[FREE IRAN Project] In The Spirit Of Cyrus The Great

[Spenta]

Flight of Capital is a Wake-Up Call for Iran

September 28, 2005
Gulf News
Amir Taheri

Here is a quiz. You have a country whose foreign exchange reserves are at the highest levels in two decades, with prospects of rising prices for its principal export while over $200 million (Dh734 million) pours into its coffers each day.

Moreover, the nation's budget deficit, a persistent though occulted feature for the past eight years, has turned into a surplus, freeing the hands of the government to throw money at its more pressing problems. The logical consequence of all this should be a dramatic rise in the value of the nation's currency.

And yet the opposite seems to be happening in Iran. Why?

The short answer is that more and more people are selling rials, the Iranian currency, and buying whatever foreign currency they can get their hands on, including the new Iraqi dinar. This, in turn, translates into a massive flight of capital from Iran.

Last Sunday Hashermi Shahroudi, a mullah who heads the High Council of Judiciary in Tehran, warned that what had started as a small haemorrhage may be building up into a flood. He estimated the total of Iranian owned capital abroad at a staggering $700 billion (Dh2.57 trillion), accumulated over the past quarter of a century. But, more significantly, he claimed that capital flight is now proceeding at an unprecedented cadence.

Shahroudi offered other interesting bits of information, presumably available to him and a handful of other senior figures in Tehran.

He said that there are now over 10,000 Iranian-owned companies in Dubai alone. To these must be added a further 3,500 companies that operate from "free trade zones" on the islands of Kish and Qeshm in the Arabian Gulf where the Islamic Republic's trade laws do not apply. An unknown number of Iranian privately-owned companies have also sprung up in other neighbouring countries, notably Turkey, Azerbaijan and Armenia.

In some cases these "offshore" Iranian companies are partly or wholly owned by influential figures within the regime. The significance of these figures becomes apparent when we remember that the total number of private companies registered for tax purposes by the Ministry of Finance in Iran itself stands at only 18,000.

Moreover, the formation of private companies inside Iran has been on a descending curve since 1997. The message is clear: while trading with Iran is profitable, it is prudent not to keep assets in Iran.

Originally, the flight of capital from Iran was largely prompted by fears of arbitrary expropriation.

In the early decade of the revolution practically any mullah could issue a fatwa transferring your house or business to whomever he wanted. There were also wholesale nationalisations, especially between 1979 and 1983. In 1978, months before the mullahs seized power, the public sector accounted for just over 54 per cent of the national economy. By 1990 that figure had risen to 78 per cent.

Unprecedented crisis

But, if Shahroudi's warnings, corroborated by reports from all over the country, are justified, Iran may be heading for an unprecedented economic crisis.

There is, of course, the possibility that Shahroudi is prompted by sour grapes. His faction suffered a decisive defeat in the last presidential election and has since lost a number of key positions as part of President Mahmoud Ahmadinejad's purge of the administration. Both Shahroudi and his political mentor, former president Ali Akbar Hashemi Rafsanjani, are expected to lose their own jobs sooner rather than later.

Nevertheless, Shahroudi's warnings could not be dismissed as a mere political swipe at Ahmadinejad.

The new administration has implicitly admitted that something is going wrong by asking all banks, which are government-owned, to observe a moratorium on all loans above a 300 million rials (Dh165,150) limit. This is prompted by fears that individuals and private companies may be borrowing solely to buy dollars or other foreign currencies as a hedge against further drops in the value of the Iranian money.

Since 300 million rials amounts to no more than $45,000, the decision shows that even very small savings are being turned into foreign currency.

The real reason for economic uncertainty in Tehran is the war drums beaten by the new administration.

Hopes that Ahmadinejad's visit to the United Nations might help defuse the diplomatic crisis over Iran's alleged nuclear weapons project were dashed by the new president's performance in New York which even his well-wishers describe as "awkward".

