Subject: DNI-NEWS Digest - 9 Feb 2000 to 11 Feb 2000

There are 6 messages totalling 652 lines in this issue.

Topics of the day:

2. Iran Air carries out overhauling of Boeing 747 aircraft
3. Iran opens 100,000-tonne cane sugar plant.
5. Election Campaign Begins in Iran
6. Fwd:

Date: Fri, 11 Feb 2000 04:06:31 EST

Ambassador Robert H. Pelletreau: Remarks to Feb 4, 2000 ITA-AIC Conference on
Capitol Hill
Date: 10 Feb 2000
Time: 21:11:00
Remote Name:


by Ambassador Robert H. Pelletreau

Remarks to the American-Iranian Council-Iranian Trade Association Breakfast
Meeting February 4, 2000 Washington DC

Elections as instruments of change do not as yet have a solid or deeply
rooted history in most of the Middle East. War, coup d'etat, and tribal
succession have been the more normal and frequent catalysts of political
transition. In revolutionary Iran, however, elections have been electrifying
events. They are playing the key role in bringing about an evolution of
leadership and policy to reflect the changing aspirations of Iranian society.

The first Iranian election to capture Washington's attention was the
Presidential election of 1997 when Mohammad Khatami swept into power over the
favored Conservative candidate Nateq Nouri. Khatami secured an extraordinary
70% of the vote in a remarkable voter turnout of over 80%. He obtained
massive support from youth (and we should remember that the voting age in
Iran is 16, recently raised from 15), from women and from a substantial
protest vote against clerical corruption, misrule and intervention in
people's personal lives. The ruling clerical establishment to its credit did
not try to prevent him from taking office and the past 2-1/2 years have been
nothing short of a second revolution as political, economic and cultural life
have steadily opened, internal debate has flourished, and reformers have
challenged conservatives in every aspect of political life. Conservative
forces have shrewdly fought back even as they have slowly given ground.

The municipal elections last year confirmed the reforming trend in Iranian
politics as a clear majority of those elected to municipal councils
throughout the country espoused modernizing agendas.

And now in two weeks time elections will take place for the 290-seat Majlis,
widely considered along with the judiciary as the bastion of conservative
power and influence. A significant shift in power toward the reformers will
have far-reaching consequences, accelerating the reopening of Iran to the
outside world as well as the pace and scope of internal evolution. Iranians
are following the maneuvering of political factions and forces intently. The
Council of Guardians which passes on the revolutionary credentials of
candidates has reportedly disqualified several hundred candidates but the
field remains impressive - over 6000 candidates, among them some 500 women
for the 290 seats. Campaign fever is rampant. Conservative judges have closed
down several newspapers and imprisoned the popular Abdullah Nouri but have
not been able to silence their critics, which include respected senior
Ayatollah Montezeri, speaking out from house arrest. Former President
Rafsanjani has entered the lists and could well emerge as the next Majlis

There are many who find the Iranian electoral system imperfect, especially
the vetting role of the Council of Guardians, but we should also recognize
the elements of democracy which are present: choice among candidates, public
debate over programs and positions, and the secret ballot. Americans should
respect the results, whatever they are, and not rush to draw superficial
conclusions about what they mean. There will be many potential cross-over
alliances on specific issues, especially under a centrist Rafsanjani

Why Iran is Important

The Majlis elections are a major political event in Iran, and Iran is a
country of central importance to the Middle East and to the United States.
Let me briefly list the reasons why this is so.The Iranian nation of over
sixty million people is too large and too strategically located to be ignored
or isolated.

The Revolution has been in power for over 20 years. There are important
internal pressures for change, but no significant opposition movement exists,
inside or outside the country.

Rational development of the Central Asian States, a policy which the United
States ostensibly supports, cannot take place without permitting
diversification of their economies and export routes, including the
development of healthy and mutually beneficial relations with Iran.

