United States Institute of Peace

The Iran Primer

Obama on Iran in 2015

On Dec. 18, 2014, President Barack Obama discussed U.S. engagement with Iran in an interview with NPR News. He said that Iran has “a chance to get right with the world” by reaching a nuclear deal. Iran and the world's six major powers - the United States, Britain, France, Russia, China, and Germany - have extended the deadline for a nuclear deal to June 2015 after missing the November 2014 deadline.The following are the President’s remarks on Iran, excerpted from the full NPR interview.
 
 
NPR News: Let me ask a few questions, Mr. President, about America's place in the world and how you see it and how you'd like to move it if you can in the last couple of years that you have. We're speaking at a moment after you've announced that you're restoring diplomatic relations with Cuba. You want to reopen an embassy there. Is there any scenario under which you can envision, in your final two years, opening a U.S. embassy in Tehran?
 
President Obama: I never say never, but I think these things have to go in steps. You know, Cuba is a circumstance in which for 50 years, we have done the same thing over and over again and there hadn't been any change. And the question was, should we try something different with a relatively tiny country that doesn't pose any significant threat to us or our allies?
 
Tehran is a large, sophisticated country that has a track record of state-sponsored terrorism, that we know was attempting to develop a nuclear weapon — or at least the component parts that would be required to develop a nuclear weapon — that has engaged in disruptions to our allies, whose rhetoric is not only explicitly anti-American but also has been incendiary when it comes to its attitude towards the state of Israel.
 
So, there's a lot of history there that's different from the history between us and Cuba. And the strategic importance of Tehran is — or Iran — is different from what we face with Cuba.
 
Having said that, if we can get a deal on making sure that Iran does not have a nuclear weapon — and that deal is possible; we know the terms of what that would look like. If Iran recognizes that it is in its own interests, having already said that they're actually not interested in developing a nuclear weapon, to go ahead and prove that to the world, so that over time as it's verified, sanctions are removed, their economy begins to grow, they're reintegrated into the international community — if we can take that big first step, then my hope would be that that would serve as the basis for us trying to improve relations over time.
 
You know, I was asked very early in my presidential race back in 2007, would I meet with these various rogue regimes? And what I said then remains true: If I thought it advances American interests, yes; I believe in diplomacy, I believe in dialogue, I believe in engagement.
 
But in order for us to, I think, open that aperture with respect to Iran, we have to get this nuclear issue resolved — and there's a chance to do it, and the question's going to be whether or not Iran is willing to seize it. I think there are elements inside of Iran that recognize the opportunity and want to take it; I think there's some hardliners inside of Iran that are threatened by a resolution of this because they are so invested politically and emotionally in being anti-American or anti-Western that it's frightening for them to open themselves up to the world in this way.
 
NPR News: That raises a word that I want to bring up that former Secretary of State Clinton used in a speech the other day. She was criticized for having empathy or understanding for even enemies around the world. There are, though, military people who use empathy for the enemy, by which they mean not sympathy but understanding the enemy so you can outwit them. Do you feel that you have sufficient empathy for the Iranians, meaning do you feel you understand what it is they need to get a deal done and is it possible?
 
President Obama: I think we do, because if you look at the negotiations as they've proceeded, what we've said to the Iranians is that we are willing to recognize your ability to develop a modest nuclear power program for your energy needs — that there's a way of doing that that nevertheless gives the world assurances that you don't have breakout capacity.
 
And, you know, Iran suffered from a terrible war with Iraq in which millions of their countrymen were lost. They have legitimate defense concerns, but those have to be separated out from the adventurism, the support of organizations like Hezbollah, the threats they've directed towards Israel.
 
And so on the one hand, you need to understand what their legitimate needs and concerns are. On the other end, you don't need to tolerate or make excuses for positions that they've taken that violate international law, are contrary to U.S. interests, are contrary to the interests of our allies. They've got a chance to get right with the world. This is not just about us.
 
I mean, there's a reason why we've been able to get this far in the negotiations. We mobilized the international community at the start of my presidency — a classic example of American leadership. The sanctions worked because we didn't just get our usual allies' support of this; we got China in support of it; we have Russia that still is supportive of the position that the P5+1 has taken in negotiations.
 
So, when I came into office, the world was divided and Iran was in the driver's seat. Now the world's united because of the actions we've taken, and Iran's the one that's isolated.
 
They have a path to break through that isolation and they should seize it. Because if they do, there's incredible talent and resources and sophistication inside of — inside of Iran, and it would be a very successful regional power that was also abiding by international norms and international rules, and that would be good for everybody. That would be good for the United States, that would be good for the region, and most of all, it would be good for the Iranian people.
 
