Friday, December 31, 2010

Iran-India Oil Dispute Resolved- UPDATE

Iran’s Oil Ministry announced today that the oil payments impasse with India has been resolved. The Indians will process the oil payment outside the Asia Clearing Union, as demanded by them, but they will pay for oil transactions in currencies other than dollar or euro to ease Iran's concerns over blockade of their funds by the US or EU. The two sides met in Mumbai today to settle the dispute. India’s crude purchase from Iran totals $12 billion a year.

UPDATE: Reuters is quoting a senior Indian official as saying that the oil payment dispute with Iran was not resolved during the Mumbai meeting, with more discussions to follow.

"We had technical level talks. There will be further rounds of discussion until a solution is reached between the policy makers of the two countries," a senior Indian official present at the meeting said [Reuters, 1 January].

Thursday, December 30, 2010

Iran-India Oil Dispute Escalates

The Reserve Bank of India, the country’s central bank, has demanded Iran to accept revenues for sales of its oil to India through European banks. The National Iranian Oil Company and the Central Bank of Iran (CBI) have refused the request, insisting that the Indian payments must continue being processed through the Asia Clearing Union system. At jeopardy is $12 billion annual oil sale to India.

The CBI has requested a meeting with its Indian counterpart to settle the dispute. There are reports that the talks will take place on Friday in Mumbai.

Iran Announces Al Qaeda Arrests

Iranian authorities have announced the arrest of seven alleged Al Qaeda members in in the city of Sardasht in Iran’s northwestern province of West Azerbaijan.

"The group was propagating Wahabism. They were trying to divide the Shiites and the Sunnis," Press TV quoted the authorities as describing the group's alleged activities.

It was not immediately clear whether the detainees were Iranian citizens or foreign national. No date of the arrests was also given. Very rarely has Iran announced the arrests of Al Qaeda members, although several of their leaders fled to Iran when the US forces invaded Afghanistan after the 9/11 terrorist attacks.

Wednesday, December 29, 2010

Fuel Consumption Cut by 20%

The government announced that fuel consumption has fallen by a fifth since it began slashing energy subsidies earlier this month. Subsidized gasoline price quadrupled on 19 December, with unrestricted price raised by 700%.

Tuesday, December 28, 2010

Iran Concerned Over Report of Gen. Asgari’s Death

Iran’s Ministry of Foreign Affairs has voiced concern over reports that former senior Iranian official Gen. Ali Reza Asgari may have committed suicide while under Israeli detention.

"The Israeli regime's abduction of Asgari with the help of the United States and the Israeli regime's recent claims is a clear and potent example of state terrorism," said Iranian Deputy Foreign Minister Mohammad Reza Raouf Sheibani [IRNA, 28 December].

Asgari was an IRGC general officer, Iran’s deputy defense minister and a member of Iran’s Supreme National Security Council at the time of his disappearance in 2007. He was reportedly overseeing a military’s clandestine nuclear research program.

In December 2009, the Iranian Foreign Ministry had identified Gen. Asgari as one of the ten Iranian detainees held by US forces in Iraq. The claim was contrary to reports that Asgari had defected to the US and was being safeguarded in the country. It was not immediately clear how and why the Israelis had taken custody of Asgari.

Gen. Asgari was also a subject of controversy. In December 2007, ten months after his disappearance, the US intelligence community issued a new National Intelligence Estimate (NIE) finding in which it dramatically reversed a previous NIE finding, now stating that Iran has halted its nuclear weapon program in 2003. Asgari was believed to be at least one of the sources, if not the sole source, behind the new NIE finding.

In September 2007, Kuwait’s Al Jerida reported that Asgari provided the intelligence for Israeli attack on a Syrian nuclear site.

Gen. Asgari and his wife vanished in Istanbul on 7 February 2007, while on a personal visit to the city.

Ahmadinejad Declares Victory on Nuclear Front; Calls for Cooperation

By Nader Uskowi

Iran’s President Mahmoud Ahmadinejad in a major speech in Karaj declared Iran’s victory in its struggle with the West over the nuclear issues and said Iran was open to cooperation with the West based on its victory.

“The [West] exerted intense political pressure and propaganda against us, they passed one sanctions resolution after another, but at the end Iran came out as the victor in the struggle of the last few years,” Ahmadinejad said [IRNA, 28 November].

“We expect all the [Western] governments that have sent us messages of cooperation not to act in hostile and retaliatory manners against us.”

"We are open to cooperation based on our rights," Ahmadinejad added.

The tone and the substance of Ahmadinejad’s speech strengthen the possibility of a compromise in future talks between Iran and the West. Iran needed to declare a victory on uranium enrichment, what Ahmadinejad did today in Karaj. It now needs to go beyond this declaration and find an acceptable compromise with the West to put an end to the sanctions, something that Iran needs to do to successfully manage its subsidy removal program, a priority for Ahmadinejad administration. The Istanbul talks in January could be the beginning of a series of talks, probably followed in Brazil and Tehran, to seal the deal with the West.

Monday, December 27, 2010

Iran VP Under Investigation

By Nader Uskowi

Iran’s presidential office today came in defense of Ahmadinejad’s embattled First Vice President Mohammad Reza Rahimi. Iran’s judiciary had announced last week that it had begun an investigation into the corruption allegations against Rahimi who has denied the charges and has said that he intends to remain Ahmadinejad’s principle deputy throughout his term in office.

