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NUCLEAR TALKS AND SANCTIONS RELIEF WILL NOT FIX IRAN’S BANKRUPT ECONOMY (PART 2)

In the previous part of this article, we reviewed the broken state of Iran’s economy and Rouhani’s plans to mend the situation through negotiations with the West and sanctions relief. In this part, we’ll further examine the inflation and unemployment in Iran, and the prospects for Iran’s economic future under Rouhani.

Liquidity and Inflation Increase

On May 25, 2013, the Central Bank declared that liquidity had reached 4,300 trillion Rials (approximately $172 billion). Eight months later, on February 12, 2014, the Central Bank published an update, declaring that by the end of December, liquidity had increased by 19.6 percent in comparison to October, reaching 5,500 trillion Rials (approximately $220 billion).

The amount of liquidity, which indicates the halt of production and the high inflation and poverty rate, is due to the printing of banknotes without a financial backing.

One of the accusations that Rouhani made against Ahmadinejad during the elections was that he had printed over 500 trillion Rials’ (approximately $20 billion) worth of banknotes without backing. Presently, Rouhani is treading the same path as his predecessor, and this shows that Rouhani’s economic measures have only ended up getting him bogged down in the same predicament.

Unemployment and Poverty

The Iranian regime’s officials declare the unemployment rate at 13 percent. However, the real statistics are far worse.

Mostafa Kavakebian, a member of the Iranian regime’s Majlis (parliament), declared last May that 11 million people are jobless. Given that the workforce in Iran (between ages 10 and 59) number at about 25 million people, the real unemployment rate is 44 percent.

Furthermore, a large portion of the middle-class population has joined the poor. According to figures published by the Iranian regime’s own official institutions, for a family to live over the poverty line, the minimum monthly salary is 18.6 million Rials (approximately $744). Therefore, based on income statistics, 80 to 90 percent of the Iranian people are under the poverty line.

On February 13, 2014, Resalat newspaper cited a member of the Majlis’ budget and planning commission, writing, “From the approximately 80 million-strong population of Iran, only one million people are earning more than 10 million Rials [approximately $400] per month. The rest receive lower wages.”

Every year, approximately 5 million people are pushed under the poverty line due to high medical expenses. Furthermore, because of high education expenses, the number of street-wandering and worker-children is increasing at a worrying rate, and has reached 3.5 million just this year.

Will the Iranian Regime’s Economic Crisis end with the Lifting of Sanctions?

In a word, no. From the beginning of the mullahs’ rule until 2012, when sanctions against the oil sector began, the Iranian regime earned over $1.5 trillion from oil sales. $700 billion of it belongs to Ahmadinejad’s era alone. With this oil income, the regime could have become the number one ranking industrial country of the Middle East, and one of the newly industrialised countries of the world.

But the mullahs will never allow the country to enter the industrialisation phase, for they spend all of the country’s income on two things:

  1. Activities pertaining to the survival and preservation of the regime, including the funding of suppressive forces such as the IRGC, police, Bassij, judiciary and prisons; the export of terrorism and Islamic fundamentalism abroad; and the nuclear weapons project.
  2. Lining their own pockets. For instance, a while ago, a trailer stopped in Turkey was found to contain 18 tons of gold belonging to Khamenei’s son. Also, a Reuters investigative group revealed the €84 billion income of Khamenei. And this is barely scratching the surface.

Conclusion

Even the Iranian regime’s own officials have confessed that while this regime struggles for its own survival through suppression, sponsoring terrorism, and the pursuit of nuclear weaponry; and while its ranks are fraught with gangs of looters; the economic conditions will only worsen, and there is no prospect for improvement. In order to fix the economic crisis, the wheels of production must start spinning again.

But Iran’s industries are only working at 30 percent capacity. More than one million people join the country’s workforce every year, and the regime is incapable of providing jobs for them. During his eight years, Ahmadinejad only produced an average of 14 thousand jobs per year. Presently, Iran’s economic growth is at –5.8 percent. To cut a long story short, the country’s economy is totally bankrupt and in ruins.

Therefore, the problems that Iran is facing are far too complicated to be solved through talks and negotiations with the US, and sanctions relief will, at best, provide the regime with a short reprieve. The reality is what the Iranian regime’s own media are fearfully predicting: “Urban uprisings and a revolution of the famished.”

Majeed Mohades is a member of the People’s Mojahedin Organisation of Iran (PMOI), the main opposition to the clerical regime in Tehran. He lives in Iraq.


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