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Overview: Iran Analysis Weekly Report Nov 13, 2016

13 Nov., 2016

Vistar Business Monitor

Iranian officials indicated concern regarding America’s commitment to the nuclear deal in reaction to the election of Donald Trump. President Hassan Rouhani and Foreign Minister Mohammad Javad Zarif stressed that the next U.S. president must fulfill its requirements under the Joint Comprehensive Plan of Action (JCPOA), reflecting the regime’s apprehension over President-elect Trump’s previous pledges to renegotiate or even dismantle the deal.

Some Iranian officials expressed hope that Trump’s election would change America’s policies in the Middle East, but noted that Iran would have to wait for his policies to materialize. Supreme National Security Council (SNSC) Secretary Ali Shamkhani said that he hoped the election would induce U.S. authorities to review “policies based on domination, intervention, and war in other countries.” Deputy Parliament Speaker Ali Motahari specifically complimented Trump’s position on Syria as “good.” IRGC Deputy Commander Brigadier General Hossein Salami said that American policy towards Iran would not change with the incoming president as “America’s foreign policy is independent of the type of party that comes to power.”

The Rouhani administration announced details of a new press law that would take some press supervision away from government institutions. President Hassan Rouhani stated that the new law would transfer some authority to supervise the press from government institutions to “the press itself” during remarks at the 22nd International Exhibition of the Press and News Agencies. He also criticized restrictions on the press based on “fake excuses” and “false pretenses.” Rouhani was elected on a platform that included greater social freedoms, but he has prioritized economic initiatives in his first term. Judiciary Head Ayatollah Sadegh Amoli Larijani censured Rouhani’s comments as “defamation” of the Judiciary, which monitors the press.

Foreign Minister Mohammad Javad Zarif called for an “immediate ceasefire” in Syria and Yemen on the last day of his two-day visit to Lebanon.
Zarif rejected the possibility that a military solution could solve either conflict and added, “The only path is talks among the people of Syria and Yemen.” As part of his trip to Lebanon, Zarif met with newly elected Lebanese President Michel Aoun, Foreign Minister Gebran Bassil, and Lebanese Hezbollah Secretary General Hassan Nasrallah. After meeting with Bassil, Zarif stated that the imprisonment of Nizar Zakka, a Lebanese citizen and U.S. permanent resident, is “a problem between the United States and Iran” rather than between Lebanon and Iran. An Iranian court sentenced Zakka to 10 years in prison on espionage charges in late September.

Zarif also met with Prime Minister-designate Saad Hariri, the leader of the Saudi-linked Future Movement, to discuss regional developments and “relations between Tehran and Beirut after the election of Michel Aoun.” Hariri was a long-time rival of Hezbollah-allied Aoun until he endorsed Aoun’s bid for the presidency in late October. Iranian officials have praised Aoun’s election as a victory for Lebanese Hezbollah.

The gradual move toward unifying foreign exchange rates has started but the timeframe for its realization depends on a variety of factors, says the governor of the Central Bank of Iran. According to Seif, who has routinely talked about putting a permanent end to the dual exchange rate regime – in place since the currency crisis of 2011-12 sent the rial crashing – by the yearend (March 20), the necessary conditions to take the long-awaited decision are emerging. “The discrepancy between the rates in the official and free market has narrowed significantly and we are not very far from a single rate system.”

Total government debt to the banking sector jumped to 2.041 quadrillion rials ($64 billion) by the end of the sixth month of fiscal year (September 21), marking a 17.4% growth from the beginning of the year on March 20. Data released by the Central Bank of Iran also indicates a 14.5% growth in private sector debt to banks during the same period. A year-on-year analysis however reveals that government and private sector debt to the banking sector shot up by 26.5% and 27.6% respectively.

An agreement in principle on the development of Phase 11 of South Pars Gas Field was inked last week between the National Iranian Oil Company (NIOC) as employer and a consortium led by Total as well as CNPC, China’s largest oil and gas producer and supplier, and Petropars from Iran in the form of Iran Petroleum Contracts (IPC). Total which claims a 50.1 percent share in the project will lead the consortium. The share of CNPC is 30 percent and that of Petropars is 19.9 percent. This is the first investment by a western company in Iran’s energy sector since the termination of international sanctions against Iran.

Crude oil prices fell on Friday after the Organization of Petroleum Exporting Countries reported another jump in production in October. OPEC pumped 33.64 million barrels per day, up from 240,000 in September, according to its monthly report. This was the highest in at least eight years, according to Reuters. This increase throws into doubt the chances that the oil cartel will implement limits to its production levels when it meets November 30. Reduced output could lift oil prices and the economies of OPEC members dependent on revenue from exports. The price of OPEC basket of thirteen crudes stood at $42.67 a barrel on Thursday, compared with $42.65 the previous week, according to OPEC Secretariat calculations.

The Tehran Stock Exchange All-Share Index experienced its first weekly drop in a month, falling by 1.6% to close at 78,411. The TSE’s main index had recorded a 0.2% gain by the end of Tuesday’s trading session, however, investors’ reaction to the result of the US election took the index down by 1.8% on Wednesday.