IRAN REGIONAL PRESENCE OFFICE - WINDOW ON IRAN - MARCH 17,

S E C R E T SECTION 01 OF 02 RPO DUBAI 000121 NOFORN SIPDIS E.O. 12958: DECL: 3/17/2019 TAGS: PGOV EAGR ECON KDEM IR SUBJECT: IRAN REGIONAL PRESENCE OFFICE - WINDOW ON IRAN - MARCH 17, 2009 DUBAI 00000121 001.2 OF 002 CLASSIFIED BY: Ramin Asgard, Director, Iran Regional Presence Office - Dubai, DOS. REASON: 1.4 (b),(d) ¶1. [C/NF] Iranian Visa Applicants in Dubai Generally Unenthusiastic About Mir Hossein Mousavi: IRPO Conoff queried visa applicants regarding their views of former Iranian Prime Minister and now presidential candidate Mir Hossein Mousavi. None professed particular enthusiasm with his candidacy and younger applicants, especially students, knew little about him. Others were inclined to dismissively lump Mousavi with other Iranian politicians. Of those offering distinct opinions, a young, female Iranian doctor disapproved of his candidacy because she believes the Supreme Leader supports it. A middle-aged chemist conditioned his support for Mousavi on Khatami's endorsement and, finally, a Tehrani gold jeweler applauded Mousavi's management of the country during the Iran-Iraq war, contrasting that era with the current reality. Comment: Iranians visa applicants in Dubai are as a group apolitical and their general lack of enthusiasm for a presidential candidate is not surprising. That students and Iran's youth know little about Mousavi is also unsurprising - such demographic groups came of age after Mousavi's generally well regarded stint as prime minister in the 1980s. Still, if their views are representative of other young Iranians, attracting their support will be a key challenge for Mousavi. The notion that Khamenei supports Mousavi's bid is odd - the two were rivals in the 1980s-and further suggests that Mousavi is now relatively unknown. ¶2. [S/NF] Iranian Government and Tehran Municipality's Interest in US Agricultural Trade: Based upon discussions with Dubai-based Regional Ag Attache, IRPO has learned that Iran's Government Trading Corporation (GTC) has been in touch with the US Wheat Council regarding proposed travel by several senior officials to visit US wheat producing areas and to explore further bulk grain purchases from the US. [Note: According to USDA, the GTC purchased $535 million of US wheat in 2008 and continues to purchase US wheat. Iran's new fiscal year budget allows for greater wheat imports this year. At present, trade sources indicate Iran is purchasing $15-20 million of US wheat per month]. IRPO Officer met with two UAE-based Iranian traders �0A;who claimed to represent the Municipality of Tehran and its interest in purchasing American agricultural products. The UAE-based traders were unfamiliar with last year's trade or with the licensing procedures and requirements for US trade with Iran, but emphasized that their purchases are separate from those of the GTC. The Tehran Municipality's shopping list of American products includes wheat, corn, barley, rice, and citrus fruits. Comment: Intermittent droughts in Iran, such as in 2008, have historically raised demand for agricultural imports, but the choice of US origin agricultural goods may indicate an Iranian (GTC and the Tehran Municipality) decision to explore expanded trade opportunities with the US. Future discussions in the US with USDA and/or private agricultural firms may clarify their motivation for selecting US agricultural commodities. ¶3. [S/NF] Roxana Saberi's Arrest Likely Organized by Spoilers to Prevent U.S.-Iran Rapprochement. In separate conservations, two highly regarded Iranian-American political analysts who both know Saberi personally, described her as "completely benign" and were highly skeptical that anything about her life or work in Iran had led to her arrest. Both men cautioned against allowing spoilers to derail plans for engagement, recalling how the January 2002 seizure of the Palestinian freighter Karine A loaded with presumably Iranian-made weapons was likely the point at which the confidence built between the U.S. and Iran during the 2001 Bonn Conference began to disintegrate. One of the contacts described Saberi, because of her dual nationality as well as the fact that she was not working directly for a prominent international news outlet, as ideal "low-hanging fruit" for security officials trying to thwart the possibility of dialogue between Washington and Tehran. ¶4. [S/NF] The Lion Rising?: Iranian Identity and Hubris in the Northern Emirates: A well-established IRPO business contact recounted the following anecdote to IRPO Officer from a banking leadership meeting he attended in Ajman emirate last week. During the Q&A session, an Egyptian attendee rose and requested to ask his question in Arabic as his English was weak and suggested a colleague could translate. A Bank Melli - Iran official immediately rose and declared that "if he is allowed to ask his question in Arabic, I should be allowed to ask mine in Farsi, and he (pointing to an Ajman government official attending the meeting) can translate for me." The government official was reportedly taken aback, but the meeting eventually wrapped up without major incident. Comment: The presence of Emirati-Iranian officials throughout the UAEG and all levels of business, particularly in the Northern Emirates, is a deeply sensitive matter rarely discussed openly in the UAE. Within the context of potential UAE-Iran bilateral tension, questions of cultural identity may sharpen. The Bank Melli official's claim that Farsi be treated equally to Arabic in an official meeting, and his use of a Farsi-speaking government official to bolster his position, is a thought-provoking example of the very real battle for influence and identity in the Gulf. ¶5. [S/NF ] Test Case for Subsidy Reform Not a Hit: IRPO Officer met with Hassan Kabiri, a scion of a prominent bazaari family and managing director/owner of Paknam, one of Iran's largest producers of detergent powder. Kabiri discussed Iran's reduction of price subsidies for detergent powder in 2008, claiming that detergent had subsequently tripled in price but that President Ahmadinejad had simultaneously reduced tariffs on imported detergent from 35 to 20%. The tariff reduction was the President's attempt to fight the inflationary impact of the price increase, but in Kabiri's estimation this effort had been a failure. Kabiri's factory was adjusting to the new economic reality by trying to lower its fixed costs, primarily by reducing the labor force. Paknam had laid off about half of its approximately 1,000 workers since the subsidy reduction, but Iran's legal code made this process extremely difficult--one laid off employee had even appealed his case to Iran's Supreme Court. Kabiri found it easier to lay off workers if he first made provisions for their post-employment welfare. Looking forward to Iran's new fiscal year that starts later this month, Kabiri predicted that the government will have to reverse course and raise tariffs on non-food items, including detergent, so that it can continue to pay for food imports as oil revenues decline. Comment: The removal of price subsidies and a reduced tariff for imports highlight some of the dangers that AN's economic transformation plan poses to Iran's domestic producers and their employees. The recent defeat of AN's subsidy reforms during the debate over next year's budget in the Majles will delay significant changes, but Iran's massive subsidies remain a key burden on government finances and a distortion in Iran's economy. ¶6. [U] Window on Iran is a classified, weekly product providing Washington policy community and Iran watcher highlights of key developments on Iran. It is produced by the Iran Regional Presence Office - Dubai. Please direct any questions/comments to: Kay McGowan XXXXXXXXXXXX or Charlie Pennypacker XXXXXXXXXXXX. ASGARD