Know. But there were bayous through out the area when they got here and the meterie and the bayou merged. They were dammed up. As a child, growing up in the city, i remember the fight for dry land. There were open ditches in the cities, at that time, they were gradually filled in and covered up. I can remember, i used to do a lot of walking on the levees at that time. Were talking back in the 50s and 6 os and they gradually got higher and higher and higher so you couldnt even see the water anymore from the streets and of course, walking on the tops of those levees, youre actually above the roofs of most of the houses. My question is this, since i basically was a northshore resident, is it not a fact that if you put lock systems over the london avenue canal and the 72 street canal, the water that, for instance, that is brought in on the hurricane surge has to go somewhere. The people in the communities of slidell, laplace, they are wondering where that water goes, they know, in their heart, its going to go to them and it will increase the level of flood water in their areas. Is it a fact or is it not . Thats my question. David i think i understand the question. Its about the rebound factor from one side to the other. The corps are building closure structures so that is a fact. St. John parish said they had the worse storm because the closure forced the strong surge up. I dont really believe the model would show its a shallow body of water so i dont know hot the fetch would be. I doubt, honestly, that would be the case. Ive been told that if you build a closure structure at the end, that by the time the water got back up, the wind it would draw the water back up. So, i dont think the rebounds would be the effect. If you look at dutch dialogues, too, and the product there, we tried hard to see were going to work inside the levees. There are people working on the coastal restoration. The third line is inside the levee. The drawing that shows up is where we drew an island in a lake as a flood defense structure for the levee. You can add islands to break storm surges. You can do things on the northshore that would mitigate or dampen anything from this flood system. I dont think the northshore is going to flood there. I think the science on that would prove it. Im not the scientist. Were on a very fight schedule, unfortunately. I want to close by asking you again, this question that really plagues me and a lot of people who care about new orleans. If, good forbid, a storm if, god forbid, a storm would hit, how well would the city do . David well, speculation on our feature. [laughter] when isaac hit, a good friend of mine, pete dirks said we have an isaac defense system. It made it for that. Levees require reinvestment. Its not a free system. You have to put money back into it, you have to operate it, maintain it. St. B, rnard parish voted no against it. If you think were going to be okay without maintaining, the question is, are we going to have the resources to invest in these levees . Are we going to become a more attractive city so more people want to live here with us, atrisk. Do you want to live at risk in this place we have to make more beautiful. Why do you like new orleans . Is it a beautiful city . Kind of. How do we get your children, 14, 16 and 18, to live us with . Most of americas not this interesting. [laughter] thats true. [laughter] david the only safety is in working together. I dont think its hard to convince the country, this is the most interesting city in america. Its been a lift to build the systems necessary to keep it alive. Youre getting there. Are you confident that youre going to get there . David we have to do our work, you know. We are are work in progress. Thank you very much. [applause] [music]. Tonight on cspan, they talk about lifting iran sanctions and fema director, craig, discussing disaster preparedness. On saturday, a public commemoration of the hurricane katrina. Members of congress and local leaders will take part in an event to remember the victims of the storm. Watch live coverage saturday at 6 00 pm eastern here on cspan. Florence harding said she only had one hobby and that was warren hardy. She was a significant force in his presidency. She would help define the role. This sunday night at 8 00 eastern on first ladies, influence and image, examining their lives. Sundays at 8 00 pm eastern on cspan 3. Economists for International Peace discussed lifting economic sanctions. This is an hour. Lets get started. I first wanted to welcome all of you. Im the senior associate here. I wanted to welcome our guest speakers today, they are the chief economist and hes the author of the report which were going to discuss today, very timely, very insightful on economic implications of liftinging sanctions in iran. And we only have about 60 minutes today, so i want us to jump right into it and well have a discussion amongst ourselves and then hand it over to all of you. Thanks very much for inviting us. First i should say that im one of the others of the report. I happen to be the boss, i think thats why my name comes out there. One of the other authors is here as well. You know, we did this because we thought that the Nuclear Agreement of july 15th was one