Thursday, February 28, 2008

Subsidies, or no subsidies, this is not the question...

Despite the fact that liquidity in the economy has increased substantially in the past two years, this report claims that many factories are at the point of total closure for not having enough cash to purchase raw materials. It adds that the banking sector refuses to lend them money, hence, private sector is effectively loosing its productive capacity. It is futher revealed that the shortage of raw material is quite serious, 80% and suggests that the government should withdraw sufficient sum from the foreign currency fund and make it available to the private sector, so that this sector could buy the necessary raw materials. I have said this on many occasions that in Iran, we face a very strange situation. For many if the government subsidises the private sector, that would be fine. And yet, it is the same group of people who have deriven everybody mad by their repeated and to a large extend unsubstantiated claims against the government subsidies on petrol, bread, cooking oil, gas etc. In short, what you notice here is an excellent example of double standard...

Thursday, February 21, 2008

Total confusion in relation to Petrol in Iran

It is reported here that Iranian parliament would strongly support free market in petrol and would like to see petrol being supplied via market without any subsidy. I am not aware what happens next that the chief of Majlis Committee on Energy adds that the government sector could pay 500 tomans/ liter for petrol and the same petrol would be offered to the public at large at 250 tomans/liter! This dual pricing does not look to me to be determined by the"free market"! This said, you can read here that the minister for Economic Affairs does appear to be supporting this policy, and believes that supplying petrol via the free market would " fuel inflation" in the economy. He then goes on to add that what the government should do- as we are not able to subsidise petrol any longer- is to try to minimise the impact of freely priced petrol on the rate of inflation. I am not sure what the price of petrol is likely to be when this policy is implemented? Would it be sold at 500 tomans a liter or 250 tomans a liter? If the lower price is the free market set price, then, why others are to be overcharged? If the higher price is the free market set price, and the government cannot subsidise any more, how can this price be halved to 250 tomans for the public at large? The Minister, however, did not explain what these measures are likely to be. Let us just wait and hope that someone from some where, perhaps another planet, would come down and succeed in controlling this seemingly uncontrollable inflationary pressure in Iran. Let us hope and pray!

Saturday, February 16, 2008

Poverty in Iran

It is reported here that official data in Iran speaks of 9 to 10 million of Iranian citizens who live below the absolute poverty line. That is to say, that between 9 to 10 millions of Iranian are unable to eat enough or to benefit from education, housing, and proper clothing. This is the official view and we know from daily experience that Mr Ahmadi-Nejad is very seriousl economical with the truth. However, the real number of those living below the absolute poverty line is estimated by researchers to be anything between 20 to 25 millions. That being 29 to 36% of the population in the country. Well done Mr. President! Well Done! In addition to " nuclear energy", do these people have any other " undeniable rights?"

Saturday, February 09, 2008

On the coming Iranian General Elections

The Supreme Leader has effectively ruled out any abstention in the incoming General Elections in Iran. In a speech he said, “Participation in the Elections is a national duty and this duty will not change by coming to power of this or that political currents”. He continued, “Everybody should feel obliged to participate and in this process do not try to find any excuses”. I reckon that following this speech, the Reformists are unlikely to boycott the Elections. What I think is likely to happen is that some of the " disqualified candidates" -the more acceptable ones- would be allowed to participate and the reformists leaders would then jump up and down claiming that now, the elections is " competitive", hence, no justification for not participating. To this, I could say that an elections should be first, " legal", and, " free" and if these coniditions were met, it would automatically be " competitive". I am not sure if Iranian elections satisfy these conditions. But what do you expect from the reformist leaders in Iran anyway! It seems that they are not concerned about the legality or fairness of the elections, so long as their " shares" are respected, then, it would be fine. But, obviously, it would not.

Thursday, February 07, 2008

In The Land of Lion and the Sun....

It seems to me that there is a race in Iran among the politicians and other commentators to see who can make a bigger fool of himself. Alireza Afshar, the chief of Election Monitoring Committee- the body in charge of disqualifying candidates for the forthcoming General Elections- complained that the press in Iran enjoys "excessive freedom" and some of " those who had been disqualified" abuse this " excessive freedom"! He went on to say that this issue must be looked into....To be honest with you I do not know what he is talking about. Apart from those newspapers which are 110% pro government, there is hardly any press left to have too much freedom! One wonders if he is really talking about Iran....

Wednesday, February 06, 2008

Economics vs jokes!!

I don't know about you, but, I am beginning to give up reading the views of my fellow Iranians about econoimc issues. These are becoming increasingly more difficult to digest and understand. Saeed Lylaz claims that in the coming year, imports into Iran would increase unemployment by 6.5 million! Yes you read it fine, 6.5 million! It is not clear to me whether this "prediction" is based on his own research or on research done by others. He says that for every $1 billion imports, unemployment would rise by 100,000, but, does not say, how, or why? Or who says this! For the sake of argument, if imports consist of raw materials for Iranian industries, why should this relationship be valid? Alternatively, he should be able to show that everything which is being imported, is actually replacing domestic production. On the other hand, if you divid the economy into traded and not traded sectors, clearly the untraded sector is unlikely to be affected by imports as suggested by Lylaz and further, I am not even sure, if 6.5 million are working in the traded sector in Iran to be made redundant now! So the puzzle continues...
Setting these points aside, if his claims are to be taken seriously, there must be massive closures in Iran. Is this happening? I am not sure. There are many problems at home, and there is no point in denying them. But, can we turn the innocent subject of economics into a joke, as he seems to have done here? Or because we disagree with President Ahamdi Nejad, are we allowed to twist facts in this way. I don't think so. What do you think?
I hope that if anyone in Iran read these lines, would help me out. God! please help! I am getting more and more confused.