Israel is seeking a large increase in annual military assistance from the United States and has begun preliminary talks with the Obama administration on a 10-year financial package that would provide up to $45 billion.
During unofficial talks in recent months by working-level bilateral groups, Israel has asked the US to increase its annual military assistance by 50 percent to an average of $4.5 billion a year over the 2018-2028 period, Defense News reported, citing an Israeli security source.
Under the existing agreement that was signed in 2007 and expires in 2017, annual military assistance to Israel grew to about $3 billion a year. That deal was negotiated during the George W. Bush administration.
US President Barack Obama agreed in principle with Israeli Prime Minister Benjamin Netanyahu to increase the follow-on aid package to between $4.2 billion and $4.5 billion, the report said.
The money is separate from the nearly $500 million in annual US funding for Israel’s missile system programs in recent years. It is also on top of the US war-fighting material held in Israel, which is valued at $1.2 billion.
Last week, the US House of Representatives Appropriations’ Defense subcommittee drafted the 2016 defense bill which included $487.5 million in funding for various US-Israel active weapons programs.
US annual aid to Israel has held steady despite cuts to a wide range of domestic and military programs in the United States, including reducing the size of the US Army to its lowest level since before World War Two.
Russia won’t try and get its ill-fated Mistral helicopter carriers from France, a Russian official has announced. Moscow and Paris are set to discuss damages to be paid by France for welching on the deal.
“Russia won’t be taking them [the Mistral vessels]. That’s a fact. There’s just a single discussion underway at the moment – on the amount of money that should be returned to Russia,” Oleg Bochkarev, a deputy chairman of the Russian governmental Military-Industrial Commission, is cited as saying by RBC.
The negotiations have been “transferred into the commercial field” and “major efforts are being made today” for Russia to receive damages, Bochkarev told RIA Novosti.
France reportedly offered €748 million as compensation, but Russia turned down the proposal, calling it “laughable.”
The official also said that Russia would build its own helicopter carriers, in place of the Mistral warships, which Paris refused to supply Moscow.
“We have such vessels planned, they’re on the drawing board,” Bochkarev stressed, adding that they will be of a different class to the French-built ships as “there’s no point copying the Mistrals.”
Russia and France signed a €1.12 billion contract to build two Mistral class amphibious ships in 2011.
Under the deal, Russia was supposed to receive the first of the two Mistral-class helicopter carriers, the Vladivostok, in October 2014 and the second, the Sevastopol, in 2015. But the mood in Paris went through a sea change.
In mid-2014, the French side postponed delivery indefinitely due to pressure from the US and the EU, which have imposed a set of sanctions against Moscow over the accession of Crimea and Russia’s alleged involvement in the Ukrainian crisis.
In late April, French President Francois Hollande acknowledged that Russia should get a refund if it doesn’t receive the Mistral ships.
Earlier this month, an article in the Le Point weekly magazine said the French government could end up having to pay “between €2 billion and €5 billion,” if it doesn’t fulfill its contractual obligations with Russia.
The French Navy repeatedly stated that it doesn’t need the Mistrals as they are built according to Russian standards.
Reports have emerged that the cheapest solution for France would be to scuttle the two newly-built ships as maintaining them costs an estimated €2 to €5 million every month.
Russian national security advisor Nikolai Patrushev has alleged that Western countries have used capital outflows from BRICS countries as a pressure tactic.
India and Brazil, among the BRICS countries, are most vulnerable to capital outflows as they rely heavily on external funding.
Western countries have pulled out more than $3.5 trillion over the last 10 years and $1.5 trillion from BRICS countries over the last three years as a mechanism to pressure the group, Russian Security Council Secretary Nikolai Patrushev said Tuesday.
“International financial institutions are being used by the West more and more often as an instrument of pressure. Over the last 10 years, the total capital outflow from the BRICS economies has reached $3.5 trillion, and more than half of that total left over the last three years,” Patrushev said during a BRICS security meeting in Moscow.
