Identifier
Created
Classification
Origin
09RPODUBAI261
2009-06-24 14:01:00
SECRET//NOFORN
Iran RPO Dubai
Cable title:  

IRAN: UNREST RATTLES BUSINESS CONFIDENCE, BUT OVERALL

Tags:  PREL PGOV ECON IR 
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VZCZCXRO7907
PP RUEHBC RUEHDE RUEHKUK RUEHTRO
DE RUEHDIR #0261/01 1751401
ZNY SSSSS ZZH
P 241401Z JUN 09
FM RPO DUBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 0440
INFO RUEKJCS/SECDEF WASHINGTON DC
RUEAIIA/CIA WASHDC
RHEHAAA/NSC WASHINGTON DC
RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0363
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL
RUEIDN/DNI WASHINGTON DC
RUCNIRA/IRAN COLLECTIVE
RUEHDIR/RPO DUBAI 0441
S E C R E T SECTION 01 OF 02 RPO DUBAI 000261 

NOFORN
SIPDIS

E.O. 12958: DECL: 6/24/2019
TAGS: PREL PGOV ECON IR
SUBJECT: IRAN: UNREST RATTLES BUSINESS CONFIDENCE, BUT OVERALL
ECONOMIC IMPACT LIMITED

DUBAI 00000261 001.2 OF 002


CLASSIFIED BY: Kathleen A. McGowan, Acting Director, Iran
Regional Presence Office, DOS.
REASON: 1.4 (b),(d)
This message was coordinated with Iran Watcher at Embassy Baku



S E C R E T SECTION 01 OF 02 RPO DUBAI 000261

NOFORN
SIPDIS

E.O. 12958: DECL: 6/24/2019
TAGS: PREL PGOV ECON IR
SUBJECT: IRAN: UNREST RATTLES BUSINESS CONFIDENCE, BUT OVERALL
ECONOMIC IMPACT LIMITED

DUBAI 00000261 001.2 OF 002


CLASSIFIED BY: Kathleen A. McGowan, Acting Director, Iran
Regional Presence Office, DOS.
REASON: 1.4 (b),(d)
This message was coordinated with Iran Watcher at Embassy Baku




1. (C) Summary: Other than the Tehran Stock Exchange's steep
decline, the initial impact of the post-electoral unrest on the
economy appears to be more psychological than real. Iran's oil
production remains steady and major business centers open.
Despite repeated rumors that the Mousavi-led opposition has
called for a general strike, major work stoppages have not yet
materialized although some small shops and businesses have
reportedly closed temporarily. IRPO contacts cite government
intimidation and the failure of the opposition leadership to
issue clear-cut calls for a strike as the primary reasons the
strikes have not gained traction. Still, our contacts note that
a broad strike by a large swathe of the population across
different sectors and regions is the opposition's best "trump
card." Work stoppages in the petroleum sector would have the
most immediate impact, our contacts say, and would shake the
regime's confidence that it can ride out the wave of green. End
summary.



Strikes Gaining Little Traction So Far




2. (S) The potency of a strike as a political pressure tactic is
not lost among the opposition's supporters or detractors, but
there has been little indication to date that such a move could
gain sufficient momentum to weaken the government's resolve to
resist compromising over the results of the election. Iranian
contacts of Watchers in Dubai and Baku who have shuttled back
and forth in the past two weeks and foreign embassy personnel
have reported few indigenous economic disturbances. Iran
Watcher Baku contacts indicated that the major oil and gas
sites, the Abadan, Tabriz, Esfahan, Kermanshah refineries, and
all the pipeline areas appeared to be operating normally, albeit
under heavier security than usual, during the period of greatest
unrest in the cities. The status of bazaars throughout the
country is less clear, but contacts say they have remained open

for the most part. In particular, according to contacts of the
Baku Watcher, the bazaar in Tabriz was open from last Thursday
through Sunday, but reportedly closed early on Monday.
Orumiyeh's was closed, but may now be open. Tehran's traditional
bazaar has been open but closing before dusk, according to Dubai
and Baku contacts and foreign diplomats posted in Tehran.
Sporadic accounts from businessmen in Esfahan indicate that the
main bazaar has remained open since the election, despite
reports of violent clashes between demonstrators and security
forces since the June 12 election.




