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Country Overview.

Iranian New Year's Message by Supreme Leader, the President and Foreign Heads of States

On the eve of the Iranian New Year, Norouz, the Supreme Leader of the Islamic Republic of Iran, Ayatollah Khamenei, declared this year as "The Year of Economy and Culture with National De- termination and Jihadi Management". This was in line with an annual tradition where the Supreme Leader assigns a title for the upcoming year, outlining the most pressing issues of the country.

After wishing the people of Iran, expatriates, and nations who celebrate Norouz, a happy and prosperous year, the Supreme Leader began to talk about the future of the country. Ayatollah Khamenei stressed the significance of problems that Iran's economy has been dealing with and articulated his hope that with the implementation of effective policies and strong efforts, these issues would soon be resolved. The Supreme Leader specified cultural development as another aspect with which the country should be concerned. He stated that with the help of its people and proper management, the country's rich culture and economy would no doubt flourish.

Hassan Rouhani also sent his first New Year's message as President to the people of Iran. He also focused on the economy and government plans to control inflation and boost trade. The President assured the people of Iran that at the very least, the market would be more stable in terms of price fluctuations. With regards to foreign relations and Iran's place in the international community, the President referred to the fact that the government has taken a huge step towards improving relations. He further mentioned that the interim nuclear deal, although short term, was a groundbreaking event and that his administration hoped to transform this into a permanent one. Mr Rouhani stated that he remained hopeful that sanctions, which have been adversely affecting the Iranian economy, can soon be relaxed. The President stressed that with these new developments, Iran has changed its position from both a domestic and international perspective. The President said that during the short time his ad- ministration has been in power, Iran has been

witnessing a large number of political and economic visits by foreigners; this, he argued, is only a glimpse of what the future beholds.

With this change in the country's atmosphere, foreign heads of states and dignitaries also sent out their New Year's message to Iran with more enthusiasm and hopes for better relations. President Barack Obama, in line with previous years, conveyed his best wishes to the Iranian people for Norouz. The US President stated that he hopes that this new chapter will include an improved relationship between Iran and the United States and its people. He said that the people's election of President Hassan Rouhani, who had made various promises to the electorate, was a voice heard around the world. President Obama said that his direct telephone conversation with President Rouhani in September 2013, which was the first direct contact between Iranian and US Presidents since the Islamic Revolution in 1979, went well and that both parties expressed their respect for each other and their nation's people. Both called for improving mutual understanding and decreasing mistrust. According to the President of the United States, there have been clear improvements in the relationship between Iran and the West; however, it will take some time for many others to share this optimism.

The US Secretary of State, John Kerry, who met and held direct discussions with his Iranian counterpart in September 2013, Javad Zarif, again for the first time since the Iranian revolution, also joined President Obama in wishing the people of Iran and those who celebrate Norouz from East Asia to the Persian Gulf region a happy and prosperous year.

UK Foreign Minister, William Hague also sent a message to Iranians around the world and wished them a year filled with new beginnings and prosperity. He stated that the UK is looking to start a new relationship with Iran and hoped that the two countries will be able to join in building stronger economic ties. Mr. Hague stated that diplomats from both nations have been travelling back and forth and that there are good signs that tensions are starting to decrease. He stated that the UK is willing and looking forward to having a better relationship with Iran and expressed hopes that the two countries can move towards normalizing their relations.

Government's campaign against registration for cash hand outs

In the weeks following the Iranian New Year, the Iranian government initiated a campaign to per- suade the wealthier classes of society to refrain from registering for direct cash hand-outs which were provided under the first phase of the sub- sidies removal scheme implemented

during the previous administration. This campaign was in line with preparations for the second phase of the subsidies removal programme, which was meant to reduce the financial burden of subsidies that the government was maintaining on energy products, basic foodstuffs and utilities.

During the first phase of the subsidies removal programme, which was implemented from December 19 2010, the Iranian government cut subsidies on fuel, utilities, and basic foodstuffs. In order to compensate for the rise in prices and its possible socio-economic consequences, a scheme was introduced to provide cash hand-outs to the economically vulnerable members of society from the resources freed up by subsidy cuts. The very high number of cash hand-out applicants and the previous government's decision to grant cash aid to all applicants, resulted in a heavy financial bur- den for the government where the amount paid as cash hand-outs to the public significantly surpassed the resources that became available from removing subsidies. Regardless of the economic consequences of such a decision, the distribution of cash hand-outs continued to all Iranians who had applied.

With the coming into office of the new government, and the resulting tighter financial policies which were pursued in order to control and reduce inflation, President Rouhani's administration planned to restructure the subsidies removal program. The second phase of the scheme was designed to increase fuel prices, which had remained fixed since December of 2010 despite high inflation.

