Monthly Archive for April, 2009

Tyranny of Numbers

Published on April 20, 2009 in Education, Natural Resources, Politics and Trade. 0 Comments

I wanted to highlight a blog I’ve just discovered written by Djavad Salehi-Isfahani at Brookings. Tyranny of Numbers looks to set the record straight on Iran’s employment, education, poverty, and income distribution and other macroeconomic issues that are often bandied about by journalists and pundits writing on Iran’s economy. In a particularly important post, Salehi-Isfahani corrects many of the stereotypes of Iran as a desperately poor country with out of control inflation that we often see in the media:

Every time a reporter mentions Iran’s inflation or unemployment data, they feel obliged to assert, sometimes quoting unnamed experts, that actual numbers are probably twice the official rates. But most people who work with numbers know well that officials can manipulate one year’s inflation rate or two, but if the rates are misreported for a number of years, the mere effect of compounding will soon reveal their hand. If you take an inflation rate twice the reported rate for the last 15 years, the price level in 2008 would be about 130 times higher than it was in 1993, nearly ten times higher than the official rates indicate. It is easy to show that under reporting inflation by 50% each year for 15 years produces some very absurd results. For example, think of what such under reporting would do to the purchasing power of unskilled construction workers. Their wages increased by a factor of 20 during the fifteen year period 1993-2008 (you can easily verify this number can by asking people in the construction business in Iran, if you do not trust the Central Bank index). The official data that show a 14-fold increase in prices during the 15-year period suggest that unskilled construction workers experienced a 42% increase in real wage over 15 years, or 2.4% per year, which is rather low because it puts the increase in their real wage just below that of per capita GDP. If one believes that actual inflation was higher than has been reported, one is saying that construction workers did even worse. How much worse? Let us assume that the so-called experts are correct and inflation is in fact twice the official rate. In that case the real construction wage in 2008 should be only 15% of its value in 1993 (then about 6000 rials per day). Clearly, even a superficial knowledge of the change in the living standards of unskilled workers in Iran would confirm that the 42% increase is much closer to the truth than an 85% decline.

The overblown accounts of Iran’s economic problems that Salehi-Isfahani looks to correct are often used to further a political agenda of portraying Iran on the verge of collapse or to fuel wishful thinking that Ahmadinejad stands no chance of re-election due to economic mismanagement. The more sober picture we see from Tyranny of Numbers, is of an Iran that lags a bit behind Turkey and its Gulf neighbors, but that is certainly nowhere near an economic meltdown linked to hyperinflation or plunging living standards.

Will Anyone Speak Farsi at NYUAD?

Published on April 14, 2009 in Education. 0 Comments

Within the next few years, New York University (NYU) will have implanted a full-service campus on Saadiat “Happiness” Island, the future cultural and educational center of Abu Dhabi. New York University-Abu Dhabi (NYUAD)’s stated mission is to become a regional hub for quality liberal arts education for more than 2000 undergraduates and less than half as many graduate students. This undertaking is important, as it has the potential to generate positive linakges into the Emirati educational system, and to help train a new generation of regional leaders.

NYUAD’s success in realizing these goals will likely be a direct result of three factors: First, an over-riding focus on the quality of undergraduate education it provides; second, making sure that the offerings are relevant to the regional market (concentrations in schools administration, Islamic finance, and the like would be a good start) and third, stressing active linkages both to the country and the region. It is worth noting that most of the problems with existing (and defunct) Gulf-US exchange programs are on both the demand (an inability to generate adequate interest by qualified student), and supply side (attracting qualified teachers).

While the word “Iran” doesn’t figure in any of NYUAD’s communications—and for cause at this stage, this is NYU Abu Dhabi–, it is apparent Iran may indirectly and directly play a big part in its success, as well as provide for a “public diplomacy” coup, if not for the U.S., then for NYU and its hosts. There are currently more than 500,000 Iranian nationals living in UAE; with well over a million in the Arab Gulf States. This is a population that is for the most part pro-Americanand for whom education is a high priority. A good number are very affluent; more are unable to access an American education directly.

