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Domestic Economy
Thu, Dec 04, 2008

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Domestic Economy
Middle East
Art & Culture
New Gas Export Strategies
Economic Plan to Materialize 2025 Vision
SP Progress Impressive
Mapna Investments at 5b Euros
39 Countries Buy Auto Parts
Germans Seek Lost Trade
Forex Reserves Reach $80b
Tea Production Up
Household Appliances
Exhibit Underway
No Halt to Argentina Biz
Foreign Investment Confab Due
Envoys Visit Saveh Industries

New Gas Export Strategies
By Majid Karimi

The trilateral meeting between the leaders of Turkmenistan, Turkey and the Republic of Azerbaijan was held at Turkmanbashi, Turkmenistan, on Friday.
Gurbanguly Berdymuhammedov, Abdullah Gul and Elham Aliev respectively discussed cooperation in the field of energy.
The meeting followed Berdymuhammedov’s visit to Germany and Austria, and negotiations for exporting gas to Europe. Of course, he has not made explicit comments regarding exports of gas to Europe via Nabucco or the trans-Caspian project.
The trans-Caspian project has not yet materialized due to ambiguities surrounding the Caspian legal regime, rift between Turkmenistan and Azerbaijan over a gas field and environmental problems.
It is difficult to predict the final stance of Turkmenistan toward the Nabucco pipeline,
as nothing official has yet been made public.
After the Turkmanbashi meeting, Financial Times reported Azerbaijan and Turkmenistan have reached an agreement about new strategies for exporting the Caspian Sea energy to consumer markets to curb the dependency of European states on Russian gas.
Based on this report, the European Union (EU) and the US have urged Turkmenistan to join the Nabucco pipeline project for transporting gas via Azerbaijan, Georgia and Turkey.
After meeting his Azeri counterpart, Berdymuhammedov said, “Turkmenistan and Azerbaijan, which are rich in hydrocarbon resources, have reached an agreement on diversifying the export routes for energy to the global markets.“
He emphasized that his country is keen on participating in the Nabucco pipeline project, but is under pressure for exporting its gas via Russia, which is the main market for Turkmen gas.
“Turkmenistan has signed a contract for supplying gas to China via the pipeline which is presently under construction,“ he said.
On the threshold of this trilateral meeting, Berdymuhammedov visited Germany and Austria during Nov. 13-19. In these visits, issues pertaining to the transport of Caspian Sea gas bypassing Russia were examined.
Manager of Azerbaijan’s Oil Projects Research Center Ilham Shaban noted that negotiations between the presidents of Azerbaijan, Turkey and Turkmenistan hints at more extensive cooperation among them in the energy sector than the Nabucco project alone.
Future meetings are not expected to focus on the gas project for building a pipeline through the Caspian seabed because at the presidential level, projects in their preliminary stages are not examined.
“So far, a few meetings have been held between representatives of Turkey and Turkmenistan in which the import of electricity and transport of gas via Iran were discussed. But, the last case did not materialize,“ he said.
The Azeri official noted that till now, no trilateral meeting was held between the leaders of Azerbaijan, Turkmenistan and Turkey.
“I should mention a similar case regarding how things proceeded regarding energy cooperation between Azerbaijan and Kazakhstan. Since November 2002, negotiations took place between Baku and Astaneh at different levels. This eventually led to an intergovernmental agreement between Azerbaijan and Kazakhstan regarding oil transport via the Baku-Tbilisi-Ceyhan pipeline. Hence, the meeting in Turkmenistan is another step to this end,“ he said.
Since the Commonwealth of Independent States gained their independence in 1991, Azerbaijan has had good economic ties with Turkmenistan and Turkey.
“I personally believe that in future negotiations between the presidents of these countries, more issues will be examined,“ he said.
Shaban further said it is difficult to predict the final stance of Turkmenistan toward the Nabucco pipeline, as nothing official has yet been made public, except a communiquŽ expressing Turkmenistan’s desire to diversify its gas supply.
“Interestingly enough, it has been mentioned that gas will be transported to China from fields located above Amudarya, from northern Dolatabad to Russia via the pipeline alongside the Caspian Sea and whatever is found in the western part of Turkmenistan will be transported to the West,“ he said.
It seems that Turkmenistan has determined, after 17 years of independence, where and how gas should be transported in a viable manner.

