April 28, 2024

Iran’s President Puts New Focus on the Economy

In an acknowledgment of the growing toll that international economic restrictions connected to Iran’s nuclear program are having on the population, both Mr. Rouhani and Ayatollah Khamenei made the economy a major theme of their remarks.

“People called for change and improvement in their living standards, they want to live better,” Mr. Rouhani said.

But he and the ayatollah offered somewhat different solutions. Whereas Mr. Rouhani said that interactions with the world, meaning talks with Europe and potentially the United States, were a way out of the crisis, Ayatollah Khamenei, who as supreme leader has final word on all important issues, expressed pessimism that such overtures would yield fruit. “Some of our enemies do not speak with our language of wisdom,” he said, urging self-sufficiency.

As Mr. Rouhani takes his public oath of office on Sunday, Iran’s growing economic crisis sits atop his agenda. Sanctions have slashed oil exports and limited Iran’s ability to transfer money from abroad. The shortage has been aggravated by the profligate spending that is a legacy of the departing government of Mahmoud Ahmadinejad.

During most of Mr. Ahmadinejad’s two terms, Iran enjoyed an oil windfall, with a flow of dollars and euros that fueled huge imports on goods ranging from ice cream to Porsches.

But now Mr. Rouhani’s aides describe Iran’s economic situation as the worst in decades. Many blame what they call Mr. Ahmadinejad’s erratic economic policies, punctuated by slashed subsidies and unbridled inflation.

The signs of woe abound.

Lacking money, Iran’s national soccer team scrapped a training trip to Portugal. Teachers in Tehran nervously awaited their wages, which were inexplicably delayed by more than a week. Officials warned recently that food and medicine imports have stalled for three weeks because of a lack of foreign currency.

While Mr. Rouhani has asked for a hundred days to review the state of the economy and devise solutions, there are some voices who now say that the only way to solve the economic ills is to come up with a political settlement of Iran’s nuclear dispute. Those voices were barely heard during Mr. Ahmadinejad’s tenure.

“Rouhani’s economic success depends on the determination of Iran’s other leaders to find a solution for the nuclear support,” an economics professor, Mohsen Renani of the University of Isfahan, told the Web site Neco News.

In another sign of dissatisfaction over the consequences of Iran’s nuclear stance, an influential political professor publicly expressed doubt recently over the benefits of the nuclear program. “Why are we producing radioisotopes when we can import them much cheaper?” the professor, Sadegh Zibakalam of Tehran University, told the reformist weekly Aseman. “Why should we maintain a nuclear program when we have no economic justification?”

While those voices may have grown louder, they by no means represent the official position of Iran’s ruling establishment, which maintains that self-sufficiency in nuclear energy is nonnegotiable.

“Whatever happens, our nuclear stances will not change nor waver,” Mohammad Taghi Rahbar, a former member of Parliament and an influential Friday Prayer leader in Isfahan, said in an interview. “Our supreme leader, the nation and all officials from all factions believe this is our inalienable right so we will not retreat at all.”

But ignoring the increasing economic pressures, while promising a better future — a strategy favored by Iran’s leaders over the past years — is proving increasingly complicated. Almost everybody in Iran is feeling the pain.

Article source: http://www.nytimes.com/2013/08/04/world/middleeast/irans-president-puts-new-focus-on-the-economy.html?partner=rss&emc=rss

Ryanair Says Aer Lingus Bid Will Be Rejected

Ryanair, based in Dublin and Europe’s largest budget airline by number of passenger, said it had been informed at a meeting Tuesday with officials of the European Commission that Brussels “intends to prohibit” the airline’s nearly €700 million, or $942 million, bid for Air Lingus. The company said its proposed concessions and remedies did not go far enough to allay antitrust concerns.

Ryanair threatened to appeal any rejection of the merger to the European Court of Justice.

“It appears clear from this morning’s meeting that no matter what remedies Ryanair offered, we were not going to get a fair hearing and were going to be prohibited regardless of competition rules,” said Robin Kiely, a Ryanair spokesman.

Antoine Colombani, a spokesman for the European Union’s competition commissioner, Joaquín Almunia, declined to comment Tuesday. He said a formal decision on a Ryanair-Air Lingus combination would be made in late February or early March by the European Commission, the Union’s administrative arm.

The odds of winning approval for a combination of the two Irish carriers have never been strong, analysts said. Brussels has already rejected two previous attempts by Ryanair over the past six years to win control of Aer Lingus, a full-service airline that is 25 percent owned by the Irish government.

The government has opposed Ryannair’s overtures, saying that it would leave Ireland, an island nation, too dependent on one operator for vital air links abroad.

Ryanair already owns nearly 30 percent of Aer Lingus, and is seeking to buy out the government’s stake and the rest of the airline’s outstanding shares.

Given that history of rejections, investors were stunned when Ryanair announced last June that it was offering €694 million in cash for the stock of Aer Lingus it did not already own.

The offer of €1.30 a share, represented a 38 percent premium to Aer Lingus’s price at the time, but was less than half the €1.48 billion that Ryanair first bid for the stake back in 2006.

Back then, Aer Lingus was decidedly more vulnerable, hemorrhaging so much money on unprofitable routes and financing its debts that banks were refusing to provide fresh loans to finance its operations. Ryanair, which was expanding rapidly, coveted Aer Lingus’s valuable take-off and landing slots at key airports like Heathrow in London.

A drastic restructuring plan, implemented in 2009 by a new chief executive, Christoph Mueller, managed to stem the bleeding. By 2010, Aer Lingus was reporting an annual operating profit, its first since 2007.

The European Commission, which opened a detailed investigation into Ryanair’s latest bid in August, has echoed the Irish government’s concerns that a merged Ryanair-Aer Lingus would leave air travelers to and from Ireland with too little choice. Ryanair’s merger proposal envisioned operating the two airlines as separate businesses, although the two would control more than 70 percent of the Irish air travel market between them.

In recent months, Ryanair said it had approached rival European airlines, including British Airways and Flybe, offering to sell dozens of routes between Ireland, Britain and Europe in a bid to preserve competition and secure regulatory approval.

Ryanair described its proposed remedies as “unprecedented” and dismissed regulators’ objections as politically motivated.

“This decision is clearly a political one to meet the narrow, vested interests of the Irish Government and is not based on competition law,” said Mr. Kiely, the Ryanair spokesman.

The Irish government has come under pressure in recent years to dispose of its 25 percent stake in Aer Lingus, along with other state assets, as it seeks to pay back the €85 billion it received from a European bailout fund in 2010. But it has been reluctant to put its shares on the market, for fear they would be snapped up by Ryanair.

For its part, Aer Lingus said that its own improved financial performance over the past year argued even more strongly against a combination with Ryanair. The airline last week reported a 41 percent rise in operating profit for 2012, to €69 million, as its annual passenger numbers rose to a record 10.8 million.

“It was and remains Aer Lingus’s position that the offer should never have been made,” the airline said in a statement.

Ryanair contends that the competitive landscape in European air travel has changed significantly since its most recent failed bid for Aer Lingus, in 2008. The budget carrier notes that European regulators have since approved a series of big airline mergers, including that of British Airways and Iberia of Spain to form International Airlines Group in 2010, and that group’s subsequent acquisition of British Midland International in late 2011.

Article source: http://www.nytimes.com/2013/02/13/business/global/ryanair-says-aer-lingus-bid-will-be-rejected.html?partner=rss&emc=rss