The Latest from Iran (9 October): Triple-Digit Inflation?
Tuesday, October 9, 2012 at 5:58
Scott Lucas in Cisco, EA Iran, EA Live, Hossein Raghbar, Hossein Ronaghi Maleki, Hossein Younesi, Kayhan, Mansour Haghighatpour, Masoud Bastani, Middle East and Iran, Mohammad Damadi, Mousa Ghaninejad, ZTE

1826 GMT: Political Prisoner Watch. Detained activist Hossein Ronaghi Maleki, a detained Iranian human rights activist, has asked the head of the judiciary, Sadegh Larijani, to prosecute the officials who beat him and other aid workers in August at a relief camp for earthquake victims in northwestern Iran.

Thirty volunteer aid workers were arrested after they set up a camp in Eastern Azerbaijan. Some were released on bail, but others, including Ronaghi Maleki, remain in custody.

The activist wrote, "I believe that our efforts were humane and right and I continue to defend aiding people for which I am ready to lay down my life. I refuse to remain silent in the face of the injustice the aid workers have been subjected to until a fair judge stands up for our rights."

Ronaghi Maleki was arrested during the protests after the disputed 2009 Presidential election for publishing a critique of the Government on his blog. He was sentenced to 15 years in prison and was released on bail shortly before his arrest in August.

1818 GMT: Currency Watch. Fars reports that exchange offices sold no US dollars today, quoting a trader that business would not be resumed until there was a "reasonable rate" for the Rial vs. the dollar.

The website also writes that demand in the Central Bank's "trade room" was mostly for the Euro, Turkish Lira, and the Ruble, with the dollar "eliminated". It is unclear whether that elimination was because of a lack of demand or because of a lack of supply by the Bank.

There is also evidence of limits on other currencies --- an importer from Malaysia has complained about a denial of a letter of credit for Malaysian Ringgit, as he was forced to use Euros instead.

1636 GMT: All-is-Well Alert. Unsurprisingly Press TV exploits the latest International Monetary Fund report (see 1330 GMT), based on information from Government agencies, for propaganda advantage, "Iran Will Win Battle Against West Sanctions".

1622 GMT: Ahmadinejad Watch. While praising Iran's people and youth in a speech today, the President slipped in an admission about Government finances, "Right now in terms of the budget we are under pressure. In many places the budget has become zero or has been cut by 25%."

1613 GMT: Sanctions Watch. Cisco Systems has ended a seven-year sales partnership with China's ZTE Corporation after an internal investigation into allegations that ZTE sold Cisco networking gear to Iran.

This spring Reuters reported how ZTE sold banned computer equipment from Cisco and other US companies to Iran's largest telecom firm. ZTE also agreed last year to ship millions of dollars of additional US tech products, including Cisco switches, to a unit of the consortium that controls the telecom firm.

1608 GMT: Currency Watch. Officials have told Parliament that they have arrested 50 "disruptors" of the currency market.

1457 GMT: Currency Watch. Assurance of the day --- the Central Bank insists that it has enough foreign currency to supply its "trade room" for importers.

For context on the foreign reserve issue, see our 0638 GMT entry.

1446 GMT: Press Watch. We are now at the point of regime censorship where Reporters Without Borders is defending the "hard-line" Kayhan, whose editor is appointed by the Supreme Leader, against the actions of the Ministry of Culture and Islamic Guidance.

The Ministry suspended Kayhan e Caricature, a cartoon bimonthly published by Kayhan, over a cartoon in the August-September issue that was deemed to have insulted the Prophet Joseph (Yusuf).

Reporters Without Borders wrote, "Kayhan has distinguished itself by repeatedly accusing journalists, intellectuals and dissidents of being in the pay of foreign interests. Nonetheless, since everyone has the right to freedom of information, we regard this decision, like last month’s suspension of the newspaper Shargh, as unfair and reprehensible."

The offending cartoon, parodying the story of Joseph and the Egyptian woman Zuleika:

Reporters Without Borders also criticised the Ministry's ban on the Wafa news agency over an article criticising a senior Ministry official.

1438 GMT: Ahmadinejad Watch. So, amid economic crisis and the threat to question him in Parliament, what is Mahmoud Ahmadinejad doing today?

He is declaring that Iran's people are its greatest asset and there are no limits on the achievements of its youth.,

1430 GMT: Currency Watch. Baztab defies the regime blackout to report that the Iranian Rial, when it can be traded, is at 35000:1 vs. the US dollar --- a weakening of almost 10% from weekend.

1330 GMT: Economy Watch. Back from an extended academic break to find a schizophrenic International Monetary Fund "analysis" of Iran....

