'Iran could be the Germany of the Middle East'

[Surenas]

Iranians pay 'dear price' for defiance

Editor's note: John Defterios is CNN's Emerging Markets Editor and anchor of Global Exchange, CNN's prime time business show focused on the emerging and BRIC markets.

(CNN) -- The eight years under Mahmoud Ahmadinejad can be marked for his defiance of the West in pursuit of nuclear development. But Iranians, especially in the past two years, have paid a dear price for that position.

Economic isolation, with round after round of sanctions, in a globalized world of trade and currency transactions remains painful.

"I calculate what I call a misery index. It's been since 1991 about two times as high in Iran as it even was in Egypt at the height of the Arab Spring," said Steve H. Hanke of Johns Hopkins University during a visit to the region. "So in relative terms the mismanagement in Iran is just phenomenal."

This is best reflected in the value of the Iranian real, which has plummeted as much as 80% as U.S.- and European- led sanctions target the country's central bank and other financial institutions.

The basic staples skyrocketed in price last autumn during the height of the currency crisis. Chicken prices went up three fold; bread went up five-fold as the cost of imports soared with a weakened currency due to the sanctions.

Empty stalls in the Iranian souk in Abu Dhabi which were filled with handicrafts of tradesman visiting from Iran each month have been replaced by garden plant shops with Indian owners. Trade between Iran and the United Arab Emirates has dropped nearly a third in the past year, according the local Chamber of Commerce.

The selling of Iranian handicrafts is one matter, but it's the sanctions against Iranian crude which are hitting state coffers the hardest. Daily oil production is hovering around two and a half million barrels a day. This is the lowest in more than two decades, according to the Paris based International Energy Agency, having been cut a million barrels a day. Using a conservative calculation of $90 a barrel that lost export production is costing Iran $33 billion in revenues per annum.

Even nations that maintain good relations with Iran, like India, have been forced to cut back on oil imports.

U.S. Senator Robert Menendez helped draft the last round of sanctions at the beginning of this month. The Western- led sanctions, he says, are designed to give the Supreme Leader Ayatollah Ali Khamenei and the new president a distinct choice.

"We think we can drive a clear choice for the Supreme Leader that either my country ultimately has an economic collapse or I divert myself and I can divert myself from nuclear weapons," said Menendez during an interview at the World Economic Forum in Jordan.

In their final debate last Friday on foreign affairs in Iran, moderate voices of the carefully chosen candidates talked of a "need to get away from extremism," referring to the hardened line against nuclear inspections.

Iranians are eager to see if the election gives the ultimate leadership in Tehran reason to open up a new chapter in foreign relations.

Iran is loaded with potential. Jim O'Neill, the creator of the BRIC acronym and author of "The Growth Map" said in his book that Iran deserved to be in his group of the Next 11 fast growing economies and that "the prospect of membership could also serve to motivate countries" such as Iran, Pakistan and Nigeria.

The country is a big market, with 78 million highly educated people. It has the world's second largest gas reserves and is in the top five of proven oil reserves. Iran's geographical position at the heart of the Middle East provides excellent distribution potential to the fast growing and energy-hungry markets of China, India and Africa.

But the building blocks to construct a solid, export driven economy, along the lines of the German industrial model, cannot be put in place under the current strategy according to Afshin Molavi of Oxford Analytica.

"Absent the removal of sanctions, Iran's economy will never achieve the potential that it is capable of achieving. Iran could be the Germany of the Middle East."

It could be an economic power, but much depends on whether this presidential election reaffirms Iran's appetite to defy the West and pursue its nuclear ambitions.

Iranians pay 'dear price' for defiance - CNN.com

 

[muse]

All of this good, however, these kinds of narratives suffer from a central problem, all the onus for action is on every other party other than the West -- and this is why they fail to persuade - Not just Iran, but the entire non-Western world is sick and tired of being pushed around, and unfortunately for all of it's great universities and scholars and business and marketing geniuses, the best the West can come up with is Carrot and Stick, where as what will actually work is sincerity - just plain sincerity.

Look at the lessons the West offers Daffy gives up Nuclear and he's dead in less than year, NK on the other hand is still around, Afghanistan gets to be occupied, nuclear Pakistan avoids that but not America's Wahabis, there's no avoiding them.

 

[kawaraj]

Bullsh1t, The west won't tolerate a country in ME to be like that. Their ultimate goal is keeping all nations in the region in a mess to let them have a leg in.

 

[InvisbleSoldier]

If IRAN will be the germany of middle east, then US is not sleeping. Last 15 days they have got order from middle east of 120 Billion Dollar defense items, that will be given to Kuwait, Qatar and Saudi Arabia. They are creating a panic among arab countries to fight with each other and when they will become weak. they will capture it. It is all foreign international policies prepared for next 20 years by them.

 

[Sam1980]

If IRAN will be the germany of middle east, then US is not sleeping. Last 15 days they have got order from middle east of 120 Billion Dollar defense items, that will be given to Kuwait, Qatar and Saudi Arabia. They are creating a panic among arab countries to fight with each other and when they will become weak. they will capture it. It is all foreign international policies prepared for next 20 years by them.

Why the hell would U.S. "capture" Arab countries? They have enough deserts back in the U.S. Arabs are good business, like the Shah was, but eventually everyone expires Mark my words!

