<http://www.ft.com/cms/s/481229ae-3948-11dc-ab48-0000779fd2ac.html> Sanctions fail to fuel dissent on Iran's streets
By Gareth Smyth in Tehran
Published: July 24 2007 04:47 | Last updated: July 24 2007 04:47
When angry motorists torched petrol stations as Tehran introduced rationing last month, Iran's opponents scented success. Ehud Olmert, Israeli prime minister, said it showed "economic sanctions are working increasingly well".
But after three weeks of rationing, riots have given way to grumbling. Tehran's streets are less congested, its air more breathable, and the government says it is on target to reduce a bill for imported petrol that was due to hit $7bn this year.
Meeting parliamentarians on Sunday, interior minister Mostafa Pour-Mohammadi claimed a "strategic, historic" decision had cut consumption by between 11m and 16m litres from a daily pre-ration figure of 75m litres.
Few analysts in Tehran doubt the action was prompted by a fear that importing about 40 per cent of its petrol made Iran vulnerable to international action as members of the UN Security Council consider a third round of sanctions over its nuclear programme.
Tehran's response, analysts say, shows how sanctions do not undermine government policy but rather reinforce its tendency to choose state-led rather than market solutions. "These sanctions are like a flood that overcomes the private sector but also strengthens the state and all its network and agencies," says Mohammad Tabibian, a prominent reform-minded economist.
"I would go as far to say Mr Ahmadi-Nejad welcomes sanctions," says a second economist. "He says he believes in the private sector, but he doesn't really, and the state is barely affected by these measures as long as it sells oil."
The government opted to ration petrol rather than raise the price – among the lowest in the world – to a market level, as Mr Ahmadi-Nejad stuck to his promises to be "fair" to less affluent Iranians. "The president thinks of quantity rather than prices, of 'social justice' rather than markets," says Heydar Pourian, editor of Iran Economics, a business monthly. Many private-sector companies face problems in attracting investment after the US pressed international banks to avoid dollar transactions with Iran.
But the bulk of Iran's state-owned economy rolls on with record oil revenue that rose 13.6 per cent to $54bn in the Iranian year ending March 20.
Iranian officials and analysts dispute US officials' suggestion that sanctions will spark unrest and undermine the government. "The people in the west who hope sanctions can lead to social unrest should know that no nation revolts when it's hungry," says Mr Tabibian. Not that Iranians are starving. They buy state-subsidised bread hot from bakeries.
At the macro level, the IMF predicts 5 per cent growth in 2007; overall international trade is growing as Tehran looks to the east.
Trade with Italy has fallen 20 per cent in six months. In 2006, Germany's exports to Iran dropped 7 per cent and Japan's fell 13 per cent.
But business with China is booming. Last year Beijing signed a $100bn deal to import Iranian natural gas and Chinese companies will be 50 per cent stakeholders in the Yadavaran oil field.
China has also become the second biggest market for Iran's non-oil exports, taking $1.72bn in 2006-7, after the UAE with $2.5bn. Iran's overall non-oil exports rose 47.2 percent to $16.3bn. "The situation over sanctions is a huge opportunity for China, former Soviet republics and regional countries," says one Asian diplomat in Tehran.
The medium to long-term outlook may not be so rosy, he adds, if Iran cannot overcome problems in oil and gas production, where contracts often go to domestic companies with limited experience.
Some officials admit the energy sector faces difficulties. Akbar Torkan, managing director of the Pars Oil and Gas Company that oversees development of the South Pars gas field, said last month that more than $4bn was needed this year to develop the field, up from $2.7bn last year.
Iran faced "problems in attracting finance and foreign investment", Mr Torkan said; a plan to sell $3.5bn bonds inside Iran, offering an 8-15 per cent return, had been sent to Mr Ahmadi-Nejad. But Iran has a poor record in raising capital by privatisation; it is doubtful bonds can replace investment offered by companies – including OMV of Austria, Spain's Repsol and Royal Dutch Shell – which are hesitating over involvement in Iran's energy sector.
<http://www.ft.com/cms/s/d471e84c-39c7-11dc-9d73-0000779fd2ac.html> Iran joins Iraq security committee
By Steve Negus, Iraq Correspondent and Daniel Dombey in Washington
Published: July 24 2007 10:45 | Last updated: July 24 2007 19:10
The US and Iran will set up a joint committee with Iraq to discuss Iraqi security issues, opening the way for a continuous dialogue between two countries whose contacts have been limited since the 1979 Iranian revolution.
US and Iraqi officials announced the decision on Tuesday after a seven-hour meeting in Baghdad involving the US and Iranian ambassadors.
However, US officials also said that Iran had stepped up support for radical Shia militia groups, and were still waiting to see "results ... on the ground" indicating that Tehran was co-operating to stabilise Iraq.
"There was an agreement to form this top committee and to address three key areas – one is reining in the militias, another is fighting al-Qaeda terrorism, and a third is to address border security," said Hoshyar Zebari, Iraqi foreign minister, who chaired the meeting.
Mr Zebari said that such committees could lead to exchanges of intelligence between Iran and the US on issues that both countries considered a threat.
Ryan Crocker, US ambassador, said after the talks that he had confronted the Iranian ambassador with US allegations that Iran provides weapons and other support for radical Shia militias in Iraq.