of the most important events of this time and its going to have important economic implications for the world and iran. I have to confess, we also thought that since this was the dog days of the summer, that our report would be the most important event to come out but i think we were wrong on that. [laughter] the public has been chaotic. Never the less, we think its important to try to understand the economic implications of the lifting of sanctions on iran. And sometimes methods that are not consistent. To organize it, we said were going to look at the implications at the global level, what affect it going to have on the global economy, irans trading partners and what its going to do to the iran econo economy. Lets start with the global level. The most important implication is the increase in oil exports by iran as a result of lifting sanctions. There was a drop by about a Million Barrels a day. For later reference, that the composition of trading partners also shifted so the big drop was in the european the trade with western europe, whereas trade with the eastern partners, the oil trade oil exports to eastern partners, actually increased in some cases and certainly the proportion was much larger. We said, lets say that irans oil exports were going to, as a result, were going to grow about a Million Barrels a day in a 612month after the court. Thats what people expect is the time needed to bring production back up to this level. And we took that assumption of a Million Barrels a day and simulated it in a multicountry model. So, this is a model of multiple countries trading with each other and then we insert a Million Barrels a day. We actually simulated the affect of lifting other sanctions. Those were of less significance. The big affect is these additional Million Barrels a day had an affect of lowering oil prices by 14 . Now, some people i, myself, was a bit surprised because a Million Barrels a day doesnt seem like a lot of oil and how do you get a drop of 14 . Its the other side of the oil demand is quite in elastic. We talk about in elastic oil demand in terms of the price of oil going up, demand doesnt fall very much. The other side of that coin is, if you have an increase in supply of a small amount, the price will fall by quite a large amount, as you can see from this from this graph, that if you have a shift in the supply curve, a Million Barrels a day, given how steep that demand curve is, you get a pretty big drop in the price of oil. Keep in mind, that this is the pure effect of the additional Million Barrels a day. Its not a prediction of what the price of oil is going to be six months from now because other things affect it like growth in china, everywhere else. This is a simulation that assumes no strategic behavior by other Oil Exporters. Were following what seems to be the case with other Oil Producers, particularly the ones with swing capacity which is saudi arabia, they didnt adjust their production. They continued keeping the production as it is. What is the affect of this additional Million Barrels a day and the drop in oil on Different Countries . Thats what were trying to get at. We express this in terms of welfare, it is more precise income. The effect is about 3 increase welfare for iran. Iran is the one country, because it has an additional quantity exported and the price of oil falling, is going to be a netgainer, even though it is an oil exporter. If you look at other countries, the price of the Oil Exporters, typically lose. For them, the price of oil has fallen as a result of the additional as a result in the iranian export. Oil importers, including the u. S. , gain. This is the classic terms of trade shock we have experienced in different ways in the upswing and downswing for the price of oil in different times in history. This is a global model that doesnt actually look closely at irans bilateral trading. We used a technique to try to simulate or try to crack irans bilateral trading relationships using a gravity model, which is looking at the growth rate of the trading partners and irans own growth rate and looking at what that trade would have been in the absence of sanction and looked at the effects of 2012 and 2013 and how that changed as the events when they became binding. We could use that to calculate the net loss in exports. Bilateral experts that iran underwent as a result of the tightening of sanctions in 2012 and 2013. You can see that in this last column, here, theres a loss of it over the last two years of various trading partners, including some of the western europeans ones, totally to 17 billion or 3. 