Romney in Iran

This issue of Tejarat e Farda (Commerce of Tomorrow) weekly in Tehran has a special section on US election, to which I have contributed an article. I have uploaded its cover, which is interesting. I hope GOP does not mind it. This issue covers fundraising process in US election, the future of US economy and the candidates' different approaches to the economy. The text on Mitt Romney's image reads "Mitt Romney comes with structural programs" then in bold "Golden Comeback". Just to give you some idea about Iranian media enthusiasm for US elections!

Earthquake in Northwest

Saturday became is a very sad day for Iranians, when two consecutive earthquakes shook Varzaghan and Ahar in Azarbaijan in northwest of Iran. Many Iranians and Iranian-Americans are seeking ways to send aid and donations to Iran, however internationally imposed sanctions make this impossible. Many, including myself, are contacting Red Cross to see if they would help. More than 300 are reported dead with a further 1500 injured. The government's reaction and the official news coverage of the incident leave much to be desired.

Tat Bank

I am reading the dispatches on Tat Bank, Iran's eighth private bank. The best I can say is that it is going to merge with two recently founded financial institutions to form a new bank called "Mardom Bank". One report speaks of some "irregularities" without further elaboration. Well the positive side of the story is that there is a banking watchdog in Iran. That is comforting, at least partially.

How Much Darker Should It Get?

Azadeh Moaveni has written a piece for Guardian in which she writes "But the reality is not as black and white as Tehran makes out. American law includes provisions allowing Iran to procure spare parts by applying to the US treasury department for a special licence. Under this provision, Iran applies for what it needs through an intermediary and the parts are installed in a licensed third-country, such as by Lufthansa in Germany. Iran has availed itself of this option in the past, and the treasury has issued nearly a dozen special licences related to its civil aircraft, according to a treasury department official. Given that Tehran is pretending this provision doesn't exist and is declining to use it more aggressively, Washington should make the case that Iran is playing its own cynical game."

I read this part several times and shared it with a few friends. While I have no doubt that Ms. Moaveni's ultimate goal is to reduce the pain and sufferings of Iranian people, I doubt that she has a true grasp of the factual reality which exists on the ground.  The truth is that the aforementioned provisions and the procedures to use them are not known. And even if they were implemented in practice, benefiting from them would not be that simple.


First one does not apply to U.S. Treasury on his or her own. The interactions between nations are ruled and governed by national governments. Particularly in Iran where national sovereignty is emphasized on a daily basis such applications without the government's explicit authorization are nothing short of treason.

Secondly even if Iranian businesses apply to be exempted from sanctions on humanitarian grounds on what basis these exemptions will be granted. The public sector is the largest sector in Iran's economy and Iranian government either owns or controls most of the industries in this county.

Third few private entrepreneurs in Iran have the resources to apply for such permits on their own. The financial burden will be too heavy and the process too time consuming. Paradoxically only businesses with government connections and access to government resources could go through this process. Wouldn't this be against the spirit of sanctions?

Since Ms.Moaveni has paid particular attention to Iranian airlines and their plight, I would like to point out a few particulars about this industry in Iran. Iranian airlines are a mix of public, semi-private and private firms. The problem is not lack of parts, it is the age of the existing fleet. Iran is one of the few countries, if not the only one, where one still could board a Boeing 707 or a 727-100 or a 747SP. These are considered classic airplanes these days. Both private and public airlines do not have access to modern aircraft. Even if one or two private airlines in Iran could receive such exemptions one would wonder how they should manage the financial transactions for this process.  No banks would accept their wires and Iran banking system is being isolated aggressively. In my last trip to Iran I talked to the director of a private flight school where men and women learn to fly and receive their licenses. The operation was fully private with two women flight instructors.  The director was desperate, since he could not get either parts for his light single engine airplanes or replace them with new ones. He told me "We simply do not have the funds to keep bypassing sanctions".

The fact is that the situation does not need to be pictured as black and white. Since it is black. And may be that is why now owning up to it has become a bit difficult.

Neither Shahs Nor Mullahs

Today Bravo is going to broadcast "Shahs of Sunset" a reality show about six Iranian-American men and women or as one of the local radio stations in Atlanta calls them "six Persian-Americans".   These not so young individuals live in Los Angeles, home to the largest Iranian immigrant population in the United States. The show is another reality TV production, filled by drama, to use a polite word, and that attractive surreal reality. It is made to entertain. However there is little doubt that it will trade one stereotype, the angry bearded fundamentalist from Tehran, for another one; vulgar, materialistic show-off from "Tehr-Angeles". Neither can possibly be representing Iran or Iranian people.

