Covering Iranian economy,
business and current affairs.

News & Events

Overview: Iran Analysis Weekly Report Oct 23, 2016

23 Oct, 2016

Vistar Business Monitor

Supreme Leader Ayatollah Ali Khamenei issued 18 guidelines for Iran’s electoral process, including a reiteration of the ban on the armed forces interfering in elections. IRGC Political Deputy Brigadier General Rasoul Sanaei Rad issued a statement confirming that the IRGC’s role in the elections will be limited to “explanation and clarification” and will not “enter or interfere with political divisions.” Iranian law prohibits IRGC members from engaging in political activity. Separately, Parliament passed a resolution limiting the timeframe in which the Guardian Council can disqualify electoral candidates. The council must approve the resolution before it can take effect.

Three ministers resigned in a reshuffle intended to strengthen President Hassan Rouhani’s cabinet ahead of the 2017 presidential elections. Iranian media confirmed the resignations of Minister of Culture and Islamic Guidance Ali Jannati, Education Minister Ali Asghar Fani, and Minister of Sports and Youth Affairs Mahmoud Goudarzi on October 19. Rouhani also appointed interim ministers to oversee each of the ministries until his administration proposes permanent replacements to Parliament. Jannati and Fani have both been controversial figures in Rouhani’s administration. Fani was undergoing impeachment proceedings until his resignation. Hardliners have heavily criticized Jannati over permits his ministry gave for controversial concerts in the city of Qom. Members of the reformist-moderate parliamentary faction praised the resignations. Mohammad Reza Aref, the faction’s head, said the cabinet changes were “in line with the faction’s demands” but “should have happened two or three months ago.” Senior reformists have complained about several ministers in Rouhani’s cabinet before. Rouhani may have reshuffled his cabinet in part to strengthen his support from the reformist-moderate base. He will require strong reformist support and the continuation of the moderate-reformist alliance to win a second term.

President Hassan Rouhani defended his foreign policy stance promoting greater global engagement during a speech marking National Exports Day. He stated, “Some think that when we say ‘constructive interaction,’ we mean sitting down with Westerners and Europeans and smiling at them, or talking with them, or dining with them. It isn’t so. Constructive interaction means establishing appropriate relations with the international community for exports, youth employment, the easier import of capital goods and raw material. Can any country say today that it has progressed without relations with the world?” Rouhani also called for investors to be able to “enter and leave Iran comfortably,” several days after news broke that an Iranian court sentenced two dual Iranian-American citizens to 10 years in prison on espionage charges.

However, Friday prayer leaders renounced President Hassan Rouhani’s call for greater global engagement by Iran. Mashhad Friday Prayer Leader Ayatollah Ahmad Alam ol Hoda directly criticized President Hassan Rouhani’s foreign policy stance of “constructive interaction” with the world. Alam ol Hoda implied that proponents of the “constructive interaction” policy think that Iran cannot survive without economic relations with the U.S. Interim Tehran Friday Prayer Leader Hojjat ol Eslam Kazem Sedighi asserted that opening up Iran to the world “will bring Iran back to the time of the Qajars and the Pahlavis,” two dynasties that ruled Iran before the 1979 Islamic Revolution. Rouhani has clashed with military leaders and hardline conservatives over the appropriate extent of Iran’s economic and diplomatic relations with the West.

Governor of the Central Bank of Iran Valiollah Seif has put economic growth for the first quarter of the current Iranian year (started March 20) at 5.4%. “We managed to achieve economic growth after eight consecutive quarters of contraction … We can now see the result of our financial and fiscal policy and stability due to financial discipline. As a case in point, GDP grew 5.5% during the first three months of the current fiscal year, while inflation reduced from about 40% at the beginning of the (President Hassan Rouhani’s) government down to 8.8%,” Seif said on Sunday. Seif’s remarks on GDP growth come, as the Statistical Center of Iran put first quarter economic growth at 4.4% in mid-August. Both the CBI and SCI are in charge of releasing periodic statistics on macroeconomic indices, which often differ from one another.

Oil prices reversed early losses to end higher on Friday, despite a stronger dollar after Russia’s energy minister said an oil output freeze agreement was necessary to help stabilize the market. U.S. crude oil settled up 35 cents or 0.69% at $50.98 a barrel from its previous close. Global benchmark Brent futures were at $51.91 a barrel, rising 53 cents or 1.03%. Russian Energy Minister Alexander Novak on Friday expressed interest in cooperating with an OPEC production cut and said that he would make proposals to his Saudi Arabian counterpart at a meeting of Persian Gulf Arab oil ministers over the weekend.

On Sunday, Iran’s Oil Ministry officially invited international E&Ps to start pre-qualifying for bidding. And by Thursday officials said they are negotiating with 16 international oil and gas firms. That’s a lot of interest, coming together very quickly. And another announcement this week from Iran’s government makes it clear why this bid round is turning into such a major event. Up until now, the view had been vague on exactly what fields might be offered as part of this licensing round. Officials had mentioned that the South Azadegan field would likely be the first project to be tendered out — given this field is a priority in terms of size (with output projected at up to 600,000 barrels per day).

Stocks gained small ground in the month of Mehr (ended October 21) on both stock exchanges in Tehran, as rising oil prices and US easing  of sanctions helped shares rise. Tehran Stock Exchange rose over 1,800 points or 2.38% to a two-month high of 78,091 points in Mehr. The market has been trading in a tight range, what technical analysts call a sideways trend.

The currency market was quiet in Mehr. The greenback rose to a high of 36,360 rials on October 16 but later slipped back to its exchange rate at the start of the month at 35,920 rials, Tehran Gold, and Jeweler’s Union website shows.

To subscribe the VBM Iran Analysis Report please visit or send an email to