing and Urban Development Abbas Akhundi announced that some 700,000 Mehr housing units would be allocated to low-income families.
Water: “Tehran, along with 10 other major cities, is at risk of water shortage,” according to Deputy Energy Minister Rahim Meydani. He warned that water shortfalls could impact half of Iran’s population in summer 2014 if consumption isn’t cut by as much as 20 percent.
Oil: Reuters reported that Iran’s oil exports fell in April for the second month in a row. Exports were down to about 1.1 million barrels per day from 1.3 million in March, perhaps due to lower demand from Indian buyers.
Chinese contract canceled: The National Iranian Oil Company cancelled a $2.5 billion deal with China National Petroleum Corporation for developing the giant South Azadegan oil field. The project had been stymied be repeated delays.
Energy deal with Iraqi Kurdistan: Rostam Ghasemi, head of the Iran-Iraq Economic Development Committee and a former oil minister, traveled to Erbil and signed an agreement with the Kurdish Regional Government to build oil and natural gas pipelines. The Kurdish government would receive 3 to 4 million liters of refined oil and natural gas in return for pumping crude oil to Iran.
Exports: Non-oil exports rose by 10.4 percent to $2.82 billion in the first month of the new Persian year (March 21 to April 20) compared to the same period in 2013.
Imports: Imports grew to $2.51 billion during the first month of the Persian year, up 21.53 percent compared to the same period in 2013.
Spare aircraft parts: Boeing and General Electric announced that they received licenses from the U.S. Treasury to export certain spare parts for commercial aircraft to Iran. Sanctions relief for Iran outlined in the interim nuclear deal allowed the Treasury to issue the licenses.
Russia oil-for-goods deal: Iranian officials have reportedly made progress on brokering a $20 billion oil-for-goods deal with Russia. Moscow would buy up to 500,000 barrels a day in exchange for equipment and goods.
Turkey free trade zone: Iran’s ambassador to Ankara, Alireza Bigdeli, announced that Tehran is planning to start talks on setting up a free trade zone in Salmas city near Turkish border.
Indian payments: India is expected to pay Iran $1.65 billion in oil payments during the next three months thanks to limited sanctions relief under the interim nuclear deal, according to Reuters.
Foreign Delegations: Diplomats, lawmakers and businesspeople from the United Kingdom, France, Austria, Switzerland, Nicaragua, Latvia, and Azerbaijan visited Tehran to boost bilateral ties and trade.
Pakistan pipeline: Pakistani Foreign Ministry spokesperson Tasnim Aslam denied reports that plans to complete the multi-billion dollar natural gas pipeline from Iran to Pakistan have been scrapped. She blamed delays on international sanctions on Iran and lack of investment.
Garrett Nada is the assistant editor of The Iran Primer at USIP
Photo credits: Gas station in Arak by SaMin SAmIN (Own work) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC-BY-3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons
EVENT: The Rubik’s Cube (tm) of a Final Agreement

The clock is ticking on a nuclear deal with Iran. The deadline is July 20. An unprecedented coalition of eight Washington think tanks is hosting three discussions on the pivotal diplomacy to coincide with the last three rounds of talks. The first event — "The Rubik’s CubeTM of a Final Agreement" — on May 13 will explore the 10 disparate issues to be resolved and the many formulations for potential solutions.
The coalition includes the U.S. Institute of Peace, RAND, the Woodrow Wilson Center, the Arms Control Association, the Center for a New American Security, the Stimson Center, the Partnership for a Secure America, the Ploughshares Fund, and staff from the Brookings Institution and the Center for Non-Proliferation Studies.
9:30- 9:35 AM: Welcome
    Ambassador William Taylor
    Vice President, Center for Middle East & Africa, U.S. Institute of Peace
9:35- 10:15 AM: Moderated Panel Discussion
    Robert Einhorn
    Senior Fellow, Brookings Institution and former Special Advisor to the Secretary of State
    Alireza Nader
    RAND Corporation and author of Iran After the Bomb
    Joe Cirincione
    President of the Ploughshares Fund
    Colin Kahl, Moderator
    Center for New American Security and former Deputy Assistant Secretary of Defense
10:15-11:00 AM: Q&A

Report: Improvement in Iran Press Freedom

            Press freedom in Iran has improved for the first time since 1999, according to a new report by Freedom House marking World Press Freedom Day. Despite the marginal progress, Iran still ranked as one of the 10 least-free countries in the world— along with Cuba, North Korea, Syria and others.The organization ranked countries on a 100-point scale with lower numbers signifying greater press freedom. The Islamic Republic’s score fell from 92 to 90 in 2013 “based on a relative improvement in the number of imprisoned journalists and reporters’ increased willingness to push the boundaries on political coverage.” The following are excerpts from the report.