The judiciary is run by Sadeq Larijani, the brother of Ali Larijani, the influential speaker of Majlis. Any serious investigation and eventual trial of Rahimi could make the growing infighting within the Islamic Republic’s political establishment very ugly.

The judiciary’s announcement on Rahimi’s investigation came days after Ahmadinejad unceremoniously dumped his foreign minister Manouchehr Mottaki while he was on a foreign mission. Mottaki is thought to be close to Larijani brothers.

On Sunday, former foreign minister Mottaki was praised in a statement by 260 parliament members — all but 30 — in a direct slap against Ahmadinejad.

Post-Subsidy Iran: Fuel Consumption Falling

Iran’s Ministry of Economy announced today that in the first nine days of the subsidy reforms the fuel consumption across the country has fallen.

"In the past nine days, our petrol (gasoline) consumption which was about 60 million liters (13.1 million gallons) a day is now at 55 million," Deputy Economy Minister Mohammad Reza Farzin told AFP correspondent in Tehran [AFP, 27 December].

"The oil ministry says that diesel consumption, which was at 54 million liters, is now at 40 to 41 million liters," Farzin said, adding that cooking gas consumption had dropped by six percent and water by five percent.

"We are spending 100 billion dollars in subsidies every year from a gross domestic product of 400 billion dollars. We have realized that low energy prices cannot deliver social welfare; it can't reduce poverty. We are determined to use the resources for managing prices more efficiently."

Tehran Still Choking

Dangerous air quality and pollution suffocating Tehran for the second month.

Photos: Mehr News Agency

Iran Lifts Ban on Afghan Fuel Tankers

Iran has lifted a ban on fuel tankers crossing into Afghanistan that has in the past three weeks prevented around 1,600 tankers from crossing the border. The visiting Afghan Vice-President Marshal Fahim made the announcement of lifting of the ban in a press conference in Tehran [IRNA, 27 December].

Tehran believed the tankers were supplying ISAF troops in Afghanistan. Kabul said the tankers were bringing fuel to meet the increased demand by ordinary Afghans during the winter months. Around 30 percent of Afghanistan's fuel is thought to come through transit routes from Iran.

Sunday, December 26, 2010

Post-Subsidy Iran: The Rising Oil Prices

By Nader Uskowi

The rising oil prices in recent weeks have created heightened optimism on part of Ahmadinejad administration about their chances of pulling off their subsidy reforms despite misgivings by the Majlis and a growing public anger at rapidly rising prices, estimated at 15-20% for household necessities. The government economists expect the oil prices to continue its rise past the $90 mark achieved in recent days to settle at around $100 in 2011.

The massive and ambitious reforms target highly subsidized energy and food products. In removing those subsidies, the government has chosen a radical path, “a surgery,” as Ahmadinejad has put it. The gasoline prices were quadrupled and on average the prices of targeted products rose by 270%. The approach was necessitated by the government’s shrinking treasury unable to meet the financial burden of massive subsidies, estimated by the government at some $100 billion annually. (Although this figure could not be the real cost to the government, but probably the opportunity cost based on FOB prices of energy products in the Persian Gulf.)

To ease the hardship on ordinary people, the government began to handout $40 a month to 80% of the population, a figure less than the rise in prices, hence the public resentment of the reforms during its first week of implementation. The $100 oil will give the government the ability to continue its $40 monthly handouts (a total of $2.4 billion a month) and even raise it, or “double” it as recently mentioned by Ahmadinejad. The hope would be that after two years of maintaining these payouts the market forces and the ensuing economic growth would raise people’s income, no longer requiring the monthly handouts.

The strategy is of course risky. There is no consensus among economists that the oil prices would be on the rise. The $100 figure was first suggested by Goldman Sachs few weeks ago. There are contrarian views of declining oil prices in the coming years, for example, due to unexpectedly higher efficiencies achieved in transport sectors globally.

And as always there is the big elephant in the room, the economic sanctions against the country, a subject not dealt with in any serious manner during the current debate on subsidy reforms inside Iran. The removal of these sanctions would have the same effects as high oil prices. Right now the government is forced to pay premium on products and services due to sanctions, eating away good portions of the premiums of high-price oil. The decision facing the government here is purely political, something the economist planners of subsidy reforms could not plan for. The upcoming Istanbul talks between Iran and the major powers will give Ahmadinejad administration the best opportunity for a compromise, resulting in lowering or altogether removal of the sanctions.

Higher oil prices and/or removal of the sanctions are what's needed for the subsidy reforms to have a chance at success.

Latifi’s Execution Halted in Kurdistan

The Iranian authorities backing off planned execution of a young Kurdish student activist in the city of Sanandaj in Iranian Kurdistan, announced the indefinite postponement of execution of Habibollah Latifi hours before the sentence was to be carried out.

Latifi, 28 years old, was arrested nearly five years ago on charges of implanting sonic bombs during student protests. Latifi and his lawyers vehemently denied the charges. A massive protest movement to save Latifi’s life began inside Kurdistan, supported by human rights organizations across the world. A large group of protesters gathered last night in front of the prison. In the early hours of Sunday, the prison director met with the protesters announcing the indefinite postponement of Latifi’s execution. It was not immediately clear if Latifi’s lawyers will be given a chance to repeal the sentence now.

