IRAN: Collective news on Economy and effects on regime downfall

Last Italian bank suspends Iran oil deals .

LONDON, Dec 20 (Reuters) - Intesa SanPaolo has suspended financing Iranian oil trading deals, becoming the last Italian bank to bow to pressure from the United States to cut ties with the Islamic Republic, trading sources told Reuters.

A tightening of international sanctions against Iran has complicated financing of any deals involving buying Iranian crude or selling refined oil products to the Islamic Republic, the world's fourth largest crude oil exporter.

"They have stopped from last month. They were the last Italian bank available for Iranian crude. I guess people will have to look elsewhere for financing now. Maybe China. But it is getting more and more difficult," a trading source said.

Two other trading sources confirmed the development.

Intesa SanPaolo declined to comment when contacted by Reuters.

The financing hurdle follows a host of sanctions on Iran over its nuclear work passed this year by the United Nations, European Union and the United States. Tehran denies the West's charge that it is seeking to build nuclear weapons.

Italian and Spanish firms as well as Royal Dutch Shell have remained among regular buyers of Iranian crude this year but many traders say the volumes may shrink next year under pressure from the international community.

"Business is continuing but much less than before," said a crude trader with a European oil company.

STILL BUYING

The United States has said it expects Total, Statoil, ENI and Shell to abandon involvement in projects in Iranian oil and gas fields to avoid sanctions.

Still, some companies are continuing to buy Iranian crude. Some have said doing so is exempt from United Nations sanctions, and the European Union said in October its measures against Iran were not intended to restrict oil dealings.

Italian energy major ENI has said it will continue to receive Iranian crude for at least another three years as Tehran still owes it about $1 billion from old deals.

But Saras, an Italian oil refiner, said last month that transactions with Iran have become more challenging as banks are reluctant to get involved.

Iran pumps 3.7 million barrels per day of crude oil, equal to about 4.2 percent of daily world demand.

There is little publicly available data on the buyers of Iranian crude but according to the International Energy Agency, which represents 28 industrialised countries, shipments to IEA member-countries in Europe fell in September.

Exports of Iranian Light crude to European IEA members have fallen to 180,000 bpd in September from 400,000 bpd in July, according to the IEA. Even so, September exports were slightly up year-on-year.

Supplies of Iranian Heavy crude to Europe declined to 660,000 bpd in September from 800,000 bpd in July. Shipments were also up year-on-year, rising from 440,000 bpd in September 2009. (Additional reporting by Lisa Jucca; editing by William Hardy)


Iran central bank repatriating foreign bank deposits .

(Reuters) - The Central Bank of Iran has decided to repatriate an unspecified amount of its deposits from foreign bank accounts, its governor said on Monday, citing global economic conditions as the reason.

"The CBI decided to lower the volume of its foreign deposits and transfer them inward by depositing them at domestic banks," the official IRNA news agency quoted Mahmoud Bahmani as telling a banking seminar.

"It was agreed these deposits should be used to meet the financial needs of domestic projects through hard currency rather than rials so that the domestic inflation rate would not be aggravated," he said.

Iran has come under tighter economic sanctions since June, aimed at pressuring it to curb its nuclear programme which some countries fear is aimed at making atomic weapons. Some of the measures restrict financial transactions.

In August, Bahmani said Iranian assets had been withdrawn from European banks in an attempt to foil the sanctions. Then as now he gave no further details.

The repatriation of funds might indicate concerns about Iran's ability to access its cash due to sanctions or a need for more hard currency in Iran to pay for investment projects, some of which have suffered from the withdrawal of foreign companies under sanctions pressure.

In addition to the sanctions pressure, the Iranian economy is undergoing a major shakeup as the government slashes the billions of dollars in subsidies it pays every year to hold down prices of essential items. The policy began in earnest on Sunday when the price of gasoline quadrupled.

Ahmadinejad calls move to eventually eliminate some $100 billion of subsidies "the biggest economic plan in the past 50 years". While economists say the measure is needed to curb wasteful consumption they say it risks stoking inflation as prices of food, fuel and transport soar. (Reporting by Hashem Kalantari; Writing by Robin Pomeroy; Editing by Toby Chopra)


Iran increases gas prices in overhaul of subsidies .