Click here for the full interview
 

US Targets Sanctions Evaders, Human Rights Abusers

           On December 30, the U.S. Department of the Treasury targeted nine individuals and entities for helping the Iranian government evade sanctions and for human rights abuses related to censorship. The Treasury also updated information related to 30 ships blocked for their affiliation with the sanctioned Islamic Republic of Iran Shipping Lines. “Although we do not support the imposition of any new nuclear-related sanctions while negotiations are ongoing, throughout the JPOA [Joint Plan of Action] period we have made clear, by word and deed, that we will continue to enforce our existing sanctions. Today’s actions underscore this commitment,” said Under Secretary for Terrorism and Financial Intelligence David S. Cohen. The following are excerpts from the press release.

 
Purchase or Acquisition of U.S. Bank Notes by the Government of Iran / Material Support to the Central Bank of Iran under Executive Order (E.O.) 13622
 
           Treasury designated the following five individuals and one entity under E.O. 13622 for materially assisting, sponsoring, or providing financial, material, or technological support for the purchase or acquisition of U.S. bank notes by the Government of Iran:  Hossein Zeidi, Seyed Kamal Yasini, Azizullah Asadullah Qulandary, Asadollah Seifi, Teymour Ameri, and Belfast General Trading.
 
          The Iranian government contracted with Zeidi and Yasini to convert Iranian funds denominated in non-Iranian local currency into U.S. dollars.  To date, these individuals and their network have effected the delivery of hundreds of millions of dollars in U.S. dollar bank notes to the Iranian government in violation of E.O. 13622.  UAE-based Zeidi was responsible for converting foreign currency into U.S. bank notes, and Yasini facilitated the delivery of U.S. bank notes to the Iranian government.
 
          Afghan national Qulandary worked with Yasini to convert Iranian government funds into U.S. dollars and deliver these bank notes to the Iranian government.  Qulandary, Yasini, and Belfast General Trading collaborated to deliver U.S. bank notes to Iran.  To date, Belfast General Trading has converted over $250 million, and Qulandary has dispatched couriers to hand carry this money to Tehran.
 
          Since mid-2014, Seifi and Ameri have each delivered hundreds of millions of dollars in U.S. bank notes to the Iranian government in contravention of E.O. 13622.
 
          Additionally, Asia Bank official Anahita Nasirbeik is being designated under E.O. 13622 for materially assisting, sponsoring, or providing financial, material, or technological support for, or goods and services in support of, the Central Bank of Iran (CBI), or the purchase or acquisition of U.S. bank notes by the Iranian government.  In mid-2014, Asia Bank converted and facilitated the delivery from Moscow to Tehran of U.S. bank notes valued at more than $10 million to representatives of the Iranian government.  Nasirbeik coordinated the deposit, conversion, delivery, and payment of the U.S bank notes.  Asia Bank is an Iranian-owned bank that has provided support to the CBI and was designated by the Treasury Department under E.O. 13622 in August 2014.
 
Sanctions Related to Iran’s Support for Human Rights Abuses
 
          Iranian information technology firm Douran Software Technologies is being designated under E.O. 13628, which targets censorship or other activities that limit the freedom of expression or assembly of the Iranian people since the June 2009 election.  Douran Software Technologies acted on behalf of The Committee to Determine Instances of Criminal Content, which was previously designated under E.O. 13628, in connection with the filtering of prohibited web pages.  Douran Software Technologies is one of the main vendors for an Iranian government project to monitor computer activity.
 
          Iranian company Abyssec is being designated under E.O. 13553 for providing support to Iran’s Islamic Revolutionary Guard Corps (IRGC), which was designated under E.O. 13553 in June 2011 for committing serious human rights abuses.  Abyssec was used by the IRGC to train its employees in cyber tradecraft and to develop offensive information operations capabilities.  Abyssec assisted the IRGC with hacking projects involving web applications and web server services.  Abyssec was considered a critical component of the IRGC's cyber program.  E.O. 13553 targets human rights abuses perpetrated by officials of the Iranian government and persons acting on behalf of the Iranian government since the June 2009 election.
 
Click here for the full announcement.
 