As I hear the commercials about this TV series filled by "pool parties", "extravagant lifestyle" or "brand orientation" of these characters I could not help but thinking of real Iranians and real Iranian Americans. I cannot help think of my friends in other cities, where they devote their time to their families. These days they are getting ready to celebrate Nowruz. They could be anywhere from Oshkosh, WI to Columbus, SC. Last year a friend who actually lives in Oshkosh told me that she had to spent one whole week preparing decorations and table covers. So the dozen families who live in the vicinity could get together to celebrate the coming of spring. She will not be on this reality TV, since she is really real.

I also cannot help thinking of average Iranian living in Iran. These days I am working on a piece about Iranian NGO and I remember Zahra, a 30 years old mother of a two year old. We met in our Alma mater in Tehran. The NGO was a group of students dedicated to help impoverished children and to assist in their education. Their office was one small room in the student center on campus. While Zahra talked to me about their challenges her two year old son strolled around. The furniture consisted of a very old table, couple of chairs. In a corner two students were packing boxes of hygiene products  for the children. Zahra was tired, she had a full time job and It was 8:00 PM.  For those kids, who are always absent from news and articles about Iran and Iranians, the show will come as a gross misrepresentation of the truth. They do not care about the brand they are wearing, as long as they are wearing something! So no I am not happy about "Shahs of Sunset".

Roshanak Taghavi has written a great article for CSMonitor  describing the dilemma many Iranian and Iranian Americans face. I think "confusion" describes the reaction the best. On one side some think the show provides a fresh insight into Iranian culture, some argue that it is the last stage in Americanization of Iranian Americans. And many are unhappy that their choices are either Tehran or Tehr-Anglese. For one I wonder when the world and the media would see us for who we really are; like anybody else we try to succeed while almost everybody else refuses to see us for ourselves. We are neither Shahs or Mullahs. We are just humans like anybody else and kinda tired of stereotypes.

A Photo from Hiking in Tehran

Last Christmas I went hiking with a group of friends in Chin Kalagh in Northwest of Tehran. Chin Kalagh has a decent trail which is not very crowded, unlike Darakeh and Touchal. The slope is mild at the beginning then it peaks up as one goes higher. The peak offers a breathtaking view of Tehran, Sa'adat Abad and Farahzad. My good friend Shayan has taken these photos in his last hike with other students from Sharif GSME. It is so wonderfully beautiful that I thought it should be shared.

Information or Truth

Yesterday I discovered World Affairs Council of Atlanta. Today theme was "Democracy. Democratization. Development". It was a great meeting, the speeches I was able to hear covered information technology transformation, development projects and the importance of democracy in achieving sustainable economic growth.
The interesting part of discussion was about social media and the reality. Many credited Facebook and Twitter with sparking Arab Spring. Speakers told the audience this is simply is not true. On the other hand all present admitted that internet has provided them with access to videos and individuals. However the stream of videos and photos and other contents from crisis areas in the world does not necessarily paint an accurate picture. Many referred to the fact that much of information could be distributed to broadcast a biased image. The internet and social media have reduced journalists' interactions with their subjects as well. Many sit in their offices and collect information via social networks. They even let social networks decide their agenda and headlines.
For me this highlighted the significance of personal motives or utility maximization behavior. Individuals do not send out information to tell the truth, but to tell their side of stories. And not everybody is truthful in recalling events and motives. As one of the audience pointed out "we have the information, but what is the reality?"
I think the greatest challenge in coming years is to overcome the asymmetry caused by personal motivations and interests.

Arresting Data

The administrator of Mesghal.com has been arrested. He has been accused of attempting to distort the market as part of a plot to dis stabilize the economy. Mesghal.com is a website dedicated to covering  currency and precious metal markets in Iran and across the globe. It has become the reference for many who work in these markets in Tehran.

A Contractionary Fiscal Policy

Well here we are the budget is in finally for IRI. It seems they are cutting spending, how successfully? no one will know.

Increasing the Interest Rate

I am not so sure if increasing interest rate will affect M1 in Iran. Still it seems it has been done to encourage people to keep their deposits in the banks. That is being said, I wonder if this means banks are going to charge a higher APR as lenders. One has to wait and to see. All in all currency market seems a bit calmer. Although I do not know if this is due to the government's edicts or its new policy regarding interest rate.
There is one silver line though; Iranian public and media have been talking about economics so much that I think they are going through a crash course on Econ101. I hope this increases the public awareness of market dynamism and shifts in the economy.