            The world’s eight worst-rated countries, with scores of between 90 and 100 points, remain Belarus, Cuba, Equatorial Guinea, Eritrea, Iran, North Korea, Turkmenistan, and Uzbekistan. In these states, independent media are either nonexistent or barely able to operate, the press acts as a mouthpiece for the regime, citizens’ access to unbiased information is severely limited, and dissent is crushed through imprisonment, torture, and other forms of repression. In 2013, conditions remained largely stable in the majority of these countries, although slight improvements could be seen in some due to the growing ability of citizens to access alternatives to state propaganda, via satellite television, internet-based news platforms, or the circulation of thumb drives and DVDs… [A]fter several years of decline in Iran, the country’s score bounced back from 92 to 90 points in 2013 based on a relative improvement in the number of imprisoned journalists and reporters’ increased willingness to push the boundaries on political coverage, including on the June presidential election.
Iran's Press Freedom Score, 1993-2013
The lower the numeric score, the greater the press freedom.
10 Worst-Rated Countries on Press Freedom (out of 197 rankings)

Bahrain - 188
Syria - 189
Equatorial Guinea - 190
Cuba - 190
Iran - 190
Belarus - 193
Eritrea - 194
Turkmenistan - 195
Uzbekistan - 195
North Korea - 197
Click here for the full report.

US Report on Iran’s Support of Extremism

      Iran used its Islamic Revolutionary Guards Corps Qods Force and regional proxies to “implement foreign policy goals, provide cover for intelligence operations and create instability in the Middle East” in 2013, according to a new report by the State Department. Tehran also continued supporting Palestinian militants in Gaza and its Lebanese proxy, Hezbollah – which has played a key role in defending the Assad regime in Syria. The following is an excerpt from the Bureau of Counterterrorism’s annual report.

            Designated as a State Sponsor of Terrorism in 1984, Iran continued its terrorist-related activity, including support for Palestinian terrorist groups in Gaza, and for Hizballah. It has also increased its presence in Africa and attempted to smuggle arms to Houthi separatists in Yemen and Shia oppositionists in Bahrain. Iran used the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and its regional proxy groups to implement foreign policy goals, provide cover for intelligence operations, and create instability in the Middle East. The IRGC-QF is the regime’s primary mechanism for cultivating and supporting terrorists abroad. 
            Iran views Syria as a crucial causeway in its weapons supply route to Hizballah, its primary beneficiary. In 2013, Iran continued to provide arms, financing, training, and the facilitation of Iraqi Shia fighters to the Asad regime’s brutal crackdown, a crackdown that has resulted in the death of more than 100,000 civilians in Syria. Iran has publicly admitted sending members of the IRGC to Syria in an advisory role. There are reports indicating some of these troops are IRGC-QF members and that they have taken part in direct combat operations. In February, senior IRGC-QF commander Brigadier General Hassan Shateri was killed in or near Zabadani, Syria. This was the first publicly announced death of a senior Iranian military official in Syria. In November, IRGC-QF commander Mohammad Jamalizadeh Paghaleh was also killed in Aleppo, Syria. Subsequent Iranian media reports stated that Paghaleh was volunteering in Syria to defend the Sayyida Zainab mosque, which is located in Damascus. The location of Paghaleh’s death, over 200 miles away from the mosque he was reported to be protecting, demonstrated Iran’s intent to mask the operations of IRGC-QF forces in Syria. 
            Iran has historically provided weapons, training, and funding to Hamas and other Palestinian terrorist groups, including the Palestine Islamic Jihad (PIJ) and the Popular Front for the Liberation of Palestine-General Command (PFLP-GC), although Hamas’s ties to Tehran have been strained due to the Syrian civil war. Since the end of the 2006 Israeli-Hizballah conflict, Iran has also assisted in rearming Hizballah, in direct violation of UNSCR 1701. Iran has provided hundreds of millions of dollars in support of Hizballah in Lebanon and has trained thousands of its fighters at camps in Iran. These trained fighters often use these skills in support of the Asad regime in Syria.
            Despite its pledge to support Iraq’s stabilization, Iran trained, funded, and provided guidance to Iraqi Shia militant groups. The IRGC-QF, in concert with Hizballah, provided training outside of Iraq as well as advisors inside Iraq for Shia militants in the construction and use of sophisticated improvised explosive device technology and other advanced weaponry. Similar to Hizballah fighters, many of these trained Shia militants then use these skills to fight for the Asad regime in Syria, often at the behest of Iran.
            On January 23, 2013, Yemeni authorities seized an Iranian dhow, the Jihan, off the coast of Yemen. The dhow was carrying sophisticated Chinese antiaircraft missiles, C-4 explosives, rocket-propelled grenades, and a number of other weapons and explosives. The shipment of lethal aid was likely headed to Houthi separatists in Northern Yemen. Iran actively supports members of the Houthi movement, including activities intended to build military capabilities, which could pose a greater threat to security and stability in Yemen and the surrounding region. 
In late April 2013, the Government of Bosnia declared two Iranian diplomats, Jadidi Sohrab and Hamzeh Dolab Ahmad, persona non grata after Israeli intelligence reported they were members of Iran’s Ministry of Intelligence and Security. One of the two men had been spotted in India, Georgia, and Thailand, all of which were sites of a simultaneous bombing campaign in February 2012, according to Israeli intelligence. Both diplomats were subsequently expelled from Bosnia. 
            On December 29, 2013, the Bahraini Coast Guard interdicted a speedboat filled with weapons and explosives that was likely bound for Shia oppositionists in Bahrain, specifically the 14 February Youth Coalition (14 FYC). Bahraini authorities accused the IRGC-QF of providing opposition militants with explosives training in order to carry out attacks in Bahrain. The interdiction led to the discovery of two weapons and explosives cache sites in Bahrain, the dismantling of a car bomb, and the arrest of 15 Bahraini nationals.
            Iran remained unwilling to bring to justice senior al-Qa’ida (AQ) members it continued to detain, and refused to publicly identify those senior members in its custody. Iran allowed AQ facilitators Muhsin al-Fadhli and Adel Radi Saqr al-Wahabi al-Harbi to operate a core facilitation pipeline through Iran, enabling AQ to move funds and fighters to South Asia and also to Syria. Al-Fadhli is a veteran AQ operative who has been active for years. Al-Fadhli began working with the Iran-based AQ facilitation network in 2009 and was later arrested by Iranian authorities. He was released in 2011 and assumed leadership of the Iran-based AQ facilitation network. 
            Iran remains a state of proliferation concern. Despite multiple UNSCRs requiring Iran to suspend its sensitive nuclear proliferation activities, Iran continued to violate its international obligations regarding its nuclear program. For further information, see the Report to Congress on Iran-related Multilateral Sanctions Regime Efforts (November 2013), and the Report on the Status of Bilateral and Multilateral Efforts Aimed at Curtailing the Pursuit of Iran of Nuclear Weapons Technology (September 2012). 
Click here for the full report.  

