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Domestic Economy
Mon, Apr 20, 2009

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Remittance Lifeline
NITC Revenues at $1.5b
Trade With Europe Rising
Leap in China Ties
US Banks Seek Branches
Nabucco Future Uncertain

Remittance Lifeline
Faced with their own domestic economic crises, several western states are imposing new conditions on migrant labor.
The Geneva-based International Organization for Migration (IOM) has warned that the current financial crisis is threatening to claim another casualty: international migration.
“Trying to combat the economic crisis by simply cutting immigration may make the situation worse,“ the IOM said in a recent policy brief.
A number of destination countries—mostly in the West and the Middle East—have stopped or imposed restrictions on new admissions of migrants for employment.
As a result, countries of origin, such as Pakistan, Bangladesh, Philippines, Morocco and Sri Lanka, which supply migrant workers, are already experiencing influxes of returning migrants, “which may result in economic and global instability in (these) poorer countries“.

Labor Migration
Jean-Philippe Chauzy, head of IOM’s Media and Communications, told that labor migration is an integral part of today’s globalised world.
“Even during this economic downturn, one simply cannot wish migration away,“ he said.
Chauzy said the global financial crisis is having a negative impact on perceptions of migrants and migration worldwide.
Special attention must, therefore, be paid to ensure that migrants, who are particularly prone to stigmatization at best of times, are adequately protected from xenophobia and discrimination in the employment sector and in all social spheres.
Kul Chandra Gautam, a former deputy executive director of the UN children’s agency UNICEF, told IPS that in the case of Nepal, his home country, the global financial crisis is expected to cause up to a 30-percent decline in remittances that provide the lifeline for many rural communities.
These remittances, he pointed out, had prevented the total collapse of Nepal’s economy during the last decade of a horrendous civil war.
“Nepal’s example is multiplied all across the poorest countries of Asia and Africa,“ he added.

Fall in Remittances
A recent World Bank study reveals that migrant earnings to developing countries will decline from $305 billion in 2008 to about $290 billion in 2009.
The fall in remittances has already been recorded in several countries, including Morocco, the Philippines and Sri Lanka.
In Latin America and the Caribbean, resource flows from the United States alone have dropped by 71 percent.
Besides the economic crisis, there are other reasons for the decline in earnings, including sharp fluctuations in exchange rates. The study says that migrants may also be more reluctant to send money through formal channels due to a lack of confidence in the stability of the international banking system, which has taken a heavy beating due to the financial meltdown in the United States.
The ongoing crisis—along with the spread of xenophobia—is prompting some of the rich countries to cut down on immigration and place restrictions on the hiring of foreign workers.
IOM’s Chauzy said solidarity between countries of origin and destination is today more than ever needed to mitigate the impact of the crisis on the fragile economies of countries of the south.
This could be done by increasing levels of official development assistance (ODA) from the rich to the world’s poorer nations.
Double Whammy
The Middle East, particularly the Persian Gulf, has been hit with a double whammy: first, the precipitous decline in oil prices, and second, the global economic crisis which has reached out from Wall Street in New York to the skyscraper offices that have sprouted in Dubai, Abu Dhabi, Doha, Dhahran and Kuwait City.
In the Persian Gulf, the boom times in Dubai, one of the fastest-growing sheikdoms of the United Arab Emirates, are virtually over.
The New York Times reported recently that over 3,000 cars, including a few Mercedes Benzes, BMWs and Porsches, have been abandoned at the Dubai international airport by expatriates fleeing the country after losing their jobs.
“Dubai is emptying out,“ one western diplomat was quoted as saying.
According to one report, over 1,500 visas are being cancelled per day in Dubai, which has about 3.6 million expatriates and only 864,000 nationals.
The number of British expatriates in Dubai alone has been estimated at over 100,000, where the real-estate market has collapsed and building construction has come to a standstill. But the bigger picture worldwide is even worse.
In Malaysia, there is evidence of policies to speed up the deportation of irregular migrants who have lived and worked in the country illegally. And, according to the World Bank, the Malaysian government has reportedly cancelled work visas for some 55,000 Bangladeshi workers.
Faced with their own domestic economic crises, several western states are also imposing new conditions on migrant labor. Britain has introduced a points-based system favoring ’high-skilled’ migrants and even raising academic qualifications.
Australia has reduced its intake: from 133,500 to 115,000. And Spain has introduced new incentives for migrants to return to their home countries.
A provision in the stimulus package in the United States makes it more difficult for US companies to hire skilled foreign workers.