Bridge to Iran

Caty Borum Chattoo has kindly forwarded me an email announcing airing "BRIDGE TO IRAN" which a series of documentaries already produced by Iranian filmmakers on Iran. It reads:

San Francisco, Calif., January 23, 2012 – Against a backdrop of rising cultural and political tensions in Iran, Link TV will premiere its four-part documentary TV series, “BRIDGE TO IRAN,” beginning on February 14 at 7:30 p.m. ET. Presented by Iranian-American host, Parisa Soultani, the series examines issues such as the role of women in Iranian politics, intimate conversations between the exiled former queen of Iran and a former dissident, and the historically powerful role of the arts – particularly theatre and cinema – within Iranian society. In each episode, in-depth discussions with top Iranian filmmakers provide a unique lens into some of the challenges and realities facing Iranians during a time of increased instability – including censorship, sanctions and safety concerns. New episodes will air at 7:30 p.m. ET/4:30 p.m. PT on February 14, 21, 28, and March 6 (with repeat broadcasts); more information about all episodes are available online at www.LinkTV.org/BridgeToIran.


“Bridge to Iran,” a co-production of Link TV and CEM Productions, was developed as a response to the cultural and political tensions that have developed between Iran and the U.S. since the Iranian revolution.


Viewable Online at www.LinkTV.org/BridgeToIran
 
---I have visited this website. Some of them are great works such as Iran: A Cinematographic Revolution, which reviews Iranian motion picture industry and traditions, We Are Half of Iran's Population by Rakhshan Bani Etemad is a great look into women's issues and challenges insider. Frankly I am lost what a movie like  The Queen and I  has to say about Iran of today, since it is a biographic work. It might have some value for those  interested in Iran's contemporary history, however I do not see how it adds to its viewers' understanding of Iran of 2012.
Overall this is an admirable effort to bring some understanding of Iran to an American audience. However against a backdrop of war the documentaries do not include anything on the human cost of war. Particularly since the memory of Iran-Iraq eight year long war is so fresh and its wounds are still bleeding. Still they offer a uniquely authentic outlook of Iranian cinema and Iranian women issues. 

Is Economy Sinking

US dollar was traded at 20'000 rials, British pound at 30'000 and euro at 25000! Is the economy sinking? I do not think so. However it sure has hit a crisis. Unfortunately these changes are happening at the beginning of new year shopping season in Iran (Iranian new year begins on the first day of spring). Traditionally this means an increase in demand and prices all over the marketplace. To this if one adds the declining rial, it seems inflation is ready to take off.

Separation: A New Window to Iran

Separation is still attracting attention on the global stage. And this has provided many with a rare way of understanding Iranian society.  

A few days ago Separation was named the Foreign Language Film of the Year at 32^nd London Film Critics’ Circle Awards on Thursday. Asghar Farhadi was named the Screenwriter of the year with film’s supporting actress, Sareh Bayat, winning the Best Supporting Actress award. After winning Golden Globe, the movie is seen as a front runner for Academy Awards and was shortlisted on Wednesday.

As the deadline for Academy Awards approaches more critiques of Separation appear in prints in English speaking media. Thursday and Friday several reviews were printed in Christian Science Monitor, Washington Post, Washington Times, Miami Herald, San Francisco Chronicle, San Francisco Examiner, Canadian National Post and the Globe and Mail as well as several others media outlets.  Reviews, interviews and opinions on the movie are plenty and the praise is universal. Although some critiques use a simpler language than others. Michael Phillips from Chicago Tribune called it “the finest film you'll see this month”.  Anita Katz for San Francisco Examiner writes “Picture a mix of Iranian realism, Italian neorealism, Bergman-esque marital drama and Sidney Lumet- style crime-and social-issue-themed vital storytelling”. The movie has helped an understanding of Iran which was rare up to now. Philip Kennicott writes “10 years hence perhaps we will all look back at films such as Asghar Farhadi’s “A Separation” and think: That helped”.

It seems Separation¸somehow, has brought the world closer to understanding a sophisticated and yet in transition society. Unfortunately there is no academy award for that. 

Gold Rising Again in Tehran

Gold coins, known as Bahar Azadi, are again on the rise in Tehran. Their price has just passed 7'200'000 Rials! to give you a perspective that is more than what a government retiree receives in a month. The new rise has began almost immediately after government opposed increasing interest rates for banking deposits. As the volatility in market increases people are more desperate to find new means to save their hard earned savings. As banks are not offering compatible returns, the options are the traditional ones: gold, hard currency and real estate.
The constant increases in money supply in recent years amplify the effects of their despair. It seems there is a large amount of money in circulation, one might even call it the beast of liquidity. The beast is causing havoc in currency and gold markets as it runs wild. In the meantime middle class shopping power is declining rapidly. Mr. Asgar-Ouladi a prominent businessman who chairs Iran-China Chamber of Commerce predicted "In six month there will be severe shortage of food and other necessities in the country." Well no one hates a declining currency like an importer. How anyone could expect the consumers to remain calm hearing these prophecies?