Saturday, December 25, 2010

Post-Subsidiy Iran: Report from Tehran

Thomas Erdbrink and Kay Armin Serjoie of Washington Post report from Tehran (read their report here) that resentment builds in Iran over price hikes after government subsidy removals.

Nearly a week after President Mahmoud Ahmadinejad launched a plan to overhaul a long-standing system of state subsidies, Iranians are reeling from drastic government-ordered price increases for staples such as fuel and bread amid signs of growing frustration and anger.

Marshal Fahim in Tehran

Afghan Vice-President Marshal Qasim Fahim (left) meeting with Iranian President Mahmoud Ahmadinejad at the Presidential Palace in Tehran. Saturday 25 December 2010.

Photo: Rooholla Vahtadi/ISNA

Mottaki’s Statement on His Dismissal

Iran’s former foreign minister Manouchehr Mottaki has publicly rebutted President Ahmadinejad’s claim that the foreign minister was aware of his pending dismissal while on a foreign mission. In a statement published online, Mottaki calls Ahmadinejad’s move to dismiss him while on a foreign mission “un-Islamic, contrary to all political and diplomatic norms, and insulting.”

“The president knew that the foreign minister’s mission to two African countries began on Sunday 12 December and was to end on Wednesday 15 December when he was scheduled to return to Tehran. I heard the news of my dismissal on Monday 13 December from the Senegalese officials during an official visit with them. Once again I deny [Ahmadinejad’s] assertion that I was aware of my dismissal, of the timing of my dismissal, and most ridiculous of all of the date of my ‘farewell’ ceremony,” Mottaki said in his statement. “They should stop such despicable behavior which is not worthy of our Islamic regime and its great leaders, and not in tune with Iranian manners, norms and culture.”

Friday, December 24, 2010

IRIS Alvand returns from Sri Lanka anti-piracy meeting

The IRIS Alvand has returned from Sri Lanka where Rear Admiral Gholam Reza Khaem Bigham and members of the Islamic Republic of Iran Navy participated in an international anti-piracy meeting attended by 22 countries, including the United States. The event also hailed the 60th anniversary of the Sri Lanka Navy.

click photos to enlarge
Above: The IRIS Alvand, Alvand class frigate, hull number 71,
upon its return to home port at Bandar Abbas.

Left: Rear Admiral Gholam Reza Khaem Bigham.
Third from left: an IRIN Commodore.

Rear Admiral Gholam Reza Khaem Bigham shakes hands with a Lieutenant Junior Grade officer. To his right, a Senior Chief Petty Officer and Petty Officer 1ST Class look on; crew members of the IRIS Alvand.

Left: A young IRIN Commander and to his left a Lieutenant; crew members of the IRIS Alvand on inspection.

Note: Any corrections appreciated in the comments section.

Photos: Majid Jamshidi at FARS News Agency

Thursday, December 23, 2010

IRGC Vessels in Qatar

IRGC vessels at Doha port on Wednesday 22 December. IRGC Navy dispatched ships to Qatar as part of its cooperation with Qatari Navy.

Photo: The Peninsula

Hong Kong Impounds Iran Ship

Hong Kong has detained an Iranian cargo ship, the Decretive. The authorities detained the IRISL vessel on 14 November for default on a $268 million loan owed to four banks led by the German bank HSH Nordbank. The loan was taken by IRISL to finance the construction of Decretive in 2008. Earlier this year, the authorities in Singapore impounded three IRISL ships for default on $210 million loan to a French bank. Uskowi on Iran broke the news of the seizure of those ships, and they’ve since been auctioned.

IRISL is under sanctions imposed against Iranian entities. Its chairman told reporters in Tehran that the banks improperly called in the loan in response to UN and US sanctions.

ECO Summit

Iran's President Mahmoud Ahmadinejad joined regional leaders from Pakistan, Afghanistan and Central Asian states for a summit of the 10-member Economic Cooperation Organization (ECO) in Turkey on Thursday. The summit is expected to produce few results.


Wednesday, December 22, 2010

Warnings Resumed: Unsafe Air Quality in Tehran

The government has resumed its warnings about unsafe levels of “particulates” in the air in Tehran as the city’s air pollution has made a comeback after few days of relative ease following a rainfall. Tehran’s air quality is reclassified as dangerous to public health.

The environmentalists blame the recent production of low-quality gasoline for the air quality crisis. The government has started a crash program at the country’s petrochemical plants to produce maximum amount of gasoline to counter sanctions against the sale of gasoline to Iran. The new supply of domestic gasoline is thought to contain high levels of aromatics. Burning aromatics in car engines reportedly produces exhaust packed with high concentrations of “floating particles” or “particulates.”

The government denies that the new supply of the gasoline is the culprit. It maintains that the new supplies of gasoline meet all international standards.

Photo: AP, 21 December 2010

Tuesday, December 21, 2010

Treasury Puts Additional Iran Entities Under US Sanctions

The US Treasury today added two additional Iranian banks – Bank Ansar and Bank Mehr – to its growing list of Iranian financial institutions under US sanctions. The Treasury accused the banks of financing IRGC and Islamic Republic of Iran Shipping Lines (IRISL) activities in support of Iran’s nuclear program. The designation would make it nearly impossible for the banks to link to the global financial markets to issue letters of credit and other financial instruments required in international transactions.