The Washington Post

By Kay Armin Serjoie and Thomas Erdbrink
Washington Post Foreign Service
Monday, December 20, 2010; A10

TEHRAN - Police patrolled the streets of Tehran and other cities as Iran on Sunday started a politically sensitive overhaul of the way state subsidies are handed out.

Gasoline prices were increased overnight by nearly 60 percent, but most Iranians were allocated a small amount of fuel at severely reduced prices for the coming month in order to soften the price shock.

New, increased prices for products such as bread, heating oil, water and other utilities were expected to be announced Sunday, officials told state media.

The overhaul is highly sensitive because it will raise the prices of nearly all daily commodities and is expected to increase inflation. More than 60 million Iranians have been given the equivalent of $80 as compensation.

Many Iranians believe that cheap fuel - which until some years ago was less costly than water in the Islamic republic - is a birthright. When Iran introduced a gasoline rationing system in 2007, dozens of gas stations were burned down in the capital, but generally people adopted quickly to the change.

No incidents were reported Sunday, but riot police were seen on standby near key squares and gas stations. "We were told this would happen, but I don't know how to pay for fuel in the future," said Hamid-Reza, a young man driving an old SUV. He declined to give his family name.

President Mahmoud Ahmadinejad, during a live speech broadcast Saturday, announced the start of the plan, part of a key economic package aimed at creating a more equal division of wealth. He called it the "biggest surgery" to the nation's economy in half a century.


By removing subsidies, Ahmadinejad and Khamenei have brought country’s economy into the war with people .
NCR
On Saturday evening, December 18, Ahmadinejad announced that the anti-popular law of abolishing the subsidies will take effect the following day. According to this scheme, whose outcome is but deepening poverty of the people, the price of gasoline will suddenly soar from 100 to 400 Tomans ($1= 1,000 Tomans) per liter. Concurrently, gasoline ration is also cut by 10% forcing consumers to buy gasoline at the free market price of 700 Tomans per liter. This leap in prices includes drinking water, flour and bread which are the most important and sensitive fundamental needs of the people.

To curtail public rage and revulsion, Ahamdinejad obscenely tried to depict as if this plan is to the benefit of the low-income echelon in the society. While, in fact, the loathsome regime of Velayat-e faqih (absolute rule of clergy) is after plundering people's wealth and earning astronomical revenues by increasing prices several fold. According to figures by sources within the regime, this plan will earn 100 billion dollars a year for Ahmadinejad's government.

Khamenei's appointed president demagogically claimed that the small amount of money deposited in the bank accounts of family heads in return for the removal of subsidies as being the money given by Imam Mahdi (the 12th imam for Shiites). He added, "We should be careful not to spoil this money with other monies, since it loses its effect." This demagoguery is part of measures taken on by the Iranian regime to hide the destructive impact of this scheme on Iranian masses. Based on technical evaluations, this plan will increase the inflation several fold and drive millions more below the poverty line. Last year, Iranian regime's parliament predicted that with the elimination of subsidies, inflation would reach 60 percent.

President-elect of the Iranian Resistance Mrs. Maryam Rajavi, addressing Iranian people, described the decision by the regime to cut the subsidies as expanding the war of the regime of Velayat-e-faqih against the Iranian society. She added: This decision is directly related to the critical condition of the regime, especially after last year’s massive uprisings that are still troubling it.

She said: By cutting subsidies and increasing prices several times, Khamenei is using Iran’s economy for his war against the people. He is spending not only the oil revenue but also a large portion of the people’s income on a brutal fight against them and on export of terrorism and warmongering in the region.

One of the Khamenei’s goals, she stressed, is to allocate Iran’s wealth to IRGC, which is a wicked militarism with Ahmadinejad as its symbol. Khamenei also tries to reduce the consumption of fundamental commodities such as gasoline in a bid to confront the impacts of international sanctions, especially under conditions that international sanctions get more extensive and effective every day because of his regime’s incapability and incapacity for any flexibility and retreat in the nuclear bomb production program.

The President-elect of the Iranian Resistance added, there is only one solution to save the bankrupt economy of Iran and to put an end to such a great poverty and inequality, and that is to establish the people’s sovereignty. Only by democracy and enjoyment of equal opportunities by every single person, Iranian people’s assets and creative power can contribute to the country’s reconstruction and prosperity extensively.

