Economy

o “The oil income accounts for more than 80 percent of Iran’s foreign currency income, and constitutes more than 50 percent of the government budget. Diving oil prices in the international markets is a great challenge for Iranian economy…not even restrained OPEC oil production has not managed to stop declining oil prices. The world market price is diving to 60 USD per barrel.

o Former petroleum minister Bizhan Zangeneh: ‘There was a time when you could manage the country’s economy with 20 to 25 USD per barrel, but today the public budget is more than ever dependent on the oil income which makes it difficult to manage the economy even with a price level at USD 70 per barrel…’

o Masoud Nili, economic strategist: ‘Diving oil prices can be read on increased budget deficit…if the government wants to keep inflation at 25 percent – in case the oil price is lower than USD 70, the government will face an even larger budget deficit…’

o Oil expert Nersi Ghorban: ‘Declining oil prices will slow down investments in the petroleum sector.’

o Economist Hadi Zonouz: ‘In case the government prints more money to cover its needs, a violent increase in inflation could occur… A further decline in the oil price would result in deep recession…’

o “Less than three weeks ago, Mahmoud Ahmadinejad in a televised interview stressed the secret nature of the foreign exchange reserve and even claimed the country can be administered for two to three years without earning a single oil U.S. dollar… Now that we have reached an emergency, there is not much money in the foreign exchange reserve…The global financial crisis will have short and medium range consequences in our country… In the short term we see the effects in the form of declining oil prices and we need to adjust our budget accordingly…

o We have had a meeting with economists and they said $50 per barrel is optimistic, and a conservative estimate would be $40 to $45 per barrel. For this year we had budgeted $56 to 57 per barrel, but our actual expenditure is based upon a price level at $80 per barrel…We had elaborate schemes of depositing the surplus from the oil income in the foreign exchange reserve for emergencies. Now we have reached that emergency, and there is not much money in the foreign exchange reserve.

o The pessimists claim the reserves will be depleted until the end of the year [March 21, 2008], and according to the optimists there will not be more than $7 to 10 Billion in the account…

o Now, our direct and indirect oil dependency is more than 60 percent…We have lost a good number of opportunities and need to create new ones.”

  • A member of the economic committee of the Parliament alarms the government’s budget deficit is remarkably higher than announced, and calls on the government to reveal the actual size of ministries’ budge deficit to the parliament, so as to jointly explore effective ways of resolving them.
  • Mostafa Pour-Mohammadi, head of the Chief Inspectorate, again warns against unauthorized government withdrawals from the foreign currency reserve to cover the budget deficit. Here, continued here.

o Article entitled, “Peril of Loans from Central Bank,” highlights economic mismanagement and failures during Ahmadinejad’s term in office and warns of dire consequences unless practical measures are taken to address escalating economic problems in the country.

· E’temad-e Melli slams Ahmadinjead’s economic policies of the Ahmadinejad government, quotes Ahmadinejad’s own former Minister of Mining. More here.

· E’temad-e Melli warns of increased price of U.S. dollar in the Iranian market.

· Jomhouri-ye Eslami warns against the government’s management of the economy during the international financial crisis and collapsing oil prices.

· Repetitive housing sales tax scheme suspended by the Ahmadinejad government.

· Zanjan Parliamentarian Jamshid Ansari proposes infusion of cash into the economy to stimulate employment.

· Labor Minister Seyyed Mohammad Jahromi, criticizing privatization, says the Iranian economy is moving towards a larger public sector.

o Iranian economists and experts call on the government not to take the path of competition with the private sector.

· Rafsanjani, speaking at Friday prayers in Tehran, warns the authorities against “being too happy with the financial crisis of the West.”: “The experts say the world has entered a recession. If combined with inflation, the recession is lethal, and its effects on underprivileged crushing…We must not think it is to our benefit and express happiness. I don’t think so…It is the poor who will suffer most…People should not say this economic crisis is a miracle punishing the West. They may be punished, but the crisis is heavy for all. It is not much we can do about it, but we must plan how to control the blows to our economy. The first wave of crisis reaching our shores is cheap oil. Brent oil of Iran has declined from 147 USD per barrel to 64 USD. This is a huge loss…In our country we must build foreign currency reserves so our economy is not jeopardized during economic crises. I don’t want to start a critical discussion on the size of our foreign currency reserves and how much of it we have managed to save. I just want to issue a warning…” More.