Politics in 2014: Rouhani's Tough Year

            It was a year of political paradoxes for President Hassan Rouhani. He faced challenges from the other two branches of government—the judiciary and parliament—as well as limits on his powers by the virtually omnipotent Supreme Leader, Ayatollah Ali Khamenei.
      Throughout the year, Rouhani made eloquent pledges to expand freedoms in the press, speech, education, and individual rights. But little actually changed. The challenges were reflected in human rights. Under the judiciary, the number of executions, including of non-violent criminals, actually went up in 2014. Journalists were detained. And several newspapers were ordered to close. Rouhani was unable to win the release of two former colleagues and presidential candidates—Hossein Mousavi and Mehdi Karroubi—who had been imprisoned since 2011.
      Parliament, a bastion of conservatives and hardliners, impeached Rouhani’s minister of science, research and technology in August. It then blocked approval of three other nominees despite Rouhani’s personal appeal on the floor of parliament. The position is key for its power to supervise most state-run universities. After diplomatic talks on Iran’s nuclear program were extended, several law-makers shouted “Down with America” on the floor of parliament.
            The paradoxes of 2014 were also reflected in social media. Top government officials including Supreme Leader Ali Khamenei, President Rouhani and Foreign Minister Javad Zarif—all had active accounts. Khamenei had Facebook, Twitter and Youtube accounts. But ordinary Iranians were banned from using them all. Iran was even working on its own infrastructure to control access to all internet content. It also began filtering mobile phone applications, shutting down virtual private networks, and cracking down on on-line activists.
 
Highlights
 
Iranians still receiveded harsh prison sentences for online activism. Major social media platforms like Twitter and Facebook remained blocked.
Four journalists, including Washington Post reporter Jason Rezaian, were detained in July. In October, 135 journalists wrote Rouhani a letter criticizing his administration for failing to improve the media’s working environment.
Iran still had the highest execution rate per capita in the world. More than 850 people were executed between July 2013 and July 2014.
 
Chronology
 
Feb. 20 The judiciary banned newly launched reformist newspaper Aseman for publishing an article allegedly insulting Islamic law.
 
March 6 – Khamenei warned Rouhani against loosening the administration’s grip on cultural issues.
 
April 26 The judiciary shut down reformist newspaper Ebtekar for “spreading lies,” according to the Iranian Students’ News Agency. It was the third such publication to be banned since the beginning of the year. But Ebtekar was allowed to reopen just four days later. 
 
June 2 – Amnesty International claimed that Iranian universities had seen no meaningful improvement in academic freedom since Rouhani’s inauguration.
 
June 5 – Ayatollah Mohammad Taqi Mesbah-Yazdi, an influential ultraconservative cleric, challenged Rouhani’s more liberal interpretation of Islam. Yazdi asked, mockingly, if the president had learned his Islam in England rather than at a seminary in Qom.
 
June 23 – Iranian police arrested two people for appearing singing and dancing in London-based Ajam Band’s World Cup music video.
 
June 26 – Interior Minister Abdolreza Rahmani-Fazli was summoned by parliament to explain why the ministry was not cracking down on dress code violations, such as women wearing leggings.
 
July 22 – Four journalists were detained in Tehran, including dual US-Iranian citizen and Washington Post reporter Jason Rezaian. His wife, Iranian journalist Yeganeh Salehi, was also arrested.
 
Aug. 19 – Human Rights Watch reported that more than 60 prisoners in Karaj, near Tehran, were being detained for exercising freedom of speech and peaceful assembly.
 
Sept. 18 – Six young Iranians received a suspended sentence of six months imprisonment and 91 lashes for appearing in a video dancing along to Pharrell Williams’ “Happy” that went viral in May.
 
Sept. 20 – Iran’s judiciary wrote a letter to Communications Minister Mahmoud Vaezi giving him one month to shut down WhatsApp, Viber, and Tango. Jokes about Ayatollah Ruhollah Khomeini had been circulating on the messaging apps.
 
Early October – Yeganeh Salehi, wife of Washington Post correspondent Jason Rezaian, was released on bail.
 
Oct. 3 – More than 130 journalists wrote a letter criticizing Rouhani for not fulfilling campaign promises to create a better working environment for the media.
 
Oct. 7 – Rouhani called for greater academic freedom during a speech at Tehran University. He claimed that restrictions in academia stifle innovation, and that Iran should increase interaction with the rest of the world for the sake of scientific progress.
 
Oct. 21 – Iranian police arrested four men suspected of carrying out acid attacks on women in Isfahan.
 
Oct. 22 – Thousands of Iranians protested in Isfahan against the acid attacks.
 
Oct. 25 – Iran executed a woman convicted of killing a man trying to sexually assault her, despite Rouhani’s efforts to commute her sentence.
 
Oct. 27 – Four journalists from the Iranian Students News Agency were arrested for their connecting the acid attacks to the government’s strict dress code in their news coverage.
 
Nov. 3 – An Iranian woman, who was arrested in June after attempting to attend a men’s volleyball match, was sentenced to a year in prison.
 