The Treasury also designated Pars Oil and Gas Company, a major subsidiary of the Iranian National Oil Company, as an entity supporting the country's nuclear and missile programs. Pars is the country's lead developer of Pars Gas Fields, which along the adjacent Qatari fields form the world's largest gas field.

On the insurance front, the Treasury added Moalem Insurance Co. to the list of entities under US sanctions. The action would prevent the company to issue internationally accepted insurance coverage for IRISL, further complicating the activities of the country's flag shipping lines.

Also designated were Bonyad Taavoni Sepah (“IRGC Cooperative”) as an entity handling IRGC investments and Liner Transport Kish, for among other things transporting arms from Iran to Hezbollah.

"It's clear that it's important for us to continue to impose pressure to highlight the fact that firms are looking for ways to help Iran evade international sanctions," said Treasury Undersecretary Stuart Levey [Reuters, 21 December].

Aftershocks Jolt Southeastern Iran

A magnitude 6.5 earthquake shook a sparsely populated region in southeastern Iran on Monday, killing seven people. Mehr News Agency reports 38 aftershocks have jolted the area in the past 24 hours. Aid workers are at the scene.

Photo: Mehr News Agency

Monday, December 20, 2010

Panahi Sentenced to Six Years in Prison, Stripped of Rights for 20 Years

The renowned Iranian filmmaker Jafar Panahi was sentenced to six years in prison and prohibited from writing or directing movies for the next 20 years. Panahi was first arrested in July 2009 for participating in a memorial near the grave of Neda Sultan for those killed in protests of the disputed presidential election.

Panahi was released on bail seven months ago awaiting his court hearing. His lawyer is expected to appeal today’s barbaric sentence.

Panahi is best known for his films The White Balloon and The Circle, which won the Camera d'Or at Cannes and the Golden Lion at Venice, respectively. Among his other famous films is Offside, which tells the story of female soccer fans who disguise their gender to watch a match in Tehran.

Quake Hits Southeastern Iran

A magnitude 6.5 earthquake struck Hosseinabad, a small town in a sparsely populated region of southeastern Iran. The quake hit at 10:12 p.m. local time. There were no reports of casualties. Hosseinabad is not far from city of Bam, where a 2003 quake killed more than 26,000 people.

Post-Subsidy Iran: Shares Instead of Cash

Iran’s economy minister said today in Tehran that the government is considering switching the monthly cash payouts to 80% of the population to shares in government-controlled entities. The $40 monthly cash payouts were designed to help the public to cope with significant cuts in government subsidies, which started on Sunday. Switching from cash to shares is seen as an attempt to check the expected rise in inflation in the post-subsidy economy.

Iran Executes Eleven Baluchis- Alleged Ties to Jundallah and Bombings

Iran executes eleven Baluchis for alleged involvement in terrorist campaigns in the Iranian Baluchistan and membership in the rebel group Jundallah. The justice department spokesman linked the people executed to a number of terrorist attacks in recent months, but did not provide any details about their alleged involvement in those attacks.

Jundallah has claimed responsibility for 15 December suicide bombing attack in Chahbahar that killed 38 people. Today’s executions are seen as the government’s response to that terrorist attack, although those executed were probably already in detention at the time two young Jundallah members detonated their suicide vests during a Shia religious procession in Chahbahar.

Saturday, December 18, 2010

New Gasoline Prices

The government announced the gradual removal of gasoline subsidies. The price of subsidized gasoline is increased 400% to 400 toumans a liter ($1.44 a gallon), with a limit of 60 liters (15.8 gallons) per vehicle per month. The price of unsubsidized (unrestricted) gasoline is set at 700 toumans a liter ($2.40 a gallon). The new gasoline prices were first reported by Uskowi on Iran in September.

Subsidy Reforms Started

Iranian President Mahmoud Ahmadinejad today announced the start of the implementation of the long-awaited subsidy reforms. The reforms, which include the gradual removal of the government subsidies for 16 major products such as gasoline, have become the hallmark of Ahmadinejad’s second term, with their success or failure expected to define his presidency. The government subsidies now cost the government some $100 billion annually and their removal is expected to jumpstart a period of economic boom in the country. The new prices for the products affected by subsidy removal are to be released late Saturday night.

Friday, December 17, 2010

Subsidy Reforms to Start on Saturday

According to informed sources in Tehran, President Ahmadinejad on Saturday will announce the start of long-awaited subsidy reforms. Sixteen consumer products will gradually lose all government subsidies within the next five years. The list includes gasoline, diesel, natural gas, kerosene, electricity, water, bread, sugar, rice, cooking oil and milk. Helping people to cope with expected sharp rise in prices, the government has started handouts of $40 per month to 80% of the citizens.

Wednesday, December 15, 2010

Suicide Bomber Kills 39 in Baluchistan

A suicide bomber blew himself up at a Shiite religious procession in the city of Chabahar in Iranian Baluchistan on Wednesday killing at least 39 people.

The attack occurred during one of the holiest periods in Shia calendar. Today is Tasua and Thursday is Ashura, two days that Shia Muslims mourn the martyrdom of Imam Hussein, the grandson of Prophet Mohammad, who was killed some 1350 years ago in a war with infidels in Karbala. Religious processions are held every year during these two days throughout Iran.

