President Rouhani says nuclear deal has already helped Iran’s economy

Last Updated Dec 8, 2013 6:11 PM EST

TEHRAN, Iran - Iran's President Hassan Rouhani said Sunday that last month's nuclear deal with world powers has already boosted the country's economy, as U.N. inspectors visited an Iranian plant that could make nuclear bomb fuel, taking the country up on its offer for greater scrutiny.

Rouhani, meanwhile, continues a push to convince skeptics at home and abroad of the benefits brought by the pact's partial sanctions relief. In an example of the challenges facing Rouhani, hard-line lawmakers accused U.S.-educated Foreign Minister Mohammad Javad Zarif, who played a major role in the nuclear deal, of being intimidated by the United States.

 Rouhani told an open session of parliament that, after the "success" of the talks, investors were gravitating to businesses and the stock exchange.

"Economic activities have been shifted to the stock exchange from gold, hard currency and real estate," said Rouhani in his televised speech. He gave no specific figures.

Iran's economy has been hit hard by sanctions imposed over its nuclear program. Rouhani has recently stressed the deal's offer of sanctions relief in return for a halt to parts of Iran's uranium enrichment program to challenge criticism from hard-liners who say Iran is giving up too much for too little.

The Obama administration estimates relief from some sanctions in exchange for a temporary pause in Iran's nuclear enrichment program will amount to just $7 billion, a meager amount for a nation of nearly 80 million people - it's less than one month's worth of Iran's oil production and just 7 percent of Iran's overseas cash that remains frozen under the sanctions.

Nonetheless, analysts say that the deal is a first step toward economic normalcy, and thus is likely to have a psychological effect that could boost markets.

The $68 billion budget predicts a U.S. dollar set to 26,000 Iranian rials. The rial is currently 29,000 to the dollar. Parliament will decide on the budget within months. Iran also separately budgets some $200 billion for hundreds of government banks and companies.

Rouhani also said the country's budget aims for more foreign investment, privatization and decentralization of the economy.

He said the budget will decrease the inflation rate, a major priority of the government. Inflation currently stands at about 40 percent but Rouhani said last week he hopes to reduce it to 25 percent by March 2015.

Rouhani said the proposed budget is 50 percent more than current year's budget. It covers Iran's fiscal year that starts March 21, 2014.

This is Rouhani's first budget. He took office in August, succeeding an outgoing president, Mahmoud Ahmadinejad, widely blamed for economic mismanagement. In addition to inflation, Iran also suffers from a high unemployment rate that runs to 12.2 percent, according to official numbers, and may be twice that among young, educated people.

Iran's economy largely depends on oil revenue, which represents up to 80 percent of its foreign income and about 50 percent of its total income.

The West suspects Iran's nuclear program is aimed at weapons development. Iran says it is for peaceful purposes like power generation, medicine and research.

Rouhani spoke as inspectors from the U.N. nuclear watchdog began their visit to a heavy water production plant that Iran agreed to open to inspection last month, according to state TV.

The increased transparency is one of the various spin-offs from an interim deal that Iran struck with six world powers last month to curb its nuclear program in return for some easing of sanctions, Reuters reports.

CBS News correspondent Elizabeth Palmer reports from Tehran that there's talk that the inspectors are next going to be allowed to inspect Iran's uranium mines, which is something the international community would very much like to have a good close look at.

Sunday's inspection was the first time in more than two years that the International Atomic Energy Agency (IAEA) had been allowed to go to the Arak heavy water production plant, which is designed to supply a research reactor under construction nearby.

Iran's heavy water work is of great concern for the West because it could in theory be used in the process of making a nuclear bomb, although Tehran says the program is for peaceful purposes.

Two inspectors arrived in Tehran on Saturday and met experts from Iran's own atomic energy agency before travelling to Arak in the evening, Iran's ISNA news agency reported.

"The inspection is under way and will be finished this afternoon, and they (the inspectors) will return to Tehran," said Behrouz Kamalvandi, spokesman for the Iranian atomic energy agency. "The inspectors will go back to Vienna tonight."

Officials from Iran and the United States, France, Germany, Britain, China and Russia are to meet on Dec. 9-10 in Vienna, where the IAEA is based, for expert-level talks on implementing the interim accord.


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