Economic Plan to Materialize 2025 Vision
The Economic Overhaul Plan proposed by President Mahmoud Ahmadinejad is the most important tool for achieving the goals of 2025 Vision, said the head of State Taxation Organization.
Ali Akbar Arab-Mazar added that the general policies of Article 44 of the constitution are aimed at causing the country’s economic boom, IRNA wrote.
He said that when the taxation structure is reformed, the economy can be managed in a better manner.
“When there is insufficient control on money, liquidity flows from one sector to the other, creating challenges in the economic system,“ he said.
Earlier, President Mahmoud Ahmadinejad said Iran should implement the Economic Overhaul Plan to administer justice across the country.
The president made the remark in a meeting with members of the plan’s working group.
The scheme drawn up by his Cabinet aims to tackle economic problems like inflation and protect the low-income strata. It will incorporate fundamental changes in the banking, customs and taxation sectors.
Noting that justice is the main goal of the program, the president said development without justice is worthless.
Ahmadinejad noted that the rich benefit from some 70 percent of subsidies and this is one of the primary reasons for changing the subsidies system.
“The plan will ensure that low-income families pay less tax while benefiting from a greater share of state subsidies,“ he said.

SP Progress Impressive
NoŽ van Hulst
As one of the countries with the world’s largest oil and gas reserves, Iran could play an important role in the field of energy at the international and regional levels, said International Energy Forum’s (IEF) Chairman NoŽ van Hulst.
According to, during a visit to South Pars Energy Economic Zone, van Hulst told reporters that the progress in South Pars is impressive.
Van Hulst noted that a major factor behind oil market stability is relations between producers and consumers.
He added that this atmosphere would help the two sides exchange information and clarify the market situation.
IEF chief also said that by reducing domestic consumption, oil-producing countries can help curb emission of greenhouse gases and consumption of more fossil fuels.
On his visit to the zone, he said, “I wanted to know about the progress made in the gas and petrochemical industries of the Persian Gulf region.“

Mapna Investments at 5b Euros
Mapna Group has made investments to the tune of five billion euros in oil and gas projects in the past three years, said managing director of the company.
Mousa Refan added that the company is ready to invest 14-15 billion euros in implementing energy projects across the country, wrote.
He named the utility projects of phases 15 and 16 of South Pars gas field, Fajr Petrochemical Company and Novin Petrochemical Company, as well as expansion of Isfahan Refinery and supply of 100 turbines and compressors to National Iranian Gas Company as Mapna’s ongoing projects.
Refan also pointed to sweetening of gas produced by phases six, seven and eight of South Pars gas field.
Mapna is a conglomeration of the parent company with 27 subsidiaries engaged in the expansion and implementation of power, oil and gas, railroad and other industrial projects under EPC and IP schemes as well as manufacturing related equipment.
Since its inception in 1992, Mapna Group has constructed or has under construction more than 60 projects worth 17 billion euros, including power projects to produce over 45,000 MW, which constitute 86 percent of the country’s total grid capacity.

39 Countries Buy Auto Parts
Over 39 countries currently purchase Iranian auto parts, signifying global collaborations and export promotion, said minister of industries and mines.
Speaking at the inaugural ceremony of an auto parts manufacturing unit in Mashhad, Khorasan Razavi province, Ali Akbar Mehrabian said many countries are interested in Iran’s participation in their projects, Fars News Agency reported.
Given the scale and scope of the huge local car market, the interest of foreign auto part makers is understandable.
“Despite the shortage of funds facing Iranian Mining Industries Development and Renovation Organization, over 30 projects are underway,“ he said, hoping that they would be put in force by March 2009.
The government is making efforts to empower the private sector in the car parts manufacturing industry.

Germans Seek Lost Trade
DIHK reported that economic sanctions on Iran may cost more than 10,000 German jobs and have a negative impact on the GermanyÕs economic growth.
The volume of German-Iranian trade rose by 7.8 percent between January and September this year compared to the corresponding period in 2007, the Federal Statistical Office based in the German city of Wiesbaden reported Tuesday.
The overall bilateral trade volume until the end of September stood at well above 3 billion euros, compared to last year’s 2.9 billion.
German exports to Iran increased 8.9 percent and comprised 84.7 percent of the total German-Iranian trade volume, IRNA reported.

Expanding Ties
The expanding bilateral economic ties come amid fierce political pressure by the German Zionist lobby to force Berlin to cut its business relations with Tehran over the Iranian nuclear dispute.
German companies have stepped up their criticism of the German government for backing the illegal UN financial sanctions on the Islamic Republic, saying their business interests have been severely affected by the controversial political move.
Managing Director of the Federation of German Wholesale and Foreign Trade (BGA) Jens Nagel has repeatedly lambasted “unilateral sanctions on Iran as totally incomprehensible.“
Nagel expressed also mounting concern that German firms were gradually losing the lucrative Iranian market to Asian competitors.
The BGA official’s assessment was echoed by Managing Director of the German Near and Middle East Association (Numov) Helene Rang who made clear that a further tightening of sanctions against Iran would “not solve the problem.“
“The sanctions are backfiring,“ she stressed.