Nov. 11 Iran’s committee for filtering the internet announced a two-month deadline for Iran’s government to regularize the use of Instagram. If authorities fail to gain access to the site’s contents, it will likely be blocked.
 
Nov. 18 – The U.N. General Assembly passed a resolution calling on Iran to end human rights abuses.
 
Nov. 26 – Iran’s parliament approved President Rouhani’s fifth candidate for education minister. Parliament rejected Rouhani’s earlier picks due to their suspected links to the 2009 protests.
 
Parliament also approved Mohammad Farhadi as the new minister of science, research and technology. In August, conservative lawmakers sacked Reza Faraji Dana on charges of trying to bring back reformist professors and students purged under Ahmadinejad.
 
Dec. 1 – Iran’s Interior Ministry approved the reformist “Voice of Iranians” party led by Sadegh Kharazi.
 
Dec. 7 – Washington Post journalist Jason Rezaian was formally charged during a court session. The court did not specify the charges.
 
Dec. 8 – Rouhani denounced corruption in what was widely interpreted as criticism of the Revolutionary Guards. “If guns, money, newspapers and propaganda all gather in one place, one can be confident of corruption there,” he said at a conference.

Photo credits: President Rouhani by Robin Wright,

Diplomacy in 2014: Better Ties, But No Deal

Cameron Glenn
 
            Tehran reached out to the world in 2014. But President Hassan Rouhani’s attempts to improve relations stalled, as hardliners in parliament pushed back.
            The world initially responded. Western diplomats and businessmen flocked to Iran, hopeful that Rouhani’s presidency would generate new opportunities. Prospects of a nuclear deal also changed the diplomatic ground rules: The Islamic Republic was no longer automatically the pariah. Sanctions were eased, and Tehran had new potential for investment for the first time in years.
            In a major reversal, even Washington and Tehran opened a direct dialogue—on the sidelines of nuclear talks—after 35 years of tension. Secretary of State John Kerry and Iranian Foreign Minister Mohammed Javad Zarif met frequently one-on-one; they called each other by their first names. Kerry said Zarif “approached these negotiations in good faith and with seriousness of purpose, and that’s what it takes to try to resolve the kind of difficult issues here.”
            But Rouhani’s administration faced opposition from hardliners at home. One group of politicians, academics, and activists held the “We’re Worried” conference in May to protest a potential nuclear deal. A few members of parliament reportedly chanted “Down with America” after the latest extension of talks in November.
            In the Middle East, Iran attempted to better its relations with Sunni Gulf neighbors even as it continued arming and supporting Shiite allies. In Iraq, it walked away from Prime Minister Nouri al Maliki, a long-time ally, after the Islamic State of Iraq and Syria seized a wide swath of territory. Tehran also provided arms and advice to Iraq’s Kurdish militia to help contain ISIS. In November, Iranian jets conducted airstrikes against ISIS targets in Iraq.
            Iran also armed Shiite groups. In Yemen, Tehran reportedly funded Houthis, also known as Partisans of God, a Zaidi Shiite rebel group that seized control of the capital of Sanaa in September. The Islamic Republic also continued to send major arms to Hezbollah, the Lebanese Shiite militia that is Iran’s most important ally in the region.

Highlights
 

● On January 20, Iran and the world’s six major powers implemented the Joint Plan of Action, an interim agreement that constrained Tehran’s nuclear program for six months in exchange for modest sanctions relief. On July 19, the two sides extended nuclear talks until November 24. After missing the second deadline, negotiators announced another extension of seven months.

● By late April, hundreds of politicians and businesspeople from Europe, Asia, Africa, and Latin America had visited Iran to build new ties in anticipation of a nuclear deal.

● On June 17, Britain announced its intention to re-open its embassy in Tehran. But hardliners in Iran mounted resistance against restoring diplomatic ties, particularly in September after British Prime Minister David Cameron criticized Iran’s “support for terrorist organizations.”
 
● In December, Iranian officials confirmed they conducted airstrikes on ISIS targets in Iraq at the request of the Iraqi government.
 
Chronology
 
Jan. 6 – Former U.K. Foreign Minister Jack Straw met Zarif, Speaker of Parliament Ali Larijani.
Relations between the two countries had been strained since November 2011, when student protestors angered at London’s imposition of sanctions stormed the U.K. Embassy in Tehran.
 
Jan. 20 – The Joint Plan of Action, the interim nuclear deal, entered into force. The International Atomic Energy Agency reported that Iran reduced stockpile of uranium enriched to 20 percent and halted construction on the heavy water reactor in Arak. The United States and the European Union announced steps to suspend a limited number of sanctions and allow the release of Iran’s oil revenues frozen in other countries.
 