"The fact is, and we made very clear in today's talks, that over the roughly two months we have actually seen militia-related activities that can be attributed to Iranian support go up and not down," he said.
He added that "there were several heated exchanges in the course of the day" with the Iranian officials over US allegations of Iranian support for terrorism. Iran denies these allegations.
"We're not here to prove something in a court of law, we are here to let them know we know what they are doing and it needs to stop," Mr Crocker said.
The two ambassadors first met on May 28. Mr Crocker also used that opportunity to admonish Iran. However, the discussion of a committee may indicate that the parties have moved beyond the exchange of accusations. The formation of a trilateral security body meets Iran's basic requirement for success of the talks.
Iraqi officials say they do not want their country to become a "battlefield" where the two countries resolve their disputes.
Tehran meanwhile has become increasingly concerned at growing chaos in Iraq and especially at the increasing strength of militant Sunni groups, including al-Qaeda, that are deeply hostile to Shia Islam.
Iranian officials want a faster – but managed – handover of power from the US to the Shia-led government in Baghdad. In an article on Tuesday in Shargh newspaper, Sadegh Kharrazi, former Paris ambassador, expressed Iran's backing for a negotiated strategy.
He wrote: "The Americans should not drag the situation to the point where Iraqis and others in the region witness them escaping by helicopters – as they did in Vietnam."
Iran's official IRNA press agency announced before the meetings the attendance of two senior Iranian security officials, Reza Amiri-Moghadam and Hossein Amir-Abdollahian, an indication of the importance with which Iran views the topics.
Additional reporting Gareth Smyth in Tehran
<http://dailystar.com.lb/article.asp?edition_id=1&categ_id=2&article_id=84071> Bush administration moves against US branches of Iran-based charity Treasury department claims organization funding Hizbullah
Compiled by Daily Star staff Wednesday, July 25, 2007
The Bush administration took action Tuesday against an Iran-based foundation, including its US branch, for allegedly providing support to Hizbullah, which the United States has blamed for bloodshed in Lebanon. The Treasury Department's action covers the Martyrs Foundation and Goodwill Charitable Organization of Dearborn, Michigan, which the government identified as a fundraising office for the foundation.
"We will not allow organizations that support terrorism to raise money in the United States," said Stuart Levey, the Treasury Department's undersecretary for terrorism and financial intelligence.
Two Lebanese - Qasem Aliq and Ahmad al-Shami - were also covered by Tuesday's order.
The US identified Aliq as a Hizbullah official who was once the director of the Martyrs Foundation's branch in Lebanon. The US says he is currently a director of Jihad al-Bina, a Lebanon-based construction firm allegedly formed and operated by Hizbullah.
Shami had worked for the foundation in Lebanon and has been in "frequent contact" with the Goodwill Charitable Organization, the department said. Goodwill Charitable Organization sent him money to distribute to the Martyrs Foundation, the department said.
The action means that any bank accounts or other financial assets found in the United States that belong to those identified on Tuesday must be frozen. Americans also are forbidden from doing business with them.
There was no current telephone listing for the Goodwill Charitable Organization (GCO).
The department called the GCO "a Hizbullah front organization that reports directly to the leadership of the Martyrs Foundation in Lebanon.
"Hizbullah recruited GCO leaders and had maintained close contact with GCO representatives in the United States," the department alleged.
The Goodwill Charitable Organization has allegedly provided "financial support to Hizbullah directly and through the Martyrs Foundation in Lebanon," the Treasury said. http://www.dailystar.com.lb
"Hizbullah's leaders in Lebanon have instructed Hizbullah members in the US to send their contributions to the GCO and to contact the GCO for the purpose of contributing to the Martyrs Foundation," it added.
"Since its founding, the GCO has sent a significant amount of money to the Martyrs Foundation in Lebanon," it said.
The department alleged that the Martyrs Foundation channels financial support from Iran to Hizbullah, Hamas, the Palestinian Islamic Jihad, as well as other terrorist groups.
Meanwhile, Israel has arrested an Israeli Arab woman suspected of aiding Hizbullah in Lebanon, the security services said Tuesday, in a rare case of alleged espionage among Israel's large Arab minority.
Shin Bet said it arrested the woman on June 30 at the Allenby border crossing between Jordan and Israel.
The woman, whose name was kept secret by court order, told interrogators she was recruited by Hizbullah while she was a university student in Jordan, the agency said in a statement. She was told that as a member of Hizbullah, she would be assisting in the transfer of cellular phones and memory cards from Jordan into Israel.
Israel's Haaretz newspaper reported that her indictment says that upon completing her studies, the suspect was given a portable device to transfer into the hands of Hizbullah operatives working in Israel and the territories. The transfer was never completed because no one came to pick up the device.
The suspect has visited Jordan several times since then, and has maintained contact with the woman who allegedly recruited her. She was arrested upon returning from her last visit.
Shin Bet has previously arrested less than a dozen Israeli Arabs on espionage charges. Officials said the agency believes the Lebanese-based group has an entire branch dedicated to drafting spies in Israel, particularly among its Arab citizens who make up some 20 percent of the population. - Agencies
-- Yoshie