Losing Good Business
Head of the Federation of German Industries (BDI) Juergen Thumann warned that German companies are to lose their good business contacts with Iran which they have developed over decades as a result of the continuing political pressure.
Several renowned German companies are involved in major Iranian infrastructure projects, especially in the petrochemical sector, like Linde, BASF, Lurgi, Krupp, Siemens, ZF Friedrichshafen, Mercedes, Volkswagen and MAN.
Around 50 German firms have their own branch offices in Iran and more than 12,000 firms have their own trade representatives in the country.
President of the Federation of German Wholesale and Foreign Trade (BGA) Anton F. Boerner has similarly warned that Germany could be among the main losers of sanctions against Iran if the situation continues.
He emphasized that the illegal sanctions would especially hurt medium-sized German firms, which depend heavily on trade with Iran.
Boerner made clear that the ongoing row over Tehran’s civilian nuclear program should be resolved through “political and not economic means.“ “We should avoid everything which might aggravate the crisis,“ he added.

Costing Jobs
Meanwhile, the German Chambers of Industry and Commerce (DIHK) reported that economic sanctions on Iran may cost more than 10,000 German jobs and have a negative impact on the economic growth of Germany.
“Economic sanctions against Iran would not solve political problems, as the example of Iraq has shown dramatically. The German economy would be severely hit in an important growth market. The loss of business in Iran could threaten more than 10,000 jobs in Germany,“ the DIHK was quoted as saying.
“If there were a real embargo, it would effectively kill off German trade with Iran,“ DIHK’s Mideast expert Jochen Clausnitzer warned.
More than 40,000 German jobs are indirectly affected by German-Iranian trade, a senior German official told IRNA recently, requesting anonymity.
The German-Iranian Chamber of Commerce is intent on expanding Tehran-Berlin business relations despite sanctions.

Forex Reserves Reach $80b
A high-ranking Central Bank of Iran (CBI) official said foreign exchange reserves have reached more than $80 billion.
CBI deputy chief Reza Raei said forex reserves have been mostly switched into euros, Fars News Agency reported.
Oil prices have dropped almost $100 since hitting a record high of above $147 in July, causing a decline in Iran’s oil revenues. However, Raei said the current reserves would be enough to meet Iran’s forex demands.
The Parliament has approved a proposal to prepare the budget plan for the next Iranian year based on $45-a-barrel oil.
President Mahmoud Ahmadinejad said even if the price of oil hits zero, Iran has enough foreign exchange reserves to last for three years.
“As far as the foreign exchange reserve is concerned, we are in good shape, and even if the price of oil hits zero, we can manage the country for about three years,“ Ahmadinejad added.
“The foresight of the country’s managers prevented Iran from being swallowed by the global economy, and this helped us because it decreased our susceptibility to the world financial crisis,“ he said in a live TV address in Tehran on Tuesday.
Ahmadinejad noted that sanctions imposed on Iran and the Islamic Revolution’s prioritization of self-sufficiency helped the country become strong enough to withstand the waves of the world economic crisis.
“We thank those countries that imposed sanctions on us because these sanctions helped us stand on our own feet,“ he concluded.

Tea Production Up
Production of tea has increased by 60,000 tons in the past three years, said the director general of State Tea Organization.
Farrokh Iranfar told IRNA that tea production rose to 190,000 tons in 2007 from 130,000 tons in 2004.
Describing the export of more than 80,000 tons of tea as one of the achievements of the government, he noted that 6 hectares of low-yielding tea gardens have been improved since the government took office three years ago. “Tea growers were also provided facilities to improve crops.“
According to him, during the period, 41 tea cooperatives were set up and ten agreements were signed with factories to purchase green tea leaves at open market rates.
He noted that his organization is responsible for improving tea production in quality and quantity and helping the industry achieve self-sufficiency.
Smuggling is the industry’s most pressing problem. According to official figures, 75,000 tons of tea is smuggled into Iran each year. Some of it is low grade Iranian tea, bought at knock-down prices and then taken abroad, where it is flavored with artificial additives, repackaged as foreign produce, and smuggled back and sold at huge profits.
The tea industry was introduced to Iran more than 100 years ago by Mohammad Mirza--known as Kashef-al-Salteneh.