Jan. 26 – South Korean speaker of the national assembly Kang Change Hee met Rouhani to discuss expanded trade and Korean investment in Iran’s energy sector.
 
Jan. 27 – A delegation of global leaders led by former U.N. Secretary General Kofi Annan, known as “The Elders,” visited Iran to encourage new dialogue between Tehran and the outside world.
 
Jan. 29 – Turkish Prime Minister Recep Tayyip Erdogan visited Iran to strengthen bilateral economic ties and discuss the Syrian crisis.
 
Feb. 2 – Kerry and Zarif discussed upcoming nuclear negotiations on the margins of the Munich Security Conference.
 
Feb. 3 – Swedish Foreign Minister Carl Bildt visited Iran. More than 100 French businesspeople arrived in Tehran to discuss economic ties.
 
Feb. 20 – Britain officially restored diplomatic ties with Iran; both countries appointed non-resident charges d’affaires as a first step in re-opening their embassies.
 
Feb. 28 – Polish Foreign Minister Radoslaw Sikorski visited Iran.
 
March 1 – Spanish Foreign Minister Jose Manuel Garcia-Magallo visited Tehran to discuss expanding economic ties.
 
March 5 – Zarif met with Japan’s prime minister and foreign minister in Tokyo. Japan expressed interest in investing in Iran’s oil, natural gas, and petrochemicals industry.
 
March 7 – Bahraini officials accused Iran of playing a role in a March 3 bombing north of Manama.
 
March 8 – E.U. foreign policy chief Catherine Ashton visited Tehran to discuss improving relations. It was the first visit by an E.U. high representative since 2008.
 
March 12 – Rouhani visited Oman to discuss economic ties and tensions with Gulf states. Rouhani signed an agreement to export $10 billion cubic meters of gas per year to Oman and build a $1 billion pipeline across the Gulf.
 
March 15 – Greek Vice President and Foreign Minister Evangelos Venizelos visited Iran.
 
March 16-17 – Belarus Foreign Minister Vladimir Makei met Zarif and business leaders. Tajik Foreign Minister Sirojiddin Aslov visited Tehran.
 
March 19 –Iran and the six major powers held nuclear negotiaitions. Ashton and Zarif described their discussions as “substantive and useful.”
 
March 27 – Rouhani and Zarif visited Kabul to discuss cooperation with Afghanistan.
 
April 7-9 –Iran and the major powers met in Vienna for talks on a final nuclear agreement.
 
April 9 – Azeri President Ilham Aliyev met Rouhani to discuss boosting bilateral ties.
 
April 16 – A delegation of Swiss lawmakers met Iranian parliamentarians.
 
April 17 – The U.S. State Department announced steps to release $450 million installment of frozen Iranian funds, after the IAEA verified Tehran was complying with the interim nuclear agreement.
 
April 22 – A French parliamentary delegation met Iranian members of parliament to discuss economic opportunities. Latvian Foreign Minister Edgars Rinkēvičs met with Rouhani, Zarif.
 
April 26 – Austrian Foreign Minister Sebastian Kurz met Zarif and Parliamentary Speaker Ali Larijani to discuss strengthening economic and cultural cooperation.
 
April 27 – Senior British diplomat Simon Gass visited Tehran to discuss boosting ties and reopening diplomatic missions.
 
April 28 – Nicaraguan Foreign Minister Samuel Santos Lopez visited Rouhani in Tehran to discuss strengthening bilateral economic ties.
 
May 3-4 – More than 100 lawmakers, students, academics, and activists held a conference entitled “We’re Worried” and accused Rouhani’s administration of caving to Western demands in the nuclear talks.
 
May 13-16 – Iran and the major powers met in Vienna, but the talks ended without tangible progress. 
 
June 9-10 A U.S. team held bilateral talks with Iran in Geneva to prepare for the next round of nuclear talks. Rouhani visited Turkey in the first visit by an Iranian leader in 18 years. The two sides failed to agree on a price for natural gas imports from Iran, but signed ten cooperation agreements on other issues.
 
June 17 – Britain announced that it intended to reopen its embassy in Tehran.
 
July 3-19 Iran and the world’s six major powers began marathon talks on July 3, less than three weeks from the deadline. On July 19, the two sides announced an extension through November 24, the one-year anniversary of the interim agreement. Iran agreed to take further steps to decrease its 20 percent enriched uranium stockpile. The major powers agreed to repatriate $2.8 billion in frozen funds to Iran.
  