Iran with its significant oil and particularly gas reserves will inevitable
have a major role to play in helping meet future world energy needs. The
United States cannot prevent it. Agreements with Total, Elf, Petronas,
Gazprom, Bow Valley and now a major agreement with Shell show that
international energy companies are not being deterred by ILSA or by U.S.
pressure from dealing with Iran. U.S. companies and U.S. technology should
also have an opportunity to participate in the development of these important

Iran and the United States have parallel interests in helping restore
stability and representative government to Afghanistan and in persuading
Afghanistan to end its safe haven for international terrorists and its
production of narcotics.

Many major issues for the United States in the 21st century-and here I would
cite international terrorism, narcotics trafficking and the spread of nuclear
weapons as three of the most urgent-will require cooperation between the
United States and Iran to be dealt with effectively.

I do not suggest that the U.S. step back from any national interest with
respect to Iran or the Middle East. Security and stability in the Gulf is a
vital U.S. national interest as is achieving a just, comprehensive and
durable peace between Israel and its neighbors. Nor will we compromise in any
way with terrorism. We must keep these core interests firmly in mind as we
analyze what is working and what is not in our current tactical approach to

Iranian-American differences are serious and cannot be simply brushed away,
but they are the product of modern history and are not as deep or intractable
as the ethno-national conflicts seen elsewhere. They are thus more treatable,
both diplomatically and intellectually. Many Iranians have relatives and
friends in the U.S. and public opinion in both countries seems ready for
further progress toward reconciliation.

Steps That Could be Taken Now

Over the period since President Khatemi's election, both Iran and the United
States have taken significant steps to lessen mutual hostility and begin
building a foundation for better relations. I will not catalog them; you in
this audience are quite familiar with the gestures that have been made. Our
own political campaign also makes dramatic, breakthrough actions unlikely.
But to close these remarks, I would like to suggest several additional steps
that the U.S. and Iran could take in the period immediately ahead to improve
the atmosphere between them.

The first of these is to expand the existing Dialogue Among Civilizations to
include visits by our respective elected representatives. In both countries,
these men and women have been chosen in open popular elections and can
legitimately speak for their societies without at the same time being
spokespersons for their governments or having their meetings labeled as
"official dialogue," a step which the Iranian Government has so far not been
ready to approve.

A set of small steps which the U.S. Administration could take with respect to
sanctions would be to further relax the existing sanctions regime along lines
that have already been established -- as humanitarian or purely civilian
trade openings which do not involve or enhance the repressive organs of

Iranian civilian aircraft and airports lack the sorts of safety equipment
recommended by today's international standards. The narrow definition of
aviation safety equipment currently approved could be expanded to include a
broader range of spare parts and safety upgrades for aircraft, relevant
testing equipment and ground safety equipment for civilian airports.

Iranian cities are suffering from various forms of environmental pollution.
The provision of equipment, spare parts and expertise to clean up pollution
and provide for cleaner air and cleaner water should be permitted. Such
exports will better the lives of ordinary Iranians and also act to improve
the global environment of our increasingly small planet.

The U.S. has authorized the export of agricultural commodities to Iran but
has in a sense taken away with one hand the permission extended by the other
through refusing to make its normal export credit guarantee programs
available for exports to Iran. This means that American farmers have begun to
sell corn because America is the preeminent supplier, but have been easily
outbid in the market for other grains by exporters from Australia and Europe
who can offer credit guarantee programs which they cannot.

We could also begin to allow Iranian consumer exports to enter the U.S.
market. I have in mind such items as carpets and pistachio nuts. The amounts
are small, but opening trade in these limited categories could be seen as a
complementary gesture to opening food and medicine exports in the other

Former President Rafsanjani called last month for the U.S. to return Iranian
money frozen in U.S. banks. Many Iranians still have the mistaken belief that
the U.S. is sitting on some vast Iranian treasure outside the framework of
the Algiers Accord and the Claims Tribunal it established. The U.S. should
prepare and publish a fact sheet or white paper providing accurate facts and
figures with respect to the "frozen assets" issue.

We can also do a better job of welcoming Iranian visitors with valid visas to
this country. Individual notifications to officials at the expected port of
entry are helpful, but what is needed is a more general agreement between
State and Justice and a quick check mechanism at all ports of entry through
which holders of valid visas could be rapidly verified without embarrassing
the visitor. Our technology is up to this challenge. Only the will is
lacking. And we should end the current humiliating practice of fingerprinting
every Iranian visitor - grandmothers, small children, the infirm, everyone -
unless there are specific suspicious circumstances in individual cases.