Shahroudi and others who understand the pitfalls ahead must also inform the people about the political and military consequences of such a policy. Although humiliated in the last election, Rafsanjani, Shahroudi and Khatami still have a constituency within the ruling establishment if not in the nation at large. They should mobilise their constituencies around a demand for a public discussion of the alleged "war policy".

There is no reason why Iran should be led into a military conflict with anybody at this point in time. Nor is there any guarantee that a conflict would not do lasting damage to Iran's legitimate national interests.

If, as Shahroudi and Rafsanjani are suggesting, the new administration in Tehran is "sleepwalking towards war" it is everyone's duty to sound a wake-up call before it is too late.

Amir Taheri was editor-in-chief of Kayhan, the most important Iranian newspaper, under the Shah. He is a member of Benador Associates.

[Oppenheimer]

It implies average folks are packing up and getting out...selling homes etc. to do so.

Not just buisinesses.

[Oppenheimer]

Found this interesting, if not relevent to the topic.

-------------


Aziz urges Muslim countries to promote reform to lure investments+
The Associated Press, Oct. 1, 2005

KUALA LUMPUR, Oct. 1


(Kyodo) _ Pakistani Prime Minister Shaukat Aziz said Saturday that Muslim countries cannot rely on the "brotherhood of Islam" to attract investment from fellow Muslim countries unless there is good governance and reform.

"It is not a common faith alone that will get investments to flow in a particular direction," Aziz said during a dialogue at the inaugural World Islamic Economic Forum in Kuala Lumpur.

"Capital flows to areas where it sees safety, good governance and a potential for good returns. This basic premise is universal and doesn't change...every leader must look at themselves in the mirror and ask themselves...am I reforming? Am I changing?" he said.

Earlier in his speech, Aziz urged Muslim countries to harness their potential and work toward an eventual "Islamic Economic Union."

Now, he said, 24 percent of the world's Muslim population earns less than a dollar a day and an average 39 percent live below the poverty line.

Muslims make up 19 percent of the world's population but only 6 percent of its income.

The Islamic world's share in global trade is barely 8 percent while intra-Islamic world trade accounts for 13 percent of Muslim countries' total trade. Collective gross domestic product is $1.7 trillion, about 8 percent of the world's GDP.

The Muslim world is riddled with conflicts, but the greatest challenge, Aziz said, is the "insidious linkage that is made between terrorism and Islam."

"We are being dubbed as fundamentalists, extremists and fanatics -- our image is being shaped by the extreme actions of a tiny minority of extremists who exist on the fringes of Muslim societies," he said.

To negate this image and to prevent extremism, Aziz said Muslims must improve their standard of living by pooling resources.

With Muslim countries holding 70 percent of the world's oil reserves and 40 percent of the world's raw minerals besides overseeing strategically significant sea routes, including the Mediterranean, Bosporus, Black Sea, Suez Canal, Red Sea, Persian Gulf and the Malacca Strait, "There can be no doubt that we possess tremendous potential," Aziz said.

To encourage trade among Muslim countries, he said they must move toward an Islamic Economic Union.

"We can make a beginning by entering multilateral free-trade arrangements among Muslim countries as well as promoting the free flow of labor and material resources. We also need to create a world-class capital market to attract international capital, which would enable us to finance our development and growth," Aziz said.

The Organization of the Islamic Conference, the world's largest Islamic organization, is now working to establish an "Islamic Common Market."

OIC Secretary General Ekmeleddin Ihsanoglu, in his speech read by Allal Rachdi, director general of the Islamic Center for Trade Development, said the first round of negotiations was launched in Turkey last year for what is known as the "Framework Agreement on Trade Preferences among Islamic Countries," a "milestone that would pave the way for the establishment of the Islamic Common Market."

A Protocol on the Trade Preferential Scheme has been drafted and is expected to be signed in November, he said.

"This stage remains a very modest progress," Ihsanoglu said, for the OIC to achieve an Islamic free-trade area.

