With a new round of negotiations beginning next week between the West and Iran, how likely is it that these will see results, asks Amani Maged Negotiations between Iran and the West over the Iranian nuclear programme have thus far not yielded results that are satisfying to both parties, with each exerting tremendous pressure on the other to extract the maximum possible amount of concessions. This process may well continue in the new round of talks that are set to begin next week. Iran, for its part, has long tried to take advantage of global power balances, suggesting that next week's talks be moved from their original venue in Vienna at the headquarters of the International Atomic Energy Agency (IAEA) to Turkey in order to reinforce the significance of Turkey as a strategic partner in the talks. Iran's response to US and Israeli deliberations about a possible military strike on Iran has also been vociferous, and its statement that its nuclear programme will not be on the agenda of next week's meetings is typical. Tehran has long been fond of issuing fiery statements, while in fact adopting a strategy of "weaving the carpet" -- in other words, wasting time. The West, on the other hand, started to put renewed pressure on Iran four months ago by announcing the beginning of a fourth round of economic sanctions against the country that were widely believed would push Tehran to the negotiating table and force it to make concessions. Regardless of official statements emanating from Tehran that have shrugged off the effects of the sanctions, it is clear that the Iranian economy has felt their effects in significant ways. Observers assert that the economic situation in Iran has grown from bad to worse, pointing to mounting unemployment, the rising cost of living and soaring real-estate prices. There have been other concrete signs of the impact of three decades of sanctions against the country, one of them in the shape of the country's petrol crisis. Iran imports 40 percent of its petrol needs, and it has been forced to reduce subsidies on petrol that cost the government some $100 billion a year, according to official figures. Iranian banks also have nearly $40 billion in delinquent loans, and the Iranian government is encumbered by a $60 billion debt. As a result, Iranian banks have begun to refuse credit facilities to Iranian firms, which in turn have not been able to purchase the raw materials and equipment they need. The banks now fear that even the loans they have given to seemingly healthy firms may eventually become delinquent. The Iranian government has taken measures to offset the crunch, the most significant of which has been an austerity programme aimed at saving around $500 million and including the abolition of various subsidies, in spite of the social and political risks. Although it has been reported that the government intends to open bank accounts for some 36 million people in which it will deposit money to compensate for the lifting of subsidies on gas, wheat and rice, some Iranian sources expect that the compensation will not exceed $17 and that this will not be enough to offset popular discontent. Another step the Iranian government has taken to alleviate the effects of the sanctions is to move a large chunk of its assets abroad back home and to turn 15 percent of its hard currency reserves into gold. It has invested some $75 billion in domestic projects and stockpiled 900 million tons of essential goods. In the opinion of some analysts Iran has also been clever in its management of its hard- currency assets. While India and China have converted only 1.7 per cent of their hard-currency reserves into gold, when Iran made its conversions the price of gold was $695 an ounce. This has since risen to $1,230 an ounce, adding billions to the country's reserves. According to one Iranian economist, Iranian gold reserves could see the country through the next ten years, citing IMF figures confirming that Iran has foreign currency reserves of $100 billion. In spite of the closer economic ties between Iran and countries such as China and Russia, some European countries have also felt the impact of UN Security Council sanctions on Iran. However, the country that has felt them the most is the UAE, commercial ties between Iran and the UAE now being over half a century old. Some 60 years ago, Iranian merchants settled in Dubai and established strong trade relations there and with the Emirates as a whole. There are now more than 400,000 Iranian residents in the UAE, making them the second-largest Iranian community outside Iran. The volume of trade between the two countries is huge, but it has been hard hit by the sanctions. Over the past two years, Iranian-UAE trade has dwindled, taking an especially severe plunge over the past two months. UAE banks have severed relations with 17 Iranian banks on the US blacklist, including the Iran Export Bank and the Melli Bank of Iran, and the UAE Central Bank has closed 40 accounts belonging to Iranian companies and individuals. UAE insurance firms now refuse to offer coverage for commercial shipments destined for Iran. Experts maintain that in taking these measures, the UAE is complying with instructions from the Security Council, adding that their combined effect has been to reduce bilateral trade between the UAE and Iran by more than 50 percent. It would seem that western pressures on Tehran and on countries with close economic ties to Tehran have paved the way to the negotiating table. However, it remains to be seen how smoothly the talks will proceed. What will be more bearable: the sanctions or the threat of war?