NITC Revenues at $1.5b
National Iranian Tanker Company’s revenues during the last Iranian year (ended March 20, 2009) reached $1.5 billion, NITC’s managing director said.
“In 2008, NITC transferred 103 million tons of petroleum products abroad,“ Mohammad Suri said, adding that the figure has set a record.
“Some $510 million of the $1.5 billion revenues are net profit,“ he told Moj News Agency.
The official added that 51 percent of the revenues came from Europe, 26 percent from Asia, 15 percent from Africa and 8 percent from other parts of the world, including Canada, Venezuela and Latin America.
As the biggest tanker company in the Middle East and 4th in the world, NITC is in charge of exporting Iran’s crude oil to ports worldwide.
The company transports Iranian crude to export markets and is responsible for the distribution of oil products to Iranian ports and island ports located in the Persian Gulf.
The company has also signed contracts with foreign firms for crude oil transportation based on international freight rates.
NITC observes International Maritime Organization regulations and has a huge project for replacing tankers, including the construction and purchase of 25 tankers with a total capacity of 6 million tons.
In recent years, NITC has taken measures for implementing enhanced management systems, maritime safety and transport, which have led to an array of awards, including ISO 9002, ISO 14001 (for management), PMS (for maintenance and repair system), STCW (for maritime supervision systems) and ISMC (for maritime safety management).
NITC shares have recently been offered to the private sector.

Trade With Europe Rising
Iran’s transactions with Belgium, Sweden and Switzerland grew significantly in the last Iranian year (ended March 20, 2009).
IRNA quoted Public Relations Office of Iran’s Customs Administration as saying the country’s imports from Belgium indicated an 85-percent growth, while exports showed an 84-percent rise.
Belgium exported commodities worth over $992 million to Iran and imported $409 million of cargos during last year.
According to the data on Iran’s foreign trade, Belgium stands at the ninth place in terms of imports from Iran while Turkey is at 10th place.
Swiss-Iran trade also progressed. The value of Swiss exports to Iran hit $3.5 billion in the past year.
This is while Sweden exported over $712 million of commodities to Iran during the period.
In related news, UK exported over $2 billion of commodities to Iran last year and was considered the sixth biggest exporter to Iran, followed by France and Italy.
Iran and Australia also announced their determination to increase annual bilateral trade to $1 billion.
At a meeting between Chairman of Tehran’s Chamber of Commerce Yahya Aal-e Es’haq and Australian Ambassador Mark Brown, the two sides emphasized expansion of bilateral commercial ties.
Referring to Iran’s geopolitical status and the country’s huge energy reserves and easy access to international markets, Aal-e Es’haq said Iran is a golden economic gate for Australia.
Calling for expansion between the two countries’ private sectors, he said annual trade between Iran and Australia should increase to $1 billion in the near future from the current $250 million.

Leap in China Ties
Vice President Parviz Davoudi told Chinese Premier Wen Jiabao (r) that Chinese firms could take part in Iran’s development projects.
China’s runaway economic growth in recent years has been accompanied by a voracious appetite for energy, and a widening quest for its foreign sources.
Iran looms large in this calculus; the Islamic Republic is currently China’s third largest supplier of crude, providing China with roughly 12 percent of its total annual oil consumption (nearly one million barrels daily). In a real sense, in other words, Iran has become an engine of Chinese economic growth, and an indispensable part of Beijing’s energy plans, reported Wall Street Journal.

Beijing’s ties to Tehran are more than merely commercial. The strengthening of the Tehran-Beijing axis is of great importance in the context of confronting the unipolar world being considered by America.
Iran’s continuing interest in diluting US influence abroad is shared by China’s leaders, who believe their country’s rise as a great power requires a diminution of America’s perceived hegemony in global affairs. China’s leaders have even thrown caution to the wind and backed Iran’s bid to become a full-fledged member of the Shanghai Cooperation Organization, the Moscow- and Beijing-led security bloc that now dominates much of the post-Soviet space.
In March, news broke of a new $3.2 billion, three-year deal struck between the Iranian government and a Chinese consortium to develop Iran’s mammoth South Pars natural gas field. The deal, coming as it did amid renewed illegal US sanctions against Iran, was a clear signal that the powers-that-be in Beijing don’t think the West has much of a prayer of preventing Iran from playing a greater role in the world.
With production at almost four million barrels daily, Iran is the second largest oil producer in the Organization of Petroleum Exporting Countries and a bona fide energy powerhouse. Economically, however, Iran is a one trick pony, relying on oil exports for some 85 percent of government revenue. Over the past several years, this single-sector economy has been a boon to the Islamic Republic, swelling the country with around $250 billion since 2005, according to the Economist.
Evidence abounds that the current downturn has hit China hard, and that its real rate of growth will likely be much more modest, which explains why the World Bank recently slashed its forecast of China’s growth to 6.5 percent, citing plummeting exports and a vulnerability to external shock. Without Iran as a stable energy supplier, even that number is likely to be out of reach.

