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Overview: Iran Analysis Weekly Report Nov 06, 2016

06 Nov., 2016

Vistar Business Monitor

Parliament approved President Hassan Rouhani’s candidates to head the Culture and Islamic Guidance, Sports and Youth Affairs, and Education ministries. Parliament voted to approve Reza Salehi Amiri as Culture and Islamic Guidance minister, Massoud Soltani Far as Sports and Youth Affairs minister, and Fakhreddin Ahmadi Danesh Ashtiani as Education minister. Their appointments follow the resignations of the heads of those three ministries last month. The vote reflects the stronger moderate-conservative presence in the current Parliament, which was elected in spring 2016. Rouhani had nominated all three for ministerial positions early on in his term, but the previous, conservative-dominated Parliament rejected all three.

President Hassan Rouhani praised Parliament’s approval of his ministerial candidates. Rouhani stressed that “cooperation between the Parliament and the government will benefit the great Iranian nation.” He also stated, “Today, international organizations and the whole world admit that Iran is the best and safest country for foreign investment, despite the fact that some revolutionary people do not understand or comprehend the country’s problems.” [CCIR only: Rouhani stated, “The Iranian nation adopted the path of moderation [in the 2013 presidential] elections with a loud voice; and that shout was reiterated once again” in the February 2016 parliamentary elections.].

Senior Iranian officials praised Lebanon’s election of Michel Aoun, an ally of Hezbollah, as president. Senior Foreign Policy Advisor to the Supreme Leader Ali Akbar Velayati celebrated Aoun’s electionas a “victory” for Lebanese Hezbollah Secretary General Hassan Nasrallah, while Foreign Ministry Spokesman Bahram Ghassemi expressed hope that Aoun’s presidency will result in an “expansion” of Iranian-Lebanese ties. Aoun’s election ended a two-year vacancy in Lebanon’s top post, which is reserved for a Maronite Christian. The decision by Lebanon’s main Sunni political group, the Saudi-linked Future Movement, to endorse Aoun indicates Saudi Arabia’s curtailed influence in the country. Saudi Arabia appears to have been in retreat in Lebanon since February 2016, when it suspended a $3 billion aid package to the Lebanese armed forces. Beirut had refused to condemn the storming of the Saudi embassy in Iran, a move that one Saudi official attributed to pressure from Hezbollah.
Supreme Leader Ayatollah Ali Khamenei rejected non-nuclear negotiations with the U.S. in a speech ahead of the 37th anniversary of the hostage crisis. Mr. Khamenei claimed that the Joint Comprehensive Plan of Action (JCPOA) exemplifies America’s “oath-breaking and lying” during remarks on November 2. He stated, “Currently some are saying that we must negotiate and compromise with this same America on Syria, Lebanese Hezbollah, Iraq, Afghanistan, Yemen, and even domestic issues. The issue of the JCPOA and the Americans’ strategy towards us afterwards are a clear example of why this belief is incorrect.” He also criticized the U.S. presidential debates as revealing “the destruction of human values in America,” adding, “How can a crisis-stricken country fix another country’s problems?” Ayatollah Khamenei has repeatedly forbidden talks with the U.S. on regional issues since the nuclear deal was reached in July 2015.

The deputy commander of the IRGC warned that Iran will send the nuclear agreement “to the museum” if the U.S. does not fully implement its commitments. IRGC Deputy Commander Brigadier General Hossein Salami stated that Iran “stands by its commitments” under the nuclear deal but added that Iran’s patience “is not endless” at a rally marking the 37th anniversary of the 1979 takeover of the U.S. Embassy in Tehran. Salami pledged that Iran will withdraw from the Joint Comprehensive Plan of Action (JCPOA) and that its nuclear activities will surpass pre-deal levels if the U.S. does not implement its commitments under the deal. Other senior officials have similarly criticized the alleged lack of sanctions relief from the U.S. while also emphasizing that Iran will not be the first to violate the agreement.

SCI reported Iran’s rural inflation reached 7.5%. The average goods and services Consumer Price Index for rural areas in the 12-month period ending October 21, which marks the end of the Iranian month of Mehr, increased 7.5% compared with last year’s corresponding period, the Statistical Center of Iran reported. The center had reported a 7.7% rural inflation for the preceding Iranian month. The overall rural CPI (using Iranian fiscal year to March 2012 as base year) stood at 243.9 in Mehr, indicating a 0.1% decrease compared with the previous month and a year-on-year increase of 7.3% compared with last year’s similar month. Urban inflation for the month of Mehr was earlier put at 7.9% by SCI.
The Producer Price Index in the 12-month period ending October 21, which marks the end of the Iranian month of Mehr, increased by 3.2% compared with last year’s corresponding figure, according to the latest report by the Central Bank of Iran. The CBI reported the same monthly average PPI inflation for the preceding month. A year-on-year increase of 3.9% was registered in the index compared with the similar month of last year. The PPI (using Iranian fiscal year to March 2012 as base year) stood at 224.5 in Mehr, indicating a 0.5% growth compared with the previous month, CBI reported. The inflation of Consumer Price Index has been put at 8.7% for Mehr by the central bank.

Oil prices settled at a six-week low on Friday following several consecutive days of large price declines. The major catalysts this week were doubts over an OPEC deal and EIA data showing a record build up in crude oil stocks. The EIA said Wednesday that U.S. oil inventories rose by 14.4 million barrels last week, the largest gain in a single week since data collection began in the early 1980s. WTI plunged below $45 per barrel on the news and the five consecutive days of losses was the longest streak since June.

Stocks rallied in Tehran last Saturday, and TSE’s benchmark TEDPIX had its largest daily gain since March 12, on improving petrochemicals and metals prices. The benchmark advanced over 1,000 points or 1.31% to a 6-1/2 months high of 80,340.70 points. However, shares on Tehran Stock Exchange fell for the rest of the week. Benchmark TEDPIX lost 670 points or 0.83% to 79,670.9 points by Wednesday, as investors pared their positions in major miners and refiners.