Patrushev added “the creation of BRICS development bank is an important step in ensuring economic security of the BRICS countries.”
India’s Central Bank Governor Raghuram Rajan, had also said earlier that India needs to build a “bullet-proof national balance sheet” to deal with the fallout on the economy from outflow of capital.
Under pressure from the U.S. and agrochemical industry lobbyists and amid ongoing negotiations for a controversial trade deal, the European Union dropped planned rules that could have led to the banning of 31 pesticides containing hazardous chemicals, a new investigative report has revealed.
The probe, led by the Brussels-based research and watchdog group Corporate Europe Observatory (CEO) and French journalist Stephane Horel, exposes how corporate lobby groups like the American Chemistry Council, CropLife America, and the American Chambers of Commerce, mobilized to stop the EU from taking action on hormone (endocrine) disrupting chemicals (EDCs)—known to have significant health and environmental impacts.
“Hundreds of documents … show unambiguously how science is being manipulated to defend vested interests, manufacture doubt and delay a pioneering regulation.”
—Nina Holland, Corporate Europe Observatory
According to the report—titled A Toxic Affair: How the Chemical Lobby Blocked Action on Hormone Disrupting Chemicals (pdf)—the examination of evidence “sheds light on how corporations and their lobby groups have used numerous tactics from the corporate lobbying playbook: scaremongering, evidence-discrediting, and delaying tactics as well as the ongoing [TransAtlantic Trade and Investment Partnership, or TTIP] negotiations as a leverage.”
Specifically, the Guardian reports: “Draft EU criteria could have banned 31 pesticides containing endocrine disrupting chemicals (EDCs). But these were dumped amid fears of a trade backlash stoked by an aggressive US lobby push.”
The newspaper adds:
On the morning of 2 July 2013, a high-level delegation from the US Mission to Europe and the American Chambers of Commerce (AmCham) visited EU trade officials to insist that the bloc drop its planned criteria for identifying EDCs in favour of a new impact study. By the end of the day, the EU had done so.
The TTIP is a corporate-friendly trade deal, currently being negotiated between the U.S. and the European Union, that is already opposed by environmental, food safety, and labor groups for its lack of transparency, corporate concessions, and negative implications for people and the planet.
Common Dreams has previously reported on efforts by pesticide lobby groups to use ongoing trade negotiations to align regulatory standards by lowering them to U.S. levels rather than increasing them to the stronger safeguards in the E.U.
The new revelations only add fuel to the fire.
“This is yet further evidence that the European Commission is more than willing to trade off, weaken, or delay much needed regulation and protections for the sake of completing this TTIP trade deal,” Samuel Lowe, of Friends of the Earth, told The Independent.
“This investigation tells the story of a major ongoing lobbying battle,” added Nina Holland, CEO campaigner and co-author of the Toxic Affair report. “Hundreds of documents released by the European Commission following freedom of information requests show unambiguously how science is being manipulated to defend vested interests, manufacture doubt and delay a pioneering regulation.”
Greek Defense Minister Panos Kammenos said that the United States attempted to encourage Greece to support a new round of Russian sanctions but Athens still enjoys sharing religious and economic bonds with its “friend” and “ally,” Moscow.
After his meeting with US Under Secretary of Defense for Policy (USDP) Christine Wormuth on Wednesday, Kammenos told reporters: “I was asked to extend the sanctions, particularly in connection with Crimea. I explained [to Wormuth] that the Ukrainian issue was very sensitive for Greece as some 300,000 Greeks live in Mariupol and its neighborhood, and these people feel safe near the [Russian] Orthodox Church.” He, also, added that Greece has already lost more than €4 billion due to the Russian sanctions.
Greece’s Defense Minister has often stated in the near past that his country continues to preserve strong ties with Russia, mainly in the sector of defense contacts. In April, Kammenos revealed to Russian news agency Sputnik that Greece plans to continue military-technical collaboration with Russia while he shared Greece’s desire to settle new agreements, if the EU sanctions against Russia end soon.