Action to improve things, of course, does not rest solely with the United
States. It is a two-way street and Iran, too, should be able to take
additional steps in the aftermath of parliamentary elections. I hope that at
the very least Iranian officials will lower their rhetoric with respect to
the peace process and not be hesitant to repeat in as many forums with as
many voices as possible their opposition to all forms of international
terrorism. Cooperation through appropriate international mechanisms in
investigating and bringing suspected terrorists to justice are also
reasonable steps to expect. Iranian political figures should have the
confidence to replace a certain amount of past posturing on issues regarding
dialogue and the United States with serious and substantive statements, not
sloganeering. We should allow each other's officials to attend international
conferences or multilateral meetings in the other country. In the United
Nations, also, there are many ways that Iran could signal its international
good citizenship through genuine adherence to conventions it has signed and
through signing or ratifying the broadly accepted anti-terrorism conventions
which it has not yet joined.

Finally, we here should understand that change is taking place in Iran.
Issues and attitudes are in debate which will have a determining effect on
the nation's future. Outside powers cannot have much influence on these
developments, nor should they. However, an attitude of respect by the United
States for the people, history, religion and civilization of Iran is most
likely to stimulate a similar posture by Iran toward the United States and
lead to the sort of relationship which will benefit not only the two
societies and economies, but the global community as well.

Date: Fri, 11 Feb 2000 04:07:22 EST
Subject: Iran Air carries out overhauling of Boeing 747 aircraft

Iran Air carries out overhauling of Boeing 747 aircraft
Date: 10 Feb 2000
Time: 20:31:17
Remote Name:

02/09/2000 BBC Worldwide Monitoring Source: IRNA news agency, Tehran, in
English 1307 gmt 9 Feb 00/BBC Worldwide Monitoring/(c) BBC

Text of report in English by the Iranian news agency IRNA

Tehran, 9th February: Despite different sanctions imposed on Iran by the US
over the past two decades, Iranian experts have managed to make basic and
semi-basic repair on the narrow-bodied planes and to begin overhauling the
Boeing 747 planes. Ahmad Reza Kazemi, the managing director of Iran 's flag
carrier, Iran Air, said at a ceremony, held here on Wednesday [9th February]
to mark triumph anniversary of the 1979 Islamic revolution, that 11
narrow-bodied planes have undergone fundamental repair work during the
post-revolution years. Kazemi said the 30-year-old Boeing 747 planes were
overhauled this year and joined the country's air fleet.

Date: Fri, 11 Feb 2000 04:08:15 EST
Subject: Iran opens 100,000-tonne cane sugar plant.

Iran opens 100,000-tonne cane sugar plant.
Date: 10 Feb 2000
Time: 20:30:30
Remote Name:


02/09/2000 Reuters English News Service (C) Reuters Limited 2000.

TEHRAN, Feb 9 (Reuters) - Iran , a major sugar importer, opened a cane sugar
plant with an annual production capacity of 100,000 tonnes on Wednesday, the
official irna news agency reported.

It said President Mohammad Khatami inaugurated the plant, built with a hard
currency investment of $45 million in the city of Shushtar in southwestern
Khuzestan province.

The plant, on which 500 billion rials ($61.4 million) were also spent, is
part of a large sugar cane development project in the province which includes
seven sugar extraction plants with a total annual capacity of 700,000 tonnes.

The agency did not say how much the plant's actual output would be.

Officials have said Iran 's sugar consumption is expected to rise to 2.5
million tonnes in 2004 from an estimated 2.1 million in 1999.

Iran imported about 900,000 tonnes of sugar in 1998, according to official

Date: Fri, 11 Feb 2000 04:09:17 EST

Date: 09 Feb 2000
Time: 06:18:45
Remote Name:

Tue Feb 8 23:13:54 2000

INVESTMENT: No need to knock, the door is open FOREIGN finance and investment
have become central elements in Iran 's economy after nearly two decades of
ideological suspicion and hostility. Barriers have been coming down much
faster than generally anticipated.