Rouhani on Freedom, Economy & Nukes

            On April 29, President Hassan Rouhani defended his administration’s foreign and domestic policies in a primetime address on state television. He dismissed hardliners who have opposed his outreach to the West and economic reforms that have recently raised prices. Rouhani said that he is proud of his government for creating an atmosphere in which citizens can criticize policies – “even though sometimes [they] make a mountain out of a molehill.” The president was also upbeat about prospects for nuclear negotiations and the lifting of international sanctions. The following are excerpted remarks from his semi-official Twitter account.

Nuclear Negotiations and Sanctions



Foreign Affairs







US Targets Weapons, Oil Sanctions Evaders

      On April 29, the U.S. Department of the Treasury sanctioned two individuals and nine entities for evading oil sanctions and aiding Tehran’s ballistic missile program. Several of the front companies were connected to Karl Lee, who was designated several years ago for procuring missile parts for Iran. “As we have made clear, we will continue vigorously to enforce our sanctions, even as we explore the possibility of a comprehensive deal addressing Iran’s nuclear program,” said Under Secretary for Terrorism and Financial Intelligence David S. Cohen. “These actions are intended to deter future sanctions evasion and prevent Iran from procuring sensitive technologies.” The following is an excerpt from the press release.

Iran’s Missile Proliferation Activities
Treasury is sanctioning the following entities pursuant to E.O. 13382, which, among other things, targets proliferators of weapons of mass destruction and their support networks.
Karl Lee (aka Li Fangwei) Front Companies
Treasury designated eight China-based front companies for acting for or on behalf of Karl Lee, a known proliferator for Iran’s ballistic missile program.  Karl Lee (aka Li Fangwei) was designated pursuant to E.O. 13382 in April 2009, as the commercial manager of LIMMT Economic and Trade Company Ltd.  Additionally, several aliases for LIMMT were also identified in April 2009.  LIMMT Economic and Trade Company Ltd. was designated pursuant to E.O. 13382 in June 2006 for providing material support to Iran's ballistic missile program. 
Following Sino Metallurgy and Minmetals Industry Co. Ltd.’s 2009 designation as an alias for LIMMT, Karl Lee directed companies with which LIMMT had contracts to send funds to other Karl Lee front companies, including Sinotech Industry Co., Ltd. and MTTO Industry and Trade Limited.   
Lee has also used Success Move Ltd. and Sinotech Industry Co., Ltd. in his dealings with Iran and to receive funds from Iran for the purchase of goods.
Lee manages Sinotech Dalian Carbon and Graphite Manufacturing Corporation, which along with another front company, Dalian Zhongchuang Char-White Co., Ltd., has been used by Lee to send at least 23 separate shipments to Iran.  Sinotech Dalian Carbon and Graphite Manufacturing Corporation also uses MTTO Industry & Trade Limited and Karat Industry Co. Ltd., as front companies.
Dalian Zhenghua Maoyi Youxian Gongsi (aka Dalian Zenghua Trading Co., Ltd.) is also a front company Lee uses in his financial dealings with Iran.  Lee entered into a contract with a Chinese manufacturer in which the Chinese manufacturer agreed to provide an aramid fiber production line to Dalian Zenghua Trading Co., Ltd.  After the contract between Dalian Zenghua Trading Co., Ltd. and the Chinese manufacturer was signed, Lee used a bank account previously associated with Karat Industry Co., Ltd., to transmit the down payment for the Iranian company's aramid fiber production line.