Greek Reporter, May 20, 2015
Greek Defense Minister Panos Kammenos was snubbed by his U.S. counterpart, Ashton Carter, and Deputy Secretary of Defense Robert Work on his visit to the United States. The U.S. Defense Secretary cancelled the meeting over the weekend, claiming he has a busy schedule.
Kammenos will go to the Pentagon to meet with Under Secretary of Defense for Policy Christine Wormuth. He will also meet with Victoria Nuland, Assistant Secretary of State for European and Eurasian Affairs at the United States Department of State. Reportedly, Greek diplomats made efforts to upgrade the Greek Defense Minister’s contacts without success.
Kammenos will also have lunch with members of the U.S. House of Representatives, and meet with the Chairman of the House’s Armed Services Committee Mac Thornberry as well as Representative Frank Pallone and Senator Jack Reed.
Finally, the Greek Defense Minister will visit Lockheed Martin to discuss a 500 million dollar contract to upgrade five military aircraft.
According to analysts, the U.S. government is displeased with Greece’s new law that theoretically releases convicted terrorist Savvas Xeros. The U.S. Ambassador to Greece, David Pearce, had stated that if Xeros — who is responsible for the assassination of U.S. diplomats — is released from prison, that would be an unfriendly act toward the U.S.
Furthermore, Greece’s flirt with Russia — initiated partly by Kammenos — and certain statements made by the Defense Minister regarding Greece joining the BRICS bank have irked U.S. officials.
Analysts say that Greek-U.S. relations are at the worst point in recent years. Especially at a time when Greece is in the middle of harsh negotiations over its debt and needs all the support it can get.
I recently returned from a six-week trip to Iran. While the primary purpose of my trip was to visit family and friends, I also made some general enquiries into the state of the country’s stagnant economy. These included informal discussions with various strata of economic agents or market players: manufacturers, bankers, shopkeepers, miners, farmers, livestock breeders, workers, teachers, and more.
Sadly, most of these economic actors painted pictures of pessimism and distrust of the country’s economic conditions. The economy is mired in a protracted stagflation, with no government plan or macroeconomic policy for recovery. While the Rouhani administration boasts of having contained or slowed down the inflation, the Iranian people do not cherish that tempering of inflation as it has come about at the expense of deepened recession; that is, at the expense of heightened unemployment and weakened purchasing power. As a retired school teacher, who now works as a taxi driver, put it, lowering inflation by worsening recession is no cause for celebration (paraphrased).
And what is the major culprit behind the depressing recession? The common answer of the overwhelming majority of the economic actors I spoke with was, in a nutshell, uncertainty—uncertainty of the constantly shifting outcome of the unending nuclear negotiations. There is a clear consensus that while onerous economic sanctions against Iran are obviously damaging, the perilous effects of the protracted and uncertain outcome of the negotiations are even more devastating. Equally devastating is the current administration’s neoliberal policies of austerity economics, which have further aggravated the recession by cutting social/public spending while not offering any industrial or developmental program or planning.
Market uncertainty, combined with a regrettable lack of protection by the government of the nation’s infant industries against the more mature industries abroad, has led to an unwillingness of the country’s entrepreneurs to invest in long-term production projects. By the same token, the major bulk of the nation’s finance capital is devoted to short-term, parasitically high-yielding but unproductive investments such as buying and selling of real estate.
The largely unregulated financial sector has led to a mushrooming growth of shadow banks—known as moasesat-e etebari, or credit institutions. While there are a handful of conventional or bona fide commercial banks, the number of dubious moasesat-e etebari has in recent years skyrocketed to over 900!
There is undeniable evidence that, using the influence of corrupt and rent-seeking authorities, many of these shadow banks borrowed huge sums of money from government banks at below-market interest rates, often under the pretext of wanting to invest in job-creating or manufacturing enterprises, but in fact used the monies thus obtained for speculative purposes. In other words, most of these shadow banks came to existence not through the investment of monies owned by their founders but through that of public money!
