This document discusses problems facing Iran's private sector and proposes solutions. It outlines that Iran faces problems from dollar economics like inflation and volatility that hinders investment. The proposed solutions include establishing a nondominium framework for sharing risk and reward between stakeholders, creating an energy stock instrument that can be prepaid for and later returned for energy, and financing projects through stock based on goods, services, and productive assets. This would help transition Iran's economy and currency to be based more on energy and lessen reliance on the dollar.
2. Introduction
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3. Setting the Scene
Session One – Problems and Solutions
Context
20th Century Problems
21st Century Solutions
Session Two - 21st Century Financing
Development Investment and Trade Credit Clearing
Case Studies
Outcomes
Session Three – 21st Century Funding
Funding Investment
Case Studies
Outcomes
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4. Session One - Executive Summary
Context
Markets
Iran
Problem
Dollar Economics and Dollar Diplomacy
Solutions
Nondominium - framework agreement eg ECO Energy Charter
Stock - credit instrument
Financing – stock based on goods and services
Funding – stock based upon productive assets
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5. Context - Prepay
In the late 1990's Enron discovered Prepay
Commodities sold at a discount for dollars & delivered later
Example: oil market price $100: 1m barrels sold for $90 now
and delivery in 6 months
Enron used Prepay to defraud creditors and investors
Since 2005 investment banks and producers have used prepay
to defraud the oil market
7. Context – Saudi Oil Production
Prepay
Unstable
Equilibrium
Prepay Shock
8. Context - Geopolitics
US is managing oil price decline to & through $60/barrel
Why?
US gasoline prices <$2.50/gallon pre-election
US antagonists such as Iran, Russia and Venezuela will be
destabilised: populations will blame government not US
Saudis have hedged (sold forward) using futures contracts at
the expense of speculative buyers
10. Context – Iran's Balance Sheet
Massively solvent
Energy Resources – huge reserves of oil, natural gas, also solar
energy and wind
Human Resources – probably one of the greatest pools of
intellectual capital there is
Zero $ Debt
BUT capital stock depreciating through lack of investment
11. Context – Iran's Income & Expenditure
Dangerously illiquid and inflationary
Physical and Financial Sanctions
Revenues collapsing
Cut off from dollar system
Subsidies unsustainable
Rampant inflation caused by deficit-based bank-created currency
12. Problems
Dollar Economics
Inflation
Wasteful energy use
Volatility makes investment difficult
Dollar diplomacy
13. Solutions
Nondominium
Neutral framework agreement for sharing of risk and reward
Nondominium does not own anything, employ anyone, or contract
with anyone but its members do
Stock
Undated prepay instrument returnable in exchange for value
Created, issued, exchanged and returned within Nondominium
framework
15. Nondominium
Custodian
Custody of data and accounts
Mutual Guarantee
Energy Users – exchange value for the use of energy
Energy Managers
Operate system, manage risk, provide quality control
Energy Investors
Buy Units of stock returnable in exchange for energy
Custodian issues energy stock on instruction of producers
Manager supervises issue, exchange & return
16. Nondominium
Neutral
No stakeholder has a dominant right
Stakeholders have veto rights
Mathematics: +1, -1 and 0
Physics: positive, negative and neutral
Economics: Public, Private....and Nondominium
Complementary & Consensual
Additional to existing agreements
No-one has to join unless they see it as in their interests
18. Energy 'Stock'
Stock
Original form of 'equity' – not shares in Joint Stock Company
Prepay/credit instrument issued at a discount to market price
Returnable in payment for energy supplied
Prepayment for supply
Undated
Return
Discount gives absolute return: eg $10's worth of gas for $8 now
Rate of Return is variable – literally the rate over time at which
stock may be returned to the issuer or sold
No interest (money for the use of money)
19. How it Works
Stock Consumers
$ or Stock energy
Returned
Stock Custodian
Investors
Stock
$
Stock Proportional Shares
Managers, Producers
20. Energy Economics
Energy-based Currency
Energy Clearing Union
Mutual guarantee of energy stock issue
Energy value exchanged/swapped by reference to the dollar
Dollar simply used as a unit of measure to keep score of transactions
and investment
There is no scarcity of metres and kilogrammes !
21. Energy Economics
Energy Investment
Danish policy after 1973 oil shock exposed energy insecurity
Identify desired outcome eg heat, electricity, transport
Identify solution with least fuel input
ie what happens in the system for each KwH of electricity or Mmbtu
of heat produced?
Energy return against energy invested – least energy cost solution
Energy investment through stock may be priced in dollars
22. Transition through Gas - International
Caspian gas energy co-operation project
Potential for gas stock as energy currency
Potential Caspian gas benchmark price in dollars
Potential for oil and electricity to be priced and swapped by
reference to gas
Potential for investment: 'energy loans' begin with 'gas loans'
E is for Energy Co-operation - potential for Russia, Iran
(producers) to link with China (consumer) to create the E-3
ECO members may then join to create an E-12
And so on to the EU............?
23. Transition through Gas - Iran
Raise domestic carbon fuel and electricity prices to
international level
Producers issue energy stock ('Energy Rials') to population
Energy Rial equivalent to energy content of a unit of gas
Banks manage transparent issue, exchange and return
Producers accept Energy Rials against energy supplied
Outcome – an Energy Standard of exchange
– Currency stabilised
– Wasteful consumption minimised
– There can never be a shortage of metres, kilogrammes or
standard units of account