Until recently, foreign investment was strictly limited and sometimes barely
tolerated. The majlis set low ceilings for inward investment and maintained
onerous conditions.

Under the Khatami administration, foreign investment has officially been
assigned a central role in the economy, and nearly all restrictions are
gradually being lifted. Officials from the president down are open in
conceding that the economy cannot be properly developed without funds and
skills from abroad.

Foreign investment, starting with the first big deal in 1995, still amounts
to less than $5,000 million. And, so far, nearly all the funds are going into
the oil and gas sector.

The single biggest outside investment is by a consortium led by TotalFina of
France, with Petronas of Malaysia and Gazprom of Russia, in phases two and
three of the South Pars offshore gas field. The first big investment in the
sector, also by TotalFina, was in 1995 and involved $600 million for
development of the Sirri offshore oil field. In recent months, the Royal
Dutch/Shell Group and other French, as well as Italian and Canadian, firms
have together put up more than $2,000 million in three other projects to
develop oil resources.

Other sectors of the economy have had less success attracting funds from
abroad. Indeed, even the existing oil and gas investments are in offshore
projects, which tend not to stir up so much political controversy.

However, things are changing fast. This year should see the first foreign
investment in an onshore oil project, probably in the Darkhovin or Bangestan
areas. Shell and TotalFina are favoured but the list of hopeful bidders
includes every significant international company apart from the Americans.
The Oil Ministry is looking for at least $8,000 million in foreign finance in
the coming years.

Ministries responsible for other sectors of the economy, particularly
industries, energy and minerals, are scrambling to stake a claim to their
share from a wish list totalling nearly $45,000 million over the next decade.

Most recently, the Energy Ministry in 2000 launched the first of its
build-operate-transfer (BOT) projects to generate electricity. The first
tender is for a 900-MW plant in Guilan; at least two other projects are to be
offered later this year. With hard currency costs of power plant development
over the next 20 years put at about $20,000 million-30,000 million, energy
officials have high expectations from private investors abroad.

In 1999, a special economic zone was created near the Bandar Khomeini
petrochemicals complex which hopes to attract billions of dollars of
investment into private petrochemicals plants. The total target over the next
10-15 years is $12,000 million.

Expectations at other ministries, particularly for minerals development, are
equally ambitious.

The main formulae used by Tehran for foreign investment are the "buy- back",
BOT and the traditional joint venture.


After reviving the pre-revolution foreign investment attraction and
protection law for joint ventures in the early 1990s, the previous government
of President Rafsanjani introduced the concept of "buy-back" to get around
parliamentary limits on external indebtedness. Later in the decade, BOT was
promoted as a way of circumventing the constitutional ban on foreigners being
given "concessions".

Many dismiss the various formulae as part of the semantic games that have
been going on between various ideological factions for years. For example,
BOT is just another form of the hated 19th century concessions to foreign
companies. The BOT concessions of those days - which helped to develop
several industries, railways and even the oil fields - were simply too
monopolistic and one-sided.

Buy-back, based on the foreign investor recouping costs through the sale of
products over a set period, is also another form of concession. After all,
even under the despised concession agreements of a century ago, ownership
reverted to Iran after expiry of contracts.

But the general atmosphere in the country has changed so much since the
mid-1990s that the debate over various forms of foreign investment is fast
becoming academic.

So-called "conservatives" in the majlis and the mosque have gone along with
almost all liberalisation measures so far. If anything, it is the reformist
camp, where there is stronger nationalist sentiment, which may pose problems
in the longer term.

Foreign investment, both for the sake of obtaining outside finance and to
bring in better management, is in favour among nearly all factions and for
nearly all sectors. Nowadays, it is difficult to envisage any serious foreign
investor being turned down. A great deal of flexibility has been built into
the system, including the availability of one-off majlis approvals.

A foreign company can technically wholly own a local venture if it obtains
special, or project-specific approval from the majlis. The limit on foreign
stake-holding under the pre-revolution investment law of 1956 was 49 per
cent, reduced by the late Shah in the 1970s to 35 per cent.

