The Iranian economy, if it had the highest quality decision...

The Iranian economy, if it had the highest quality decision makers in charge of it, would be wonderful according to an article from CNN. The Iranians would be stinking rich (in the top 10 countries in the world perhaps?), and if that happened I am sure our share price would be a lot higher.

The UK defence secretary, a Mr Hammond, gives further scope for optimism, although he claims not to be in the regime change game. I don't know if he is naive or mad. Perhaps he is both. His comments on Iran are below. The proposed EU ban on Iranian gas imports will only be symbolic from what I have read.

The quality of decision making in Iran looks set to get worse, but of course that is what we need to happen to drive the subsequent complete change in fortunes I am hoping for.

Hammond does not speculate on what will happen if the Iranian leadership does a volte face on the nuclear issue. One commentator I read likens the West's offer to enrich the uranium for Iran to be like Iran wanting to import cars for $10,000 each in a one-off scheme to give a limited number away, while Iran insisting on doing the enrichment itself to be like insisting on making the cars itself at a cost of $100,000 each (after amortising the plant costs over the number required). The difference in cost is a measure of how self sufficient Iran wants to be or a measure of how much it wants the nuclear know-how. (Maybe they fear the West could turn off the supply of enriched uranium to bargain for better human rights and better treatment of Western citizens taken hostage from time to time). I think South Korea has 23 times the number of nuclear power stations that Iran has and they import their enriched uranium rather than do it themselves (because it is presumably cheaper).

Fingers crossed for regime change or a sea change in the quality of decision making in Iran (long before Wonarah ever gets going).

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http://www.iranfocus.com/en/index.php?option=com_content&view=article&id=26118:only-threat-to-regime-will-budge-mad-tehran-hammond&catid=8:nuclear&Itemid=45

SUNDAY, 07 OCTOBER 2012

LONDON (AFP)— The world should tighten the squeeze on Iran over its "mad" nuclear plans to the point where the regime's survival is threatened by its own people, defence secretary said.

Philip Hammond told The Observer that there were signs the regime was beginning to "fracture" on the issue of its disputed nuclear programme.

The West worries Iran is trying to develop an atomic bomb under cover of a civilian nuclear energy programme but Tehran insists its intentions are purely peaceful.

Hammond's comments, published on Sunday, come ahead of a meeting of European Union ministers on October 15, when Britain, France and Germany will press for toughening up sanctions on Iran's energy sector and financial institutions.

"There is talk of a general trade embargo and of shutting down the remaining access that Iran has to international banking channels. We can definitely make the pain much greater," he told the weekly.

"The only thing that is likely to budge the regime is if they see or sense an existential threat.

"If the level of economic pressure starts to translate into potentially regime-threatening disruption and dissent on the streets of Tehran, then they may change course."

In one week, Iran's rial currency has shed around 40 percent of its value, sharply accelerating a slide that has gone on over the course of this year as Western sanctions have worsened the Islamic republic's underlying economic woes.

"There is evidence that the leadership is beginning to fracture over this question. They are beginning to turn on each other as the pain gets transmitted through. And they can end it all instantly," Hammond said.

"Their professed position is that they're enriching uranium for peaceful purposes. Nobody believes them."

He stressed that nobody was out to cause more suffering for the Iranian people and said regime change was not the aim -- it was merely to apply the pressure needed to force Tehran to drop its nuclear programme.

"There is further tightening we can do," Hammond said.

"We can definitely make the pain much greater. Nobody wants to cause the Iranian people to suffer unnecessarily but this mad scheme to build a bomb has to be brought to an end."
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The CNN article on their site contains videos on the currency crisis.

(CNN) -- Iran is in possession of the building blocks to construct a promising, fast growing, developing economy.
The basics are all there -- a sizeable population of 78 million people, with a median age of just 27. A highly cultured and educated society, and by its own geological surveys the country is blessed with 9% of the world's oil reserves. Utilizing a conservative IMF calculation of $75 a barrel, that means Iran sits on $10 trillion of oil reserves and another $3.5 trillion of gas reserves.

Iran, minus the intense sanctions put forward by the West starting in mid-2010, would warrant a slot in the N-11 group of countries -- this is the next wave of the most promising economies within the emerging market sphere of Jim O'Neill at Goldman Sachs.

That is the promise, but the reality today with its devalued rial is the polar opposite.

According to economist Steve Hanke, Professor of Applied Economics, at Johns Hopkins University, the Republic is the first country in the Middle East to ever have hyperinflation -- defined as an economy seeing its monthly inflation rate soar 50% or more each month.

Iran joins Zimbabwe (2008) and North Korea (2009-2011) as the only three in the 21st Century to experience that fate and at the same time share a common link of being subject to international sanctions.

Iranian President Mahmoud Ahmadinejad in his United Nations address toned down the rhetoric from the recent past and suggested the post-war institutions are not benefiting all citizens.

"There is no doubt that the world is in need of a new order and a fresh way of thinking," he said in his eighth and final address to the General Assembly as President.

But that call for a new global order may ring hollow with those struggling on the ground. With daily insights from our reporter Shirzad Bozorgmehr in Tehran, we know that the costs of staples in society are soaring. Chicken prices have risen three-fold in the past year, barbari bread a five fold increase. This is directly linked to its currency. [I think the bread price rises are partly to do with the withdrawal of flour subsidies - he is wrong about that].

When U.S. President Barrack Obama signed the sanctions legislation into law in July 2010, the rial was trading at just over 10,000 to the dollar. It is recovering from a low last week of 37,500 on the black market, but at 28,500 the currency is still down nearly 70% in the last year.

In 2010, Iran began removing subsidies for fuel, from heating oil to engine petrol, which amounted to $4,000 per year for the average family of four according to the IMF. This was a sign Iran was starting to normalize its economy and at the same time began introducing a privatization program to reduce the size of the state. That effort, economists say, stalled since it clashed with Iran's isolation from the global economy due to its pursuit of its nuclear development plan.

It has been a toxic result for the average Iranian who is caught in the middle of a "cat and mouse" game of uranium enrichment and negotiations with the Vienna based agency, the IAEA. All the while, the screws linked to sanctions are being tightened.

Oil makes up 90% of the country's export earnings, but their customers have trimmed back volumes due to the sanctions and difficulty getting systems insured. China, South Korea, Japan and India are big customers. Beijing, energy consultants say, is using the plight of sanctions to reduce the price they pay.

Iran's daily production, according to OPEC, is the lowest in over two decades. It is down nearly a million barrels a day in the last five years. The sanctions also limit any new investment by the international oil giants who are already operating in Iran. So the sanctions of today will leave a terrible aftertaste for years to come.

With rising import prices due to a plummeting currency, Iran Inc. is also no longer able to compete. There are reports that the industrial sector has laid off up to 800,000 workers this year and those who have kept their jobs are seeing their wages eroded by skyrocketing prices.

Tehran bazaar reopens after currency protests

This is a critical window for Iranians. President Ahmadinejad's term expires in June of next year. Most candidates, whether moderate or not, are keeping their heads down during this flashpoint of anger being expressed on the streets linked to the falling rial.

Meanwhile, Iranians must be asking the question: What if we joined the global economic community, even with its imperfections after the 2008 debt crisis? At this juncture it is far too early to answer that question, but most would likely say Iran's isolation to date has not been the answer to their financial woes.

http://edition.cnn.com/2012/10/07/business/iran-currency-analysis/index.html?hpt=hp_c1