.jpg)
Another active municipal infrastructure project being constructed at Tehran: the Hakim Tunnel
.jpg)
Iranian workers assembling rebar grids, with tunnel linings assemblies and concrete-related silos visible in the distance.
.jpg)
Telescopic basket employed in use with assemblage of tunnel linings
.jpg)
Study of Tehran municipal workers at the Hakim Tunnel construction site
.jpg)
Internal view of Hakim Tunnel, with workman engaged in tunnel lining waterproofing
.jpg)
Internal detail of tunnel upon stage of tunnel lining waterproofing
.jpg)
External view of Hakim Tunnel in Tehran, under construction
Photos: Mohammad Esmaeili at omrani.tehran.ir
There is a false narrative in the mainstream media such as the following from today's LA Times, that asserts:
ReplyDelete“Khamenei desperately needs a deal to ease the sanctions pressure on an economy that is already in deep trouble because of mismanagement and international isolation. Popular discontent with the economy could become a threat to the regime.”
While it is certainly true Iran's economy has been impacted by sanctions, there remain economic indicators such as these infrastructure and commercial construction projects active throughout the country that depict a more fuller, complex picture of what is taking place in Iran today.
It's a big mistake to believe that coercion in the form of sanctions has driven Iran to the surrender table. Nuclear negotiations as they have progressed to date would also have been possible under previous, successive administrations going back as far as the Khatami admin, if not the Rasfanjani admin.
The construction activities reported on this blog is only one indicator of economic activities in Iran, but does not, and could not represent the fuller picture of the economy. On 10 March, Iranian Minister of Economy Ali Tayeb-Nia made a major address at the Assembly of Experts on Iran’s state of economy, which was covered on this blog (http://www.uskowioniran.com/2014/03/state-of-economy-in-iran.html?q=iran+economy).
DeleteThe economy was contracting at 5.8 percent annually when Rouhani came to power, which means the GPD was being reduced by 7 percent a year when population growth is taken into account. The annual rate of inflation was at 43 percent; unemployment was at its height, with the country losing 200,000 jobs annually.
On investment side, Iran registered a negative -22 percent rate of growth in economic activities last year countrywide, including a negative -32 percent in construction sector.
The government was facing a serious budget deficit and was borrowing billions from CBI with no means to repay it, except printing money, pushing inflation even higher. (For numbers, please read our post of 10 March).
It was in this context of a national economy in a disastrous state, that Rouhani ran for presidency on the promise to end sanctions and bring back economic vitality. Rouhani thought, and still thinks, that sanctions were the main reason for economic calamities. And he won the election decisively on a platform of ending sanctions and end nuclear impasse. Within the first six months of his presidency, he signed JPOA with P5+1, and is now negotiating a final agreement.
Economy is still contracting; CBI announced last week that the annual rate of inflation rate is at 32 percent, and investment activities, including activities in construction sector, are still in negative territory. Sanctions must be lifted to get the economy back to normal, and a nuclear agreement is meant to have those sanctions lifted.
It's good and refreshing to see construction activities in the country, as the photos above show. But these activities shown are just one element in the health of the construction sector, which is contracting the most among all the sectors of economy, and cannot present a full picture of the state of economy.
Although sanctions especially after 2006 have inflicted great damage to the Iranian economy, Iran's fundamental economic issue practically for the past half century has been and continues to be its ineffective institutions. The whole system is corrupt. Economic rules and regulations and their supervision and enforcement are arbitrary. Direct and indirect consumer subsidies and the "purchasing" of domestic support, through autonomous foundations and economic contracts and other benefits for the Revolutionary Guards and the security and intelligence services, constitute an enormous economic drain. Financial, goods and labour markets are highly regulated and inefficient. Corruption is endemic (as is in almost all third world countries and Eastern Europe). The rich do not pay even minimal income and capital gains taxes (probably paying taxes is considered not being clever!). Fairness and equity are not considered and addressed. Iran's oil and gas sector are in bad shape, requiring over billions in investment that has to come from foreigners in the form of debt or foreign investment. Essentially, economic policies are targeted to insure the regime's short-run security (by keeping the poorer classes happy!). Iran’s oil and gas income based on $34 billion reported for the first 9 months (as of Jan 2014) works out around $3.7 billion per month or approx $45 billion per annum. Assuming 85% of budget comes from oil and gas, we are talking about a total income of $52 billion per year. This is pretty close to $47.84 billion (2013 est., from http://en.wikipedia.org/wiki/Economy_of_Iran), For simplicity let us agree with $50 billion per annum. At this rate it will take Iran 6 years to invest all its income to recover its oil and gas sector alone. On that basis how a picture of half finished construction can prove that the economy is doing alright!
Delete