Iran has set the goal of extending energy cooperation with China, Parviz Davoudi, first vice president of Iran, said.
“With regard to huge oil and gas resources in Iran and the huge interests into downstream industries, the country sees the road completely open for gas and oil relations with China,“ Davoudi said at a press conference at the Boao Forum for Asia Annual Conference 2009 in south China’s Hainan Province, Xinhua reported.
“We consider Iran as one of the most stable countries in the Middle East to provide necessary energy source for China,“ he added.
Davoudi also said Chinese investors could get into the area (of the privatization of Iran’s industry) and get in big industries including oil and gas.
He said Iran has been ready to cooperate with China either within the frame of Islamic banking or out of this model.
He said Iran believes that the most important cause of the crisis relies on elements including the lack of moral values of the capital system and the financial system, and the overconfidence in the capital system.
“In providing solutions to problems we should have multilateralism with huge participation and presence of more countries in decision-making in relation to the financial decision,“ he noted.
Davoudi said under the current financial crisis, a lot of countries interfere in their banking system and they are nationalizing their banks, which contradicts all capitalist ideas.

US Banks Seek Branches
Four American banks, including Citibank and Goldman Sachs, have applied for opening a branch in Iran, an Iranian daily has reported.
The banks made a formal request to the Central Bank of Iran (CBI) about 20 days ago to establish a branch in the country, the Jam-e-Jam newspaper quoted an informed source as saying.
“If the CBI approves their request, these four banks will set up a temporary branch in an Iranian free trade zone,“ the source told Jam-e-Jam, without revealing the names of the other two banks.
“If they can work according to Iran’s banking law, they will be allowed to open branches in Tehran and other cities.“
The report comes as Tehran and Washington are to enter direct negotiations to resolve a standoff over Iran’s civilian nuclear program.
The two Wall Street giants--Goldman Sachs and Citibank--have been hard hit by the economic recession in the US. Goldman Sachs reported first-quarter earnings of $1.66 billion on Monday, which easily surpassed Wall Street’s estimates.
The investment bank also launched a $5 billion common stock offering in the hopes of using the proceeds to help it pay back $10 billion in government aid it received last year.
Citibank is the consumer banking arm of Citigroup, which has received $45 billion of bailout funds from the US government. The banking group returned to profitability in the first quarter of 2009 after posting more than $18 billion in losses last year.

Nabucco Future Uncertain
Cambridge Energy Research Associates (CERA) analysts say despite its commercial challenges, the Nabucco pipeline could overcome the problems or be built for political reasons based on the perceived demands of European energy security.
According to the report’s authors, there are two additional major political issues that could negatively impact the Nabucco project. The first is the political situation in Turkey. The second major political issue is that Russia is politically and economically stronger, and its energy production has rebounded, Today.Az wrote.
The issue of potential gas suppliers for the pipeline is of not small importance. Azerbaijan, Turkmenistan, Egypt, Iraq and Iran are considered to be possible suppliers.
According to BP estimations, proven reserves of Azerbaijani gas total 1.28 trillion cubic meters, Turkmenistan 2.67 trillion cubic meters, Egypt 2.06 trillion cubic meters, Iraq 3.17 trillion cubic meters and Iran 27.8 trillion cubic meters since Jan. 1, 2008.
“Before the construction of Nabucco is launched, the project participants must reach agreement on terms of operation. The agreements must include terms for each transit country and potential buyers, tariffs and agreements on security and financing,“ the report said.
The report said some potential gas suppliers have certain political and economical obstacles.
Iraq, as a possible gas supplier for Nabucco, faces security problems.
“Iraq has ample supplies of natural gas. Iraq remains a country in turmoil both politically and economically. The security situation, while improved, remains extremely risky for major construction projects,“ the report said.
As to Egypt, this country has ambitious plans for increasing its gas exports, and there is interest in Egyptian gas flowing into Nabucco following the completion of the pan-Arab gas pipeline from Egypt to Turkey by 2010.
However, authors of the report are suspicious whether Egypt can commit gas to Nabucco for long-term period. “Egypt may have already committed its gas to other pipelines and many of Egypt’s gas exports are being dedicated to LNG.“
Iran is a country with large gas reserves second to Russia. Iran has expressed its willingness to supply gas to Europe lately. A number of Nabucco officials have likewise stated that Iran cannot be excluded from it.
Construction of Nabucco gas pipeline will begin in 2011. The first supplies will be carried out in 2014.