The three-day World Islamic Economic Forum, touted as the "Davos" of the Islamic world, was initiated by the OIC, which is currently chaired by Malaysia.

[Spenta]

Ledeen mentioned that people were fleeing. How much of it is real, I don't know.

[Liberty Now !]

Well, that's the profitable thing about creating dictatorial fascist regimes, and keeping nations under backward rulers.

you get to enjoy all the cash flow to the West once they come into power, and every time they seem to be leaving! as well as, all the way in between

no one enjoys selling the country to the West like a fascist dictator. especially of the islamist nature! (as we all know Shah had to go exactly because he wasn't a good enough dictator! nor did he like selling out his country.)

no wonder why the whole of Middle East has to be turned into Islamic Republics of terror.

I mean, a peaceful strong democratic friendly smily Iran! who needed that!

or Lebanon for example, wasn't it so utterly sickening to see Beirut so live, happy and vibrant? did I say peaceful and friendly to west?

the more power to islamo-fascist terrorists.

as the brits' queen of Hell promised: "we will put them in the place they deserve to be." whatever that meant! think we were advancing far too fast for our own good, and a bit too friendly to the west. they hate that.

for Iran the place was picked by her highness as, "worst off than bangladesh". I know we're even more worst off, but who can count on brit's promises anyways.

this is our story, and we're sticking to it.

and the cash flow continued happily ever after!
_________________
Paayande Iran

[Oppenheimer]

Dear Spenta,

There are other sources besides Ledeen...those I know personally are getting out, and their plans were made months ago.

Along with capital....the IRI is facing a new "brain drain" of professionals.

Those I know who are staying are staying to take the fight to the regime.

[Spenta]

assuming they can take the fight to the regime. I certainly hope they can.

[Oppenheimer]

Dear Spenta,

Some don't have any other choice. In fact, what you see is a process of "survival mode"....human instinct to protect one's family.

The IRI has placed the entire population of Iran at risk....

You know how it is on a cloudy day, when a breeze picks up and you catch a whiff of ozone on it, you know rain is imminent....

There's one hell of a storm coming....and the people know it.

[Kaaveh Ahangar]

Long Live the Memory of Shahanshah Aryamehr.
_________________
Long Live the Memory of Shahanshah Aryamehr.

[Oppenheimer]

http://sanibrite.ca/departure79/page4.html

(excerpt)

Moments before His Majesty left the hall, Kambiz Yazdanpanah, the public relations director of the Imperial Court, rushed over to me and asked me if I could do the interview on the steps of the Royal Pavilion. Without preparation I went forward and requested permission to do the interview.

His Majesty nodded his approval.

My first question was addressed as follows: "Sire, at a time when dark clouds have returned to cover the skies of Iran and whilst the country is burning in a fire of unrest and anarchy, what is the reason for Your Majesty's trip?"

The Shahanshah answered me while gazing at the sky above , his face full of anguish for the future of the country. "I have already said that for some time I have been feeling tired and in need of rest and medical attention.

Now that the new government has received a vote of confidence I have chosen to go on a trip."

I asked how long he intended to be away? His Majesty replied that it all depended on the state of his health.

I asked about the itinerary of his trip. His Majesty said that he intended to go to Egypt because President Anwar Sadat had invited him and maybe later he would visit Morocco.

In regards to the vote of confidence His Majesty said he hoped the new government would prevail over difficulties and the nation would finds its calm again and for this he added, "We will need the help of true patriots in the complete sense of the word."

I then asked, "Does His Majesty have a message for the people of Iran?"

After a long sigh, His Majesty replied, "I have no other message than to appeal to everybody's sense of patriotism to preserve our country."

I taped this final message which is available in the international archives of major news organizations.
At the end of the interview I said: "All patriots await the return of the Shahanshah Aryamehr!"

For this very sentence I was arrested a few months into the revolution in Ahwaz by armed gangs.