IRAN: HUNGARIAN DIPLOMAT SAYS IRAN STILL

C O N F I D E N T I A L SECTION 01 OF 03 ASHGABAT 000625

SIPDIS

STATE FOR NEA/IR AND SCA/CEN

E.O. 12958: DECL: 05/15/2019
TAGS: IR PGOV PHUM PREL TX
SUBJECT: IRAN: HUNGARIAN DIPLOMAT SAYS IRAN STILL
SELF-ASSURED ON THE ECONOMY

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Classified By: Charge Richard Miles, reasons: 1.4(b) and (d).


1. (C) SUMMARY: A visiting Hungarian diplomat from Tehran,
accredited to both Iran and Turkmenistan, shared with us his
latest impressions of both living and working in Iran. These
included his frustration with trying to get an accurate
picture of economic conditions there, as well as trying to
communicate with the government. The Iranian Government is
still misrepresenting the status of the economy to the
public, he said, and provides exaggerated and otherwise
inaccurate figures to back up its optimistic picture of the
state's finances. Notwithstanding the professional
challenges, our interlocutor says that he enjoys living in
Iran, and shared several anecdotes that give a flavor of
daily life there. END SUMMARY.


2. (C) In a recent conversation with Embassy Ashgabat Iran
Watcher, a visiting Hungarian diplomat said the Iranian
Government continues publicly to paint a rosy picture of the
country's economic health, despite contrary indicators
everywhere. Szabolcs Tutto, an Economics and Trade officer
at the Hungarian Embassy in Tehran, said that Iran's leaders
are still "in denial" about the effects of the global
financial crisis on the internal economy, particularly
regarding the huge drop in oil prices after the peak in July

2008. In certain closed fora, he said, some experts admit
that their problems are serious, especially regarding their
ability to continue financing state subsidies given the
current situation.


3. (C) According to Tutto, after the global financial crisis
struck, the Iranian Government stated repeatedly that the
country was immune to its effects, and maintained that that
Iran is "big and developed and has enough oil and gas to
survive." Not long after, however, the Ministry of Economy
and Finance held a symposium to discuss the crisis, inviting
representatives of all government ministries, as well as
foreign diplomats and international organizations. Most of
the presentations were by foreign diplomats, sharing their
country's experience with and response to the crisis. The
Iranian officials, meanwhile, sat quietly and said next to
nothing.


4. (C) Recently, while updating an annual economic report on
Iran for the Hungarian Foreign Ministry, Tutto was amazed by
the lack of information available on the economy: He went to
a number of government websites to locate statistics; the
most recent information available was from 2007. He called
Iran's official economic data "manipulated" and totally
unreliable. For general news on economic and other issues,
Tutto prefers Iran's English-language press to articles
written in Persian: The Persian language, in his view, more
often lends itself to over-elaborate syntax, allowing the
writer to skirt the issue.

THE MFA: VERY UNHELPFUL


5. (C) Tutto has all but given up trying to meet with or
learn anything substantive from the MFA in Tehran: Even when
he manages to get a meeting with officials at the geographic
bureau covering Hungary -- the normal wait time is two to
four weeks after submission of a written request -- his
interlocutors (two studied in Hungary and speak the language
quite well) appear "distant" and are nervous about discussing
anything. Recently, one official had suggested holding a
meeting at the Embassy, and seemed displeased when Tutto
preferred instead to meet him at the Ministry. In general,
the MFA almost never initiates meetings with foreign
missions, and its staff seem, in his view, "not to care"
about cultivating relationships with diplomats.

A LOVE OF FAXES...


6. (C) Tutto finds economics reporting on Iran frustrating
and often pointless because there is so little reliable
information available. He, therefore, prefers to focus on
the trade promotion side of his job, where he is in frequent

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contact with the Teheran Chamber of Commerce. (There is also
an "Iran Chamber of Commerce," that doesn't seem to
accomplish much). He finds communication with the Chamber a
bit frustrating, however, because its staff, although they
have e-mail access, are uncomfortable using it and prefer to
send faxes. In fact, he said, most government officials seem
to love faxes over any other form of communication. If you
send an e-mail to an official, he said, they don't respond.