· Significant port development in Amirabad port by the Caspian Sea, Imam Khomeini and Martyr Rajayi hub ports. More here.

· Report marks a decline in Iran’s gross national product (GNP) from last year’s 6.4 percent to 5.5 percent this year, anticipating a further reduction next year.

· Minister of Labor and Social Affairs ascribes soaring unemployment to the Central Bank’s ill-conceived policies that has resulted in low productivity and joblessness. According to the report by Kargozaaran, unemployment rate has reached 10.2 percent this summer and is very likely to increase in the upcoming winter. An alarming number of university graduates – up to 60 percent amongst the 25-29 year-olds – are projected to be facing unemployment in the foreseeable future.

· Donya-e-eqtesad expresses the concern that oil prices continue to drop despite an OPEC emergency meeting.

o Aftab-e Yazd’s analysis shows that OPEC’s decision to limit production has not stopped decline of oil prices.

· (E) VOA editorial: Economic distress in Iran.

· Judiciary chief Mahmoud Hashemi Shahroudi says “the economic security of the people is endangered.”

· According to International Monetary Fund, average rate of economic growth in Afghanistan, Yemen and the Sudan is higher than in Iran.

Trade

· Air France/KLM suspend direct flights to Tehran.

· Mehdi Safari, director of the European Affairs Bureau of the Foreign Ministry, says natural gas exports to Europe would have considerable benefits for Iran.

· Kazakhistan prime minister says his country is ready to exchange oil and gas exploration monopolies with Iran.

· Parliamentarian Seyyed Hassan Dehdashti says it is not to Iran’s benefit to export raw petroleum or natural gas, supports formation of a natural gas cartel between Iran, Qatar and Russia.

· Abrar-e Eqtesadi reports increased rivalry between China and Turkey to take over the Iranian textile sector.

· Iran to import oranges from Egypt and Turkey to bring down fruit price in the Iranian market.

· Two Malaysian companies sign a memorandum of understanding for development of Esfandiayr Oil Field in Khargh.

Politics

· (E) Ahmadinejad recovers from illness.

· Several Principalist parliamentarians demand dismissal of the interior minister and threaten impeachment in case Ahmadinejad does not replace him.

o Ali Mottahari, deputy parliamentary speaker and a supporter of Ahmadinejad, now demands ouster of Interior Minister Ali Kordan.

· Aftab-e Yazd editorial attacks “demonization of potential reformist presidential candidates” by the hardline media.

· Mehdi Karrubi promises presence of former prime minister Mir-Hossein Mousavi, former interior minister Abdollah Nouri, former interior minister Ali-Akbar Mohtashami-Pour and other members of the political elites in his cabinet.

o Kayhan discusses the factional dispute in the reformist camp between Mehdi Karrubi and former vice president Abtahi.

o Karrubi, visiting Khuzistan province, says “people need political motivation. One must be careful. Once again the people must be present in the political scene…”

· (E) Velayati will not run for president.

· Reformist theoretician and former Khatami advisor Said Hajjarian says ”If Khatami chooses to run for presidency based upon insistence others, when facing complications, he will claim ‘I never wanted to run for presidency, you forced me to do so!’”

· Ahmadinejad predicts that “pressures against the government will intensify as the first term of the presidency nears its end.” Ahmadinejad also stressed the importance of preserving popular support for the government’s promised economic reform scheme introducing oil dividend.