Sept. 18-26 – Iran and six major world powers resumed talks in New York. Kerry and Zarif also discussed the threat posed by ISIS.
 
Sept. 22-25 – Rouhani met several world leaders in New York during the U.N General Assembly. He called for international cooperation against ISIS. On September 24, he held talks with British Prime Minister David Cameron in the first meeting between an Iranian president and a British prime minister since the 1979 revolution. 
 
Sept. 25 – Chairman of Iran’s National Security and Foreign Policy Committee Alaeddin Bouroujerdi urged parliament to block the reopening of the British embassy in Tehran, after British Prime Minister David Cameron condemned Iran’s “support for terrorist organizations.”
 
Oct. 14-16 – Iran and the six major powers made a “little progress” at talks in Vienna.
 
Oct. 21 – Iraqi Prime Minister Haider al Abadi made his first visit to Iran since taking office in September. “Choosing Iran as my first destination after taking office indicates the depth of ties,” he said.
 
Nov. 9-11 Kerry, Zarif, and Ashton met for two days of trilateral talks in Oman, followed by a day of meetings between Iran and all six major powers.
 
Nov. 19-24 – Iran and six major powers held talks in Vienna. On November 19, the U.S. and Iranian teams held bilateral talks. Kerry, Ashton, and Zarif held another round of discussions on Nov. 21. The two sides missed the November 24 deadline for a deal and announced that talks would be extended until June 30, with the goal of a political agreement by March.
 
Nov. 25 - Lawmakers chanted “Down with America” after Deputy Speaker of Parliament Mohammad Hassan Aboutorabi-Fard expressed support for the extension of nuclear talks.
 
Nov. 26 – Bahraini officials denounced Iran’s interference in Bahrain’s domestic affairs after the Iranian Foreign Ministry issued a statement condemning the raid of a Shiite cleric’s home.
 
Dec. 3 – A car bomb exploded in Sanaa, Yemen, allegedly targeting the Iranian ambassador. Al Qaeda in the Arabian Peninsula claimed responsibility for the attack.
 
Dec. 5 – Iranian Deputy Foreign Minister Ebrahim Rahimpour confirmed that Iran had conducted airstrikes against ISIS targets in Iraq, at the request of the Iraqi government. Rahimpour also said that Iran had been assisting Kurdish fighters in the north.
 

Photo Credits: EU External Action Service and  U.S. State Department via Flickr

 

Tags: Diplomacy

Economy in 2014: Some Fixes, Few Solutions

Garrett Nada

            President Hassan Rouhani made significant headway in stabilizing Iran’s economy in 2014. During his first full calendar year in office, he began addressing mismanagement and corruption from President Mahmoud Ahmadinejad’s tenure. His policies brought inflation down from 39 percent to 17 percent. After two years of recession, Iran’s economy was expected to grow by 1.5 percent.
     But the Islamic Republic still faced daunting challenges. General unemployment was 10 percent and youth unemployment was more than double the national average, reaching 24 percent. Some seven million Iranians, about eight percent of the population, were also living in extreme poverty.
      Rouhani took a pragmatic approach to domestic reforms, in contrast to the inefficient populist policies of the Ahmadinejad years. In April, the government cut subsidies on gasoline, which sent prices soaring by 75 percent. It also appealed affluent and middle-class Iranians to forego $18 monthly handouts initiated under Ahmadinejad. Although 73 million people, or about 95 percent of the population signed up, Tehran projected monthly savings of $482 million because 2.4 million waived the payments.
            Nuclear diplomacy offered a slight reprieve too. The interim deal—implemented in January and extended twice in July and November—suspended some sanctions and allowed repatriation of oil revenues frozen in banks abroad. Iran gained access to $4.2 billion in frozen assets during the first six months, then another $2.8 billion from July to November.
            Anticipation of a nuclear agreement that eased sanctions generated international commercial interest in Iran. At the World Economic Forum, Rouhani appealed for new investment. Dozens of groups from Europe, Asia and Latin American visited Iran to assess opportunities and build relationships. In October, Boeing’s small sale of aircraft manuals, drawings and navigation charts to Iran Air carried symbolic weight as the first transaction between U.S. and Iranian aerospace companies since the 1979 U.S. Embassy takeover.
            But Tehran’s failure to get a deal with the world’s six major powers—and in turn ease more sanctions—was a major impediment to generating new jobs, new investment and new revenues. Recovery would require increased access to foreign exchange, oil markets and global financial flows.
            In 2014, Rouhani targeted corruption to account for billions lost during the Ahmadinejad years. An investigation of celebrity businessman Babak Zanjani revealed a deep network of corruption that extended from Iran to Turkey, Tajikistan to Malaysia. Zanjani also owed Iran’s oil ministry $2 billion. The Ahmadinejad administration reportedly had Zanjani help evade sanctions and sell oil abroad and transfer money through overseas banks. But Zanjani apparently never transferred the money back to the oil ministry.
            Plummeting oil prices were Iran’s biggest challenge. In December, Rouhani was forced to present a budget for 2015 based on an average oil price of only $70 per barrel, slashed from $100 per barrel in the 2014 budget. He also vowed to reduce Iran’s dependence on oil from an average of 45 percent of all revenues to about 31.5 percent.
            At the same time, however, the Rouhani government proposed a 33 percent hike in defense spending. The proposal notably included a 50 percent increase, to about $6.5 billion, for the Revolutionary Guards, a reflection that Iran had begun to build diplomatic bridges but still had broad and basic security concerns.

