In what seems like a calculated follow-on from Obama’s warnings to Iran in last night’s State of the Union, the U. S. Senate passed a broad sanctions bill (by unanimous voice vote) aimed at businesses that supply Iran with gasoline. The House has already passed similar legislation, and the two will have to be reconciled in conference before becoming law.
It is impossible to tell how biting the sanctions will actually be until the final text is in hand since very minor changes in wording can make a big difference. The administration has been seeking a greater degree of flexibility in how these sanctions are enforced and the procedures for granting exceptions to them.
The image above is from today’s Dunya-ye Eghtesad (World of Economics) with the main headline “American private sector against sanctions ” — a reference to the recent letter (PDF) signed by several American business and trade groups protesting that the sanctions are overly vague and:
could prohibit any U.S. company from transacting routine business with critical partners from around the globe even if these transactions have no bearing on business with Iran. These provisions could encompass a very large portion of the global trade community with consequences that in our view have not been adequately assessed. The proposals could have a large impact on the U.S. Export-Import Bank, precluding it from partnering with counterpart agencies abroad to co-finance U.S. exports that have no relation to Iran’s energy sector.
Meanwhile, the National Iranian-American Council has been making the case that gasoline sanctions would put undue pressure on the people of Iran (and less so on the intended target of the regime) and I’ve argued elsewhere that another overlooked drawback to the sanctions is the potentially destabilizing effects they could have on the region by encouraging smuggling of heavily subsidized gasoline from the GCC states.
At present its still too early to tell how “crippling” these sanctions will be, but it seems few of the bill’s opponents were prepared for it to sail through quite this fast. -WW
Iran’s Tabnak news website reports (Persian) that customs workers, labor activists and merchants in the Arvand Free Zone have stopped cooperation with the zone’s management and are forcing commercial goods to be re-routed to the nearby port of Khorramshahr. At issue is a 2% discount in rates that the Free Zone management claims to be the result of a directive from the High Secretariat of Free Zones – a claim the workers deny.
The piece dances around larger problems afoot in Khuzestan, Iran’s southwestern province along the border with Iraq, home to the bulk of the country’s Arab population. Residents are said to be resentful that Ahmadinejad has brought in members of his clique to run the Free Zones at the expense of locals, and there are intimations that dealings in the zone are far from transparent.
While there is nothing in the piece that would suggest that this is anything other than a local dispute, Mohsen Kashmirian, the president of the Khorramshahr Worker’s Rights Organization, is quoted lamenting the economic mismanagement that is a central critique of Ahmadinejad’s presidency:
While in past years the Arvand free Zone had been a huge source of income thanks to the customs and trade workers, unfortunately we see that the zone’s management – especially the present administration – have not shown the commitment necessary to building a platform for growth of trade and commerce at the port – only a neutral and ineffective organization.
After tensions we reported in October, there seems to be increasing cooperating between Iran and Kuwait on natural gas. Payvand reported in November that Iran was in talks with Kuwait and Saudi Arabia for joint development of the Arash/Durra gas field the three countries share. Today, Press TV reports (excerpt below) that talks with Kuwait are progressing over linking Kuwait’s gas network to Iran’s South Pars field. -WW
“Iran’s gas transportation network has already expanded to Khorramshahr in southern Iran and it’s possible to further extend the network to Kuwait,” said Reza Almasi in an interview with Mehr News Agency on Monday.
He said that the plan to link the two countries’ gas networks includes building a submarine pipeline to Kuwait’s border, which is possible in a short time considering the infrastructure of the southern Iranian province of Khuzestan.
The issue of annually exporting 3-4 billion cubic meters of natural gas pumped from Iran’s South Pars gas field to Kuwait was the one of major topics raised in a meeting in November, 2009 between Iranian Oil Minister, Masoud Mirkazemi, and his Kuwaiti counterpart, Sheikh Ahmad Al-Abdullah Al-Sabah, in Tehran.
We have been following Iran’s increasingly severewater shortage over the past year. This problem hurts agricultural yields in Iran and also contributes to cross-border tensions with Iraq. Today’s FT has an article chronicling how water shortages have hurt the Iranian pistachio crop, both in terms of absolute output and output per hectare compared with its closest rival in the market, the United States. The most shocking statistic comes towards the end, that Iranian farmers pick about 800kg of nuts per hectare against 3,200kg in the US.
Pistachios are Iran’s biggest non-oil export and the source of politician Ali Akbar Hashemi Rafsanjani’s family fortune, so these changes could have serious political repercussions.
The clip from Al-Jazeera English above gives a bit more background on Iran’s pistachio industry and its rivalry with the U.S. and a snip from the FT article follows:
-WW
Pistachios are one of the Islamic republic’s leading commodities, constituting 11 per cent of non-oil exports – more than Iran’s famous hand-woven carpets, saffron and dates.
They generated $1.2bn in export earnings in 2007 and $800m in 2008, according to the Pistachio Association. It is predicting a figure of $1.2bn for 2009.
The relatively poor showing of the nuts is a symptom of the wider problems afflicting Iran’s agricultural sector, which accounts for about 17 per cent of gross domestic product. Farming suffers from a shortage of investment by the government and the private sector.
Limited funding by banks, under-mechanised systems and the high costs of water make Iranian produce uncompetitive.
Most of the pistachio industry is private and controlled by small-scale farmers. The government does not set prices but it sometimes steps in to buy crops to support farmers.
Roger Haily of Lloyd’s List reports (Dec. 17, 2009) that Iman Khomeini port (IK), will soon be privatised. The statement was delivered by Iran’s Minister of Roads, Hamed Bahbahani at a conference in Tehran. IK, which is located near the Iran-Iraq border, currently handles an estimated 38% of Iran’s trade, including most of the country’s grain imports. Conceived under the Rafsanjani presidency, Iran’s privatisation program slowed considerably under Khatami. Ahmedinejad has increased nominal investment in ports and free zones, while transfering control of facilities from Rafsanjani-era ‘technocrats’ to IRGC stalwarts. The Ahmedinejad government claims to have sold/delivered $63 billion of state-owned equity to the private sector since 2005. –EDC
Perspectives on Iran's place in the post-Saddam Middle East, with an eye towards the Gulf.
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