5 over a twoyear period. This could be thought of as the net effect of sanctions on exports. And, conversely, this is the amount by which we might exports to go back up, onceing sanctions are lifted. Whats happened, both before sanction s, as well as during the sanctions era, there was a shift toward eastern partners. They had been looking east for policy or Something Like that and they were trading more with russia, with korea, india, that accelerated during the sanctions era. What we will see with the lifting of sanctions, first of all, is an increase in trade with the west, both simply because that is what was cut but because of the composition of goods they trade with the west are very different. Iran basically buys consumer goods from the eastern partners, but it actually buys hightech machinery and equipment from the western partners and it is in dire need of those, having neglected this during the sanctions period. Let me turn to the third part, which is the affect on the iranian economy. And, as i think many of you know, during the period of sanctions being tighted in 20123 and 2013, iran went into a recession and the growth has become positive just this last year to about 3 . We expect that to be somewhat higher with the stimulus offered by the increase in oil exports, its the revenue thats going to revive the economy and we expect growth to be about 5 to 6 by 2017. Now, thats one side. Now you can see from the graph, the other big issue in iran, as it is in many other countries is unemployment. Here, theres an interesting twist to the usual story, if you look at Unemployment Rates and Labor Force Participation rates, partig particularly, if you split it up between women and men, we found a pattern during sanctions and the pattern was the Unemployment Rate for young women went up. Women were dropping out as well as were they were increasing unemployment. The Unemployment Rate for young men actually went down. This is a bit of a surprise. If you think about it, its one of those cases where economics is actually useful because. [laughter] what was going on there was during the sanctions period, 1 2012 2013, it depreciated rapidly. When it depreciates, the tradeable sector is relatively more profitable. Women were in the nontradeable sector in serves, whereas the men were in the tradeable sector like the automobile sector. You had a shift of a pattern of unemployment. They were suffering from the depreciation and so women were having trouble finding jobs and many of them dropped out of the labor force at that time. Now, if you buy the story, this whole pattern would reverse with the with the end of sanctions. You would get Foreign Exchange coming in so the Service Sector would start growing so you would be able to absorb woman into the labor force and into employment. The tradeable sector, thats my last point, the tradeable sector might suffer. This is an important point to keep in mind because this event, the lifting of sanctions can be thought of as a windfall to iran. It really matters how you manage this windfall if its going to generate any kind of sustainable growth. There, theres some concerns because we in the report, we track the experience of previous windfalls because weve all had windfalls before when the price of oil has doubled and tripled before. The way they managed those windfalls was not very impressive. In 73, when the price of oil first shot up, they decided to sideline the National Planning office and decided, by himself, on all the Public Investment projects to be spent on that and they werent very welldesigned or managed and it was a wasted opportunity. More recently, when it rose in the early 200s, which is another windfall, there was a big windfall and it was interesting because when there is this windfall, you get an Exchange Rate of appreciation, it is going up. Traditionally, you expect the nonoil tradeable sector to suffer and it did, during that period, expect for two sectors who was pharmaceuticals and chemicals. They continued to grow. Why is that . It turns out, those are the two that were subsidized the most. They received direct subsidies because the president wanted to promote those to the eastern partners and the other is that, not only did they receive direct subsidies, they got the benefit from the most of the energy subsidies. So, really, the reason why they kept the nonoil tradeable sector going in these two areas, with huge subsidies, which is a very in efficient way efficient way. Lets try to make good use of this and the way to do that would be i dont think the Real Exchange depreciation can be avoided, that is just a phenomenon of market forces. We can lower the cost of production of these nonoil tradeable sectors by removing some of the manmade constraints. There are lots of constraints that are policy and bureaucratic restraints. If we can implement some of those policies and reforms, you can actually bring down the cost even when the Exchange Rate is depreciating. Secondly, infrastructure. And in particular, iran is a good infrastructure in some ways. The telecommunications has been neglected. This is critical for these nonoil exportable sectors, they need telecoms, the hightech one. This is whats going to be key for the postoil era because iran actually has to start preparing for what its going to do when the oil runs out. Theres tremendous potential because its got a higheducated population. If you want to move to the nonoil era, you have to move to a knowledge economy and those require hightech communications, equipment and good infrastructure and the complimentary policies. Thank you. On wall street, they say never confuse this. Everyone thinks theyre the same. So, let me hand it over to youre no, im just going to speak. First of all, id like to congratulate him and his team for their timely and comprehensive analysis of the lifting of irans