The Corner

Iran News Round Up

(Thanks to Ali Alfoneh for his compilation)



Nuclear Issue



  • Hossein Semsami, acting ministry of economy and finance, says he will continue the trend towards Islamization of the banking system of the Islamic Republic.
  • Agahsazi publishes the farewell speech of the outgoing minister of economy and finance, Danesh-Ja’fari:
    • “We and our dependent institutions witnessed the activities of the pressure groups in current and executive affairs. [We witnessed] some groupings which tried to change the direction of affairs by misinformation campaigns… On many occasions, this damaged the economy of the country… A lot of matters overshadowed the work of the ministry, such as problems with the parliament, problems with the Expediency Council, problems with certain individuals, problems with the Islamic Republic of Iran Broadcasting, problems with the press, problems with former presidential candidates, problems with potential presidential candidates, and tens of other problems which can’t be mentioned… Simultaneously, we were engaged in an exhausting chess battle with the U.S. Treasury. They have appointed a Zionist vice-secretary called Stuart Levy to stop the Iranian economy. This person travelled to most countries of the world and held meetings with individuals several levels bellow his level. First, he would encourage and bribe them to cooperate against Iran, and if this did not produce results he would continue his work with threats. Thanks to the benevolence of God, we managed last year to checkmate them, but we should have been active in this field earlier. They started to sanction our banking sector to stop our foreign trade, but we didn’t allow them to do so and fought valiantly…The ill wishers are defeated and our economy develops towards perfection. But one must admit that the people have been under pressure.
    • But what can be done? The enemy has started economic warfare, as Saddam started military warfare. Naturally, our obligation is to defend…When it comes to dissolution of the Planning [and Budget] Organization one must say that this move was uncalculated, and brought nothing but defeat and hopelessness to the employees of this great institution…One day Dr. Rahimi, director general of the Supreme Audit Court announced in an interview that one oil contract signed under the previous government was problematic and one must declare this contract which entails 20 billion in damage null and void. I, and the petroleum minister talked to him and stressed that such a behavior with regard to international contracts damages our international credibility and people would not trust us anymore… In the latest speech in Qom, which was broadcasted widely, one can easily detect the roots of unprofessional reports to the more senior positions. At the meeting of the cabinet I told [Ahmadinejad] that such discussions damage the country. He said what I meant was to explain the taxation system, the customs and the banking system, and I have not had other intentions. But when I followed up the story my original concern was strengthened. To begin with, none of the executives of the customs, taxation or tobacco directories were aware of the matters, and most of the expressed matters are not valid. Just to mention an example, cigarette imports to this country are totally free and no concession has been given to anyone. Twenty-one larger and smaller companies are involved in the import of cigarettes and during last year there has been an import of 300 million Euros. Now, how can anyone be ready to pay 5 billion to buy the concession for cigarette import? This discussion is illogical.
    • The other question expressed, the two firms which produce the same commodity and have similar incomes from sales, but one pays 300 million in taxes and the other 3 million. Investigations show there is no such cases registered by the taxation authorities of the Islamic Republic. Aside from this, our taxation system is not based upon sales, and we can’t expect the two firms to pay the same tax. Our taxation system is based upon income, which means production minus production costs. In other words, it is possible that the two factories have the same income, but they do not necessarily share the same production costs. I wish the details of this matter had been subjected to investigation before being processed so hastily… Let’ take a look at the latest report from the National Bank of the Islamic Republic. During the past nine months the interest rate of “Participation Bonds” has been up to 15.5 percent, and stocks 19 percent. Gold has increased with 7.1 percent, the U.S. Dollar 1.1 percent, but real estate in urban areas 43.2 percent, in Tehran up to a 58 percent increase!…Therefore there is a lot of speculation in the real estate sector…Why don’t we see such a development in other countries, or if we do, to a lesser degree? When the purchasing power of the economy with a 35 to 40 percent increase in liquidity, increases, it is only natural that with more money one must buy more goods and if there are not enough goods in the market the price of the commodities goes up. If we want to fight inflation we must fight its roots which mean controlling the growth of liquidity… Is it possible to decrease liquidity when the National Bank makes $60 billion into rials? Any one who can is welcome to try!…Inflation is the inevitable result of such a policy and one can’t escape from this reality…
    • In this period I and the National Bank tried our best to make Dr. Jahromi who has recently entered the economic sector from the political sector to abstain from printing money, since it is not good for employment, but we didn’t succeed…If we want to succeed in economic matters we must master and be truthful to the fundamentals of the science of economy…I and the Director General of the National Bank were against lowering of interest rates…”

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Michael Rubin is a resident scholar at the American Enterprise Institute, senior lecturer at the Naval Postgraduate School’s Center for Civil-Military Relations, and a senior editor of the Middle East Quarterly.