Jundallah has accepted responsibility for the suicide attack. The rebel group is very active in Baluchistan, a predominantly Sunni region in Shia Iran. The group has been involved in many terrorist attacks in the region. Last year, the Iranian government kidnapped and later executed their leader.

Tuesday, December 14, 2010

Growing Criticism of Mottaki’s Dismissal

The Iranian President Ahmadinejad’s dismissal of former foreign minister Manuchehr Mottaki while Mottaki was on an official visit to a foreign capital has brought a wave of criticism against Ahmadinejad, especially on the right and among Ahmadinejad’s normally reliable supporters. Ahmadinejad’s ability in making sound judgments and his tolerance of opposition even among his closest circle of advisors have come under scrutiny. Hossein Shariatmadari, the influential editor of the conservative daily Kayhan, best sums up such reactions to Mottaki’s dismissal.

The dismissal of Mr. Mottaki while on a foreign mission would bring suspicion on the part of the public and the foreigners what seriously urgent issue was at work that did not allow Dr. Ahmadinejad to even wait for 24 hours for his foreign minister’s return to make the decision public. [Ahmadinejad] even saw it critical to contact the press to break the news of the dismissal.

What happened in recent days that the respected president could not wait for few hours to dismiss his foreign minister?

Few months ago, Ahmadinejad appointed his “special envoys” for different parts of the world, like Esfandiar Rahim Mashaie to be his envoy in Middle East. Mottaki objected to these appointments, considering them parallel work with the ministry of foreign affairs, and after the intervention by the supreme leader Ahmadinejad backed off and changed the titles to “advisor.” But three days ago, Mashaie was sent to Jordan to carry a message by Ahmadinejad. Perhaps Mottaki objected to this and was dismissed while on a foreign mission. Ahmadinejad could have waited a bit for God forbid not giving the impression that he cannot take criticism even from his own foreign minister.

Monday, December 13, 2010

Rain in Tehran

It rained in Tehran on Monday and the city ended its state of emergency that was in effect because of dangerous air quality in the past three weeks.

Photo: Mona Hoobehfekr, ISNA

Salehi Named Acting Foreign Minister

Iranian President Mahmoud Ahmadinejad today changed his foreign minister, appointing Ali Akbar Salehi, the head of Atomic Energy Organization of Iran (AEOI), as the acting foreign minister.

The incumbent foreign minister, Manouchehr Mottaki, was on official visit to Senegal, and in an unprecedented move was fired while visiting a foreign capital.

TAPI Pipeline: A New ‘Silk Road’

Turkmenistan, Afghanistan, Pakistan and India signed an agreement in Ashkhabad to build a gas pipeline, called TAPI for its participating countries, transporting Turkmen gas across Central Asia to Afghanistan, Pakistan and India. The Indian petroleum minister called TAPI Pipeline the “New Silk Road.”

The TAPI gas line would trump an earlier plan to build an Iran-Pakistan-India (IPI) pipeline.

Pictured from left: Indian Petroleum Minister Murli Deora, Pakistani President Asif Ali Zardari, Turkmen President Gurbanguly Berdymukhamedov and Afghan President Hamid Karzai during the signing ceremony of TAPI pipeline project in Ashgabat, Turkmenistan on Saturday 11 December 2010.

Photo: AFP

Sunday, December 12, 2010

A Government in Disarray Over Subsidy Reforms

By Nader Uskowi

The removal of government subsidies was the focal point of Ahmadinejad’s economic reforms for his second term that began in August 2009. After heated debates in Majlis over the effect of the subsidy removals on the country’s inflation rate, the government’s plan passed the parliament in early January and became law after the Guardian Council approved it on 15 January 2010. Ahmadinejad announced at the time that the implementation of the first phase of the plan would start in “a few months.”

Helping people to cope with subsidy removals, Ahmadinejad requested Majlis to approve $40 billion allocation to be paid out in cash to over 80% of the population in monthly payouts. Last March, Majlis fearing high inflation resulting from such cash infusion into the economy refused to pass the bill, but later approved a smaller version that would allocate $20 billion to the government to fund the monthly payouts.

The government finally announced that the first phase of subsidy reforms would start no later than 21 September (the beginning of Iranian calendar month of Mehr). The government also announced that its subsidies are costing the treasury $100 billion a year, and their removals were key to country’s future economic growth.

In October, after the 21 September target date had come and gone, a number of government officials said the first phase of the reforms would start shortly and would include the energy sector, including gasoline. They also suggested that the price of new “subsidized” gasoline would be set at $1.44 per gallon with a limit of 16 gallons a month per vehicle, with consumers able to purchase extra gasoline at $2.40 a gallon.

On 12 October, government officials suggested that the first phase of the reforms would start in “ten days.” On 19 October, the government started depositing 40,500 toumans (about $40) as monthly cash payout in the accounts of 60 million Iranians, or 80% of the population. The monthly cash payout amounted to some $2.4 billion.

On the eve of the planned announcement of the start of the subsidy removals, the country’s minister of commerce raised some fundamental objections to the plan, questioning the government’s assertion that the reforms were in planning stages for months and even years. The minister said on 20 October that replacing the old subsidies with the new ones (i.e. $2.4 billion cash handout) and postponing simultaneous reductions in government expenditures would create an “avalanche” that would “destroy” everyone.

