Iran's budget for 2013 as mirror of economic opportunities
Iran is preparing basic financial document - the state budget for next year, which begins on March 21, 2013 in the country. The bill will be presented to the Parliament of Iran until December 5.
Based on the fact that Iran hasn't achieved any success in economic terms this year, but on the contrary, mired more in economic sanctions against the country, it can be assumed that the overall state budget for the next Iranian year will be an extension of this year's budget. Iran's state budget revenues for 2012 are projected at 5.66 quadrillion rial (about $461 billion).
Generally the revenue and expenditure side of the budget for next year isn't known yet, but there is no doubt that the budget will be scarce and the deficit will be significant. Thus, Iran expects a deficit of 540 trillion rial (about $44 billion) this year contrary to the strategy adopted for the gradual reduction of the budget deficit. Today, many sectors of the country don't receive even less part of what they should to receive according to the budget.
The reason is the decline in Iran's oil trade by 40 percent this year - the main source of revenue.
The Iranian government has long been discussing ways to reduce dependence on oil revenues of the state budget and looking for replacement options. But as these discussions have not yielded results and an alternative to oil revenues isn't found then expected revenues from the oil sector will again account for a based part of the state budget for 2013. According to the forecasts of Iranian Foreign Ministry, which sometimes go against independent estimates, oil production in Iran will increase annually through the development of joint deposits and reach5.2 million barrels per day by March 2016 compared to the current 4 million barrels.
The rest of the state budget revenues, such as taxes and fees, as well as funds released as a result of cuts in state subsidies for energy, despite their importance, are purely secondary for the country at this stage.
The budget expenditures are mostly composed of funding of direct social spending, which has increased sharply in the current year. The Iranian parliament approved a law on suspension of the governmental subsidization plan's second phase on October 7. According to secretary of Iranian Expediency Council Mohsen Rezai, as a result, cash subsidies to citizens should be raised to 1.1 million rials (about $ 90) per person, from 450.000 rials (about $ 37), which are currently paid by the state.
Provision of production sector with liquidity will also become a priority next year. Iran is planning to independently produce consumer goods, which are currently imported. As in the current Iranian calendar year, about 800 trillion rials (about $ 65 billion) are required for the manufacturing sector of the country to meet the needs, next year, given the ambitious plans to expand the range of manufactured goods, the manufacturing sector will require even more public investment. Iran plans to achieve great success in its defense sector and to achieve self-sufficiency in production of essential military equipment and systems.
The measures to ensure the country's food supply, in particular, the creation and preservation of these resources, will require additional funds from state budget next year. Therefore, if previously food products were stocked for three months, today under sanctions, Iran extended this period to nine months.
The expenses on the state apparatus may be reduced this year as it was done last year, but it will not affect the financing of defense spending, health care, education and science.
During the discussion of the draft budget for 2013 in Iranian parliament the basic contours of the budgetary system will stand out more clearly. But based on the current conditions of Iran's socio-economic and socio-political development, it can be assumed that, in general, except for a strategically important industry, the investment focus of the budget next year will not be strengthened, and the efficiency of the social sector's public expenditure will not be improved through changes in their structure. It is known that the society can afford to have a system of state budget, which most accurately reflects its realities, and Iran's realities today are not a secret for anyone.
Afghan potential in regional aspect
Afghanistan has turned into a widely ramifying line between Central and South Asia because of historical reasons. Restoring the social and economic structures and Afghanistan's statehood can play a significant role in creating new conditions for the entire region. Restoration of peace in Afghanistan and infrastructure relations between Central Asia and South Asia mean Afghanistan's energy supply and its integration into the global area.
Launching the anti-terrorist campaign in Afghanistan and normalising the situation have become another opportunity for international cooperation and Central Asian countries entering the global area. This is especially important for Tajikistan, Turkmenistan and Uzbekistan. Indeed, if peace is restored in Afghanistan, then these countries route to the South Asian region will be opened.
Afghanistan's returning to a peaceful life still remains one of the most urgent international challenges which have not been resolved. Moreover, NATO's vainness in Afghanistan is a serious test for the possibility of forming a union of the regional countries. NATO members have not reached agreement on distributing the responsibilities. This means the servicemen of some countries are at war and those of other countries just conduct a humanitarian mission or perform police functions.
Modern Afghanistan resembles the territory upon which the independent military and political groups are separately placed, whose influence on the spot is stronger than the central power. That is why the uncertainty continues in the country. Instability is a potential threat to the national security of each individual country of the Central Asian region.