Gas Exports to Kuwait
National Iranian Gas Company is in talks with Kuwait Petroleum Company on exporting 300 mcf of natural gas daily to the Arab country, NIGC Managing Director Reza Kasaeizadeh said.

Kharg Oil Exports
Iran exports and swaps 950 million barrels of crude oil annually via southern Kharg oil terminal, said Managing Director of Oil Terminal Company Mousa Souri.

Iraq Top Trade Partner
Replacing the United Arab Emirates in terms of non-oil imports from Iran, Iraq has now become officially the greatest trade partner of the Islamic Republic.
“Last year, Iraq replaced the United Arab Emirates as the greatest trade partner of Iran in terms of non-oil imports,“ Head of Promotion Organization of Iran Mehdi Ghazanfari said, adding that during the period, Iran exported goods worth well above $2.383 billion to Iraq.
Non-oil exports to Iraq a year earlier stood at $1.586 billion, compared with UAE’s $2.328 billion (2008) and $2.153 billion (2007).
Mineral water, foodstuff, detergents, fresh and dried fruits, edible oil, carpets, home appliances, ironware, confectionaries, aquatics and construction materials were the main Iranian goods exported to Iraq.

Reconstruction Projects in Lebanon
Iran Ambassador to Lebanon Mohammad Reza Sheibani called on Saturday for expansion of relations with the Lebanese government and political groups as one of the priorities of Tehran’s foreign policy.
In an interview with Al-Alam News Network, Sheibani said Iran supports Lebanon in the political, spiritual and financial fields.
“During the Zionist regime’s brutal invasion of Lebanon, we witnessed considerable efforts by the Iranian diplomatic system to halt the aggression against Lebanese nation,“ he said.
Talking about the Islamic Republic of Iran’s economic aid to Lebanon, he said Iran delivered its humanitarian aid including drugs and foods to Lebanon after the conflict.
Referring to Iran’s reconstruction efforts in Lebanon, he said that the Islamic Republic of Iran would proceed with assistance to Lebanon’s development and reconstruction projects.
According to him, Iran has completed many construction projects throughout Lebanon so far, including reconstruction of 136 educational and 62 religious centers. Nine other development projects are currently underway.
“Iran has also completed 108 projects in the energy sector including equipping electricity generators and reconstruction of the power grid in different parts of Lebanon. Some 24 roads which were destroyed by the Zionist regime are also under reconstruction by Iran,“ he added.
The Iranian Headquarters for Reconstruction in Lebanon was established in 2006.

Algeria Keen to Expand Relations
Algeria has friendly and deep-seated relations with the Islamic Republic, Algerian Parliament Speaker Abdulaziz Ziare said, expressing his country’s willingness to strengthen ties with Iran.
“The Iran-Algeria relations have been steadily on the rise in economic, cultural and political domains,“ Ziare told Fars News Agency.
“Iranian businessmen and traders play an active role in Algeria and they have formed partnerships in different fields and we hope that they would increase their presence,“ he said.
Meanwhile, Businessmen from four Pakistan provinces exchanged cooperation agreements with Iranian traders on Saturday. Head of Sistan-Baluchestan Province Chamber of Commerce told reporters on the sidelines of the meeting that to develop economic activities customs tariffs should be slashed.
Abdulhakim Riggi added that the law for 5 to 30 percent customs discounts has not been enforced yet. He said that according to the aforementioned law, 309 items of Pakistani products for import and 318 items of Iranian goods for export have been included for customs tariff reduction.