Recognizing UAE sensitivities (and ambivalence) towards its Iranian neighbors, the sensitivities of NYU trustees, and the current state of US-Iranian relations and parallel legal issues, would it not be to both UAE, the US and Gulf interests to spend some effort planting the seed of an NYUAD education with UAE-resident Iranian nationals? Thus far, NYU administrators have been quiet on the subject, noting only that the institution will cater to a wide range of students. We hope someone’s giving this issue some thought.

ED Note: This post originally ran in March 2009.

Iraqis Boycotting Iran-made Buses

Published on April 12, 2009 in Trade. 0 Comments

Nizar Latif has an interesting article in The National this week on the reluctance of Baghdad residents to ride buses imported from Iran, which are identified by their bright yellow paint scheme. It does a great job of conveying the ambivalence of the Iran-Iraq relationship, where friendly state to state relations and expanding trade fall against the backdrop of painful memories of war among the general population. A few paragraphs:

“Residents believe these buses may be working for the benefit of the Iranian government and Iran’s economy,” Mr Mansour said. “The buses represent a direct Iranian presence in Baghdad and there are plenty of people here who are outraged about that.”

On a personal level, the 56-year-old driver said he was also unhappy with the Iranian machines, although not for ideological reasons. “The Iraqi government used to import British or German buses, which were always high quality,” he said. “These Iranian buses are not as good; they spend too much time broken down in the middle of the road. No one can love a bus like that.”

Some 50 Iranian-made buses, painted a distinctive yellow, were recently purchased by the Baghdad city authorities. The decision was a purely practical one, based on urgent demand and their affordability, according to the mayor, Saber al Esawi.

“We imported the buses to resolve a shortage because many of the buses in service in 2003 were stolen after the fall of Baghdad,” he said. “We needed new buses to serve the citizens.”

Buying Iranian proved to be a controversial step, however, and was met with disbelief by some Baghdad residents, who immediately suspected a conspiracy was under way.

“I was shocked when I saw the Iranian buses,” said Mohammed Ibrahim, a doctor with a clinic overlooking the Bab al Moutham bus station. “We’ve had so much Iranian intervention here and now we have Iranian industries invading.

“I don’t know why we would buy bad quality Iranian buses, buses that even the Iranians don’t like to have in Tehran because they break down. I can only think that administrative corruption is to blame, that the provincial council wanted to have good relations with Iran.”

Iran and the UAE Higher Education System

Published on April 6, 2009 in Free Trade Zones and Trade. 0 Comments

In 2004 Iran’s Islamic Azad University founded a branch campus in Dubai. Anyone with even a passing interest in Iranian higher education is no doubt aware of Islamic Azad’s dramatic expansion since its establishment in 1982. Founded by former president and then speaker of the majlis Hashemi Rafsanjani, the private, not-for-profit institution now enrolls 1.3 million students spread across 360 campuses. It currently lays claim to the title of largest university in the world, and enrolls upwards of 58 percent of Iran’s student population with a goal of winning 64 percent of the market share by 2010.

In many respects, Dubai was an obvious outlet for expansion. The Emirates were the first members of the GCC to privatize their higher education system. All GCC states have increasingly sought privatization as a means of offsetting exploding demand for post-secondary training but this is hardly to suggest that they have shared the same approach. In sharp contrast to the tightly regulated, Western-oriented privatization being exhibited in neighboring Qatar, the opening of the UAE has been market-driven and multipolar. Islamic Azad-Dubai settled into the Dubai Knowledge Village Free Zone, and in so doing, joined higher education providers (both traditional and for-profit) from Australia, Belgium, Ireland and the UK, but also India, Russia and Sri Lanka.

The driving concept is unique yet intuitive: Iran’s largest higher education provider now has access to the 450,000 Iranian citizens of the Emirates, a wealthy group that, before the recession, held between $20 to $200 billion of Dubai’s assets.