Worse yet, many of the oligarchic borrowers and/or founders of these shadow banks now refuse to pay the monies they borrowed! And the government does not or cannot do anything about it because there is an incestuous business relationship between the two sides. Parasitic growth of these speculative shadow banks has reached unsustainably dangerous levels of an imminent implosion of the financial sector—similar to what happened in the US nearly seven years ago, which has since been transmitted to a number of European countries. It is regrettable that President Rouhani and his economic team do not seem to have learned any lessons from the disastrous experiences of the unregulated financial markets in many of the core capitalist countries.
The US and its allies are obviously aware of the fact that continued uncertainty resulting from prolonged nuclear negotiations is wreaking havoc on the Iranian economy. Perhaps this helps explain why they intend to extend the negotiations for a long time: 10, 15 or even 25 years. There are speculations that this policy is designed to help bring about regime change from within, that is, by instigating a social upheaval through an economic collapse.
Not only has the Rouhani administration thus thrown the private sector into confusion and uncertainty, it has also largely abandoned traditional public sector responsibilities in terms of macroeconomic guidance and infrastructural developments. The administration’s rudderless economic outlook is reflected (among other places) in its latest (1394, Iranian calendar) budget priorities.
“The Budget Bill, which has been produced by the newly‑revived Organization of Management and Planning, offers no explicit conceptual framework within which the budget is formulated, nor is it based on any “planning” for the economy. . . . It also does not begin with a discussion of the nation’s economic development pre-requisites nor give any indication of its trajectories.
“The key concept behind the budget is a twisted “neoliberal” model. . . . The proponents of the neoliberal economic policy support extensive economic liberalization, free trade, and reductions in government spending in order to enhance the role of the free market, individual and private sectors in the economy” .
The priorities of the budget bill are so warped and irrational that they tend to harm both the supply and demand sides of the economy. On the supply-side,
“[T]he budget neglects the productive sectors, infrastructure and the environment. Development funds have been increased by a nominal 16 percent; in real terms that will mean a reduction. Agriculture receives an increase, but its share is minimal relative to the sector’s need. Manufacturing remains cash-hungry given the tight-money policy and a 22 percent interest rate. R&D’s share in the GNP remains at about 0.06 percent and industry-driven R&D is almost non‑existent. Infrastructure, including transportation and urban development, is equally under-budgeted” .
On the demand side, except for health care spending, real or inflation-adjusted funding for most social programs has been cut. Subsidies for housing, education, food, and fuel have been reduced when the inflation rate is accounted for. The budget also fails to devote funds for the repayment of the government’s growing debt to the social security and retirement funds.
“The preference for muddling through and preserving the status quo of zero growth is evident in the uses of the budget. Thus, while the supply side of the economy is neglected, the demand side is depressed through the use of contractionary fiscal and monetary policies. The budget also disregards growth-friendly educational, industrial and trade policies while it only gives lip service to construction and infrastructure. Most significantly, the sanctions-crippled Iranian economy needs serious popular mobilization and attention to social justice, but the elite-centered budget is equally oblivious to these requirements” .
Since the public sector has traditionally played a major role in the building of the country’s industrialization/developmental infrastructures, the Rouhani administration’s shirking that responsibility, that is, of drastically reducing public spending on infrastructure building, has significantly contributed to the deepening of economic recession and/or the rising of unemployment.
While in light of the ongoing economic recession, this curtailment of public/social spending is certainly irrational from an objective macroeconomic standpoint (as it would aggravate the recession), it is quite rational from the standpoint of the neoliberal austerity economics, to which Mr. Rouhani and most of his economic team seem to subscribe. According to neoliberal school of economic thought, a recession must be created in order to (a) fight inflation, and (b) create conditions (in the fashion of an economic shock therapy) for a subsequent economic recovery. Such conditions would include lowering labor cost by heightening unemployment, expanding deregulation of business activities, shrinking the public sector in order to make more room for the private sector, diluting environmental and workplace safety standards, expanding privatization of public property and services, including of education and health services, and the like.