sanctions. Let me say a bit on the study and a bit on policy implications, the study brings homes a couple of things. Intensification of sanctions since 2012 has been on the iranian economy and how important the boost of lifting them will be. It makes you understand better why iranians came to the table, and also why the negotiators are confident that they are unlikely, the western negotiators so to speak, they are unlikely to flout the agreement in the future. Second, the report shows the lifting of sanctions will be beneficial for the World Economy overall, even though Oil Producers will lose. It is a striking fact that the economies of developing countries on average are about 25 30 bigger than they were prefinancial crisis. At the iranian economy is not much different than it was then. That to me highlights in a simple way, were talking real money in these numbers. The report discusses the lifting of sanctions as a windfall which suggests a onetime big game gain. The lifting of sanctions should not be called a windfall in my view. It is much more of a fundamental shift in the iranian economy. An economic regime change, not a political regime change. An economic regime change. It should be looked at as the potential for a new start, a start were iranian iran integrates into the world market in an integral way. We are confident with the lifting of sections. The welfare gains could run up significant larger than the 2 a year or so estimated in the report. Because in addition to the onetime boost to all exports, and the efficiency effects of trade opening, you have to factor in a sustained increase in total productivity growth and in private investment. Not only foreign investment, but also domestic private investment. Chanta is absolutely right to stress that these beneficial effects will depend dominantly on how iran deals with the new economic regime. As an opportunity to enact Structural Reforms and clean up its governance or alternatively as an opportunity to capture by the state and its associated special interests. And possibly get up to no good abroad. Iran is a large and sophisticated economy. About the same size in terms of population and income as turkey. An economy about 40 larger and 40 richer perperson roughly than egypt. It is much more than an oil economy or an oil state. Presanctions, it produced 1. 6 million cars. That is almost three times as many as italy produces today. Admittedly, italy is not a good example of efficiency. [laughter] i was working in italy when they were producing 2 million cars. 1975. Opening up iran has an effect on world trade and investment at a time when world trade is stuttering. The report says iran could attract the number could be much higher than that. Turkey attracted 13 billion in 2013 and turkey does not have huge oil reserves in need of technology and money to restart and expand. As for the effect on oil markets, the report stresses the biggest gain for the World Economy. I have to say i have my doubts as to whether this is good for the world today. I understand the point that it improves the incomes of oil importers, including the united states. It reduces the incomes of Oil Exporters. But the point is we live now in a lowinflation, low price world. We live in a low price world. Low oil price world. I believe you can have too much of a good thing. The oil price has already fallen so fast and so low that the wellknown destabilizing effects on the budgets of Oil Exporters and on the income statements and Balance Sheets of companies and the oil sectors are already very significant. They could outweigh the positive effects of consumer demand. Looked at another way, oil is today a much more a part of the smaller part of the Family Budget but it is absolutely critical at the margin for Oil Producers. I am also concerned this is slightly below the belt, chanta, i am concerned about the effect of Even Lower Oil prices on Carbon Emissions and the increased Oil Consumption that it implies. As i mentioned in a report last month in this room, it is amazing to me how the ifi, International Financial institutions, can submit analysis to put climate on the top of the list and then to ignore the next. Finally, a word about business and about economic policies. Businesses have already assumed that the deal is going to go ahead and have been flocking to tehran for months. The opportunities in investment in the Energy Sector and in providing all manner of goods and especially services. How big the opportunities turn out to be depends on the Energy Investment regime iran put in place on the evolution of the real Exchange Rate on the International Investment regime and on the growth of the iranian economy. Obviously the numbers on these policies are in the hands of iranian politicians. But the International Community is not without tools to help influence this process. Iran throughout this period has continued to receive article four missions from the imf and cooperate with them. And apparently to listen to them. The message we have is that in all respects they are moving in the right direction on Macro Economic policies. Businesses will be looking for sound fiscal monetary policy. A sense that inflation under control. That the Exchange Rate is