Highlights

● Inflation was down to about 17 percent in December from about 39 percent in January.
 
● Under the interim nuclear deal, Iran was granted moderate sanctions relief and access to some $7 billion in frozen assets held overseas.
 
● Joblessness remained a key problem, with youth unemployment at 24 percent and general unemployment at 10 percent.
 
● Dozens of political and business delegations visited Iran in 2014. But most companies held back from investing or signed memorandums of understanding stipulating that business would begin only when sanctions are lifted.
 
● At various points during the year, The World Bank, the International Monetary Fund and The Economist projected Iran’s economy to grow at least 1.5 percent by the end of 2014.
 
● Rouhani’s government took some steps toward domestic reform, including cutting the subsidy on gasoline and tackling corruption.
 
Chronology
 
Jan. 7 Minister of Science, Research and Technology Reza Faraji Dana estimated that brain drain cost Iran’s economy some $150 billion annually as a result of 150,000 highly skilled individuals emigrating each year. 
 
Jan. 14 In its Global Economic Prospects, The World Bank estimated that Iran’s economy shrunk by 1.7 percent in 2013. The bank projected a growth rate of 1.5 percent for 2014. 
 
Jan. 23 President Rouhani announced Iran’s intention to “reopen trade, industrial and economic relations” with all of its neighbors in an address at the World Economic Forum. He claimed Iran’s economy “has the potential to be among the world’s top 10 in the next three decades.”

Feb. 5 In a televised interview, President Rouhani expressed regret for problems with distribution of food rations, after three people reportedly died waiting in line in subzero weather. His administration had extended the food aid program from 3 million people to 17 million to counter inflation. Rations included cheese, chicken, cooking oil, eggs and rice.

Late Feb. India’s January oil shipments from Iran more than doubled compared to December, resulting in the highest monthly shipments since February 2012, due largely to Indian purchases after sanctions were eased.

March 12 Iran sealed a deal to export 10 billion cubic meters of gas per year to Oman during President Rouhani’s first visit to Muscat. The 25-year deal was valued at some $60 billion. Oman committed to building an underwater pipeline to Iran.
 
April 14 The Statistical Center of Iran reported that the average unemployment rate for the Persian year that ended on March 20 was 10.4 percent, down from 12.2 percent in March 2013. Female unemployment was 19.8 percent, more than double the rate for men at 8.6 percent. Youth unemployment was even higher at 24 percent for those between ages 15 and 24.
 
April 14 Deputy Energy Minister Rahim Meydani warned that water shortfalls could impact nearly half of Iran’s population, some 37 million people, in the summer if consumption wasn’t cut by up to 20 percent.
 
April 16 The IMF said Iran’s economy showed signs of stability under President Rouhani, but noted that the “near-term economic outlook remains uncertain,” in its first comprehensive report in two years.

April 23 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 was projected to save some $482 million per month after some 2.4 million waived the handouts.
 
April 25 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.
 
April 27 – Rostam Ghasemi, head of the Iran-Iraq Economic Development Committee and a former oil minister, traveled to Erbil and signed an agreement with Iraq’s 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.
 
April 29 – 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 by repeated delays.
 
May 6- 9 – Tehran hosted its 19th annual International Oil, Gas, Refining and Petrochemical Exhibition, drawing some 600 energy companies from 32 countries. Some 1,200 domestic companies attended the show.
 
Mid-May – The IMF projected real GDP growth rates of 1.5 percent for 2014 and 2.3 percent for 2015.
 
May 24 Billionaire businessman Mahafarid Amir Khosravi was executed at Evin prison over a scandal that cost 14 state-owned and private banks almost $2.6 billion, reportedly the largest fraud in Iran’s history.
 
