Around 50 Iranian companies from the automotive sector have showcased their parts and equipment in Russia’s main car show while the country itself is struggling to make good quality vehicles.
Iran’s Industries Minister Reza Fatemi-Amin traveled to Moscow at the head of a large delegation to attend the opening ceremony of the MIMS Automobility Moscow 2022, from August 22 to 25.
He told IRNA that the show marks a turning point in automotive industry cooperation between Iran and Russia as the two countries seek to offset the impacts of foreign sanctions on their economies.
Seeking to expand their markets in Russia, Iran’s largest carmaker the Iran Khodro Company, branded as IKCO, and its rival Saipa plan to cooperate with Russian automakers in car productions, such as a project between Saipa and Russia’s AvtoVaz -- maker of the Lada -- to manufacture a Renault model that was discontinued in Iran in 2018 after the French company left Iran because of US sanctions.
Sixteen European car manufacturers (including four of the top 10 by market share) sold close to half a million units of Russia’s total sales of 1.67 million in 2021, making the country the eight-largest car market in the world in terms of global sales volumes. But following the sanctions over the Russian invasion of Ukraine, almost all foreign firms left and car sales were down by 84 percent in May.
Criticizing Iranian automakers for producing low-quality vehicles responsible for a high rate of road accident casualties, Iran’s traffic police said Tuesday that substandard and unsafe cars lead to at least 17,000 deaths and 300,000 injuries every year.
Fars, linked to the Revolutionary Guard, is not the only government-controlled media outlet periodically bringing up this issue, as Iran negotiates with the United States through the Europeans to restore the 2015 nuclear deal (JCPOA).
Once the deal is restored the United States will lift oil export sanctions imposed by former President Donald Trump when he withdrew from the JCPOA in 2018. It will also remove international banking restrictions also imposed as part of Trump’s ‘maximum pressure’ on Tehran.
But what Iranian media presents as ‘Europe’s freezing winter” has almost nothing to do with Tehran’s crude oil exports, except generally helping to bring down oil prices. Europe’s need to replace Russian gas is a specific issue on its own that Iran cannot help with at all.
There are two major reasons why a nuclear agreement now cannot impact Iran’s ability to export natural gas for the foreseeable future.
First is Iran’s huge domestic need that exceeds its current production capacity, and second is the absence of the infrastructure to export the gas as LNG.
Iran produces around 750 million cubic meters of gas per day, which is a considerable amount, but it has suffered from domestic shortages for the past three years as demand has risen and gas production has plateaued or decreased.
The huge domestic demand primarily comes from extraordinary low prices – a de facto fuel subsidy offered to the population more as a loft-over of the revolutionary days than any good reason. Some estimates say that Iran has sustained a loss of close to $300 billion in the past decade simply by selling gas cheap to domestic consumers. In the same manner, gasoline and electricity are extremely cheap in Iran. A gallon of gasoline is sold at the pump for around 22 US cents.
Natural gas production could have increased with exports in mind, since Iran has the second largest reserves in the world, but for close to 20 years successive government were unable to invest in boosting extraction. The reason for this was both international sanctions (2010-2015) and current US sanctions imposed since 2018. There are also US sanctions prohibiting American participation in Iran’s energy sector going back to 1996.
All these sanctions were imposed because of Iran’s nuclear program and they banned investments and critical technology that only Western energy giants could have provided for expanding production.
Even Chinese energy companies left Iran’s South Pars gas field in the Persian Gulf that can easily produce more than 10 percent of global needs.
Having fallen behind in gas production, Iran also never built LNG terminals to serve global markets, like its tiny neighbor Qatar has done. Building such terminals can take 3-5 years, even if a nuclear agreement is signed today and US sanctions are lifted. Considering the need to build larger gas platforms to boost production, the time needed for Iran to ship LNG to Europe is at least 7-8 years.
There are also political hurdles Tehran must overcome. Its most important strategic ally is Russia, which would not like Iran taking a big share of its European market. The Iranian government is talking about a “gas swap” with Moscow, which means Russia wants Iran to sell its natural gas.
If current European strategy of replacing Russian gas stays in place in the absence of a resolution to the Ukraine crisis, any gas deal with Iran would mean buying energy from Moscow.
The crisis which has seriously affected the everyday lives of the majority of the city’s nearly 600,000 population in the past few days, has been attributed to the critical depletion of the water in the Ekbatan Dam reservoir, with zero inflows.
With nothing in the pipes, water for drinking and other purposes is now being distributed by tanker trucks. Iran’s Red Crescent has also been distributing bottled water in the city.
A month ago, during a visit to Hamedan, capital of a province of the same name, President Ebrahim Raisi ordered the related authorities to solve the city’s water problem within two months.
In recent years, many cities across the country have been scenes of massive protests to the authorities’ mismanagement of water resources, harmful dam building, and politically motivated diversion of rivers that have devastated agriculture and drinking water sources. Also, there is rising temperatures and sand storms, expert attribute to global warming.
in July 2021 big crowds protested in over a dozen cities and towns in the southwestern province of Khuzestan where at least 700 villages were receiving regular supplies of water by tanker trucks.
In July 2021, Protests over water shortages in Khuzestan lasted for more than a week and it spread to several neighboring and nearby provinces including Chahar Mahal-Bakhtiari, Esfahan, Lorestan, and Bushehr.
Later in November water protests in the city of Isfahan, the capital of the central province of Esfahan, turned into anti-government unrest. Security forces cracked down on protesters with heavy handed tactics and many were injured by shotgun pellets.
Earlier this month, a large group of people in the city of Shahrekord in southwest Iran held a protest rally after nine days with no piped water. Officials said the problem stemmed from the recent flash floods in the region and the lack of any water treatment plant for the province. Water has been cut in Shahrekord, and four other cities due to the recent floods and increased water turbidity.
Ironically, despite a dam-building craze in the past 30 years, most of the water from this summer’s exceptional monsoon rains was lost in plains and deserts.
Iran is in the midst of a long drought that has become worse in the past couple of years. Ninety-seven percent of Iran’s land is arid or semi-arid.
The rapid growth in demand for water has led to severe depletion of available sources. The annual renewable water availability per capita reached a crisis level in 2021. Studies by the United Nations Development Program (UNDP) indicate that by 2040 Iran is likely to face a severe water stress level.
Several human factors, experts say, are contributing to the worsening situation: population growth, industrial demand, mismanagement of water resources including allocation to water-intensive industries, and planting many water-intensive crops including rice and sugarcane.
Steel mills are particularly blamed for draining available water resources. Most of Iran's largest steel factories are in arid regions such as Esfahan, Yazd, and Kerman provinces despite the very high water usage in steel production.
Critics blame Iran's development model, or lack of one, in the past few decades and unbalanced sectoral growth for much of the water crisis in the country.
Iran is also among the ten countries in the world that extract most groundwater and a hotspot of land subsidence induced by groundwater withdrawal.