As of 2007, the UAE’s Ministry of Higher Education and Scientific Research recognized 42 institutions of higher education. On a systemic level, the UAE bears certain important resemblance to the American higher education framework. Both systems lack a real centralized structure, choosing instead to emphasize consumer choice. Institutions must demonstrate flexibility to accommodate diverse and changing student needs in global state system increasingly subject to market forces. As such, both the American and Emirati systems inspire tremendous competition for student enrollment with the result being that there is pervasive vulnerability. Occasional institutional failure is an inherent possibility.

Elsewhere the systems diverge significantly. Most obviously, foreign providers are being introduced to the Emirates to urgently build capacity whereas foreign-based higher education has never been invited to operate autonomously in the US. Even with an invitation, foreign providers would have lacked the space (and thus motivation) to set up shop in an already crowded American system.

The arrival of foreign institutions in the Emirates has often meant finding and filling educational niches that are national in basis. Potential university students have long-determined their educational needs using cost-benefit analysis– by aligning intellectual curiosity and economic incentives with institutional reputation and the availability of quality course offerings. But in the Emirates, as distinct from Qatar, there is an implicit, in fact unabashed, nationally-based appeal to large and diverse expatriate populations.

Islamic Azad is a prime example. With long stagnating support from the public sector, higher education providers in the UAE are emerging in a fiercely competitive local context. Islamic Azad functions with an overall operating budget of $1.2 billion and generally appears to be solvent. Yet there is a risk that the fiercely competitive nature of the local market will result in the delivery of education that persistently compromises on quality. The Islamic Azad-Dubai continues to operate without the approval of any national or regional accreditation agency.

There are additional issues to consider: how do so many competing pedagogies operate in one higher educational structure? What does this contribute to national cohesion in a system that is traditionally characterized by Emirati nationals attending public primary and secondary schools and expatriates opting for private education?

The tertiary education system in the Gulf States is expanding faster than any other region in the world. In many ways it is an experiment without precedent. -SW

U.S. Military Pushing for Gulf Detente?

Published on April 4, 2009 in Politics, Security and Trade. 0 Comments

NIAC’s excellent blog reported yestetrday that U.S. representatives Conyers and Davis have introduced a sense of the House bill calling for the negotiation of an incidents at sea agreement with Iran. The full text of the resolution is here, but the jist is that the absence of military protocols for navigating Hormuz makes incidents like the 2008 Iranian harassment of a U.S. warship much more likely, and that without agreements in place or communication channels to resolve disputes, such an incident could easily escalate into a wider conflict. A key clause of the resolution frames the naval protocol as a step that can be taken even without a U.S.-Iran diplomatic reconciliation:

Whereas the absence of diplomatic relations between the United States and Iran need not be an obstacle to direct, military to military talks on procedural issues involving the safety of naval personnel and assets;

This comes on the heels of comments by General Petraeus that seemed to downplay concerns over Iranian aggressiveness in the Gulf and echoed concerns about unintended conflicts. An excerpt from the Bloomberg story:

“I don’t think we have any concerns about disruption to the navigation” in the Gulf, Army General David Petraeus said in an interview. “Certainly nothing from Iran.”

Iran’s naval forces have been quiet in the 15 months since U.S. officials say they challenged three U.S. Navy warships briefly in international waters in the Strait of Hormuz. Five Iranian “fast boats” in January 2008 confronted the vessels in the 33-mile-wide waterway between Iran and Oman at the mouth of the Persian Gulf, which is the sea route for almost a quarter of the world’s daily supply of oil.

Tensions at that time “were approaching the point where a miscalculation could result in something fairly serious, and I think everyone took a deep breath and stepped back from the ledge,” Petraeus said.

“We are still not sure whether that was sort of a rogue, small-boat operator getting a little bit feisty or what that was,’ ‘ he said, referring to the 2008 incident. “That has indeed calmed down. We’ve done a large number of transits with big-decked ships and they haven’t been impeded in any way.”

Before his departure at the tail end of the Bush Adminstration, Admiral Fallon had been one of the loudest voices calling for a naval agreement that could help reduce tensions in one of the world’s key strategic points. The resolution introduced yesterday cites support from DOD officials, that, taken with Petraeus’ comments, seem to point to an emerging consensus in the U.S. military on such a common sense step.