Will write more on this soon.

Iran: Women Unemployment, Still High

I am checking the report for last year, Spring 2010 to Winter 2011, the statistics on women are very interesting.

• The unemployment among women still is much higher than unemployment among men: %20.5 versus %11.9 overall, %39.7 for women age 15 to 29 years versus %21.8 for men of the same age group. 
• The increase in unemployment for women is also higher than the increase in unemployment for men. Women age 15 to 29 years experience %8.7 increase in unemployment from the previous year, for men age 15 to 29 years old this has been %2.1. This means a proportionally larger number of women are unemployed. This confirms previous findings (Abbasi and Dadpay among others) that youth and women are the most vulnerable group in Iran's labor market. They usually feel the burden of economic downturns first. 
• Still close to one out of every three women work in agriculture, %28 versus %17.5 for men. Still almost half work in services, %47.6 of women and %48.8 of men.

Question is what should be the focus to combat women unemployment? Employment opportunities equality might be the first place to start. The disproportional unemployment among women might be hinting at a still segregated labor market.

Of course these are only the descriptive analysis and some very basic intuitions. More can be found out through modeling and further analysis.  

Has Iran's Economy Lost One Million Jobs?

Ebrahim Alizadeh in a report for Jahan Sana'at daily in Tehran has written that in the past year one million job has been lost in Iran. His report prompted me to check the original report from Statistical Center of Iran (SCI).  The latest report which covers Iranian calendar year of 1389, from March 2010 to March 2011, includes a summary statistics for Iran:

• Iran labor force for 10 years and older population in this year has been 23,875,023 with a participation rate of %38.3 (men's participation rate at %62.1 and women's participation rate at 14.1%). (Ref. Table 1 of the report).  The participation rate has declined %0.6 since its previous year where it stood at %38.9. 
• In 1388 (March 2009 to March 2010) SCI reported that 21,000,079 were employed in agriculture, service and industrial sectors, in the following year this number is 20,656,621. This means 343,458 jobs lost on a year to year basis. 
• Looking at seasonal data however we see in the winter of 2010 the number of unemployed rises to 3,420,836 with labor force falling to 23,367,266. This means a total employment of  19,946,430. This means a loss of 1,053,646 jobs. In this I believe we have to take into account that winter does reduce activities in agriculture and construction. This could be the effect of the season. However still 343,458 is a rather large number. 

Unemployment has increase also by 1.6 percent from %11.9 in 1388 to %13.5 in 1389. Given that the participation rate is falling I believe that we are witnessing a discouraged workers' effect taking place in Iran. Thus I agree with Jahan Sana'at conclusion that the government claim of success in combating unemployment is actually a misconception. The data shows the supply of labor has been falling and not its demand.

Dollar & Rial in Tehran

There are several reasons for the recent events in currency market in Iran.

First USD has been and is undervalued in Tehran. Iranian governments since Pahlavi always make the value of Rial a matter of political prestige. According to politicians a strong Rial meant and means a strong economy. However this is an illusion, since this claim is only justifiable if Iran had a strong export base. Iran exports oil, which many consider capital. Thus governments, past and present, have maintained a strong Rial using oil revenues.

Second market has realized this a long time ago, Iranian consumers and businesses have witnessed the collapse of Rial in the past. In a way it was expecting USD to gain value. Imposing sanctions on Central Bank of Iran served only as a trigger to ignite a shock. It signaled the market that CBI might not be providing market with paper money, hard cash, in future. USD was already on the rise, from 11650 Rials at the beginning of summer to 13000 Rials at the beginning of summer. This steady rise was accelerated by the news of sanctions.

Still CBI and government keep a brave face, fighting the tide. The question is if Iranian manufacturers would benefit from these events. They are already squeezed harshly by losing their subsidies. In the past years the undervalued USD and strong Rial encouraged massive imports. Many have already lost their consumers and local markets to Chinese products. The rising dollar for them means increasing cost of parts and necessary material. Acquiring both has already been made impossible by sanctions.

Taking into account the increased cost of transactions and the government increasing fiscal responsibilities, particularly paying out the cash subsidy, one would expect to see a further rise in USD in Iran's currency exchange. It seems many on the ground has already adopted this.

Back in Atlanta

After almost four weeks in Tehran I am back in Atlanta. Rial value is depleting at the best, which was expected. So many things to say, one does not know where to start!