The Business Year

Mahmoud Ahmadinejad

IRAN - Diplomacy

Seeking Universal Peace & Justice

President, Islamic Republic of Iran

Bio

Dr. Mahmoud Ahmadinejad is currently President of Iran.

How do you evaluate the developments that took place under your presidency in Iran? The approach taken to development in the ninth and 10th administrations of Iran has undergone a […]

How do you evaluate the developments that took place under your presidency in Iran?

The approach taken to development in the ninth and 10th administrations of Iran has undergone a fundamental change in the way that justice has gained prominence. The optimal efficiency of industries has also become one of the main components of development. Since 2004, invaluable fundamental measures have been undertaken, both in policymaking and in implementation. The overall efforts made are known as the Economic Overhaul Plan and have helped keep the country on track toward constant growth, despite the sanctions imposed by hegemonic powers and the repercussions of the global economic crisis. This has both qualitatively and quantitatively resulted in improved economic conditions across all walks of life, bridged the gap between the rich and the poor, and brought about more support for the disadvantaged in the country. Within the Economic Overhaul Plan, reforms have been undertaken to improve the way subsidies are provided to the public, the taxation system, and the banking system, as well as customs. Some of these reforms have already been enforced and others are about to come into effect. Despite the fact that most of the major economies in the world have been facing a financial crisis and recession, Iran’s GDP, without taking petroleum into account, has grown at a fixed rate of 5% between 2004 and 2011. In 2011, the economic growth of Iran, without taking petroleum into account, was 5.2%. The income distribution inequality indicators in the urban and rural areas of Iran also bear witness to the fact that in recent years the economy has indeed improved. According to a report released by the Statistical Centre of Iran, the Gini coefficient, which in 2004 was 0.4061 in urban areas and 0.3896 in rural areas, reached 0.3560 in urban areas and 0.3390 in rural areas in 2011. This is the lowest it has been since 1969. The value of non-oil exports, which stood at around $10 billion in 2004, exceeded the $23 billion mark in 2011 and, on average, has seen an annual increase of 27.6%. Imports into the country during the same period rose from $40 billion to $61 billion and grew at approximately 8.2%. In line with policies aimed at boosting the capital markets, the value of the Tehran Stock Exchange (TSE) rose from IR325 trillion in 2004 to IR1,168 trillion in 2011 and, on average, saw an annual growth of 23.3%. Besides the economic growth in various fields and all the attention given to it by the government, we were also very mindful of our responsibility to privatize. Article 44 of the constitution makes it mandatory for the government to sell its affiliated organizations to the private sector. The government has tried its best to implement it. Brilliant achievements were made thanks to the implementation of the article, and the total value of privatizations was IR764 billion in 2004 and has now risen to IR245 trillion. Hence, privatization has become a top priority for the government and has led to a deeper market. In 2004, the revenues from tax collection, without taking petroleum into account, were about IR102 trillion, which rose to over IR259 trillion in 2011 and, on average, have experienced growth of 23% in recent years. The subsidy reform plan is yet another important and effective measure adopted by the government and once it was implemented, the consumption of fuel, as well as water and wheat, went down considerably. All in all, the reduction of fuel, water, and wheat consumption over a period of 15 months prior to 2011 was estimated to be worth $17.2 billion. The estimate is $7.7 billion dollars when the annual growth rate is not taken into account. Also, oil and gas consumption was reduced by 9% and 12%, respectively. Moreover, the consumption of mazut (without taking into consideration power plants), liquid gas, and kerosene, reduced by 40%, 11%, and 10%, respectively. The World Bank’s Human Development Index report has also named Iran one of the top countries when it comes to human resources development, and this was achieved for the first time under my presidency. The Human Development Index is a succinct criterion for human development. In the 2011 report, the Human Development Index for Iran indicates a 0.707 figure, which places Iran 88th in the world and places it higher than countries like Turkey, ranked 92nd, China, ranked 101st, South Africa, ranked 123rd, and India, ranked 134th. Such changes and improvements prove that the government has always enacted a plan when it comes to human resources that has been able to promote Iran’s standing in the world.

In your view, what important opportunities and challenges does Vision 2025 represent?