3. (S) Our contacts do not believe that a large scale general
strike will occur soon, and speculate that only highly
provocative moves by the government would instigate a widespread
strike. Many have noted that whether people will respond to a
general strike, especially in the oil sector, will depend on the
state of protests at the time the strike is called and who is
perceived as calling for it. Baku sources contend that a clear
call from Mousavi/Karroubi that is able to be disseminated will
have maximum impact. However an Iranian business consultant in
Dubai observed that most families' financial situations in Iran
today are precarious and that many people do not have the
savings to willingly forego their income for a sustained period.
The consultant also noted that although some people he knows
did not go to work last week out of solidarity with the
demonstrators, many others likely fear government retribution.
The Iran Watcher in Baku notes that his contacts in the energy
sector are not certain that overwhelming numbers of petroleum
workers would heed calls for general strike. Iranian energy
businessmen in Tehran and other cities told Baku Watcher that
the strike option has been suspended as a last line of defense
move. All indicated that there was talk of closing bazaars
earlier this week, but that Mir Hossein-Mousavi has asked the
bazaaris to hold back until he gives the word. Iranian
professors from Mashhad, Qom, and Tehran and an industrialist in
the oil sector earlier this week suggested that a massive strike
was unlikely because it would undermine what they view as the
peaceful tone of the reformists' campaign.




DUBAI 00000261 002.2 OF 002



4. (C) Sporadic internet reports of industrial work stoppages
are difficult to confirm. An Iranian blog claimed that Iran
Khodro workers stopped work on June 18 out of solidarity with
people in the streets, but our contacts were unaware of the
effort, indicating it did not get much attention. The Syndicate
of Workers of Tehran and Suburbs Vahed Bus Company plan to use
June 26, previously "Justice for Iranian workers day," to call
on the government to protect civil rights and condemn violence
and oppression in light of the recent crackdown.



Private Sector Rattled, but Likely Resilient




5. (C) Steep declines and the continuing volatility of the
Tehran's Stock Exchange (TSE) suggest that unrest ignited by the
election has shaken investor confidence inside Iran. The TSE
fell 116 points between June 14 and 22 before regaining 88
points on June 23. Although state domination of the bourse
prevents it from being a true equities exchange, business
contacts note it is a good measure of the business community's
confidence in the economy. On June 22 the head of the TSE
announced pending legislation that would offer significant tax
exemption to shareholders who decrease their turnover of shares.
This is likely an incentive to people to leave their money in
the market.




6. (S) One factory owner from Tehran said that he has had a hard
time getting his products through customs and is warning
customers that he accepts no responsibility for any delivery
disruptions, although he has not yet experienced any. Two other
small business owners noted that the business climate has been
grim since the election. Yet our business contacts also remind
us that Iran's economy in general, and the relatively small
private sector in particular, have survived many past crises.



Oil Sector Safe for Now




7. (U) By all accounts, Iran's oil sector remains stable. Iran
exports approximately 2.4. million barrels of oil per day, and
its oil and gas sites-which are distant from major urban
centers-have maintained normal production, according to market
data. A Dubai contact recently in Iran noted that he did not
observe any unusual activity or talk of shortages at the gas
stations in Tehran. StatoilHydro-a Norwegian company active in
Iran's lucrative South Pars Gas Field-shut its Tehran office on
16 June because of nearby street protests, and as of 18 June
was giving its Norwegian workers and families the choice to
leave, according to Western press. StatoilHydro and Schlumberger
spokespersons on 18 June however said that business is operating
as usual.



Economic Red Lines for the Regime




8. (S) Comment: Significant economic pressures would almost
certainly worry the regime. A large bazaar strike similar to
the closure in protest of the VAT last October and those leading
up to the Revolution would no doubt grab the regime's attention.
Historically, bazaar closures are the requisite first step to
larger, more coordinated strikes backed by the financial clout
of the business community. The strike last October, which
originated in Esfahan, demonstrated that the close-knit
relations essential for uniting the bazaar and engaging it in
collective action still exist. Since the revolution however, the
bazaar has engaged in political action only because of economic
apprehension. It is unclear whether the opposition's political
statement is resonating with the bazaar. A business contact in
Dubai perceives a lack of cohesion within the bazaar but said
that if there was broad participation throughout the country,
many would be more likely to participate. End comment.
MCGOWAN