While one group in the IMF was projecting a far-from-rosy situation for the Islamic Republic with a 0.9% contraction in the economy in 2012 (see 0645 GMT), another IMF office is declaring all is well, with Iran managing to reduce inflation and return to growth next year.

As economists inside Iran warned of soaring --- even triple-digit inflation, IMF anlaysts predicted that the rise will ease to 21.8% in 2013 from 25.2% in 2012. Unemployment will grow from 12.3% in 2011 to 14% percent in 2012 and 15.6% in 2013,; however, Iran will have a balance-of-trade surplus of 3.4% of GDP this year and 1.3%next year --- a reduction but not a collapse from a surplus of 12.5% last year.

What could account for such hopeful numbers, amidst day-to-day evidence of Iran's gathering economic problems? As we noted with last year's IMF report --- now hopelessly left behind by events --- most of the report is based on statistics provided by the Iranian Government.

0730 GMT: Currency Watch. The "real" rate for the Iranian Rial is now effectively blacked out, but Aftab offers the related news that gold prices continue to soar --- the website says old gold coin is now selling for 16 million Rials (about $1300 at official rate).

Before Tuesday's suspension of figures, gold was reportedly trading at 13 million Rials. A number of 11 million Rials was posted this weekend after the Central Bank's intervention, but all figures have now disappeared from the leading currency site Mesghal.

0725 GMT: Ahmadinejad Watch. More on the drive by MPs to question the President (see 0615 GMT)....

MP Mohammad Damadi has said the plan for interrogation will be forwarded to the Board of Parliament next Sunday. He insisted that MPs would not retract their signatures.

0715 GMT: Political Prisoner Watch. Journalist Masoud Bastani, serving a six-year sentence, just before returning to prison after his first furlough in three years --- he says, "I don't know when I will see my Mom again" and says good-bye with the message, "Be Our Voice":

0645 GMT: Economy Watch. The International Monetary Fund, in contrast to its glowing forecast last year for the Iranian economy, now projects that GDP will fall by 0.9% in 2012, the first contraction since 1994.

In April, the IMF had forecast growth of 0.4%.

The bleak figures for the Islamic Republic contrast with a projection of 6.6% throughout the Middle East and North Africa.

In July 2011, the IMF hailed Iran's subsidy cuts programme and pronounced, "The successful implementation of the drastic price increases has created a unique opportunity for Iran to reform its economy and accelerate economic growth and development."

0638 GMT: Currency Watch. More specialist testimony from within Iran on the situation --- economist Mousa Ghaninejad unveils the reality behind the Government's emergy measures to prop up the Rial:

It is clear that these new rates are only sustainable if the Central Bank continues to feed foreign exchange into the market.

My heart wishes for the fall of the rial to stop, but economic rationale tells me otherwise.

Former Minister of Intelligence Hossein Younesi has declared that control of currency rates through arrests and police methods is a "mistake" and said that the Government must change its economic policy.

0622 GMT: Currency Watch. All "open market" foreign exchange rates --- not just the Rial-to-Dollar rate --- have disappeared from the currency website Mesghal and Mazanex.

Trade, even in official exchanges, has reportedly slowed to a near-suspension after the Central Bank imposed a rate of 28500 Rials to the US dollar this weekend.

The Central Bank's "trade room" for importers is selling US dollars at 25495:1, but the amount of transactions is not clear.

0615 GMT: Ahmadinejad & Khamenei Watch. Is there a political showdown on the horizon?

Following the collection of signatures from 93 MPs to interrogate the President, Mansour Haghighatpour, the deputy head of the National Security Council, said the encounter is inevitable --- that is, unless the Supreme Leader opposes it.

An EA correspondent uses a card game to note that, with such a development, Mahmoud Ahmadinejad would not be alone in a tense situation: "If Khamanei refuses the questioning of the President, the Old Maid will be in his hand."

0555 GMT: We start the day with a striking claim --- Iran's inflation has been between 50% and 60% in recent months and is now more than 100%.

While we have documented rising prices in all sectors of the Iranian economy, with evidence of "spikes" on foodstuffs and other basic items, we have avoided a general claim, given the difficulty of getting reliable statistics from the Islamic Republic. (The official rate of inflation is 22% to 27%, depending on which State agency is putting out the figures, but analysts have long believed the actual figure is higher.)

However, on this occasion, the assertion comes from a well-placed source. Hossein Raghfar is an economist, university professor, and former advisor to President Ahmadinejad.

Raghfar put his claim in a wide context beyond sanctions, which he said played only a facilitating role". Instead, he blamed Government policies of the last seven years, with an erosion of the country's manufacturing base, a "corrupt" business environment, and "cumbersome" regulation.

Article originally appeared on EA WorldView (http://www.enduringamerica.com/).
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