While suspending the military presence in one form or another in Afghanistan after 2014, the U.S will be able to freely operate in Central Asia. Of course, Washington will not be able to oust Russia from the region. Moreover, the desire of both countries to gain a foothold in Central Asia will face a mutual resistance.
One must not forget about the third, very important player in Central Asia - China. Frankly speaking, the recent events in South-East Asia show that Beijing is likely to pay more attention to it and give Moscow the geopolitical advantage in Central Asia.
How can Central Asian countries maintain security in a similar situation?
The main cause of the U.S 'caring' attitude to the Central Asian countries is the desire to create a foothold in the region for potential military operations against Iran, Russia, and China. Therefore, Central Asian countries themselves are the guarantees of the security of their countries. One must not deny Russia's interests in the region by virtue of which it will assist the Central Asian countries.
It should be stressed once more that Afghanistan certainly has great potential and is an important country for the region. However, political realities and the 'heroin economy' nullify this potential, at least at this stage, but the region may get 'sick fatigue' of endless experimentation with different political scenarios.
Restoration of relations between Georgia and Russia beneficial to both parties
There was a government change in Georgia, as a result of which opposition coalition Georgian Dream led by billionaire Bidzina Ivanishvili came to power.
During the election campaign Ivanishvili positioned as a pro-Russian politician by Western, Georgian, and even by Russian media.
Perhaps this view was triggered by the statements of Ivanishvili, who has promised to improve relations with Moscow, and by the facts of his biography closely connected with Russia, where he lived for a long time and created a multi-million dollar fortune. Some people even call him a "project of Moscow" and accused of colluding with the Kremlin.
However, one and a half months since the announcement of the election show the baseless of these statements.
To date, it became clear that the policy priority of the new government of Georgia led by Ivanishvili will be the continuation of Mikhail Saakashvili's rapprochement with the West and to join the EU and NATO. This was announced by the Prime Minister himself during the meeting with the leaders of NATO and the European Commission. However, the very fact that Ivanishvili made his first visit as prime minister to Brussels speaks volumes.
As for relations with Russia, there are grounds to believe that there will be improvement in this direction under the new government. It is too early to speak about the restoration of the Georgian-Russian political relations. Ivanishvili himself said about it more than once.
Restoration of political relations with Russia is closely associated with the restoration of Georgian territorial integrity for Georgia. Russia is principled in its position on the status of the breakaway regions of Georgia. Thus the changes in the issue are possible in case of concessions from both sides, which aren't assumed yet.
But the restoration of economic ties between the two countries is possible, and Georgia is interested in it. The Russian market are more familiar and understandable for Georgian businessmen than distant markets in Europe and the U.S..
In addition, Georgian production was aimed at Russia due to historical factors. For example, the main market of the famous Georgian wine was Russia before the break of the relations in 2008.
Saakashvili has also made attempts to establish economic relations with Russia recently. In particular, Georgia unilaterally abolished the visa regime with Russia at the end of February 2012. As a result of this measure the flow of Russian tourists doubled in the first half of 2012, and it is not a bad achievement for Georgia, which main budget revenues source is tourism. However, the dialogue between the leaders of Russia and Saakashvili was complicated by chilly relations.
But Russia is ready to sit down at the negotiating table with Ivanishvili. And the head of the government of Georgia pursues much more flexible policy with regard to Russia, and shows interest in developing bilateral relations, at least outwardly.
In particular, Ivanishvili created a new post of Special Representative of the Prime Minister for relations with Russia, to which former Georgian ambassador to Russia Zurab Abashidze appointed.
It is still unclear if Russia will resume economic relations with Georgia. On the one hand, the Russian market is not in need of Georgia, and its opening for Georgian goods can only be a good gesture on the part of Russia. But on the other hand, the economic relations will give opportunity to Russian Federation to recover at least a little influence in Georgia, which completely died out under President Saakashvili. And Russia, which is now taking active steps to strengthen the influence over the neighbors are unlikely to miss such an opportunity.
One should not rule out the return of Georgia to CIS, although the country will have no special economic privileges from membership in the Commonwealth. Russia has already expressed a positive attitude to this issue. Georgia hasn't made a statement yet.
Thus, the basic principles of the foreign policy of the new government of Georgia will be not much different than the previous government. However, the policy of Ivanishvili will be more flexible and cautious.