Iran Regime’s Fractured Economy and Its Impact on the People

Iran Regime’s Fractured Economy and Its Impact on the People

Written by
Shamsi Saadati

Mullahs try to blame sanctions for Iran’s failing economy, regime’s officials & state-run media identify corruption as the real reason.

While the Iranian regime tries to blame sanctions as the only reason for the country’s failing economy, the regime’s officials and state-run media, during their infightings, identify the institutionalized corruption and the regime’s failed economic structure as the only reason for the freefall of Iran’s economy.

In an article published on August 27, the state-run Mardomsalari daily wrote: “Today we have an extremely failed and fallen economy. The main reason is the currency shock and the plundering of the economy by semi-private companies and banks. Sanctions have become an excuse for some people to plunder the country. We suffer from both foreign and domestic sanctions and those who profit from this situation.”

By the direct order of the regime’s Supreme Leader, Ali Khamenei, the Revolutionary Guards (IRGC), under the pretext of privatization, have for years confiscated the majority of the Iranian companies. in this regard, the regime’s president Hassan Rouhani, during the regime’s infighting on June 22, 2017, said: “In the [Ahmadinejad] government portions of the country’s economy was placed under the control of the military and security apparatuses under the pretext of privatization,” he said in reference to the IRGC. He described these entities as the ‘armed government’ and acknowledged the fact that the private sector cannot compete with them.

A clear example of this so-called “privatization” is Haft Tappeh Sugarcane factory in Khuzestan Province and Hepco Company in Arak – factories that were continually active and successful but went bankrupt after the transfer of their shares. Now, workers of these companies are on strike for not receiving their wages for months.

In another development, the Iranian regime was about to sell the oil to the Iranian society to compensate for its budget deficit. This happened, after different governments in the mullahs’ regime for years borrowed huge amounts of money from banks, alongside plundering the oil sale revenues, and whenever they had a shortage of money, they ordered printing more money. This caused more than 2 trillion tomans of liquidity and unbridled inflation in this budget.

 

According to the estimates of the Central Bank’s Economic Studies and Policies Department, the volume of liquidity in the week ending June 18, 2020, reached 26514.6 trillion rials, which shows a growth of 7.3 percent compared to the end of the previous year. Also, the volume of monetary base at the end of June 2020 reached 3834.7 trillion rials, which shows a growth of 8.8% compared to the end of the previous year.

To compensate for its budget deficit, Hassan Rouhani’s government started to use the Iranian stock market. This caused the sudden freefall of the Iranian stock market. In this regard, the state-run Donya-e Eghtesad on August 25 wrote: “After the government’s round-the-clock advertisements for securing the purchase of shares from the stock exchange and bringing it to the record index of two million units on August 9 this year, the purchase of shares fell and a large amount of liquidity left the stock exchange. Over the past two weeks, we have seen the index fall from two million units to 1.6 million units. Thus, the main indicator of the Tehran Stock Exchange was 22.2% away from the peak of August 10. It is noteworthy that in the last 11 trading days, the total value of the stock market has decreased by $116 billion in the total stock exchange and OTC.”

Hassan Rouhani’s approach

Last week, in a video conference with Khamenei, the regime’s president Hassan Rouhani bogusly claimed that although the oil price has decreased due to the coronavirus pandemic, his government has been able to control the situation. “While the economies of many major countries shrank by up to 20 percent, Iran’s economy suffered only 3 percent in the face of the problems caused by the coronavirus outbreak. This is a sign of the government’s ability to stand up to and manage this problem,” he claimed.

Yet, he failed to say that if this is true, why are there daily protests by all walks of life in Iran for not receiving their wages for months? If his claims are true, why is the dollar exchange rate in Iran currently at 23,7500 rials? And what happened to the regime’s negative 7 percent of economic growth?

In this regard, Rouhani’s Minister of Economy, Farhad Dejpasand on June 7, told the state-run Khabar Online news agency: “The coronavirus outbreak damaged Iran’s GDP by 15 percent. Even if the sanctions are lifted and we could freely export our oil, we will not have access to all resources.”

The Iranian regime’s Parliament Research Center in a report published in May announced a sharp decline in people’s living standards in the 2010s.

In this regard, while referring to this report, the state-run Eqtesad News website, on June 4, reported: “According to the Majlis Research Center, the poverty line of four-person households in Tehran has increased from 2.5 million tomans to 4.5 million tomans in the last two years, which means that the inflation rate has increased by 80%, and this inflation rate has led to significant growth in the poverty line in Tehran and other parts of the country. This, along with a significant reduction of general income, has led to an increase in the poverty rate over the years, and the available evidence suggests that this variable is increasing in 2019 and 2020.”

In addition, the state-run Jamaran website, on August 22, wrote: “The report given by the Research Center says that country’s economy, only due to the coronavirus outbreak, will have a 7.5 to 11 percent decline in GDP. Studies recently published by the Parliamentary Research Center show that only due to the coronavirus outbreak, it is predicted that between 2.870 million to 6.431 million jobs will be lost in Iran in this year alone.”

Impact on people

These wrong economic policies and the regime’s institutionalized corruption has put more pressure on Iranian society, which is currently grappling with the COVID-19 outbreak and its rising death toll. Mehdi Abouri, the regime’s deputy minister of roads and urban development, told
the state-run Mehr news agency on Sunday: “There are about 1.7 million households in dilapidated areas, and 3.2 million households reside in informal settlements. In other words, there are around 20 million people living in the suburbs and shantytowns.”

The regime’s wrong economic policies along with its oppression and now the coronavirus crisis have increased the Iranian society’s restiveness. In this regard, the state-run Ebtekar daily in July 31 wrote: “The current situation cannot be continued. We have been through the warning point for a long time. If the starving people’s movement is fully established, there will be nothing left. This society has reached its boiling point many times, but it has stalled for whatever reason. November [nationwide Iran protests] was just the partial rising of the starving people. If there is no positive and fundamental change in the current situation, sooner or later, a fire will ignite; a fire that will burn everything.”

As Mr. Abbas Davari, the Chairman of the Labor Committee of the National Council of Resistance of Iran (NCRI), said: In these circumstances, no Sino-deal, Euro-trade, or US-bargain can save the ruined economy that is designed only for enriching the few ruling mullahs. The only elixir is regime change.

 

Iran Regime’s Fractured Economy and Its Impact on the People

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