Diplomacy

· (E) U.S. has made formal request to open U.S. Interest Section in Tehran.

o Vice President Esfandiyar Rahim-Mashayee’s trip to New York aims to negotiate opening of a U.S. interest section in Tehran.

o (E) Iran calls on U.S. to release kidnapped Iranian ‘diplomats’ [believed, by the U.S., to be Qods Force members]

· E’temad-e Melli discusses U.S. sanctioning of the Revolutionary Guards.

· Iranian financial sector actors condemn U.S. sanctioning of the Export Development Bank, stress the importance of the bank in providing loans to developing countries.

· Hojjat al-Eslam Ranjbar head of the ideological and political bureau of the Iran Defense Industries, says Iran is resisting the pressures of the bullying powers.

· Kayhan editor Hossein Shari’atmadari, answering Rafsanjani, asks why Iran should not be happy about the misfortunes of the U.S.?

· Donya-e Eqtesad publishes Parliament Speaker Larijani’s interview with Fars News Agency, in which he elaborated on his recent meetings with EU Secretary-General Francisco Javier Solana, U.S. motive behind establishing a diplomatic mission in Tehran, Parliament’s support and diplomatic measures regarding Iran’s nuclear issue, upcoming presidential elections, multitude of presidential candidates, Parliament’s plans to address people’s basic needs, and Interior Minister Ali Kordan’s allegedly fake credentials.

· Iraqi Kurdistan leader Massoud Barazani, leading a high-ranking Iraqi delegation, in Tehran. According to Kargozaaran:

o Barazani met Foreign Minister Manouchehr Mottaki and discussed key commercial agreements and security measures along the borders of Iran and Kurdistan. The Iraqi official is also expected to meet Ahmadinejad, Parliament Speaker Ali Larijani, Secretary of Supreme National Security Council Saeed Jalili, and Chairman of the Assembly of Experts Hashemi Rafsanjani.

o Barazani and Mottaki expressed divergent opinions about a proposed security pact between Washington and Baghdad.

o Mottaki stressed the security agreement should be scrutinized and approved by all Iraqi parties, including the Iraqi government, national security council and parliament, while Barazani emphasized the current draft of the accord was not jeopardizing Iraq’s sovereignty and added that there was no better alternative to the present framework, highlighting that the Kurdistan issue was clearly manifested in the treaty.

o The security agreement, which sets the withdrawal of U.S. forces by 2011 and provides a legal and judicial immunity for the American forces in Iraq, has yet to be approved by the Iraqi parliament and a great number of Iraqi officials and Shia figures hold reservations about certain articles of the pact.

§ (E) Iraqi President Talabani invites Rafsanjani to visit Iraq

· Palestinian refugees living in Nahr al-Barid camp in Northern Lebanon thank Iran for financial assistance.

· (E) Iran condemns U.S. attack on Syria.

Religion, Culture, and Society

· Hajj-Ali-Akbari, head of the Iran Youth Organization, warns against demographic trends in Iran and “marriage crisis” due to readiness of an entire generation to start family life, but lack of economic opportunities for them to do so.

· Martyrs from the Iran-Iraq war buried at Tehran’s Teacher’s Training University.

· Iran to issue electronic National Identification Cards to Iranian citizens.

· Parliament approves a 10 percent increase in universities’ enrollment capacity. The proposal has been a central theme of contention between the executive and legislative, and Ahmadinejad has accused the parliament of “interfering in the executive affair.”

Terrorism

· Hezbollah’s Nasrallah refutes poisoning reports.

· (E) Hamas’ office in Tehran offers cash prize to best hacking of a Zionist website.

Military and Security

· The Revolutionary Guard Air Force chief Hossein Salami says the IRGC stresses the ideological foundations of the IRGC.

· Supreme Leader’s Foreign policy advisor Ali-Akbar Velayati says if the U.S. chooses to stay in Iraq it will “suffer the same destiny as the Soviet Union.”

· Deputy Basij Chief commander Hossein Hamedani says the Basij is “nuclear energy…to be released in case of aggression.”

Photo of the Day

· 13,000 students demonstrate in front of former U.S. Embassy in Tehran.