Ten days passed, still no reforms.

On 1 November, this blogger argued in a post entitled “Removing Subsidies: Political Risks and Rewards,” that if Ahmadinejad could pull off the reforms, eliminating most of the subsidies without inciting pressure from the public and rival politicians to scrap the program, he could start an economic boom that can politically reward him and his close associates, some of whom might have aspiration to run for president in 2013. If Ahmadinejad’s first term was marked by uranium enrichment and later marred by the Green movement, his second term would be defined by the success or failure of his subsidy reforms.

On 6 November, the minister of economy announced that government’s plan of redistribution of the savings from subsidy removals. 50% would be redistributed directly to the people, 30% would be allocated to agriculture and industry sectors, 20% would be allocated to the government’s general budget. Majlis immediately objected, saying no monies from the savings could be used by the government to boost its budget.

On 16 November, informed sources in Tehran indicated that the reforms would begin on 22 November (1 Azar).

On 19 November, the second monthly installment was deposited into people’s account. But the 22 November came and gone, no reforms in sight. But the old subsidies were still in force and the government was handing out additional $2.4 billion a month, notwithstanding the avalanche warning from the commerce minister.

On 1 December, the influential conservative daily Kayhan quoted the minister of economy as saying that the gasoline prices would rise 700% to $2.52 per gallon. His ministry later denied that the minister made the statement. But Kayhan stayed with its story.

On 4 December, the Central Bank of Iran (CBI) announced that the inflation has risen to 9.7% and attributed the rise in prices to physiological factors, namely public expectations of rapidly rising prices as a result of impending subsidy reforms. Now Iran has a government that is continuing its monthly cash payouts and raising expectations of an imminent rise in energy prices as the result of the reforms, with inflation rising rapidly, but no savings from the reforms, because there were no reforms. The government is creating all negative side effects of the reforms, and denying itself the benefits of the savings generated by the reforms themselves. Wow!

On 12 December, the speaker of Majlis announced that the reforms might not begin until the start of the Iranian New Year (March 2011).

This is a government in disarray. They need to put their act together and begin the first phase of the reforms now.

Saturday, December 11, 2010

Iranian Journalist Wins Press Freedom Award

The Paris-based media watchdog, Reporters Without Borders has awarded its 2010 Press Freedom Prize to two “symbols of courage,” jailed Iranian journalist Abdolreza Tajik and the Somali radio station Radio Shabelle.

“This year we are honoring a courageous journalist, Abdolreza Tajik, and a beleaguered radio station, Radio Shabelle,” Reporters Without Borders secretary-general Jean-François Julliard said. “These laureates work into two countries, Iran and Somalia, where reporting the news is a constant battle.”

The awards were presented at a ceremony in Paris on Thursday night. The prize recipients are chosen by an international jury of journalists and human rights activists based on significant contributions made to the defense and promotion of press freedom around the globe. Nobel peace laureate Shirin Ebadi accepted Tajik’s prize on his behalf.

“I regret that Abdolreza is not here to receive this award in person. His only crime has been to write, to write the truth. For doing that, he is being held in solitary confinement in Evin prison, without his lawyer being able to see him or have access to his case file,” Ebadi said after accepting the prize.

Abdolreza Tajik has written for a number of newspapers including Fath, Bonyan, Bahar, Hambastegi and Shargh.

Rising Inflation, Why?

In today’s issue of Donya-e Eghtesad (“World of Economy”), Iran’s leading business journal, Mehran Dabir Sepehri examines the reason behind the rising inflation in the recent months and takes issue with the explanations offered by the director of the central bank and the minister of economy. Click here to read the article in Farsi. Following are Sepehri’s main points:

  • The director of the Central Bank of Iran (CBI) has blamed psychological factors for the rise in prices, presumably the public expectation of the impending removal of government subsidies of the energy sector. The minister of economy blames the rise in oil prices and the start of the academic year for the inflation.
  • Sepehri believes the culprit is CBI’s own policy of dramatically increasing the money supply in the past two years, whose effects are now being felt. Sepehri points out that two years ago the total amount of currency in circulation in the country was $170 billion. The figure reached $235 billion last year (in Iranian calendar). No figures have been published for the current year, but the circulation volume is expected to be even higher this year. Sepehri predicts continued rise in prices because of the rise in money supply.

Friday, December 10, 2010

More Sanctions Possible – US Official

The US and the EU are determined to maintain existing economic sanctions on Iran and are prepared to impose additional ones if the two sides could not come to an agreement on Iran’s nuclear program, a senior US official said today.

"We and our allies are determined to maintain and even increase pressure," said Gary Samore, the White House coordinator for arms control. "We need to send the message to Iran that sanctions will only increase if Iran avoids serious negotiations and will not be lifted until our concerns are fully addressed" [AP, 10 December].

Samore made his comments during a conference on “Countering the Iranian Threat” hosted by the Foundation for the Defense of Democracies. The comments came three days after the two sides resumed their talks in Geneva, but no serious agreements came out of those talks. Iran and the major powers are to resume their talks in January in Instanbul.

Yet another poll mirrors official 2009 Iran presidential election results

A recent poll taken by the International Peace Institute with Charney Research shows results consistent with three previous polls by other organizations, mirroring closely the official results of Iran's 2009 presidential election. In addition, by a solid majority Iranians support Islamic Republic governance as well as support Iranian law enforcement efforts during the post-2009 election demonstrations. Iran's nuclear program also enjoys majority support, including an aversion to dealing aspects of it away. Link to the complete poll and methodology available here.