simple. The Exchange Rate regime is simple and nondiscriminatory. The Exchange Rate must be realistic. Imf can help on all of these. As important is the fact that iran has renewed its bid as it already has several times to join the world trade organization. Its a multiyear process. Its a very frustrating process. But it is also one that provides a unique opportunity to reshape irans economy for modern times. A tough wto negotiation will result in an iranian economy with more uniform tariffs, more liberal investment regime, affecting particularly trade service, a reduction in the role of state run enterprises, respect for International Standards and norms, including intellectual property. Crucially, if it is done well, the wto negotiation will greatly strengthen the hands of reformers in iran. For the World Bank Iran would represent the single most important active program in the middle east region. There will be large lending opportunities, and these are obviously important for the banks efforts. In the end the money will be secondary in iran. The bank will bring enormous experience in analytical resources on irans most pressing challenges. Reforming the trade regime, improving competitiveness, upgrading infrastructure, modernizing the education system, established a more transparent governance mechanism, reforming the labor market and the list goes on. I want to say the developing economies learned the hard way that the Economic Analysis is not the most important. It is the politics, stupid. I may be naive but i like to believe that if iran can make substantial progress in terms of growth and economic integration and that the benefits are felt by families and the young, that the politics will gradually change. Chantas report helps clarify everyones thinking. Let me start with a simple question which probably doesnt have a simple answer. If irans Oil Production and exports are projected to double at a time when the price of oil has been cut by more than half, could we look back a few years from now and see this opening up with a negative. That the gdp was higher when there were sections . Not in the case of iran. If you think about it, iran is still currently in oildependent economy. Their comparative advantage was oil and that was the one thing they cannot produce. Or they were not able to export much. Even if the price of oil falls, it will not fall so far that iran will suddenly discover its comparative advantage with something else. There will be a game. Gain the magnitude of the benefits will be lower. There is no question about that. I think there is still a net gain. Those figures are debated about the price of oil for the iranians to be able to balance its budget. Do you have an assessment of that at the bank . Let me ask my colleague. I dont think we have an for iran. 100 . Do you have an assessment let me move the subject slightly. Both of you have been working in the field of developing economics for a long time. There was an interesting piece about myanmar, burma in the wall street journal about how the countrys economic opening has enriched government cronies and military cronies and it has not trickled down to the population of myanmar. If you can kind of project it two or three years forward based on a comparative perspective that you have, how do you see this potential removal of economic sanctions playing out within iran . What other kind of countries which often times people who do Political Science like to invoke 1970s china or the soviet union, is there another country or region in which you find most applicable to irans potential . I can answer a little bit on the first part of the question which is we have done some analysis on several other countries in the region, particularly tunisia and europe egypt. We find the unemployment problem is directly related to crony capitalism. We find that if the ben ali regime in tunisia had control family connections that on the banking sector, the telecom sector, and the transport sector. As a result those sectors stood in the way of export. There is some work by kevin harris at princeton that is trying to do a similar kind of analysis of iran. It is preliminary work. He is finding various connections in the private sector with the regime. That could lead to similar consequences. I think there is a concern it is really transferable competition so that elite capture does not get in the way of promoting. I agree completely with what he said. What i would add is that on principles, not having means to iran now or ever, im just looking at the data. And comparing it with other countries. You have a country that that has been closed for a while there has been a big shift in resources. You can import. This is somewhat artificial. Im sure that a lot of positions have been developed and is highly distorted and relatively isolated economy. In the course of the last three or four years. In this sense this is why i have put so much stress on the wto negotiations. Which the iranians are really very keen on and they keep coming back to it. That is precisely what the wto negotiations can help offset to a degree. By putting forward the interest of exporters and creating a Binding Mechanism for the reformers in the country to change things. That