Can sanctions relief heal Iran’s economy ?

iran-rial-us-dollar

By A. Pakatchi

The second round of talks between Iran and P5+1 has just ended and another series of talks is planned for March. One issue of concern is Iran’s economy and whether sanctions relief can heal the deep wounds of the Iranian regime.

The Iranian regime is now faced with many internal crises, of which one of the most important is the economic crisis. Precisely speaking, Iran’s uncontainable economy can be described as collapsed, paralyzed and bankrupt. Some critics of inside the Iranian regime describe their own economy as being on a free-fall. The serious question that comes up now, is if there is any way out and if Iran can survive this crisis.

Rouhani believes that the key to resolve this economic crisis is the removal of the sanctions applied by the west. He claimed he could do this through rounds of atomic talks with the west. Not everyone agreed with him.

Javad Mansoori, former commander of IRGC and a close ally to Khamenei, told the Iranian Fars News Agency, “The situation in our country will not get any better and our problems will not be solved, because the roots of problems come from within.”  He added, “It is not that if Mr. Zarif signs the final resolution, and the west keeps its promises, then all our problems will be solved.” He concluded, “Even if it rains gold, nothing will change

Looking at the figures given by Iranian regime itself, gives us a prospect of today‘s Iran. The economic problems this regime faces are beyond being easily solved. Javan newspaper, published by IRGC, quotes from Ali Tabibnia, Iran’s minister for economics that 8.5 million Iranians are now unemployed. This is while the production entities are just working at 30% capacity and the inflation rate is above 40%.

A main problem-creating factor for Iranian economy is the regime itself. Many of the regime‘s agents have their own extrajudicial “trusts”. There is a huge business of importing goods, mostly from China, run by family members of high ranking officials of the regime. They use their position – plus healthy amounts of bribes – to circumvent the normal and legal processes.

An important center that reflects the state of Iran’s economy is the Iranian traditional markets, the bazaars. Bazaars in Iran were once one of the main trade centers. They are now suffering from an unprecedented recession that, according to the regime’s Chamber of Commerce “has been unprecedented in the past 70 years” (Etemad newspaper Feb. 12, 2014).

An essential reason for the recession is the poverty among the Iranian people.

Not many people have the power to buy goods any more. Most bazaar producers have to close down, if things do not change by the end of the Iranian year, (March). That would inject many more unemployed into Iran’s working force. The recession is not just for one or two trades, indeed it encompasses all. Etemad newspaper, close to Rouhani, wrote, “This year, even a 50% price reduction did not change anything.”  This recession, of course, means that the wheels of production are turning slowly and may be moving toward a complete halt.

Iran is also suffering from liquidity which itself causes languorous production, high inflation and finally poverty for the people. This also associates with government printing new bills without any backing. One of the issues Rouhani exposed about his predecessor, Ahmadinejad  was that he had printed banknotes, without backing, worth of 50 thousands billion Toomans* (about $15 billion). Now Rouhani, himself, is going the same path, showing he is in the same slough.

The number of Iranians going under poverty line is increasing. The Iranian state newspaper, Etelaat, wrote, “The monthly salary approved by the former government pays only about 5 days of a family’s monthly expenses.”

About 80 to 90 percent of the Iranian people are under the poverty line. Ressalat, another state newspaper reported on February 13, “Only one million of the 80 million Iranians have incomes above one million Toomans.”

Regime’s minister of health has recently announced, “7.5% of Iranian people – equivalent to 5 million – go under poverty line each year.”

Right now there are Iranians who, unable to afford the extremely high costs of accommodation, live in tents just outside the cities, or even sleep in empty graves. The rent for a two bedroom house, in Tehran is, at least 400 thousand Toomans, which is what a worker earns in a whole month. High costs of education in Iran have pushed many children out of school. The number of under-aged children in Iran who are working has reached about 3.5 million.

Considering all the above, the question remains to be answered that will sanctions relief, as some claim, really solve Iran’s economic crisis?

In its 35-year rule, the mullahs’ regime has made much income from its oil sales. Just before the sanctions, last year, the regime’s revenue from its oil sales reached to $1,500 billion. 700 billion of it was from when Ahmadi Nejad was president. With this money, the Iranian regime could be the first ranking industrial state, at least in the Middle East. On the world level this regime could compete with countries such as Brazil, South Korea, or Indonesia.

In the mullahs’ regime, money is spent on two things, which never allow it to enter the industrial phase:

  1. Expenses to keep this regime in power. That includes its suppressive entities, such as IRGC, Bassij corps, the police, courts, prisons… and export of terrorism and fundamentalism, the war with Iraq, and finally its projects to build nuclear bombs.
  2. “Looters without border”: There are members of the ruling families that the executive systems of the government have no power to control them.

What is the remedy for Iran’s economy?

The main part of Iran’s revenues is spent on the means of keeping this regime on its feet. This is not seen in any other country in the world. The main obstacle to Iran becoming a productive industrial state is this “Velayat Faghih” regime. Iran’s economic growth rate has now reached to minus 8.5%. For any country, this can mean bankruptcy and destruction.

Therefore, the problems of Iran’s economic crisis are not anything that negotiations with US or sanctions relief can be of any help to them.

Something that has extremely horrified the Iranian regime and nowadays has become the subject of discussions in the Iranian parliament or its state media is “urban uprisings” and “uprisings of the famished.”

*:  1 US Dollar = 2,500 Toomans

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