Mrs. Rajavi called on the people of Iran, particularly the youth, to unite and hand in hand turn the catastrophe that the mullahs ruling Iran have prepared for them into a major challenge against the regime itself. She urged the students and brave girls and boys that created last year uprisings to not allow the velayat-e faqih regime to hold on to power by destroying the wealth of the deprived majority of the Iranians gained by hard work, pain and suffering.



Iran gasoline use drops 16.6 pct after price hike .
(Reuters) - Iranian gasoline useage dropped by 16.6 percent on the first day after the government of President Mahmoud Ahmadinejad implemented a deeply unpopular four-fold price rise, the oil ministry website said on Monday.

"On Saturday, 63.9 million litres of gasoline was consumed in the country but it dropped by 10.6 million litres on Sunday to 53.3 million litres simultaneous with the enforcement of the targeted-subsidy law," the website reported the state National Iranian Refining and Distribution Co. as saying.

Up until Sunday, subsidies had allowed Iranians -- who see cheap fuel in the oil-rich country as a birthright -- to pay just 1,000 rials (about 10 U.S. cents) per litre for the first 60 litres they buy per month. Beyond that they paid 4,000 rials per litre.

The price hike pushed the 60-litre ration price up to 4,000 rials and the higher price to 7,000 rials.

As well as saving state cash, the subsidy cut is aimed at curbing excessive consumption of valuable resources in Iran, whose economy has been hit by United Nations, European Union and U.S. sanctions in a dispute over its nuclear programme.

People rioted when the government started rationing subsidised petrol in 2007, but a heavy police presence at gas stations and a general feeling of resignation meant there was no trouble reported on Sunday. (Writing by Hashem Kalantari, editing by Mark Trevelyan)



Petrol prices shoot up as Iran scraps subsidies .

(AFP) — Domestic petrol prices shot up as much as fourfold on Sunday as the Iranian government started to implement a controversial plan to remove subsidies on energy and food products.

Iran previously had two prices for petrol, with motorists allocated a quota of 60 litres (16 gallons) of petrol per month at a subsidised price of 10 US cents per litre. Beyond this quota, they had to pay 40 cents a litre.

From Sunday, motorists have to shell out 40 cents for the monthly quota of 60 litres, and 70 cents for the rest of their purchase of petrol, a hike of 75 percent, state television announced on its website.

Diesel prices also jumped to 0.15 cents from 0.0165 cents, the website said.

In a late-night interview on state television, President Mahmoud Ahmadinejad announced that the scrapping of subsidies would start to take effect from early Sunday.

"For the moment we do not have plans to free the prices, but the prices will be corrected. New prices will be announced tonight," he said.

The government plans to phase out subsidies on energy products such as petrol, diesel, gas, kerosene and electricity, and food items such as water and bread.

According to official estimates, subsidies on these products cost state coffers around 100 billion dollars a year.

Soon after Ahmadinejad's announcement, AFP reporters saw motorists queueing outside petrol stations in Tehran to fill up their tanks before the new fuel prices were announced.

Tehran governor Mortaza Tamaddon urged people "not to gather at petrol stations as there was no problem to meet the city's need for petrol," state news agency IRNA reported.

On Saturday, however, Iranian authorities gave 50 litres of petrol at a price of 10 cents as an exceptional measure, media reports said.

Ahmadinejad has been severely criticised by various groups for the subsidy removal plan which has been delayed by three months.

Part of Iran's ruling conservative camp says the plan would further stoke inflation at a time when the economy is already reeling under high price rises and unemployment.

But the government has toned down the potential impact of the plan and maintains that inflation itself has already fallen to single digits.

Parliament had also tried to delay and limit implementation of the measure by challenging the government's sole authority to decide on how to distribute among the poor the savings generated from the scrapping of subsidies.

The Islamic republic's supreme leader, Ayatollah Ali Khamenei, has backed the plan despite the concerns of some conservatives.

To offset the rising prices, Ahmadinejad's government has begun to pay part of the expected savings from subsidy removals in the form of direct aid to the people.

According to official figures, some 60.5 million Iranians have already started to receive 810,000 rials (74 dollars) paid into bank accounts every two months. This represents 2.5 billion dollars a month in the state budget.

Ahmadinejad warned that the foreign media were acting against his subsidy scrapping plan. "They don't want Iran to progress and become a model country where there are no poor," the hardliner said.