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Overview: Iran Analysis Weekly Report July 31, 2016

31 July, 2016

Vistar Business Monitor

The Central Bank of Iran released its latest report on the Consumer Price Index for the fourth month of the Iranian Calendar Year (June 21 – July 21 2016). According to the CBI, the CPI measure has increased by 0.8% compared to the previous month. The M-o-M inflation reported for the previous month had stood at 1.2%. In the latest report, the Food & Beverages group index has dropped by 0.2%, recording the largest negative change. In contrast, the Health Care price index has experienced the highest growth by increasing 5.1%.

The Islamic Republic of Iran Customs Administration (IRICA) has also released its monthly report on the country’s foreign trade. The IRCIA has reported Iran’s non-oil trade balance standing at a surplus of $+3.4 billion. In its previous report last month, the non-oil trade surplus was reported at $1.37 billion. During the first four months of the Iranian Calendar Year (starting on March 21, 2016), $16.3 billion worth of goods have been exported, while Iran’s total imports stood at $12.8 billion for the same period. In comparison with the previous year, Iran’s non-oil exports have increased by 21% while the country’s total imports have dropped by 7%.

Moreover, the Central Bank of Iran has released its monthly report on the Tehran Housing Market. According to this report, the number of home sales in the Iranian capital have reached 14,969 in the fourth of month of Iranian Calendar Year, 4% lower than that of the previous month. But the figure is up by 27.6% on a yearly basis. The average price of one square meter of residential space sold during June 21 to July 21, 2016 has been $1,194, 0.1% higher than the previous period. On a yearly comparison, the price has increased by 4.4%. Furthermore, the total number of home sales in the last four months has been 51,880, marking a growth of 11.4% compared to the same period last year. However this record is still 17% lower than the number of sales recorded in the same period in 2014. The average price in the reported four months has increased by 0.5% annually to $1,181. The price has also increased by 3.1% from two years earlier.

Iran’s Islamic Revolutionary Guards Corps (IRGC) has arrested the former CEO of one of Iran’s biggest banks and his deputy over alleged corruption as officials grapple with a ballooning pay scandal. Ali Rastegar Sorkhei, the former CEO of Bank Mellat and his international affairs deputy, were arrested by the IRGC on an order from Iran’s judiciary. Previous reports linked Rastegar Sorkhei and his apparent resignation last month to a major scandal involving inflated salaries, bonuses, and other benefits for state executives and bank heads. The hard-liners described Rastegar Sorkhei as a member of an organized banking “corruption ring” that has been identified in the country.

Rouhani Administration Spokesman Mohammad Bagher Nobakht announced new ceilings for government salaries in response to the ongoing scandal over government officials receiving “astronomical salaries.” Hardline figures have repeatedly asserted that President Hassan Rouhani’s brother and adviser, Hossein Fereydoun, is implicated in the scandal. Moussa Ghazanfarabadi, the head of the Tehran Revolutionary Court, addressed rumors that Fereydoun was involved in the “corrupt banking network” that led to the arrest of a former head of Bank Mellat. He stated, “President Rouhani must be very careful in selecting individuals in his administration and must remove unhealthy individuals from his environs - even his brother - much faster.”

Tehran Revolutionary Court head: Rouhani’s brother may be involved in banking scandal. Moussa Ghazanfarabadi, the head of the Tehran Revolutionary Court, addressed rumors that President Hassan Rouhani’s brother and adviser, Hossein Fereydoun, is implicated in the Bank Mellat corruption case.

On the international note, Senior Iranian officials blamed Saudi Arabia for the continuing instability in Iran’s border provinces. Former IRGC Commander and Expediency Discernment Council Secretary Mohsen Rezaei claimed that “the Saudi consulate in northern Iraq assists the Komala Party [a leftist Kurdish nationalist party] and sends terrorists into Iran.”

Supreme National Security Council Secretary Ali Shamkhani, meanwhile, stated that Iran’s security forces will not allow foreign countries to “ship weapons and rent terrorism” with the intention of destabilizing the Iran-Pakistan border. He added that it is regrettable that “one Muslim country on behalf of the Islamic world’s enemies uses its own money to spread war and terrorism in the region.” The comments by Shamkhani and Rezaei closely follow IRGC Commander Major General Mohammad Ali Jafari’s comments last week blaming regional countries for “doing their best to spread insecurity in Iran.”

Rezaei identified Saudi Arabia’s activity in fomenting unrest along Iran’s borders with Iraq and Pakistan as part of a new strategy against Iran. Rezaei’s comments come as senior Iranian officials have sharpened their rhetoric against Saudi Arabia. IRGC Commander Major General Mohammad Ali Jafari recently blamed “some regional countries” for the increasing number of clashes between Iranian security forces and “terrorists” in Iran’s border provinces.