This neoliberal/austerity/supply-side prescription has since the late 1970s and early 1980s replaced the Keynesian/New Deal/Social-Democratic prescription of the previous period of nearly three decades (from mid-1940s to mid-1970s), which often relied on public-sector spending in pursuit of economic recovery. The historic switch from the New Deal to neoliberal economic paradigm took place largely in the 1980s—under the formal stewardship of President Ronald Reagan in the United States and Prime Minister Margaret Thatcher in Great Britain.
The supply-side doctrine, epitomizing the dominance of economic policy-making by big business, has since the 1980s been pursued vigorously in country after country, including now in many European countries. Having thus become the dominant economic strategy in the core capitalist countries, with devastating consequences for the overwhelming majority of the people (the so-called 99%), austerity economics has now arrived in a number of the less-developed countries, including Iran—a development which catapulted Mr. Rouhani to the seat of the country’s presidency as its messenger.
President Rouhani’s subscription to neoliberal economic doctrine is evident from his many speeches and statements, as well as from his book, National Security and Economic System of Iran [امنیت ملّی و نظام اقتصادی ایران]. In his book, Mr. Rouhani deplores Iran’s “very oppressive” labor laws to business. He argues that the minimum wage must be slashed and restrictions on the laying off of workers eliminated if Iran’s “owners of capital” are to have the “freedom” to create prosperity. “One of the main challenges that employers and our factories face,” he writes, “is the existence of labor unions. Workers should be more pliant toward the demands of job-creators” .
Not surprisingly, Mr. Rouhani’s economic outlook is essentially devoid of any specific development plan or industrialization project as he and most of his economic advisors subscribe to an economic doctrine that frowns upon government intervention in economic affairs—unless such interventions help “pave the way” for unfettered market operations. According to this doctrine, solutions to economic stagnation, poverty and under-development lie in unhindered market mechanism and unreserved integration into world capitalist system. Recessions, joblessness and economic hardship in many less-developed countries are not so much due to economic mismanagement or the nature of global capitalism as they are because of government intervention and/or exclusion from world capitalist markets.
This explains why Mr. Rouhani has made the solution to Iran’s economic problems contingent upon a political détente or friendly relations with the United States and its allies. The administration’s perception (or delusion) that the mere establishment of relations with the U.S. would serve as a panacea to Iran’s economic woes has essentially made Iran’s economy hostage to the unforeseeable outcome of its negotiations with the United State and, therefore, hostage to the endless, and increasingly futile, nuclear negotiations.
This also explains Mr. Rouhani’s and his nuclear negotiators’ dilemma: they have essentially trapped themselves into an illusion, the illusion that a combination of charm offensives, smiley faces and diplomatic niceties would suffice to change imperialist policies toward Iran. In reality, however, the U.S. policy toward Iran (or any other country, for that matter) is based on an agenda—an imperialistic agenda that consists of a series of demands and expectations, not on diplomatic decorum, or the type of language its leaders use.
One would expect that the market uncertainty created by nuclear negotiations may have led Iran’s producers of industrial and agricultural products to be eagerly looking forward to a breakthrough in the negotiations and a lifting of the brutal sanctions against their economy. My discussions with a number of manufacturers and farmers revealed, however, that while they certainly suffer from the oppressive economic sanctions, they are also concerned that, in light of President Rouhani’s neoliberal free trade policies, a relief from sanctions that may result from such a breakthrough may, in fact, end up driving them out of business by further opening the domestic market to an unbridled deluge of foreign products.
For example, Mahmoud Sedaqat, vice president of the Association of UPVC Window & Door Profiles Manufacturers, bitterly complained that while domestic production capacity of this petrochemical is more than twice as much as domestic needs, the government recently reduced import tariffs for this product from 30% to 15%, thereby paving the way for the substitution of imports for domestic products. Sedaqat further pointed out that government’s careless trade policy and a lack of protection for domestic producers has led to an atmosphere of confusion and uncertainty among domestic producers, which is contributing to further aggravation of the ongoing economic stagnation .