The main problems in the way of obtaining greater foreign investment lie in
Iran 's own inability to absorb large amounts of foreign investment and in
the still negative perceptions of would-be investors.

However, foreign investor confidence has been improving in the past two
years, in parallel with changing political perceptions. The US has been
relaxing its sanctions regime against Tehran and European governments have
taken a positive view of political developments under Khatami.

Iran has a poor rating from international institutions. But if, as expected,
the World Bank resumes in 2000 the lending programme that it halted in 1994
under US pressure, the atmosphere for foreign investment in Iran is bound to
be improved.

The free investment and trade zones created in the 1990s may provide a
pointer to how far Iran will open itself up to foreign investors. In these
zones, which are geographically offshore, the legislation necessary for a
completely free market is almost in place. On the mainland, "special economic
zones", with less generous incentives, have also been created.

The free zones were introduced not simply to get around mainland restrictions
on inward investment, but to break ideological taboos and familiarise the
population with new ideas without provoking strong political opposition.
Offshore, and literally out of sight, the free zones allowed all sorts of
supposedly radical ideas to be introduced and tested. The tactic appears to
have worked only too well.

Date: Fri, 11 Feb 2000 07:51:55 EST
Subject: Election Campaign Begins in Iran

Election Campaign Begins in Iran
By Afshin Valinejad
Associated Press Writer
Thursday, Feb. 10, 2000; 1:31 p.m. EST

TEHRAN, Iran –– Campaign workers braved freezing temperatures Thursday,
plodding the streets of Iran before dawn to distribute leaflets and put up
posters for next week's parliamentary elections.

The Feb. 18 vote has become a battle between reformists and those who still
support the principles of the 1979 Islamic revolution. The outcome will
determine the future of the reforms launched by President Mohammad Khatami
since he was elected in 1997.

The campaign, which is restricted to a week, includes more than 6,000
candidates vying for the 290 seats in the Majlis, or parliament. Hard-liners
now enjoy a slight majority.

"No woman or man should stay at home on election day," Khatami was quoted as
saying in Thursday's editions of Fath newspaper. "Our dear youth should be
very excited and let others know that Iran is alive and the revolution is

Moderate candidates are banking on a huge turnout from Iran's young people,
most of whom were born after the revolution and support Khatami's drive for
greater social and political freedoms. Hard-liners are opposed to any
watering down of the strict Islamic codes of conduct that have been in force
since the clergy overthrew the U.S.-backed shah in 1979.

"We have to vote for relatively more reform-minded and capable candidates to
prevent hard-liners and conservatives from entering the Majlis," said Mahnaz
Eltefat, a university student in her 20s.

Hard-liners accuse moderates of betraying the Islamic revolution through
their calls for more social liberty and openness toward the West.

The hard-line body that supervises elections provoked protests when it said
earlier this week it had disqualified 576 applicants. Moderates accused The
Guardian Council, which is dominated by conservatives, of using its power to
eliminate pro-reform candidates. Hard-liners denied the charge, saying the
disqualified candidates did not fulfill the criteria laid down by law.

One electoral bloc, the Coalition of National-Religious Individuals, issued a
statement Thursday criticizing the screening as an "illegal weapon."

"We invite all Iranians to participate in the elections and to prevent with
their votes the entrance of anti-reform candidates to the parliament," the
statement added.

Meysam Saeedi, 30, a candidate of the main pro-Khatami group, the Islamic
Iran Participation Front, accused hard-liners of trying to portray a moderate
image ahead of the elections.

"Recently conservatives have said things similar to what reformists are
calling for and it makes people confused about who is who," Saeedi said.

The undoubted popularity of Khatami and his supporters appears to have
worried hard-liners, causing them to take steps to attract the moderate vote.

In January, Iran's supreme leader Ayatollah Ali Khamenei, a leading
conservative, pardoned the popular former mayor of Tehran after he had served
seven months of a two-year prison sentence for embezzlement.

Former President Hashemi Rafsanjani, a candidate who had swung toward the
hard-liners, has recently spoken in favor of greater access to the Internet
and the legalization of dish antennas that would allow Iranians to tune in to
foreign television broadcasts.