Late May  Tehran and Islamabad extended the deadline to complete the multi-billion-dollar gas pipeline from December 2014 to December 2015. The nearly 1,000 mile pipeline would help Pakistan deal with its overwhelming energy needs.
 
June 9-10Iran and Turkey signed 10 cooperation agreements on tourism, joint ventures and customs cooperation during President Rouhani’s visit to Ankara, the first official visit by an Iranian president in 18 years. Turkey sought a discount on Iranian gas but the two sides failed to agree on a price.
 
June 23 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.
 
June 23 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.
 
June 26 India paid Iran $550 million to partly clear pending oil dues, in accordance with the interim nuclear deal that allows Tehran to repatriate blocked funds across the world.
 
June 29 Iran transferred about $776.3 million worth of shares of state-run companies to the private sector in spring 2014, according to Tasnim News Agency.
 
June 29 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 revealed plans to export 10,000 cars to Russia by 2015.
 
July 8 India paid a second tranche of $550 million to Iran in oil payments under the interim nuclear deal.
 
July 24 – India paid a third tranche of $550 million to Iran in oil payments under the interim nuclear deal. 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.
 
July 29 – The cumulative impact of U.S. sanctions since 2011 cost Iran some $120 billion in oil revenues as of July, 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 the Senate Committee on Foreign Relations.
 
July 31China, 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.
 
Sept. 25 The Central Bank of Iran announced that the economy grew for the first time in two previous Persian years. The economy expanded 4.6 percent in the first quarter of the year that started on March 21.
 
Oct. 4 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.
 
Oct. 9 Iran’s economy was projected to grow 2.2 percent in terms of real gross domestic product in 2015, according to the IMF’s World Economic Outlook for October.
 
Oct. 22 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. Embassy takeover.
 
Oct. 26 Some seven million Iranians, about eight percent of the population, were living in extreme poverty, according to Minister of Labor, Cooperatives and Social Welfare Ali Rabiei.  
 
Oct. 29 Crude oil revenues were cut by about 30 percent, according to President Rouhani. The president was likely referring to falling market prices worldwide.
 
Oct. 29  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 measured regulations affecting 11 areas of the life of a business.
 
Nov. 10Government spokesperson Mohammad Bagher Nobakht told the state news agency that the Supreme Administrative Council approved the reinstitution of the Planning and Budget Organization, which was merged with another organization in 2000 under President Mohammad Khatami and dissolved by President Mahmoud Ahmadinejad in 2007. 
 
Nov. 20 India paid another $400 million to Iran in oil payments under the interim nuclear deal.
 
Nov. 26 South Korea transferred $500 million to Iran in oil payments.
 
Dec. 1 The government implemented a 30 percent increase in bread prices. Mojtaba Khosrotaj, the deputy minister of industry, mines and trade, said the decision was made after some 70,000 bakeries complained about low prices.
 
Dec. 1 Iran’s trade deficit increased by less than $3 billion in the first eight months of the Iranian year that started in March, according to official customs data. Iran imported some $34 billion worth of goods, mainly food and automobiles, from China, India, South Korea and Turkey while it exported about $31 billion worth of goods, mainly to Afghanistan, China, India, Iraq and the United Arab Emirates.  
 
Dec. 1 Tehran hosted an international auto conference, which gathered more than 500 representatives from some 250 companies and 30 countries. The French ambassador to Tehran, who attended the event, said that his country’s companies are just waiting for constrains imposed by sanctions to loosen before investing.
 
Dec. 2During a visit to Tehran, Qatar’s minister of labor signed a memorandum of understanding that would send Iranian workers to the Gulf country. The move was aimed at helping Iran with its unemployment problems by providing Qatar with skilled workers. 
 
Dec. 3 President Rouhani attended the inauguration of a new 570-mile railroad connecting Iran to Turkmenistan and Kazakhstan that took seven years to build.
 
Dec. 4Parliament passed a resolution that would allow the taxing of religious foundations and military-linked companies, including those overseen by the supreme leader.
 
Dec. 7President Rouhani presented his budget of some 8,400 trillion rials, or about $312 billion at the official exchange rate, to parliament. It was based on an average oil price of about $70, down $30 compared to last year. The budget also included a 33 percent hike in defense spending.
 
Dec. 9Iran and Pakistan signed five memorandums of understanding to increase cooperation and enhance trade ties. One memorandum aimed to establish a sisterhood relationship between Iran’s ports of Shahid Rajaee and Chabahar with Pakistan’s ports of Karachi and Gwadar.
 
Dec. 11More than 722,300 cars were reportedly manufactured since March, indicating nearly a 70 percent growth compared to the same period last year.
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