Mohammed Reza A’le Sara, a representative of domestic producers of automobile tires, likewise complained about a glaring lack of protection of his industry against the unrestrained imports of similar, indeed substitutable, products from abroad. A’le Sara also pointed out that, despite the comparable quality of domestically-produced tires, 50% of domestic demand is currently supplied by imports. A careful or calculated government support for domestic producers, he further argued, could gradually but certainly make Iran self-sufficient in this industry .
Mohammed Serfi, an economics analyst, recently pointed out that the degree of import-substitution in Iran could be as high as 70%; meaning that as much as 70% of Iran’s imports could be substituted by domestically produced goods. Yet, due to the Rouhani administration’s warped open-door/free-trade policy, the crucially important industrialization strategy of import-substitution—pursued by all the currently more developed countries at earlier stages of their development—is ignored. .
Complaining about the administration’s lack of an economic strategy, Gholam-Hosein Shafe-ei, Chairman of Iran’s Chamber of Commerce, also argued that while relief from economic sanctions is obviously necessary it is not sufficient; perhaps more importantly are government-championed macroeconomic objectives and carefully-guided ways or plans to achieve those objectives. In the absence of clearly defined economic objectives and the concomitant strategies of import-substitution and export-promotion, Shafe-ei reasoned, Iran could become a heaven for foreign producers while many of domestic producers would be driven out of business.
Under President Rouhani, farmers have suffered even more than manufacturers. Since he was elected nearly two years ago, his administration has raised the energy/utilities bill by anywhere between 50% and 80%. This has drastically heightened the cost of agricultural production, as it has of industrial production. Additionally, the government has in recent years changed both the provision and distribution structure of fertilizers, increasingly shifting those responsibilities from the public to the private sector. This has further added to the cost of production. The government has also failed to establish a meaningful policy of crop insurance or financial assistance in the face of various natural disasters such as floods, drought and other climate fluctuations. Combined with the administration’s misguided free trade policy, which has greatly facilitated the import of many agricultural products, these ill-advised policies have effectively driven many farmers out of business, thereby plunging the agricultural sector into a deep recession.
Prior to the Rouhani administration’s pursuit of neoliberal economic policies, Iran viewed economic sanctions as an (unsolicited) opportunity to become self-reliant: to rely on domestic talents and resources in order to become self-sufficient by producing as many of the consumer goods and other industrial products as possible. And it did, indeed, make considerable progress in scientific research, technological know-how and manufacturing industries.
For example, prior to the recent rise of neoliberal economic policies, which have greatly undermined Iran’s manufacturing and agricultural capabilities, Iran had become self-sufficient in producing many of its industrial products such as home and electric appliances (television sets, washers and dryers, refrigerators, washing machines, and the like), textiles, leather products, pharmaceuticals, agricultural products, processed food, and beverage products (including refined sugar and vegetable oil). The country had also made considerable progress in manufacturing steel, copper products, paper, rubber products, telecommunications equipment, cement, and industrial machinery.
None of the oppressive economic sanctions in retaliation for the 1979 revolution deterred Iran from forging ahead with its economic development and industrialization plans. The Rouhani administration’s misguided and haphazard switch from that tradition of inward-looking strategy of self-relying economic development to the ill-conceived outward-looking strategy has thrown tens of thousands of small and medium-sized industrial and agricultural producers into a market atmosphere of confusion and uncertainty. As has already been pointed out, the uncertainty stems from two major sources: (1) a glaring lack of protection of domestic producers against the more competitive foreign producers, and (2) a regrettable linkage or tying of any macroeconomic policy to the unending, unpredictable and, ultimately, futile results of the nuclear negotiations.
The inordinately high priority given to the dubious nuclear negotiations, which has sadly taken most of the Rouhani administration’s time and energy at the expense of everything else, has place the urgently needed macroeconomic policies on hold. The sooner such unduly delayed policies are delinked from the fraudulent imperialist game of nuclear negotiations the better.