is what is happened in china, vietnam, a number of other countries. They underwent serious wto negotiations. The other point i would make is that this is drawing a little bit from the recent experience in egypt. If the regime is confident and well entrenched, a can take on its special interests more easily. If the regime is feeling threatened, and secure, and youre the best judge of that, not me, then its capacity to confront cronies and special interests is more compensated. Complicated. I sense there has been an evolution in the thinking in washington about the wisdom of irans acceptance of the wto. Because in the past, during the bush administration, that was received as a carrot and we should not offer that to them. Now there is a sense there is an economic mafia joining wto and is not necessarily in your interest. A couple more questions were handed over to all of you simply set your questions ready. We talk a little bit there were the potential winners and losers as a result of the removal of sanctions. The winners are major oil importers, china, europe. The potential losers are the Oil Producers. Maybe other countries that are not necessarily in the obvious categories that this economic category might have. Devarajan just to be clear, we were talking about winners and losers as a result of the effect of increasing oil exports on the world oil price. That was simply that one particular thread that we were tracing through. There are lots of other implications as a result of the nuclear deal, including the lifting of sanctions that will change the pattern of winners and losers. There are people who are saying that this could actually lead to Greater Peace in the middle east region. There are some huge winners there like all of us. We dont analyze but could definitely be part of the story. Dudash i want to stress with a set at the beginning. What i said we have already had this big boom from oil prices. Actually the result of been quite disappointing in terms of economic growth. In part because, im talking about the decline in oil prices that has already occurred, in part because the effects on investment and many Oil Exporters has been more important than many had anticipated. They cut back quite a bit in part because in many instances the benefits of Lower Oil Prices had not filtered down to consumers. Sometimes for good reason because they would use subsidies. In the case of iran as well they have a very Serious Energy subsidy reform program. In part because some governments just needed more taxes. They have increased taxes. The effects have been quite disappointing. What worries me most now is that there are a lot of precarious situations among the Oil Producers. I dont assume i understand the logic of the transfer of resources being from low spenders to high spenders. Being positive for world demand in the short term. I question that is the case now. I am concerned that further Oil Price Declines will mean no effect on the world aggregate demand and perhaps a decline in world aggregate demand because of the effect it has on Oil Producers at this low level of oil prices. Devarajan i meant to respond to one of your comments earlier. I think it is important to separate two things which is the effect of an increase in oil supply in the market and its effect on oil prices. From the secular decline in those prices we saw towards the end of 2014 and we are seeing again now, which is more on the demand side. One of the reasons we are not seeing this growth has a result of the Lower Oil Prices is because its a lack of growth that is putting oil prices down. We have to separate those two. They are two different phenomena. Low inflation is also as a result of the lack of growth. We are seeing a slowdown in china, lower growth in china, lower growth in europe. And a nacent recovery in the united states. Sadjadpour i remember when the major financial crisis happened, the Global Crisis happened in 2008. It did not really affect the Economic Situation in tehran. Iran bragged about having was basically immune to Global Economic trends. Putting aside the price of oil, some of these major collapses were happening in emerging markets. How do you see that impacting the Economic Situation in iran moving forward . Devarajan it is still the case that iran is not all the intricate it integrated into the Global Financial system. I think the effect of the current turmoil, iran in the near future will be through the oil prices. That is the main channel were going to see until iran becomes more integrated in the Global Financial system. Sadjadpour hand it over to all of you. If you just introduce yourself and be as brief as possible. Michael gordon. Under this following up on the notion of winners and losers, under the jcp airway, in the iran agreement which is a rather complicated document, there is a long list of banks, companies, individuals, enterprises of various sorts on whom sanctions are removed. And it is a phased process. Some are removed right away on implementation day when the nuclear conditions are met. Some are removed on transition day eight years down the line. And in some cases they are to be removed by the European Union but not necessarily by the united states, depending