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Overview: Iran Analysis Weekly Report Oct 16, 2016

16 Oct, 2016

Vistar Business Monitor

A deputy minister in Iran’s Economy and Finance Ministry downplayed the significance of the U.S. Treasury Department’s new guidance on Iranian sanctions. The Treasury Department’s Office of Foreign Assets Control clarified on October 7 that non-U.S. banks can do dollar transactions with Iran if they do not pass through U.S. financial institutions. The clarification also permits transactions with non-sanctioned Iranian entities that are “minority owned” or “controlled in whole or in part” by individuals who remain under non-nuclear sanctions.

Deputy minister Hossein Ghazavi claimed that the guidance does not resolve the “ambiguity” in Iran’s relationships with foreign banks, which still worry about dollar transactions violating U.S. sanctions. He stated that the guidance will not “create a palpable change” but acknowledged the move as a step in a “positive direction.”

Iran’s Minister of Economic Affairs and Finance Ali Tayyebnia said Iran is pursuing a resilient economy that is less dependent on oil, has reduced nonperforming loans in its banking sector, and anticipates European participation in financing a landmark Boeing deal. In an interview on the sidelines of the fall meeting of the World Bank and International Monetary Fund, Tayyebnia gave an upbeat account of reforms undertaken since President Hassan Rouhani took office in 2013. Nevertheless, Tayyebnia, like other Iranian officials, accused the United States of not completely fulfilling its promises under last year’s landmark nuclear deal and suggested that the United States should do more to facilitate Iran’s return to the international financial system.

Central Bank of Iran (CBI) Chief Valiollah Seif on Saturday hailed Iran’s economic achievements during the period of low oil prices. The International Monetary Fund and the World Bank are surprised by Iran’s economic achievements, including its success to lower inflation rate from 40 percent to less than 10 percent, Seif said during a meeting with local officials in northwestern province of Qazvin. While Iran’s economy is growing, many countries are faced with economic crises as a consequence of falling oil prices. Iran achieved 4.4 percent growth in the first quarter of this Iranian calendar year which is a positive sign of improvement for the Iranian economy, he said. Referring to the country’s stable currency market, the official said that the Central Bank will continue the policy of controlling the prices and preventing turbulence in the currency market.

On the domestic note, senior military and political officials commemorated the religious festival of Ashura, which marks the death of the third Shia Imam. Supreme Leader Ayatollah Ali Khamenei, IRGC Commander Major General Mohammad Ali Jafari, and IRGC Quds Force Commander Major General Qassem Soleimani attended events marking Ashura in Tehran. Meanwhile, prominent cleric Ayatollah Ebrahim Raisi criticized individuals who “have closed their eyes to the crimes in Syria, Iraq, and Yemen” during a speech commemorating Ashura in the city of Mashhad. Iranian media has recently started referring to Raisi as an ayatollah, a rank above his previously-held title of hojjat ol eslam. Some observers have considered his new rank to be a signal that the regime is grooming Raisi to succeed Supreme Leader Khamenei by bolstering his religious credentials. In March 2016, Mr. Khamenei also appointed Raisi as head of the Astan Quds Razavi Foundation, a charitable endowment that manages the Imam Reza Shrine in Mashhad and is worth an estimated $15 billion. A Washington Post article recently described Raisi as a likely candidate to replace Ayatollah Khamenei as the next supreme leader due to his close ties with Iran’s Judiciary and security apparatus.

On the foreign affairs note, Iranian officials denounce Saudi-led airstrike in Yemen. President Hassan Rouhani condemned the Saudi-led airstrike that killed over 140 mourners and wounded more 500 at a funeral in Yemen on October 8. Rouhani criticized Saudi Arabia for “attacking their Muslim brothers without any reason” and continuing “the massacre of women and children in the holy month of Muharram.”

Foreign Minister Mohammad Javad Zarif and Russian Foreign Minister Sergei Lavrov discussed Syria during a phone conversation on October 11. They reportedly emphasized the “need” for a diplomatic push to resolve the Syria crisis, which they stated can only be solved by a political agreement. Supreme National Security Council Secretary Ali Shamkhani and Russia’s envoy on Syria, Alexander Lavrentiev, also met on October 10 to discuss the latest developments in Syria. Shamkhani called for closer counterterrorism cooperation among Iran, Russia, and Syria. Iranian media outlets recently introduced Shamkhani as the chief official “responsible for coordinating Iran’s political, military, and security efforts with Syria and Russia.”

Foreign Minister Mohammad Javad Zarif attended an international conference on Syria in Lausanne, Switzerland, on October 15, according to a deputy foreign minister. Iranian media had reported on October 13 that Zarif would not be participating in the Lausanne talks. The Russian, American, Iraqi, Turkish, and Saudi foreign ministers will also attend.

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