...AND OF CONFERENCES


7. (C) In Tutto's words, the Iranians are "conference
freaks." In the last five or six years alone, he said, they
have held 14 large international oil and gas conferences. He
has attended a couple of them himself, and said that the
organizers use them to tout Iran as a great investment
opportunity for foreign energy companies. Often, there are
powerpoint presentations with "grandiose plans" for
constructing modern oil refineries, as well maps in which
Iran is notionally covered top to bottom with a network of
gas pipelines.


8. (C) Tutto attended an event recently at which Foreign
Minister Mottaki made a brief appearance. As is always the
case when the FM arrives at a venue, not only was he
surrounded by a bevy of security guards, but all local cell
phone networks suddenly went down while he was in the
building. The networks went up again only after he had
safely departed.

THE (NON)EFFECT OF SANCTIONS


9. (C) According to Tutto, the economic sanctions imposed on
Iran are fundamentally ineffective for the simple reason
that, with the limited exception of those that make banking
operations difficult, they are detrimental to the people
rather than the government. Moreover, he said, they have had
no effect on the government's behavior. He pointed out that
given Iran's heavy reliance on imported gasoline for domestic
consumption -- it imports 40 million liters per day --
sanctions that restricted this would have an impact. He
conjectured that, conversely, fuel import sanctions could
actually allow the government to limit or end fuel subsidies
(as they have wanted to do for some time) and raise the price
of gasoline. In his experience, European companies are
increasingly "turning a blind eye" to the sanctions, doing
business with Iranian entities well beyond the $200 million
ceiling in transactions per entity that is allowed. The
Iranian Government frequently notes with confidence that it
has trade relations with "15 countries in the region."
"THIS TOO SHALL PASS"


10. (C) Tutto has been posted to Tehran for the past 18
months, and in his conversations with Iranians, he finds them
on the whole to be "not in a revolutionary mood." Time and
again, people tell him that 30 years of Islamic rule
constitutes only a "fraction" of Iran's 5000-year history,
and so for the time being, most see accommodation, not
confrontation, as the best way to deal with their
circumstances. Most everyone he speaks with expresses a
dislike for Ahmadinejad, mostly for having "ruined" Iran's
reputation in the world. They distinguish, however, between
Ahmadinejad and the clerical establishment, and have much
greater respect for the latter.


11. (C) He predicts that Ahmadinejad will prevail in the
presidential election, notwithstanding widespread support for
Mousavi among urban and educated voters. IRGC and Basij
members, who are essentially told whom to vote for, still
constitute Ahmadinejad's main base of support, along with
Iran's rural voters, who take their cues from the Supreme
Leader. In Tutto's view, SL Khamenei is unlikely to shift
support away from Ahmadinejad at this point, just weeks away
from the election.

WHAT'S YOUR SALARY?


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12. (C) In travels around the country, Tutto said that
Iranians frequently ask him the same three questions: "Where
are you from?" "Do you like Iran?" and "How much do you
earn?" (He has taken to responding to the last query by
giving a figure that is half of his actual salary, which
seems to satisfy most inquisitors.) In general, day-to-day
finances are on everyone's mind in Iran. Hyper-inflation
continues to make life difficult, and real estate prices have
skyrocketed, putting apartments out of reach for many young
couples, forcing many to postpone marriage.

TRAFFIC SITUATION MUCH IMPROVED


13. (C) Tutto feels fortunate to live and work in an enclosed
compound in north Teheran, allowing him to avoid having to
deal with Tehran's notorious traffic jams. On those
occasions when he has driven into town recently, he has seen
a great improvement in the traffic situation, which he
attributes to the decision several months ago to deploy the
military to control traffic. Much of the congestion had
apparently been due to drivers parking any which way along
major streets, narrowing the traffic lanes and causing
snarl-ups. These days, he said, there are soldiers posted
"every 10 meters" along the streets to ensure that no-parking
rules are obeyed. The real problem, he said, lies in the
utter lack of parking lots in the city and insufficient mass
transit.


14. (C) COMMENT: Our interlocutor offers a useful and
interesting picture of daily life in Iran as a foreign
diplomat. He seems to enjoy living and working there, despite
the many challenges in doing so. He reiterated that he has
never seen a people that "favors the American way of life"
more than the Iranians. END COMMENT.
MILES