on the entity involved. Many, if not most of these enterprises are linked to the irtc and people that have been involved in nuclear program. The question i have is did you examine within the framework of the iranian economy what the effect is on removing these sanctions in terms of strengthening or weakening areas players . Various does the agreement strengthen the irtclinked companies and if this strengthens the weaker of these companies encourages economic reform in iraq . Discourages it, or has no effect . Devarajan it is a big question and a very important one. We did not look at that. Mainly for the reasons that you alluded to. It is very collocated and there is a lot of uncertainty even over how much money there is that is being blocked. I read an article in the New York Times about the range of estimates. We really did not we ducked that issue. Its potentially very important. We also dont want a mix of stocks. We are talking about the effect of the lifting of sanctions on the productive capacity of the economy. These are assets that are sitting there, the money is sitting there in the question is will they be able to use it rather than have it frozen . Its a question of how much money there is and also its a political judgment for how they will use it. We dont have any prior independent assessment of how those resources will be used. Dudash because of the fact that they had benefited from economic isolation, they fell behind by the International Oil companies. Somehow this economic opening will be integral to the juice of the revolutionary guard. And a rising tide all boats rise, and the guard will stand to benefit from this as well. The question is if they stand to benefit from opening up more than the population. That remains to be seen. Thats why i asked about burma. These things happen and often times we look back if it is russia or burma in retrospect and we say to cronies got very wealthy but it did not necessarily trickle down to the people the way they anticipated. I will come back to the back. My question is a bit more with regards to domestic politics and its effect with regards to Economic Reforms. Iran has talked about Economic Reforms for years. Part of why there has not been a lot of success has been there is not been this sort of consensus is among the different political actors. And basically the lack of political will. Rouhani has quite an extensive economic reform plan in my question is what are some areas where iran will have an easier time politically instigating some of these reforms, basically developing the productive factor as well . What are some areas where they might have to wait a bit longer to do later on . Sadjadpour great question. \ hello, you mentioned the implications of the iran deal as an economic regime change. You acknowledge that relies on choices. I want to take it one set backwards. How can we say that the postdeal economic environment constitutes economic regime change when a run will be facing stronger sanctions in place for the next several years than it did before the 2001 when the 2010 with the two sections regime with put in power was put in power . Even if they managed to insert a clause in case of sanctions. And when the u. S. Implementation sanctions on other issues have become much stronger and much more effective over the years . Is it economic regime change or other going back to something similar to what it was before 2010 one there were still a lot of restrictions in place . Sadjadpour lets take one more. We did a study on iran and i think one of the implications of lifting the sanctions, it will strenghthen the position of the government. That brings me to the issue raised that lifting the sanctions is good for the moderate government. They will proceed further with reform. With the sanctions, the hardliners benefit more. That speaks to the issue of Exchange Rate. Shanta mentioned the windfall. I think it will not allow significant depreciation of the official rate. Appreciation what happened is that the black market rate will appreciate and you will eliminate the spread between the two rates. Any appreciation of the Exchange Rate which will be very small, only 10 , the black market could be offset with further structural reform. The rouhani government will go ahead with the reforms in an environment where the sections are lifted. Sadjadpour some good questions. What are the sectors that are less sensitive for them to try to reform economically . Devarajan i was hoping you would answer. [laughter] devarajan it is really a combination of which sectors are where there is a economically compelling case for reform. And there is a political window. I dont know about sectors but certainly the whole area of subsidies seems to be a high priority on both sides. There was a political imperative to do something about subsidies because it is draining the fiscal balance enormously. And obviously there is an economic benefit. Iran may be more so than others, did an amazing reform of subsidies seven years ago. This is one where they replaced fuel subsidies with cash transfers, with a particular twist which was keeping in mind. I keep telling other countries to do it. They provided the cash transfers ahead of the reform and a waiver