Archive for April, 2013

UK Government blocks Shell paying Iran oil debt in food, medicine

Wednesday, April 24th, 2013

LONDON: Britain has blocked efforts by oil major Royal Dutch Shell to settle a $2.3 billion debt it owes Iran by paying in kind with grains or pharmaceuticals, industry sources said.

Shell has been trying for months to find a way to work around international sanctions that prevent it paying in currency for crude it bought from the National Iranian Oil Company before a European Union embargo on Iran that started last July.

The sources said the British government was reluctant to provide relief for the Iranian economy when Western powers are using sanctions to apply financial pressure on Tehran to dismantle its nuclear programme.

“The view is that doesn’t make sense to smooth the way for a payment that helps Iran when government is trying to press Iran to negotiate,” said an industry source.

A government spokesman declined comment on the Shell case but said: “The government fully backs the tough regime of EU sanctions that have been put in place against Iran.”

Talks earlier this month between Iran and six world powers including Britain failed to make progress in resolving a decade-old dispute around Iran’s nuclear progress. Another round of negotiations has been scheduled for May 21.

The industry sources said Shell in February explored with the British government the possibility of asking British pharmaceuticals maker GSK to deliver medicines to Iran in a payment-in-kind deal known as an offset agreement.

GSK said it had not been approached or held any discussions on the matter. Shell declined comment.

In October, the Anglo-Dutch oil company sought permission for an offset agreement that would have seen US agricultural trader Cargill deliver grain to Iran.

Following publication by Reuters, Dutch foreign minister Frans Timmermans in a letter to parliament acknowledged the proposal, saying: “As in all sanctions regimes there are some carefully defined exceptions applicable for which in certain cases an exemption can be granted by national governments.”

Meetings were held with Cargill but, said the industry sources, the proposal was turned down by the British government. Cargill and Shell both declined comment at the time.

MAINTAINING IRAN RELATIONSHIP

The sources said the oil company wanted to repay its debt to NIOC to maintain cordial relations with Iran, one of the biggest producers in the Organization of the Petroleum Exporting Countries.

“Politics come and go but it’s in the interests of Shell and its shareholders to pay its debts and maintain a relationship with a leading oil producer like Iran,” said one of the sources.

Shell revealed in a March filing to US regulatory authorities that it owed Tehran $2.3 billion and made a net loss of $6 million trading

Iranian oil in 2012.Unlike its rivals, Shell continued trading with Iran under a provision for pre-existing contracts close to the EU’s June 30 deadline before the embargo. The debt is for oil purchased in 2011 and 2012.

Iran’s oil revenues have fallen by about 50 percent since sanctions were imposed last year, and regional economists believe it has been forced to draw on its foreign reserves to help buy essentials like grains.

But with an estimated $100 billion of foreign reserves at the start of 2012, thanks to high oil prices, the Iranian economy is far from collapse.

The International Monetary Fund said last week that while sanctions had frozen Iran out of the international banking system, Tehran was avoiding a balance-of-payments crisis and should emerge from recession in 2014.

Food and medicine are among the humanitarian goods not barred by US and European sanctions but, isolated from international banking, Iran has been forced to pay a premium for grain imports.

Washington has tried to restrict countries like China, India, South Korea and Japan that still buy Iranian oil to paying for shipments by the barter of approved goods – including food and medicine.

US sanctions state that funds used to pay for oil must remain in a bank account in the purchasing country and can be used only for non-sanctioned, bilateral trade between that country and Iran. Any bank that repatriates the money or transfers it to a third country faces a US sanction risk.

Nevertheless, said the industry sources, it appears the British government would rather Iran be obliged to spend foreign reserves or use oil revenues to barter for essential imports than benefit from shipments of humanitarian goods paid for by Shell debt.shell

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Though watched and muzzled, independent labour unions are stirring

Wednesday, April 24th, 2013

From The Economist

DURING a Persian new year’s party (in late March) at Iran’s flagship South Pars project in the Persian Gulf, where the world’s largest known gasfield is being tapped, a labourer called on Iran’s workers to unite. Behnam Khodadadi demanded better pay and conditions, and a proper trade union. Around 1,500 workers stopped security guards from detaining Mr Khodadadi. A week later he was fired from his job at Iran Industrial Networks Development, a contractor for the state-owned National Iranian Oil Company. Mr Khodadadi may have been muzzled, but disaffection is growing among Iranian workers as inflation outpaces wage rises and workers are laid off. At the same time attempts to organise labour are being suppressed in the run-up to June’s presidential elections.

“They haven’t paid us for at least four months and I have to keep borrowing money,” says Jamshid, a 32-year-old industrial worker in Tehran, the capital. Last month the minimum wage was raised by 25%, to 4.87m rials ($140) a month, but even by official criteria this is one-third of what is deemed to be a living wage in the capital. The drop in the rial’s value means that, when it comes to the imports on which Iran relies, Iranian cash is worth barely a third of what it was in 2011, before the United States imposed sanctions on the country’s financial system.

Iran does not recognise independent unions, so workers have to make do with Islamic Labour Councils, which must be approved by employers and the security services. Reckoning that these councils are in cahoots with the government, workers tend to keep their grievances to themselves for fear of being sacked as troublemakers. Labour leaders are often imprisoned.

Ali Nejati and Reza Shahabi, who led sugarcane workers’ and bus drivers’ unions respectively, were recently freed under surveillance. Mr Shahabi is now in prison again, as is Muhammad Jarahi, who stands for petrochemical workers, and Shahrokh Zamani, a painter, all of them guilty of “endangering national security”. “Not having independent workers’ unions guarantees things will stay the same,” Mr Nejati recently told an Iranian radio station based in Germany. “As a workers’ representative I complained and I went to prison for it and was fired.”

Despite the long history of Iran’s labour movement and the big part its oil workers played in deposing the shah in 1979, Iran’s workers have witnessed a steady erosion of their bargaining power. After the revolution, independent workers’ councils won rights to such things as a 40-hour week and lodging allowances. They got rid of people who had worked for the shah’s intelligence service. But during the Iran-Iraq war (1980-88) the unions’ independence was destroyed. Under President Akbar Hashemi Rafsanjani and his successor, Muhammad Khatami, imports soared while Iran’s own manufacturing industry slumped. Unions have been further weakened by the reclassification of many workers as temporary.

Last month several bakers were arrested for allegedly organising their colleagues in the Kurdish city of Sanandaj. At the same time, workers at a tractor-making company in Tabriz, in the north-west, signed a letter accusing managers of “brutal treatment, intimidation and failing to pay wages”. “Authorities who always talk about justice in the Islamic republic should know that complete injustice prevails in this system,” they wrote.

“We are at the mercy of our employers,” says Mahmud, a Tehran street sweeper on his night shift, scraping rubbish out of an open gutter with a coarse wicker brush. “We almost never get the overtime pay we are entitled to but we can’t complain because we would be fired.” A senior municipal worker admits that thousands of non-unionised street sweepers, who clean the capital by night, often go months without pay. Last year the office of Muhammad Qalibaf, Tehran’s mayor and a presidential hopeful, commissioned a film called “Those Who Wear Orange” about a brainy university graduate who becomes a street cleaner—for love of the job.

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