 

[iranigirl2]

Iran has a lot of potential, we have a young population that's highly educated. We have resources. We have good infrastructure. We are open minded. etc..


Although I have to warn you that the western press and politicians always try to downplay the sanctions and contribute everything to "mismanagement", which is not entirely true.

A lot of industries in Iran are destroyed because of these Sanctions. One example is Airline industry.


But ultimately, politicians at home bear the responsibility for not giving enough freedom to young talent within Iran to flourish.


but keep in mind, Iran has a lot of problems and these problems will NOT go away anytime soon.

 

[InvisbleSoldier]

Why the hell would U.S. "capture" Arab countries? They have enough deserts back in the U.S. Arabs are good business, like the Shah was, but eventually everyone expires Mark my words!

They have only the deserts dear. Not the gas fields as Recently IRAN has been stated as biggest gas reserves than Russia. They attacked IRAQ for oil in order to support their war in Afghanistan. They have interest in every single country like they have created the world ?. Why do not they sit back at their own country and let the world do whatever countries want to. US defense industry recently was going bankrupt. They made scared middle east arab countries and got a contract of 120 billion dollar. This is all the truth. US has no back bone. Since the start they are trying to eat things of other countries. Invaded sub continent for gold. Running after one person since 15 years and killed million and stating all the terrorists. Why there is no check on them ? If IRAN do some thing or England or any other country. then they have a problem. Even aliens do attack US all the time. Why they do not choose other 250 countries ?

 

[InvisbleSoldier]

Why the hell would U.S. "capture" Arab countries? They have enough deserts back in the U.S. Arabs are good business, like the Shah was, but eventually everyone expires Mark my words!

They have only the deserts dear. Not the gas fields as Recently IRAN has been stated as biggest gas reserves than Russia. They attacked IRAQ for oil in order to support their war in Afghanistan. They have interest in every single country like they have created the world ?. Why do not they sit back at their own country and let the world do whatever countries want to. US defense industry recently was going bankrupt. They made scared middle east arab countries and got a contract of 120 billion dollar. This is all the truth. US has no back bone. Since the start they are trying to eat things of other countries. Invaded sub continent for gold. Running after one person since 15 years and killed million and stating all the terrorists. Why there is no check on them ? If IRAN do some thing or England or any other country. then they have a problem. Even aliens do attack US all the time. Why they do not choose other 250 countries ?

 

[InvisbleSoldier]

Why the hell would U.S. "capture" Arab countries? They have enough deserts back in the U.S. Arabs are good business, like the Shah was, but eventually everyone expires Mark my words!

Half of the US products are used by Arab countries. Arab countries are giving good business to them.

 

[Sam1980]

With normalization of relations with the U.S. most of these problems will go away, U.S. companies have way more better technologies compared to Indian and Chinese companies, they could invest in our gas and oil fields and we could be their partners, like the rest of the world. The problem we are having with the U.S. is ideological, however normalization of relations with the U.S. even under the current political system is possible.

And I don't know where did you get that statistic? This is a list of U.S. trading partners, have a look.

List of the largest trading partners of the United States - Wikipedia, the free encyclopedia

But I agree with you, Arabs certainly contribute to U.S. arms industry!

Think of it this way, Iran is under harshest sanctions in contemporary history, but Iran is a big country nonetheless and in need of new passenger aircraft, investments in oil and gas, etc... these are all great opportunities for American companies, normalization of relations benefit both parties, currently Iran is unable to receive the money for the oil its selling to China and India, they simply won't/can't pay in hard currency, Iran's current situation has made many countries seize the opportunity to "milk Iran".

Normalization of relations certainly endangers many countries' interests, that's why they don't want to see it happen! Unfortunately there are some mentally challenged people in Iran who are either too uneducated or too ideological to understand this.

 

[The SiLent crY]

Iranians pay 'dear price' for defiance



Iranians pay 'dear price' for defiance - CNN.com

why are you always posting BS bro ?

 

[Surenas]

why are you always posting BS bro ?

The only who is regularly posting BS on this forum is you.

 

[The SiLent crY]

The only who is regularly posting BS on this forum is you.

would you please show 1 of them ?

 

[Chinese-Dragon]

Currently Iran is unable to receive the money for the oil its selling to China and India, they simply won't/can't pay in hard currency, Iran's current situation has made many countries seize the opportunity to "milk Iran".

Umm... We do pay in hard currency.

We have the largest foreign exchange reserves in the world, at $3.2 trillion. No one else in the world comes close.

And Iran officially accepts the Chinese Yuan in payment as well.

 

[Sam1980]

Umm... We do pay in hard currency.

We have the largest foreign exchange reserves in the world, at $3.2 trillion. No one else in the world comes close.

And Iran officially accepts the Chinese Yuan in payment as well.

You certainly do have large foreign exchange reserves as well as gold. But the issue is that sanctions make it impossible for Chinese or Indian buyer to pay in hard currency (USD, EURO, etc..)

Chinese Yuan is not easily convertible and even if it was, you can't just haul billions worth of hard currency or even Yuan around! Iranians can no longer open LC to deal with other countries, and this will greatly limit the scope of Iranian trade with Europe and other countries.