Achieving a worthy economic, scientific, and technological status in the Southwest Asian region, creating equal opportunities, forging appropriate income distribution, promoting increased per capita income, and providing jobs to everyone are just some of the objectives that the Vision 2025 plan is trying to reach. Considering the knowledge-generation indicators, Iran is way ahead of the objectives set forth by the Vision 2025 plan and has already achieved many of them. In terms of new technologies, including nanotechnology, aerospace-related technology, and the production of recombinant medicine, Iranian researchers have achieved a lot. Economically, we are in good shape in many areas. For example, in terms of GDP according to purchasing power parity (PPP), Iran is considered the second largest economy in the region and the 17th in the world. In addition, when it comes to foreign trade, the growth of the capital markets, the rise in FDI, and the production of industrial and mineral goods and certain agricultural goods, we are now ranked highly. However, in certain areas we need to achieve more; we need to pick up the pace to meet those objectives by 2025. In terms of social justice, we have registered the lowest Gini coefficient since 1347 (1969), which is indicative of the fact that the divide between the rich and the poor has become smaller, and that lower-income families are better off nowadays.

The global economic crisis has left an impact on the government’s budget. What measures has your government taken to support the Iranian economy and domestic development?

I should first remind you that the impact of a financial crisis on an economy is directly related to the degree that the economy is integrated and linked to the global economy. The second point is that an economic crisis affects economies that are reliant on trade and financial exchanges. In the oil-rich countries, a portion of trade and financial exchange is affected by fluctuations in the oil market, and in this way global economic meltdowns may become significant. In this regard, an examination of crude oil prices over the last two years shows that despite some periodical ups and downs, oil prices have steadily gone up. This might be a result of the global crisis and the concerns that dealers may have about the disturbances in the strategic and international gateways of crude oil transportation. In other words, the aforementioned factors have caused an increase in global oil prices over the last two years. Of course, in recent years, the government has been trying its utmost to make the budget invulnerable to oil price fluctuations. In this context, the 2012 budget has been drawn up considering the price of oil at $85 per barrel, which is much lower than the actual oil prices in the market. Also, some of the revenues will go toward developing the non-public sectors through the mechanisms of the National Development Fund of Iran (NDFI). Parallel to this, the government has been keen to increase its revenues coming from tax collection. This has become one of the top priorities. Another strategy is to reduce expenditures. The government has worked to be frugal since the beginning of the current Persian calendar year. The same strategy will be used in preparing the budget in 2013. With regard to the impacts of the financial crisis through international financial interactions, it doesn’t seem that the current crisis will have a significant effect on the Iranian economy. The rise in stock market indices in recent years, which on some occasions coincided with the decline in stock market indices in European countries, bears witness to this.

“Since 2004, invaluable fundamental measures have been undertaken, both in policymaking and in implementation.”

In the second half of June 2012, you travelled to Latin American countries such as Nicaragua, Bolivia, and Venezuela. How are bilateral ties between Iran and South American countries playing a part in boosting the Iranian economy?

Having a constructive and effective interaction with the rest of the world and strengthening economic, political, and cultural relations with the independent countries of the world has always been one of the foremost priorities of the foreign policy of Iran. This has also been emphasized in the Economic Overhaul Plan as well as the fifth Five-Year Development Plan (FYDP). Accordingly, the development of ties with Latin American countries has been very important to us and Iran has been focusing on the commonalities to meet our countries’ needs. Iran and Latin America have a lot to cooperate on. Iran is eager to share its technical engineering capabilities and various experiences in industries such as cement, petrochemicals, housing, energy production, agriculture, the development of infrastructure, machinery, foodstuffs, mines, and so on with those countries, and wants to utilize their experiences and learn from their success stories as well. Latin America enjoys manifold potential and actualized capacities that have caught Iran’s eye, and we want to engage in bilateral and multilateral cooperation with the region. That is why our relations have been steadily on the rise in recent years. Latin American countries are some of the richest in energy resources and minerals, and their total GDP is more than $5 trillion. Chile is the world’s biggest copper producer and Peru is amongst the leading producers of gold and silver in the world. Bolivia has not only huge gas reserves, but also lithium mines. Venezuela is one of the major oil producers in the world. Other countries in that region are rich in minerals. According to the officially released numbers and figures, Iran exported goods worth of $173 million to the American continent and mostly to Latin American countries in 2011. In the same year, imports from the continent reached $772.9 million, which brings the total volume of trade with that part of the world to $900 million. The political developments in Latin America, and especially the developments that have happened since 2002, such as the coming to power of popular governments in many Latin American countries, are critical of injustices at the international level and have come to the attention of Iran. This is another factor in encouraging us to expand our ties with Latin America.

