Rooyesh

Iran is examining a proposal to knock three zeros off its national currency to increase economic confidence and reduce the number of banknotes, the central bank governor said on Tuesday. However new central bank chief Tahmasb Mazaheri said the suggested revaluation would need to be carefully studied before it could be implemented. “This is at the suggestion phase,” Mazaheri said, according to the IRNA news agency.

“In carrying out the preliminary studies we have to accurately evaluate the uses of this work and necessary measures taken for compensating any losses,” he added. Iran’s economy has been hit by considerable inflation over the past 20 years, meaning that 10,000 rials (the main currency unit) is now worth less than one dollar. The exchange rate of the rial to the dollar has soared from 70 rials to the dollar at the time of the Islamic revolution in 1979 to more than 9,300 rials today. Paying for more expensive goods and services in Iran can thus involve handing over unwieldy bundles of cash. Every Iranian citizen holds at least 114 banknotes at one time, compared with 10 to 12 for a European, figures show. Iran’s neighbour Turkey, which has recovered from a major economic crisis in recent years, in 2005 lopped six zeros off its national currency to create New Turkish Lira and facilitate cash transactions.

The proposal came from lawmaker and member of parliament’s economy commission, Gholam Reza Mesbahi Moghaddam, who said “practical and psychological” problems had been created by the fall in value of the Iranian currency. IRNA said that President Mahmoud Ahmadinejad had told the central bank last week to “work thoroughly” on the issue. “The deletion of three zeros from the national money is a method which could be useful, but first the ground should be prepared and the people need to be told why this is being done,” said Mazaheri. Ahmadinejad has been criticised by economists for stoking Iran’s double figure inflation himself by ploughing money from high oil revenues into infrastructure projects and causing a a spike in money supply growth.

Source: AFP

The White House did not anticipate Iran as a rival in Iraq. Indeed, the ouster of Saddam Hussein was initially seen as a potential spur for change in Iran, too. Today, however, even critics of U.S. policy agree with the assessments of Petraeus and Ambassador Ryan C. Crocker that Washington and Tehran are vying for influence in Iraq and the wider region.

“On Iran’s activities, they are probably right. If anything, we may be seeing only the tip of the iceberg and the problem,” said Bruce Riedel, a former senior CIA, National Security Council and Pentagon official who opposed the war and the troop buildup. “What is striking about what they said today, comparing U.S.-Iran talks with five years ago on Afghanistan, is that we’re dealing with an Iranian government that feels the wind is behind it and America’s moment in the Middle East is receding — and Iran wants to give us a firm push from behind as we depart so we will never, ever think about intervening on the ground in the Gulf again, and certainly not into Iran,” Riedel said.

The Bush administration’s decision to hold the first formal bilateral talks with Iran in almost three decades has not helped. In contrast with Iran’s cooperation on the transition after the Taliban’s ouster in 2001, the three sessions held in Baghdad between Crocker and his Iranian counterpart have been a flop. Iran’s arms shipments and meddling have only increased, say Arab and European sources. Yet Petraeus’s description is too simplistic, said Ray Takeyh of the Council on Foreign Relations. “It’s not the Iranians who want to fight against the Iraqi state. They’re probably happy with the Shia domination of the Iraqi state,” he said. “These [Iraqi Shiite] groups are also not looking to be Iranian proxies. . . . It’s much more a give-and-take.”

By:  Robin Wright, The Washington Post