During the visit, Larijani and senior Omani officials praised expanded Omani-Iranian political, cultural and economic cooperation, in particular the Iran-Omani “Kish field” gas deal. The agreement, signed in December of 2008, would in its first phase deliver 1 b. cubic feet of natural gas per day to Oman, through a pipeline linking the underwater field to Oman’s Musandam Peninsula. An extension would carry gas on to the city of Sohar, on Oman’s Batinah coast, West of Muscat. In its final phase, the pipeline is expected to deliver 3 b. cubic feet per day. If Iranian gas were to be re-exported, neighboring countries experiencing severe energy shortages would stand to benefit.

Oman agreed to cover the entire 12 billion US development cost, but has been having some difficulties raising the required capital. An anonymous source told Reuters last week that the global economic crisis would delay completion by a year, to 2013. Larijani’s trip coincided with an official visit to the Sultanate by the head of Hamas’ political directorate Khaled Mishal.The ex-“Enriched Iranium” blog detailed Oman’s growing ties with Iran 2007-2008, including agreements to trade Omani investment in newly-privatized Iranian companies for technical assistance and investment in Omani ports. –EDC

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.

Mohammad Nurian, the president of Iran’s Meteorology Organization has warned, that low rainfall levels put sixteen of Iran’s provinces on the “threshold of total drought ” for the upcoming year, according to a recent article published by Iran’s Environmental News Agency.   Nurian warned that drastic human and economic costs would be suffered if the upcoming water shortage were not better planned-for.  Iran’s varied geography makes for drastic differences in climate from region to region.  In the past, severe water shortages in Iran’s  south have scuttled deals to sell excess potable water from water-rich provinces like Khuzistan  to Gulf Arab States.

The above image is taken from a very interesting report on Iranian wheat production put online by the US Foreign Agricultural Service.  The full text and more historical data on Iran’s rainfall is available here.

Sheikh Jasim Saidi, a Salafist member of Bahrain’s parliament, called for the expulsion of the Iranian ambassador and a break in formal relations. The National Association for Oil and Gas would look to other neighboring countries, and increased local exploration to fulfil its incrasing natural gas needs,” as Bahrain could “not continue to negotiate with an ‘entity’ that denied its existence. ” The London-based Al Hayat leads with Saudi condemnation of Nateq Nouri’s remarks, which the Kingdom refers to as a “violation of Bahrain’s Arab identity.” Interviewed on Al-Jazeera radio, an unnamed Arab official was quoted as saying the incident was most unproductive, as Iran has much to gain from better relations with its Arab Gulf neighbors.

For the best outline of the program, I’d refer you to Robin Wright’s article from a few months back. At the time I wrote a post on my objections to it, namely that (among other things) it empowers Iran’s Revolutionary Guards to take on a bigger role in the economy since they can muster state resources to do things like smuggle goods, set up front companies and launder money.

Others no doubt celebrating the move are the smugglers, hawala operators, and countless other individuals who take part in the massive informal trade between the UAE and Iran. I can almost hear the champagne corks popping from Cairo.

The theory behind sanctions, both the formal kind and the informal sort spearheaded by Levey, is that business interests will pressure the government to change its naughty ways. That pressure no doubt exists to some extent. But I am constantly surprised that policymakers rarely take into account (at least publically) the knock on effects that sanctions have within the targeted societies and their economic neighborhoods. For me, the interesting question is who benefits from the re-channeled economic activity shaped by sanctions. A lot of this happens across the Gulf, and is something we should be thinking about more carefully.

“A noxious tide of toilet paper, raw sewage and chemical waste has transformed Dubai’s most prestigious stretch of shoreline into a foul-smelling health hazard.

A stretch of the exclusive Jumeirah Beach — a magnet for Western tourists and home to a string of hotels — has been closed.”

This particular article is a bit over dramatized, but it is typical of the environmental horror stories that are common in press coverage of the UAE, both international and domestic. In this case, the culprit was workers dumping waste into storm drains that led directly to the beach. Tomorrow the story could be shipping waste, air pollution, helicopter noise, the list goes on. There is no doubt that pollution of the Gulf is a big problem on the way to becoming a huge one.

The UAE government is certainly aware of the problem, and seems keen clamp down on domestic polluters. It has also conducted bilateral deals with Bahrain, for example this agreement recently renewed on limiting fishing. But the problem is that the Gulf is a small ecological neighborhood, so bilateral deals can only go so far. Any serious efforts to combat problems like water pollution or overfishing will require coordination of all the Gulf states.

A few months back al-Jazeera reported that the GCC and Iran were studying a joint security apparatus. This went nowhere, largely I would guess because of the huge amounts of tension on the geopolitical level over things like the three islands dispute, the nuclear issue, perceived Iranian meddling in the Levant, etc.

Given this, I would think some type of joint Iran-GCC effort on environmental issues have a much better chance of getting somewhere than security talks. Could it actually work? I don’t know, but its certainly something to watch going forward.