Iran Public Opinion 2010 -

Thursday, December 9, 2010

Spraying Water on Tehran Produces No Change

Iran’s Environment Protection Organization (IEPO) sprayed water on suffocating Tehran on Tuesday. The experiment was to shake up the atmosphere to produce rain or create artificial wind corridors to blow the thick haze away. Iran’s Mehr news agency reports that water spraying by five pesticide planes did not produce any changes.

“When there are no clouds, how could they even think they could produce rain by impregnating non-existent clouds?” said Majid Abbaspour, the dean of Tehran’s Scientific Research University’s School of Energy and Environment. “And any possible effects on diluting the air pollution would have been at most very temporary” [Mehr News Agency, 9 December].

Hassan Aslian, the former director of IEPO, said the experiment could have produced dangerous acid “rain.”

“Carbon monoxide and sulfur dioxide, the most dangerous component of the air pollution in the city, in high densities mixed with water could produce acid rain over the city,” Aslian said [Mehr News Agency, 9 December].

Meanwhile, the air quality situation in the Iranian capital remains as alarming and dangerous for the third consecutive week.

Photo: Mehr News Agency

Wednesday, December 8, 2010

Iran Confirms Impoundment in Singapore of Three IRISL Ships

Mohammad Dajmar, the president of the Islamic Republic of Iran Shipping Lines (IRISL) said on Wednesday the impoundment in Singapore of three IRISL ships is a violation of international law [IRIB, 8 December].

Uskowi on Iran had first reported the seizure of IRISL’s three big, new ships in Singapore last September. Three Iranian vessels are named Tochal, Sahand and Sabalan.

The ships were seized because their liability coverage (“Blue Card”) was terminated by their insurer. Simultaneously, the French bank Credit Agricole put a $110 million claim for non-payment of the loans on the three ships. Iran claims that financial sanctions prevented it from making its regular loan payments it had on the loan.

"We had a loan (on the vessels) and Credit Agricole recalled the entire loan because of sanctions. In other words, they committed a violation. Because the loan contract was signed before the sanctions," said Dajmar. "We are trying to prevent the auctioning of these vessels," he added.

The US financial sanctions on Iran, called CISADA, bars access by Iranian banks to the international financial system and makes it difficult for the country to pay its loan payments and maintain insurance coverage on its ships.

Tuesday, December 7, 2010

Nuclear Talks to Move to Istanbul

The talks between Iran and the major powers ended in Geneva today and were rescheduled to resume in January in Istanbul. Both sides said the talks were positive. The host, EU’s Catherine Ashton, characterized the discussions as “detailed, substantive.”

Critics of the talks maintain that they are only producing cover for Iran to develop its nuclear weapons program. The proponents argue that Iran needs the cover of these talks to strike a deal with the West, namely transferring its inventory of enriched uranium abroad for lifting of economic sanctions against the country.

Shams Al-e Ahmad: 1929-2010

Shams Al-e Ahmad, a leading Iranian scholar, author and educator, died in Tehran on Sunday. He was 81. The younger brother of the late Jalal Al-Ahmad, Shams was as equally a cultural figure and prolific writer. His body of work include “From Brother’s Eyes”, “The Cradle”, and “Aghigheh.”

Uskowi on Iran extends its condolences to Al-e Ahmad family and to Iranian scholarly community.

Photo: Arash Khamooshi, ISNA

Iran, P5+1 Meet in Geneva

Iran's Chief Nuclear Negotiator Saeed Jalili (l.) and EU Foreign Policy Chief Catherine Ashton Entering the Talks

P5+1 Delegation. US Undersecretary of State William Burns Seated in the Middle

The talks between Iran and the six major powers (P5+1) recessed Monday and will resume in a second session on Tuesday. There were low expectations before the talks began, and early reports from Monday’s session indicate that both sides repeated their positions with no immediate compromise in sight.

The West seeks an end to Iran’s uranium enrichment program. Iran would not even want to discuss such outcome. A compromise in which Iran transfers substantial amount of its low enriched uranium abroad in return for higher enriched nuclear fuel to run its research reactor remains as the only hope, although it looks increasingly out of reach.

Nevertheless, the atmosphere prevailing in the meeting yesterday was described as very positive by a number of participants. If today’s session goes well, the two sides would resume their talks early next year in Turkey.

Photos: Reuters and Getty Images / Fars News Agency

Monday, December 6, 2010

Iran, Major Powers Resume Nuclear Talks

The talks between Iran and the major powers on the Iranian nuclear program resumed today in Geneva. The two-day meeting is the first in nearly 15 months. During the period the UN, the US and the EU imposed additional economic sanctions on Iran and the Iranian nuclear facilities became targets of Stuxnet attack and other covert operations. In the meantime, Iran expanded its nuclear program by producing yellowcake inside the country and enriching uranium to 20% grade.

Iran insists that its nuclear program is peaceful and would not accept any suspension of its uranium enrichment program. The West insists that such suspension is needed to ensure that Iran is not making fuel for nuclear warheads.

A compromise is increasingly looking difficult to achieve. A possible option is a variation of an older plan whereby Iran would transfer most of its current inventory of low enriched uranium abroad in return for higher enriched fuel for the country’s research reactor.

