Iran’s economic super crisis

Iran’s economic super crisis

As the US sanctions hit Iran’s energy and bank sector today, top officials in Iran insist that nothing serious has happened, dismissing concerns about the impact of sanctions on the country’s economy.

“America wanted to cut to zero Iran’s oil sales … but we will continue to sell our oil … to break sanctions,” Rouhani told economists at a meeting broadcasted live on state television.

“This is an economic war against Iran but … America should learn that it cannot use the language of force against Iran … We are prepared to resist any pressure,” Rouhani said.

Tasnim state-run News Agency quoted the Managing Director of the Iran Export Guaranty Fund as saying that “given the foreign exchange reserves and the country’s economic capacities, even if we do not have three years of oil exports, the country will be managed.”

Rouhani also said that “Today the enemy (the United States) is targeting our economy … the main target of sanctions is our people.”

These remarks have been echoed by some Western media and critics of America’s tough policy on Iran.

In anti-US government orchestrated rallies in Iran yesterday, which marked the anniversary of the US embassy takeover in 1979, supporters of the Iranian regime were seen chanting “death to America”.

However, any Iranian would tell you that ordinary Iranians do not share that sentiment. Videos posted on social media covering the rallies showed that school students who are forced to attend the rallies every year, refused to chant “death to America”, while a voice on the video said, “Death to Khamenei” instead.

In previous gatherings and demonstrations in Iran, people were also heard chanting “our enemy is right here, they lie when they say it’s America”.

In short, Iranians know who to blame for their misfortune. They have known for 40 years that the cause of all their problems,whether it be economic, social and political, is the Iranian regime.

The economy has been suffering for a long time now. A look into Iranian state-media will tell you that the dire state of the economy is the product of 40 years of systematic mismanagement, corruption and theft by the Iranian regime. Even Iranian regime experts are calling it a “super crisis”.

Iran’s economic super crisis

State-media report that every day more factories and industries are closing down due to bankruptcy leading to more unemployment.

The high inflation rate which some economic experts call “super inflation” has eliminated the Iranian middle class which has resulted in in the poverty of 80% of the population.

According to Professor Steve Hanke, an economist who periodically posts Iran’s inflation rate on his Twitter account, Iran’s inflation rate is 265%.

Iranian companies and bankruptcy

In comments covered by the ISNA state-run News Agency today, the Advisor of the Association of Automobile Manufacturers of Iran said that the “determination of unrealistic prices by the Competition Council has caused car parts and automobile manufacturers to suffer losses.”

“If this continues, with the bankruptcy of car parts manufacturers, automobile production will also be stopped,” Davoud Mirkhani Rashti added.

Other reports show that many foreign companies have been forced to fire their employees as a result of the economic downfall.

A Business Development Expert at Caspian Fashion, a company that represents 25 European apparel brands in Iran with more than 100 stores and more than 2,500 employees has that about half of its employees were laid off recently.

“In recent months, on one hand, due to the rising dollar, and on the other hand, due to the ban on the import of apparel into the country, we had to lay off a large number of our employees and close a number of our stores, which had a huge impact on our company’s activities,” Ashraf Abadi said in comments carried by Tasnim.

Soaring unemployment

According to ILNA state-run News Agency, only 14 million people in Iran have permanent jobs with a stable income.

“This is while only 23 million people are employed in Iran and 9 million of them do not have a permanent, stable job,” the new agency which covers labor news wrote on November 4.

Citing the lack of accountability by Iran officials in relation to the economy, the news agency wrote that “The energy of politicians in the sectors of industry, services and agriculture is used exclusively in political and factional infighting”.

“Factions are merely thinking of consolidating power rather than boosting employment,” it said.

In another report, the website forecasted the unemployment of 100,000 car manufacturing companies.

“There are 800,000 workers in the car parts and automobile industry. If 100,000 workers are laid off, it means a catastrophe has taken place,” ILNA said quoting Ali Khodaei, a member of the Board of Directors of the Supreme Council of Islamic Labor Council.

“Laborers have turned into the most vulnerable part of the economy,” he added.

Iran’s systematic corruption

According to Transparency International, an NGO that tracks global corruption, Iran is one of the most corrupt countries in the world.

Iran is ranked 130 out of 180 world countries on the global Corruption Perceptions Index (CPI) 2017, published by Transparency International on February 2017.

Below is a list of incidents of government corruption that was published on state media amidst the regime’s factional infighting. As always, this is just the tip of the iceberg. 

  •  379 instances of those affiliated with the Rouhani government receiving very large salaries
  •  Reports on the embezzlement of around 8 billion toumans from the Iran Teachers’ Fund
  •  A 1,200 billion touman embezzlement of the Meli Bank and Melat Bank by an Attorney General of the regime
  • The membership of Oil Minister Mohammad Reza Nematzadeh in the board of directors of 19 companies
  •  The 1,000 billion touman salary of one of Rouhani’s cabinet ministers in the course of three years
  •  The head of the Melat Bank having received onebillion and 400 thousand toumans

It worth noting that the budget for 2018 was announced as 11,949,353,674,000,000 rials. Only one instance of the embezzlement listed above could have solved serious problems.

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