Overview: Iran Analysis Weekly Report August 28, 2016
28 Aug., 2016
Vistar Business Monitor
Last week the statistics published by the Central Bank showed the continuation of the falling pace of inflation. The minister of economic affairs and finance announced that inflation stood at 8.9% at the end of the fifth month of the Persian year 1395 (Mordad). Minister Ali Tayebnia hailed the administration’s effort to achieve single digit inflation, as expected, saying that inflation has remained a single digit for the past couple of months.
The director of the National Tax Administration says the government’s tax revenues increased by 29% in the first four months of the current fiscal year that started in March compared to that of the same period in 2015 to stand at 275.7 trillion rials ($7.8 billion). Revenues from direct tax and value added tax stood at 166 trillion rials ($4.7 billion) and 110 trillion rials ($3.1 billion), respectively. The figures show nearly 95% of budget’s projected income from taxes during the four-month period was realized. The tax office put the total amount of tax arrears at 493 trillion rials ($13.9 billion) and tax evasion at between 130-300 trillion rials ($3.6-8.4 billion) per annum.
Iranian non-oil exports exceeded $19 billion during the first five months of the current Persian calendar year, a 10.22 percent increase compared to the same period last year. Accordingly, non-oil imports fell 2.85 percent at approximately $16 billion. President Hassan Rouhani has repeatedly pledged to strengthen Iran’s non-oil sector in the wake of the nuclear deal. Critics have claimed that an economic contraction within Iran has caused the decrease in imports instead.
The goods and services Consumer Price Index for urban areas in the 12 months ending August 21, which marks the end of the Iranian month of Mordad, increased 8.9% compared with that of last year’s corresponding period, according to the Central Bank of Iran. The CBI put the inflation rate for the preceding month of Tir, which ended July 21, at 9.2%. The overall CPI (using 2011 as the base year) stood at 245.5 in Mordad, indicating a 1.1% growth compared with that of the previous month. The index registered a year-on-year increase of 9.4% compared to that of the similar month last year. Earlier, the Statistical Center of Iran put the inflation rate for Mordad at 8.7%.
Supreme Leader Ayatollah Ali Khamenei warned government officials not to trust the U.S. after alleged shortcomings in the nuclear deal’s implementation. Mr. Khamenei criticized America’s “misconduct” in implementing the Joint Comprehensive Plan of Action (JCPOA) during a meeting with President Hassan Rouhani and his cabinet on August 24. He warned, “This experience teaches us that one cannot trust the promises of any administration in America.” As in his past criticisms of the nuclear deal, Khamenei fell short of calling for Iran to abandon the accord, however.
Foreign Ministry Spokesman Bahram Ghassemi stated on August 22 that Russia’s use of Shahid Nojeh Air Base “has ended for now.” Russia also confirmed on August 22 that its aircraft left the base. The Russian Defense Ministry had announced its use of the base in the western province of Hamedan on August 16.
Alaeddin Boroujerdi, the chairman of Parliament’s National Security and Foreign Policy Commission, denied that Russia is using any Iranian base other than Nojeh Air Base during an interview on August 24. Russia used Nojeh Air Base to launch airstrikes in Syria from August 16 to 18. When asked if Iran has also allowed Russia to use a base in Tabriz, East Azerbaijan province, Boroujerdi responded, “No. Nojeh was chosen because it is in the direction of Russia’s flights towards Iraq and Syria.”
Supreme National Security Council (SNSC) Secretary Ali Shamkhani emphasized that “Iran’s strategic relationship with Russia has not ended” after Russia halted airstrikes from Iran’s Nojeh Air Base. Shamkhani acknowledged the potential for Russia to use the base again in the future but stated that it would depend on “battlefield developments in Syria.” The SNSC had reportedly authorized Russia’s use of the base. Other Iranian and Russian officials have left open the possibility that Russian warplanes will operate from Nojeh Air Base in the future. Defense Minister IRGC Brigadier General Hossein Dehghan, for example, claimed that Iran “will give the Russians permission to use Nojeh Air Base whenever it is necessary.”
Defense Minister Hossein Dehghan defended the IRGC Navy’s aggressive behavior toward U.S. military vessels in the Persian Gulf. IRGC Brigadier General Dehghan stated, “It is natural that our boats are constantly monitoring the traffic of foreign ships, and this naturally happens within our own waters.” He also warned that “if a foreign vessel enters our waters, we will give it a warning. If it tries to invade, we will confront them.” IRGC Navy speedboats conducted a “high-speed intercept” of a U.S. guided-missile destroyer in the Strait of Hormuz on August 23. According to one U.S. defense official, the speedboats came within 300 yards of the U.S. destroyer, which was in international waters. Separately, an Iranian fast attack craft reportedly harassed two U.S. vessels in the northern end of the Persian Gulf on August 24. The same Iranian vessel then aggressively approached another U.S. warship in a separate encounter later that day. The close timing of these incidents suggests that they are the result of a coordinated effort by the IRGC Navy to escalate its harassment of U.S. warships rather than resulting from the actions of a “rogue” local IRGC Navy commander.
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