Planes to Spray Water Over Suffocating Tehran

Iran's Environment Protection Organization (IEPO) will start spraying water on Tehran, the suffocating capital of Iran, to dilute the city’s air pollution that has reached alarming and dangerous levels in recent days. The worsening situation forced the closure of offices and schools in the last few days.

IEPO Director Mohammad Javad Mohammadizadeh told reporters in Tehran that 10 airplanes will sprinkle water over the city on Monday or Tuesday. He added that IEPO’s researchers are trying to find ways to shake up the atmosphere to produce rain or create artificial wind corridors to blow the thick haze away [Fars News Agency, 6 December].

According to a research carried out by the IEPO and the Tehran Municipality, over 80 percent of the air pollution is due to the 3.5 million automobiles plying the almost permanently clogged streets in the Iranian capital [Press TV, 6 December].

The geographical location of Tehran, wedged between mountains, is also a contributing factor in the pollution's chronic choke of Tehran.

Photo: Press TV

Sunday, December 5, 2010

Iran Produces Yellowcake - AEOI

The Director of Atomic Energy Organization of Iran (AEOI) Ali Akbar Salehi announced today in Tehran that Iran has produced the first batch of its own “yellowcake,” the raw material for uranium enrichment. The country previously had to import yellowcake from abroad. Salehi added that with today’s announcement, Iran is now “self-sufficient” in the entire nuclear fuel cycle [IRNA, 5 December].

"Iran has become self-sufficient in the entire fuel cycle, starting from (uranium) exploration, mining and then turning it into yellowcake and converting it to UF6 and then turning it into fuel plates or pellets," Salehi said.

Salehi made the announcement on the eve of talks on Iran’s nuclear program with the world’s major powers scheduled for Monday.

This [the production of yellowcake] means Iran would go to the negotiations with strength and power," Salehi added. "No matter how much effort they put into their sanctions in creating all sorts of hindrance... our nuclear activities will proceed."

Saturday, December 4, 2010

Iran Inflation Rising; Subsidy Reform Announcement Expected Soon

Iran's Central Bank Governor Mahmoud Bahmani today told reporters in Tehran that the country’s rate of inflation rose for the third month running to 9.7%. The governor attributed the rise to “psychological atmosphere” in the country [IRIB, 4 December].

Observers in Tehran expect the imminent announcement by President Ahmadinejad of the start of the first phase of the removal of government’s $100 billion annual subsidies. This phase would include subsidy removal of energy products, including gasoline and electricity. The current rise in inflation rate could be the result of the anticipation of the significant rise in energy prices.

The government has begun a concerted effort to keep non-energy prices at the official levels in a move to curb the inflation.

"All efforts of the government and the central bank are to keep the inflation rate in single digits,” Bahmani said.

Friday, December 3, 2010

Clinton Welcomes Iran’s Participation in Nuclear Talks

Secretary of State Hillary Clinton said today in Bahrain welcomed Iran’s agreement to resume talks with the US, China, Russia, Britain, France and Germany over its nuclear program after a year of impasse. During the year, the UN, US and EU brought severe economic sanctions against Iran.

"Perhaps the Iranians, with their return to the talks in Geneva starting Monday, will engage seriously with the international community on what is a concern shared by nations on every continent but most particularly here in the region," Clinton said.

Clinton’s host, Bahrain's Foreign Minister Sheik Khalid bin Ahmed Al Khalifa said the Middle East “can never live with” a nuclear-armed Iran.

"When it comes to taking that power (peaceful nuclear program) to developing into a cycle for weapon-grade, that is something that we can never accept and we can never live with in this region," Sheik Khalid said. "We've said it to Iran and we've heard it from all."

A WikiLeaks cable had also shown that Bahrain’s King Hamad argued “forcefully” for “taking action to terminate their (Iran's) nuclear program, by whatever means necessary. That program must be stopped. The danger of letting it go on is greater than the danger of stopping it."

Iran insists its nuclear program is for peaceful purposes only.

Clinton is in Bahrain to attend an international security conference where Iran’s nuclear program is expected to be a major topic of discussion.

Source: AP

Thursday, December 2, 2010

Iran Arrests Suspects Over Nuclear Scientist Assassination - UPDATE

Iran’s Intelligence Minister Haidar Moslehi said today in Tehran that the security forces have made “a number of arrests” in the assassination of the Iranian nuclear scientist Majid Shahriari. Another nuclear scientist, Freidoun Abbasi, was also targeted but survived the assassination attempt. Moslehi accused the Israeli Mossad, MI6 and the CIA of involvements in the attacks.

Moslehi did not provide any details on the arrests, the identity of the detainees, or their possible links to the foreign intelligence agencies. It was not immediately clear if the announcement was an attempt by the government to calm down the public outrage over the attacks, or the authorities had actually identified and detained the attackers.

UPDATE – Iran’s deputy chief of the Judiciary, Ebrahim Raisi, told the prayers at the Friday Prayer in Tehran that the Israeli Mossad with the help of local nationals has carried out the attacks on the nuclear scientists. He promised that the perpetuators would be arrested and brought to justice. Oddly, he did not mention, or was unaware of, that the country’s intelligence minister had already announced the arrest of the suspects in the attacks.