© Copyright 2000 The Associated Press

Date: Fri, 11 Feb 2000 18:27:48 EST
Subject: Fwd:
WASHINGTON - In advance of Iran's parliamentary elections next Friday, most
Western analysts are under the illusion that who controls the legislature
will determine whether Iran moves from clerical dictatorship to
representative democracy. By focusing exclusively on an electoral sideshow,
outsiders miss the main event.
The prevailing vision reduces Iran's domestic scene to a convenient plot of
good versus evil, with the good guys called reformers and the bad guys
called conservatives. Oversimplification in Washington has narrowed the
dialogue with Iran to focus on the ''reformers'' alone, which helps explain
why U.S. relations with Iran never seem to go anywhere. America has lost
sight of the big picture in Iran.
Conservatives may be as open as reformers to improving ties with the West.
But neither group is likely to have much effect, either on foreign relations
or on its own society, as long as the ultimate political authority rests not
with any popularly elected Parliament or president but with a ''supreme
leader'' chosen by fellow clerics.
In other words, the Iranian political dynamic is not democratic in the sense
that the term is understood in the West.
Nor is Iran's current constitutional structure merely the product of the
whimsical fantasies of a few theocrats. Washington should not treat the
notion of a head of state being a member of the clergy as an aberration.
Separation of church and state does not have strong roots in most Islamic
Washington should try altering its approach to promoting change in Iran.
That means engaging Iranians across the political spectrum. Not all
conservatives are opposed to relations with America, just as not every
reformer wants to see a rapprochement. The reality is less cut and dry.
For example, Ayatollah Hussein Ali Montazeri recently called for the
position of supreme leader to be popularly elected. This senior cleric was
the designated successor of the late Ayatollah Ruhollah Khomeini, who
fathered the revolution that overthrew the shah in 1979, until Ayatollah
Khomeini shoved him aside.
And the current president, Mohammed Khatami, for all his populist style, has
within his camp such figures as Ayatollah Sadegh Khalkali, a man notorious
in Iran for sentencing thousands of people to death for violating Islamic
The diversity of Iranian politics makes labels almost meaningless. Hard-line
conservatives, traditional conservatives, independents, old leftists, new
leftists, liberals and reformists abound. But what unites most of them is
pragmatism, and the master of this political art is Ali Akbar Hashemi
Rafsanjani, the former president, current chairman of the powerful
Expediency Council and probable next speaker of Parliament. He is now
running as an independent.
A popular story in Tehran points up his ability to be all things to all
people. In 1988 he was riding with the president and the prime Minister when
they came to a T junction in the road. The driver asked which way to turn.
The president said ''right.'' The prime minister said ''left.'' Mr.
Rafsanjani said, ''Signal left but go right.''
He recently suggested that Tehran and Washington would one day bridge their
But in Iran, it is two steps forward, one step back. Until his conviction
for heresy, Abdullah Nouri was a leading candidate to become speaker of
Parliament. Mr. Nouri, a popular cleric who published a widely read
newspaper, had openly challenged the idea of Islam as a monolithic ideology
subject to interpretation by a select few. His assertion that the supreme
leader is ''just another Iranian and not above the law'' is reminiscent of
the 17th century movement in Britain that challenged the power of the king
to override the laws of Parliament.
Increasing numbers of Iranians who supported the revolution are challenging
the supreme leader's claim to be God's representative on earth and refusing
to accept the notion that arbitrary arrests and executions are the will of
their God. The frustrations of ordinary Iranians, especially women and young
people, can only further democratic reforms if these are fostered
Rather than take sides in a largely meaningless election and tailor
sanctions to the result, America should take a more practical approach. This
means continuing to expand the sale of agricultural and other products as a
step toward lifting all sanctions and normalizing relations.
The best way to advance reform in Iran is by offering the Islamic Republic a
remarkably simple commodity that has been sorely lacking - respect.
The writer is founder and chairman of Business Executives for National
Security, an organization of U.S. business leaders. He contributed this
comment to the International Herald Tribune.

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End of DNI-NEWS Digest - 9 Feb 2000 to 11 Feb 2000