The international trade climate has undergone changes during your presidency. How has your government turned these challenges into opportunities?

Global trade, just like many other economic indicators, has been adversely affected by the global financial crisis, especially in 2009, when it faced a severe decline. The 2009 recession was the biggest plunge global trade has experienced since the Great Depression in 1929. Global trade growth was reduced from 7.75% in 2007 to 3.03% in 2008 and to -10.72% in 2009. This has been almost unprecedented in the history of the global economy. Although the crisis affected developed economies the most, the reduction in their economic growth made the emerging and developing economies lose their export markets and end up with less export revenues. Amidst all this, Iran was one of the countries that was least affected thanks to its own domestic capacity. Aside from the global financial crisis, hostile countries targeted the Iranian economy and have tried to create problems and disturb the commercial and financial system. Of course, the government has been able to remove or at least alleviate such disturbances. In order to overcome the imposed limitations and to turn these threats into opportunities, various initiatives have been launched, such as developing domestic potential to convert raw materials, and especially crude oil, into goods with higher value to be exported, expanding trade relations with neighboring countries and other regions, and developing bartering mechanisms and other alternative methods to do business with others. This way, we have been able to contain negative impacts and even make some significant advances along the way. In recent years, the emerging powers and developing countries have gained larger and larger footholds internationally. Meanwhile, developed economies have been losing their influence accordingly. Therefore, since the role of the emerging economies has been on the rise, Iran has been aiming to approach and develop ties with them. Iran is at the heart of the Middle East, both geographically and culturally. Iran’s cultural, religious, and economic background, in comparison to the other countries in the Middle East, has allowed it to make a significant impact on both regional and world affairs. Iran is known as the bridge between East and West, and ever since ancient times has been featured in the considerations of every major civilization. Being a portal between continents and located on the Persian Gulf and the Strait of Hormuz, which is an important transit point for much of the Middle East’s oil, makes Iran an important country for the West. The most important characteristic of this land is its geographical situation, which gives Iran a significant role as a bridge between continents like Asia and Europe, and also between civilizations. For this reason, transportation routes between continents, including road, seaways, and now airways, historically had to pass through these lands. The Silk Road and other commercial activities that were essential for both the East and the West in ancient times made this country highly significant in the past. In the past century, through improvements in naval transportation and the identification of substantial sources of energy, the Persian Gulf has become an important location for naval powers around the word. And today, through improvements in air transportation and its subsequent increase in importance, Iran’s skies have become an important transit route between the continents. Iran’s geographical position gives it an important role in the Middle Eastern region, which means that it is central to any significant politico-economic considerations about the wider region. In addition, the discovery of vast fossil fuel reserves at the bottom of the Persian Gulf and the countries around it, and the worldwide industrial demand for these resources, means that there is a huge amount of oil tanker traffic passing through the Persian Gulf every day. This makes Iran’s geopolitical and geostrategic position more important, and gives Iran even more leverage in its dealings with other countries in the region. During the Cold War, being a neighbor of the Soviet Union and the Eastern Bloc, as well as holding important oil reserves in the Persian Gulf and the Middle East, made Iran a focus of Western interests. Iran is located on the Persian Gulf and the Strait of Hormuz. The Persian Gulf was an important seaway in the past and it still has its own value. It has estimated reserves of 565 billion barrels of oil, which is equal to 63% of all the world’s known resources of oil, as well as 30.7 trillion cubic meters of natural gas, which equals 28.5% of the world’s total. This gives Iran, without a doubt, the biggest hydrocarbon deposits in the world. It is obvious that this situation is not going to change anytime soon. Another reason for the importance of Iran’s energy reserves is that the West is evolving too slowly to diversify away from oil. Despite numerous oil and gas pipelines crossing the Red Sea, this area is still a vital economic and transportation center for the whole world.

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