Household Appliances
Exhibit Underway
The 8th International Household Appliances Exhibition will open in Tehran’s Permanent Fairgrounds today, December 4.
Close to 280 Iranian and foreign companies from 14 countries active in manufacturing household appliances are putting on display their latest products during the event, ISNA wrote.
This year’s exhibition indicates a 25-percent increase in the number of participants compared to last year. Foreign companies from Belarus, Japan, Switzerland, Singapore, Britain, the US, Germany, Italy, the United Arab Emirates, Belgium, Turkey, China, France and South Korea are taking part in the exhibition.
Deferent kinds of household appliances including refrigerator, air conditioner, washing machine and swing machine, among others, will be put on display during the four-day event.
Meanwhile, the 1st International Brand Festival will be held on December 23 at the IRIB conference hall. The festival aims to promote brand management and facilitate cooperation in branding.

No Halt to Argentina Biz
Argentina has denied reports that it plans to cut trade ties with Iran due to an old diplomatic dispute between the two countries.
According to Press TV, Argentine Justice, Security and Human Rights Minister Anibal Fernandez on Tuesday dismissed reports that he had told Julio Schloser, general secretary of the Argentine Israeli Mutual Association, that the Argentine government will suspend commercial ties with Iran.
Fernandez’s spokesman, Fernando Coradazzi, said that Fernandez “did not make an announcement related to issues that are not of his competence.“
Coradazzi added that the minister only talked about specific issues on the agenda with leaders of the Jewish community during their meeting.
Iran continues to expand its trade relations with the Latin American countries despite baseless US pressures and accusations. For instance, trade between Iran and Brazil quadrupled between 2002 and 2007, and it will further increase as much as five-fold, from $2 billion to $10 billion annually.
In addition to Brazil, Iran has signed dozens of economic agreements with Bolivia, Cuba, Ecuador, Nicaragua, and Venezuela. In Nicaragua, Iran and Venezuela have agreed to invest $350 million in building a deepwater seaport off the Caribbean coast, in addition to a cross-country system of pipelines, rails and highways.
In 2007, Iran became an observer member of the Bolivarian Alternative for the Americas, a trade initiative led by Chavez in response to the failed Free Trade Area of the Americas effort proposed by the United States. Trade between Venezuela and Iran grown steadily and the two countries have launched joint ventures in a number of sectors, including energy, agriculture, housing, and infrastructure.

Foreign Investment Confab Due
The International Foreign Investment Conference will be held in Tehran in mid February 2009, an official said.
Deputy Economy Minister and Head of Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) Behrouz Alishiri said that the forthcoming conference will be totally different than all other investment events held thus far, IRNA wrote.
He added that the event is sponsored by the government and Islamic Development Bank.
“The conference consists of seven professional panels including medicine and auto manufacturing and other economic fields,“ he said
OIETAI chief noted that a specialized expert workshop will also be held on the sideline of the event.
Iran absorbed $24.3 billion of foreign investment from 1993 to 2007. Foreign transactions with Iran amounted to $150 billion between 2000 and 2007 worth of major contracts and both private and government lines of credit. Iran also at the moment has $62 billion worth of assets held abroad.
Foreign investment hit a record $10.2 billion in 2007 from $4.2 billion in 2005 and $2 million in 1994. Asian entrepreneurs headed by China made the largest investments in the Islamic Republic by investing in 40 out of 80 projects funded by foreign firms.
The largest amount of foreign investment was in the industrial sector, including food and beverage, tobacco, textiles, clothing, leather, chemical, steel and oil derivates. The figure exceeded $8.76 billion.
Water, electricity and gas sector ranked second, attracting $874.83 million. In the third place, the real estate sector absorbed more than $406 million. Investments in service, telecommunication and transportation as well as mines reached $193 million, $14.3 million and $14.2 million respectively.
Asian countries invested $7.666 billion in various projects followed by several multinational consortia. Investments by these multinational companies exceeded $1.39 billion. Although European entrepreneurs were involved in 34 projects, they each invested only in the range of $1.2 in the Islamic Republic. American countries also committed $12.329 million in the country.
Iran’s trade with Asia and Pacific nations more than doubled in the past three years, reaching about $90 billion in 2007. Among developed nations, the most active investors have been Swiss, German, Norwegian, British, French, Japanese, Russian, South Korean, and Swedish companies.