More fundamentally, the sooner the nuclear talks are seen (or acknowledged) for what they really are—a pretext or a ploy on the part of the US and its allies, both inside and outside Iran, to adapt the country into another “client state”—and dealt with accordingly, the better. So far, Iran’s negotiating team has successfully concealed many of the gratuitous concessions they have made during the negotiations—essentially suspending the nation’s hard-earned nuclear science and technology while having gained no meaningful relief from sanctions—from the Iranian people. Whether they will succeed in continuing to sell a fraudulent deal to the Iranian people, or whether they may face a harsh backlash when the people learn of the deceitful nature or substance of the deal remains to be seen.
Ismael Hossein-zadeh is Professor Emeritus of Economics (Drake University). He is the author of Beyond Mainstream Explanations of the Financial Crisis (Routledge 2014), The Political Economy of U.S. Militarism (Palgrave–Macmillan 2007), and the Soviet Non-capitalist Development: The Case of Nasser’s Egypt (Praeger Publishers 1989). He is also a contributor to Hopeless: Barack Obama and the Politics of Illusion.
 Hooshang Amirahmadi, “Iran’s Neoliberal Austerity-Security Budget”
 As excerpted by Keith Jones, “Iranian president declares country ‘open for business’”
 Mahmood Sedaqat, “کاهش تعرفه پروفیل «یوپیویسی» ضربه دولت به تولید داخلی است,” Kayhan, Mordad 25, 1393 (August 16, 2014).
. Interview with A’le Sara, in Farsi: واردات بیش از 50 درصد لاستیک علیرغم توان تولید داخلی
 Mohammed Serfi, “Gentlemen, the Party is Over,” in Farsi: آقایان! ضیافت تمام شد!(یادداشت روز)
Exxon Mobil is reported to have stationed lobbyists to push the envelope on Iran sanctions with the US government as Western companies are jostling for access to the Middle East country’s massive oil and gas fields.
According to Bloomberg, the Texas-based oil company has hired a lobbying firm founded by former Republican Senator Don Nickles to press the US government on lifting sanctions against Tehran.
Western companies are eager to work on Iranian fields because they are among the largest and cheapest to develop, it quoted on economist as saying.
“Given sanctions and the dilapidation of oilfields over time, it looks like it’d be a lot of work” for foreign companies, Allen Good, a Chicago-based analyst at Morningstar Inc. told Bloomberg.
“But unlike Iraq, you’d don’t have a civil war going on so it’d be an easier path to growing production. You could get a pretty good bump pretty quickly,” he said.
Western companies are holding their breath as nuclear negotiations between Iran and the US and other members of the P5+1 group are heading to the decisive round.
Expectations of a final agreement and consequent removal of sanctions have put energy entities on the watch but those hopes are being sapped by reports that the West was hunkering down for “excessive demands”.
The US government reasserted its obdurate position on Thursday by announcing sanctions on two Arab airlines for selling nine used commercial aircraft to Iran.
While the direction of the talks remains unclear, foreign companies are vying to forge initial links with Iran.
On Thursday, CEO of Italy’s Eni SpA Claudio Descalzi said he traveled to Tehran two weeks ago. Speaking to La Repubblica, Descalzi said Iran could “start attracting investment” from foreign companies again if a nuclear deal was sealed.
Eni and other major European energy giants left Iran after the US intensified sanctions on the country.
American companies are banned from any business with Iran under a US law which has effectively been in place since the 1979 Islamic Revolution.
On Tuesday, President Barack Obama renewed unilateral US restrictions on purchases of oil and oil products from Iran.
Exxon business in Iran goes back to the period before the revolution when the shah was a close ally of the United States.
Earlier this week, an Iranian oil ministry official said the country’s oil and gas is open to American investment but US companies have to tie up with Iranian companies under certain terms.
