Archive for the 'Free Trade Zones' Category

Trouble in the Arvand Free Zone?

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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.

-WW

Guards Win $2.5b Chabahar Rail Contract

Today from the BBC:

Iran’s Revolutionary Guards have won a $2.5bn tender to build a railway route linking the south-eastern port of Chabahar to Iran’s rail network.

Transport minister Hamid Behbahani said it was part of a transit route for goods from Chabahar to the north-eastern border town of Sarakhs.

The Guards’ engineering wing, Khatam-ol-Anbia, has been awarded government contracts worth billions of dollars.

The BBC article puts the rail contract in context of the IRGC’s increasing influence in Iran’s economy and politics.  Certainly a valid angle, but there is a bit more to the story.  Chabahar is one of Iran’s coastal free zones, meant both to create Iranian jobs and to boost Iranian trade with Central Asia.  The port was reinvigorated in 2004 and has been financed almost entirely by India, as a rival to Pakistan’s nearby Gwadar port (Registan has a useful backgrounder on the two ports here).  The railroad in question will link Chabahar to the Turkmen border, thus giving India a trade route to Central Asia that bypasses Pakistan.  The original article (Farsi) makes no mention of any Indian financing for the deal, but given the gobs of money they’ve spent on developing Chabahar I wouldn’t be surprised if they are paying for the rails too.

-WW

Rezaee: Economic Federation Better Than Stagnation

In a pre-election debate, Ahmedinejad paid challenger Mohsen Rezaee (An arch conservative and former head of the Revolutionary Guards, who also holds a Ph.D. in Economics from Tehran University) ta’arof as one of the few candidates with ‘new ideas’. He then mocked Rezaee’s proposal to divide Iran into nine economic regions or ‘focal points’ as wholly unworkable: “How can one have economic federalism without political and administrative components? “, he asked.

Rezaee replied that he actually did mean economic federalism, not full federalism, and that matters of international policy, defense, etc. remain with the center. Rezaee explained that while there might be 40-45 provinces or more, each with their own devolved political and security functions, economic blocs would be much larger: “There might be nine economic administrators with full visibility on the activities of their respective regions. These would be responsible for their regional economic blocs and (report to) the president.” Ahmedinejad responded by saying that that dividing the country into nine administrative units was in fact not a new concept, as it had been proposed at one time by the Sepah (Revolutionary Guards). Furthermore, Ahmediejad told Rezai, “economic administration without political or social direction is without meaning.”

The federal question has been one that has plagued Iran for centuries, with decentralisation (or, more precisely, lack of central control) being both a cause of Iran’s economic stagnation, as well as the hallmark of some of the more productive periods in Iran’s past. As Springborg and Clement put it, Iran’s modern dysfunction has been a failure to globalize. Rezaee’s conception of economic federalism relates somewhat to the policies of former president Hashemi Rafsanjani, whose attempts at privatisation and export-promotion through China-esque Free- and Special Economic Zones have met with limited success. While these ideas are only sketches of plans thus far, they do constitute thought, in contrast to Ahmedinejad’s vigorous defense of the status quo.

EDC

IRISL Looks to Expand Reach, May Invest in North Africa Terminals

Tehran-headquartered Islamic Republic of Iran Shipping Line (IRISL) is looking to expand its reach through slot-sharing agreements  with other lines and investments in foreign container terminals.   According to Containerisation International (CI On Line,  March 22, 2009) the company recently signed agreements with China Shipping Container Lines (CSCL)  for capacity on the Mediterranean/Asia trade, and Melfi Marinae SA on the Mediterranean-Caribbean Basin trade.  Captain A. Ezzati, IRISL’s General Manager for Strategic Planning and International Affairs,  noted said the line is “not ruling out” the prospect of investing in terminal facilities in the Med basin, including Tunisia, Algeria and Libya, in anticipation of increased relay cargo from the Far East and Middle East.  Malta, Barcelona and Valencia are currently key relay point for cargo going to/from Iran to the Carribean and Central America.

In related news, IRISL is upgrading its fleet to include four six 5000 TEU (Twenty-foot Equivalent Units) and four 5150 TEU container ships,  nine 22,000 dwt multipurpose heavy lift vessels and ten open hatch handy-sized bulkers scheduled for delivery.  IRISL is one of the largest commercial companies in the Middle East, and ranks 25th globally (as of 2004).   The company, which employs some 7,000 staff and carries (2004)  22 million tons per year,  controls approximately 40% of the domestic Iranian container trade.   The U.S. Treasury Department added IRISL to OFAC’s Specially Designated National (SDN) list in September of 2008, thereby freezing any U.S. assets and prohibiting transactions with U.S. parties.  IRISL’s domestic representative offices include Bandar Abbas, Bandar Imam Khomeini and Chabahar.

Iran and the UAE Higher Education System

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

Kish or Qeshm for Noruz this Year?

freezone-travel

The above are two ads that appeared in today’s Etemad-e Melli. Both push vacation packages to Iran’s Kish and Qeshm free zones in the prelude to Noruz (Persian New Year). Interesting that in the upper ad Kish island takes pride of place over the major city of Shiraz.