Envoys Visit Saveh Industries
Thirty Tehran-based foreign ambassadors on Monday visited Saveh industrial units in Markazi province.
According to IRNA, Saveh governor said that getting acquainted with the region’s capabilities in the fields of agriculture, industry and horticulture were among other objectives of the visit.
Ali-Mohammad Golestani-Fard noted Saveh enjoys high potentials in the fields of agriculture, especially pomegranate. “The region has about 500 industrial units. Over 150,000 tons of industrial commodities were exported last year.“
He voiced the province’s readiness to boost economic and trade ties with other countries.
The foreign envoys were from Egypt, Argentina, Sudan, Cuba, Belgium, Japan, South Korea, Syria, Lebanon, Senegal, Switzerland, Georgia, Zimbabwe, Uganda, Vietnam and the United Nations
Markazi and Fars provinces are the country’s largest producers and exporters of pomegranates with an annual production of above 700,000 tons. Pomegranate plant gives more fruits in dry and semi-arid areas in Iran.

Unskilled Graduates
Labor Minister Mohammad Jahromi said 70 percent of university
graduates have no job skills and should undergo technical/vocational training courses.

Samand in Senegal
Samand production line, with an annual capacity of 10,000 cars, will come on stream Friday in Senegal, Iran Khodro Company Managing Director Manouchehr Manteqi said.

US Automakers Cry for Help
Humbled and fighting for survival, Detroit’s once-mighty automakers appealed to Congress with a retooled case for a bailout as large as $34 billion, pledging to slash workers, car lines and executive pay in return for a federal lifeline.
GM and Chrysler said they needed an immediate cash infusion to last till New Year’s, and warned they could drag the entire industry down if they fail, AP reported.
Chrysler LLC said it needed $7 billion by the yearend, and General Motors Corp. asked for a quick $4 billion as just the first installment of as much as $18 billion to stay afloat and weather even worse economic storms.
Ford Motor Co. had a more upbeat report, but the other two members of the US Big Three painted the direst portraits to date of what could happen if Congress does not quickly step in.

Kuwait Market Dragged Down
Kuwait’s main index edged down in early trading on Wednesday, dragged lower by Mobile Telecommunications Co (Zain) and National Bank of Kuwait.
The Kuwaiti index slipped 0.07 percent to 8,757 points as Zain fell 1.79 percent and National Bank of Kuwait declined 1.35 percent, Arabian Business reported.
The index, down almost 30 percent this year, has closed lower in the last two trading days.
Kuwait approved a $7.26 billion fund to invest in the local bourse, which has been hit by the global financial crisis. Last month, the Cabinet asked its investment arm--the Kuwait Investment Authority--to set up a fund to invest in the bourse to shore up confidence.

China Reluctant to Invest
China’s sovereign wealth fund, which last year poured $5 billion into Morgan Stanley, is reluctant to plow more money into foreign banks until governments hash out coherent policies to cope with the global economic and financial turmoil, the fund’s head said on Wednesday.
The remarks by Lou Jiwei, chairman of the $200 billion China Investment Corp., represent a new blow for ailing banks that were hoping the Chinese government investment fund would use its deep pool of cash to bail them out, AP reported.
Lou said that he was unwilling to invest in foreign banks amid so much turbulence and uncertainty.
“Confidence in financial institutions is lacking because foreign governments seem to be changing their policies every week,“ he said.
Speaking on a panel discussion in Hong Kong at a conference organized by former President Bill Clinton, Lou said, “We have to wait for the time when there won’t be massive collapses of financial institutions.“
The Chinese government investment arm was set up to make profitable use of Beijing’s foreign reserves, which totaled $1.9 trillion by the end of September.
Most of those funds are kept in US Treasuries and other safe but low-yielding securities.

Russia in Major Gold Find
A gold deposit estimated at more than 100 tons has been found in Siberia, the Russian National Geological Prospecting Co. announced.
The goldfield is in the Republic of Buryatia in East Siberia, RIA Novosti reported.
It was found in the Perevalny Block, owned by Geomin Management. Geomin plans to invest $18 million at the site for additional exploration in 2009, officials said.
Russia is a significant producer of gold, but in recent years known reserves suffered depletion. Most of the known deposits are in Siberia and the Far East.

Qantas Will Remain Aussie
Qantas will remain a majority-owned Australian airline even if it merges with British Airways to create a global carrier to better cope with challenging market conditions, the government said on Wednesday.
The chief executives of the two iconic airlines have been in merger talks since August as they battle volatile fuel prices and shrinking passenger demand as the world economy creeps into recession, AFP reported.
The Australian Financial Review said the merger would create a $5.2-billion carrier with bases on two continents.
Qantas Airways confirmed in a statement on Wednesday it was “exploring a potential merger with British Airways Plc via a dual-listed company structure“ but said that there was no guarantee a transaction would be forthcoming.
But the airline has acknowledged that the industry was heading toward a period of consolidation and as recently as last week said that it would be in Qantas’ interests to merge with a rival sooner rather than later.