Another objective was to create an obligation for those seeking cash aid to re-register if they wished to continue receiving the cash hand-outs. This was done in the hope of persuading wealthier Iranians to refrain from requesting the aid in the second phase.

Different government officials argued that if the more affluent classes refrained from accepting cash hand outs, the Iranian government would use the freed up resources to battle issues such as un- employment, and improve production, healthcare, public transportation, and education. The campaign included artists, political figures, and other noteworthy individuals who publicly advocated for refraining from the registration process to receive monthly cash payments. Government officials also indicated that in the coming months, the government would review the applications in order to make sure the applicants meet the requirements to receive the cash payments.

Despite weeks of advertising and the government's efforts, however, out of Iran's population of 77 million, 73.6 million registered to receive the cash hand-outs; the number of people who refrained from registering in the second phase of subsidies removal scheme for receiving this type of aid, in comparison to the first phase, was only 2.4 million. Despite the set-back in failing to persuade more people to forgo their aid, the government stated that about IRR 12,000 billion will be made available to the government this year as a result of those who refused the cash hand-outs at this stage. The government also stated that more people can register to refuse the hand-outs in the future. Officials also stated that the executive branch will consider its options regarding identify- ing the wealthier classes who have registered and halt the payments to these individuals in the coming months.

As the receipt of cash hand-outs has become a politically, socially and economically sensitive is- sue, analysts are waiting for the government's future actions regarding further restructuring of the cash hand-out scheme and the possible elimination of a higher income families and individuals from the payment list.

EU human rights report and the US refusal to grant visa to Iranian Diplomat

In early April, Iran's relations with the European Union and the United States faced further challenges following a resolution by the EU Parliament condemning the human rights situation in Iran and the US's refusal to grant a visa to Iran's United Nations representative nominee.

The Iranian Ministry of Foreign Affairs, summoned the Greek ambassador, as Greece currently holds the rotating presidency of the EU, to object to the resolution passed in the European Parliament which called for member countries to highlight human rights in all aspects of its relations with Iran. Even though the resolution holds no legislative power and is designed to reflect the parliament's view towards human rights in Iran, it has encouraged EU diplomats to include dialogue with Iranian officials regarding human rights in future discus- sions. The EU resolution condemns restrictions on free speech in Iran and requests that Iranian officials to place a moratorium on capital punishment.

Iranian officials objected to the resolution and have called such moves a direct interference in Iran's internal policies. The Iranian foreign minister, Mr. Zarif, in delivering a speech at the Iranian parliament, mentioned that the EU holds neither the position nor the moral authority for issuing such a resolution against the country. Iran's Speaker of Parliament also called the passing of the resolution politically motivated while the foreign ministry's spokesperson described it as unfounded and un- acceptable. The resolution and the resulting comments by Iranian officials came about despite the fact that Iran is currently engaged in negotiations with three European countries (Britain, France and Germany) as part of the P5+1, represented by the EU's top diplomat, Ms. Catherine Ashton regarding its nuclear programme.

Moreover, following the nomination of Mr. Hamid Aboutalebi as Iran's ambassador to the United Nations, the White House stated that the United States would not be granting a visa to the career diplomat due to Mr. Aboutalebi's alleged role in the US Embassy takeover in 1979. Mr. Aboutalebi, who had previously served as Iran's ambassador to Australia, Belgium, Italy and the European Union, elaborated that he had no role in the embassy takeover and hostage taking, and simply acted as a translator afterwards.

Iran's Deputy Foreign Minister, Abbas Araghchi, stated that regardless of the US's refusal to grant an entry visa to Mr. Aboutalebi, Iran will stick to its choice as representative for the country at the United Nations. Discussions followed this decision by the United States, as to whether the host country for the United Nations, has the right to refuse entry to the member state's choice of representative. Iranian Member of Parliament, Mr. Hossein Naqavi Hosseini, stated that it is the host country's obligation to issue visas for representative at the UN in accordance to an agreement signed between the US and the world body in 1947.

The US congress, however, passed a law that would grant the government the authority to reject visas to UN diplomats if they are suspected of links to terrorism, espionage or perceived national security threats. The White House further stated that it would stick to its decision of refusing entry to Mr. Aboutalebi.

Iran has taken the case to the UN's committee on Relations with the Host Country for review as it believes the United States has breached its obligations as host to the United Nations.

It remains to be seen how this diplomatic row will develop, however, as Iran and the United States continue to be seriously engaged in negotiations that are meant to resolve issues regarding Iran's nuclear programme. These have the potential for the removal of all related sanctions which have been placed on Iran in case of an agreement.

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Publication:Iran Investment Monthly
Geographic Code:7IRAN
Date:May 19, 2014
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