Unblocking Armenia
Trade and tourism ties between Iran and Armenia are on the rise, political expert Stepan Grigoryan told
The expert said basic aspects of the developing Armenian-Iranian relations are transport, communication and energy.
“We have taken the first steps in energy cooperation through the construction of Iran-Armenia gas pipeline. Unfortunately, no gas still flows through the pipeline but we should solve that problem as soon as possible to guarantee our energetic security and make it useless to keep Armenia in blockade,“ said the expert.
According to him if Armenia manages to make another step forward in the Iran-Armenia gas pipeline, then Turkey would become more interested to improve its relations with this country.
He reiterated that his country’s cooperation with Iran will help unblock the Central Asian country.
When asked as to whether the proposed Iran-Armenia railway project was justifiable, he responded, “The potential project will be a major factor in the arena of foreign relations. When they even speak of the plan, the policies of this or that regional country is changed.“

Russian Oligarchs Lose $380b
Oleg Deripaska, once the richest Russian oligarch, has lost his place among the country’s top 10 billionaires, after $25 billion of his empire evaporated during the financial crisis.
Only one in three Russian tycoons classed as billionaires last year remains in that exclusive club, according to Forbes Russia, which compiles an annual rich list.
The magazine has calculated that Russia’s top 100 wealthiest citizens have seen their fortunes depreciate by 73 percent--or $380 billion--as a result of falling markets and asset prices.
Top of this year’s list was mining tycoon Mikhail Prokhorov, who sold 25 percent of Russia’s biggest mining company to Deripaska before the financial crisis hit last year. His $9.5 billion fortune made him $1 billion richer than second-placed Roman Abramovich, owner of Chelsea FC.
This is the first recession to threaten Russia for the last decade, in which a super-rich class of billionaires have made their fortunes in the asset-rich country.

Turkmenistan, RWE Sign Energy Deal
German energy company RWE AG signed a tentative deal on Thursday with Turkmenistan that could see it exporting natural gas from the Central Asian nation to Europe.
The memorandum of understanding marks a significant breakthrough in western efforts to diversify gas deliveries away from Russia, which is currently embroiled in a diplomatic row with Turkmenistan over a pipeline explosion last week, AP reported.
RWE Chief Executive Juergen Grossmann said the long-term deal will also give his company development rights to an offshore field in the Caspian Sea.
European plans to reduce dependence on Russian gas have focused on building a pipeline across the bottom of the Caspian Sea, an option that is being studied by RWE.
RWE is a partner in the international consortium hoping to build the EU-backed Nabucco pipeline, which is aimed at bypassing Russia by transporting from Azerbaijan, through Turkey and onward to Europe.

UK Chiefs Urge Minimum Wage Freeze
A top British business leaders’ network on Sunday urged finance minister Alistair Darling not to increase the national minimum wage in this week’s forthcoming budget.
The British Chambers of Commerce (BCC) said the private sector would lead the economy out of recession but could not do so without the freedom and flexibility, AFP reported.
Darling, the chancellor of the exchequer, presents his budget on Wednesday. The minimum wage stands at 5.73 pounds ($8.46, 6.48 euros) an hour for adults, 4.77 pounds for 18- to 21-year-olds and 3.53 pounds for 16- and 17-year-olds.

Worst of Dubai Crisis Over?
Dubai’s ruler insists his Persian Gulf emirate has recovered from the worst of the fallout from the global economic crisis and has also defended the grandiose vision of the formerly booming city state.
“We have overcome the crisis with the least amount of losses,“ Sheikh Mohammad bin Rashed Al-Maktoum, who is also United Arab Emirates prime minister, told Dubai’s first e-press conference.
“For us in the United Arab Emirates, I can safely say that we have succeeded in containing the risks of the global financial crisis in record time,“ said Sheikh Mohammad.
His answers to journalists’ questions were posted on the website on Saturday.
Sheikh Mohammad put the recovery down to the additional liquidity that the Abu Dhabi government pumped into the Emirates’ banks and the bond issuance of $20 billion.

Spain Aid Package for VW
The Spanish government has made 100.7 million euros ($131 million) available to SEAT in a bid to persuade parent company Volkswagen to build a new Audi model in Spain.
The aid is part of an 800-million-euro package put together by the industry ministry in a bid to improve the competitiveness of the Spanish automobile sector which has been hard hit by the economic crisis.
Business daily El Economista said Industry Minister Miguel Sebastien had gone to Volkswagen’s headquarters in Germany to plead the case for having the new medium-sized 4x4 Audi Q3 made at SEAT’s factory at Martorell in Catalonia.
But VW management demanded the 100-million-euro aid earmarked for SEAT be released merely to ensure that Martorell was not ruled out.