“From the government’s standpoint, there is no limitation for oil investment by the Americans in Iran,” deputy Minister of Petroleum Amir Hossein Zamaninia said.
The official said European and American companies are showing strong interest for investment in Iran’s oil and gas industries.
“Over the past couple of months, not one or two companies but several American entities have announced readiness to invest and participate in Iran’s oil industry projects if sanctions are annulled.”
Zamaninia said most US companies have proposed to partner with other companies for investments as he spelled out Iran’s conditions.
“The pattern for partnership and investment of American companies in Iran’s oil and gas industry has to be based on the trade package which has been earmarked to the Iranian private sector,” he said.
In a decree, issued by his office, the US president said that “global economic conditions, increased oil production by certain countries, and the level of (oil) spare capacity” had allowed him to take the decision.
Saudi Arabia, a key US ally in the Middle East, has ramped up production leading to a crash in crude prices.
“I determine … that there is a sufficient supply of petroleum and petroleum products from countries other than Iran to permit a significant reduction in the volume of petroleum and petroleum products purchased from Iran by or through foreign financial institutions,” Obama said in his statement.
The statement also referred to a US measure which forbids transactions with Iran.
Under the measure, foreign companies are cut off from the US financial system and face sanctions if they engage in transactions with Iran’s financial institutions.
However, a preliminary agreement reached in Nov. 2013 allows Iran to sell around 1 million barrels per day of crude oil.
The US restrictions fly in the face of that agreement under which no new sanctions should be imposed on the Islamic Republic.
Washington contends the agreement does not include renewal of the previous restrictions.
The US and five other countries are currently discussing a possible final agreement with Iran by the end of June.
Iran says any deal should envisage immediate removal of all sanctions, with the US saying they should be lifted gradually.
The Los Angeles City Council agreed to raise the city’s minimum wage by more than a dollar per hour each year until the amount reaches $15 an hour by 2020, city officials said on Tuesday. The measure would affect the finances of 800,000 people.
Based on a 40-hour workweek, the raise would amount to an additional $48 a week or approximately $2,000 a year before taxes for the next five years. Los Angeles is now the largest city to adopt major a minimum-wage increase, joining three others that have passed similar legislation: Chicago, San Francisco and Seattle. The move also puts pressure on other large urban centers, such as New York, to do the same.
“Make no mistake,” said Councilman Paul Krekorian, the measure’s sponsor, according to the Los Angeles Times. “Today the city of Los Angeles, the second-biggest city in the nation, is leading the nation.”
The measure also ties yearly wage increases to the consumer price index starting in 2022. In Krekorian’s original measure, an amendment was included that would have required employers to grant workers 12 paid days off each year. There was a huge outcry from the business community, however, and the amendment was dropped before Tuesday’s vote. It will be considered again as separate legislation.
The wage increase measure will now go to the city attorney’s office to be drafted as an ordinance, and then back to the City Council for approval later this year, before finally being signed into law by the Mayor. The first increase to go into effect will push the minimum wage from $9 per hour up to $10.50 in July 2016.
The City Council’s 14-1 vote on the measure did not come without inducement. Corporate employers have been reluctant to increase hourly pay rates despite record profits, and have left it largely up to politicians to try to solve the problem of stagnating wages, as the cost of living continues to increase.
The much-publicized efforts of the Service Employees International Union to support fast food workers in their quest for a $15 wage have been effective in raising the bar for wages. As part of the campaign, it publicized how corporations have been relying on state subsidies, such as food stamps and housing support, to supplement their employees’ wages.
Critics, many of them business leaders, say the increase will turn the city into a“wage island,” pushing businesses away into places outside the city limits where they can pay employees less.
“They are asking businesses to foot the bill on a social experiment that they would never do on their own employees,” Stuart Waldman, president of the Valley Industry and Commerce Association trade group, told the New York Times.
“A lot of businesses aren’t going to make it. It’s great that this is an increase for some employees, but the sad truth is that a lot of employees are going to lose their jobs.”