Since 2013, Karl Lee has also used and continues to use Tereal Industry & Trade Limited as a front company for his dealings with Iran.
Support to Iranian Oil Sanctions Evaders
Saeed Al Aqili, Al Aqili Group LLC, and Anwar Kamal Nizami
Treasury is designating Saeed Al Aqili, the co-owner, Vice Chairman and Chief Executive Officer of Al Aqili Group LLC pursuant to E.O. 13645 for providing support in connection with deceptive oil deals for Iran.  Saeed Al Aqili uses his companies to assist Iran in selling oil in evasion of sanctions.  Treasury is also identifying Al Aqili Group LLC for being owned by Saeed Al Aqili.  Activities of Al Aqili Group LLC include arranging oil sales for the IRGC and facilitating the circumvention of oil sanctions by disguising the oil’s origin.  Saeed Al Aqili also regularly does business in Iran and has conducted financial transactions with, or on behalf of, the Central Bank of Iran and Bank Melli Iran.
Saeed Al Aqili also assists Seyed Seyyedi’s group of front companies.  Saeed Al Aqili and his representatives, working in conjunction with representatives of Sima General Trading, gave Seyyedi the authority to manage and conduct banking activities on behalf of KASB International LLC.  Seyyedi and a network of his affiliated companies, including KASB International LLC, were identified pursuant to E.O. 13599 in September 2013 for providing support to Government of Iran entities, including NIOC, the Naftiran Intertrade Company (NICO) and Sima General Trading.  Sima General Trading was identified in March 2013 pursuant to E.O. 13599 for providing support to Government of Iran entities.  KASB International LLC, also known as First Furat Trading LLC, was one of the Al Aqili Group’s subsidiary companies.
Anwar Kamal Nizami is a Dubai-based Pakistani financial facilitator for KASB International LLC and is being designated pursuant to E.O. 13645.  In his role as a financial expert, he manages the banking relationships and overall finances of KASB International LLC, which is not only affiliated with Saeed Al Aqili and Al Aqili Group LLC, but also with Seyyedi and his Iranian oil evasion network.  Nizami also works for Sima General Trading.
Identifying Information
Name: Mohamed Saeed Al Aqili
AKA: Mohamed Saeed Mohamed Al Aqili
DOB: 23 July 1955
POB: Dubai, UAE
Passport Number: A2599829
UAE ID Number: 784-1955-8497107-1
Title: Vice Chairman and Chief Executive Officer, Al Aqili Group LLC
Name: Al Aqili Group LLC
AKA: Al Aqili Group of Companies
Address: Oud Metha Tower, 10th Floor, PO Box 1496, Dubai UAE
Website: www.aqili.com 
E-mail: info@aqili.com 
Name: Anwar Kamal Nizami
DOB: 19 April 1980
Nationality: Pakistani
Passport Number: AE9855872
Title: Accounts Manager, First Furat Trading LLC
Name: Sinotech Industry Co., Ltd.
Address: No. 190 Changjiang Road, Dalian City, China
Name: MTTO Industry and Trade Limited
Address: No. 9 Hongji Street, Xi Gang District, Dalian City, China
Name: Success Move Ltd.
Address: No. 1109 Zhongshan Road, Dalian, China
Name: Sinotech Dalian Carbon and Graphite Manufacturing Corporation
Address: Dalian, China
Name: Dalian Zhongchuang Char-White Co., Ltd.
Address: 2501-2508 Yuexiu Mansion, No. 82 Xinkai Road, Dalian, Liaoning Province, 11601
Name: Karat Industry Co., Ltd.
Address: No. 110 Baiyun Street, Dalian, Liaoning, China
Name: Dalian Zhenghua Maoyi Youxian Gongsi
AKA: Dalian Zenghua Trading Co., Ltd. 
Address: Dalian, China
Name: Tereal Industry and Trade Limited
Address: No. 9 Hongji Street, Xi Gang District, Dalian City, China

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