A look at Iran’s collapsing industries

At a time when The Wall Street Journal reports the regime in Iran has enjoyed “more than $10 billion in sanctions relief,” policies implemented by Tehran have laid the grounds for the total annihilation of industries across the country. Unemployment is skyrocketing and domestic production lines are coming to a standstill.

Iran was home to around 155,000 small industrial units, creating around 4.4 million jobs. In recent years, however, 45% of these units, amounting to nearly 70,000, have been forced to close down and to this end 2 million people became unemployed.

Construction projects in Iran have nearly come to a complete halt, and the regime is further seeking a so-called “privatization” scheme. It is worth noting, however, the “private” firms involved belong to senior regime officials and their inner circles, making Iran’s private sector associated directly or indirectly to the regime.

Entities such as the Revolutionary Guards, state police, the “Mostazafan” and “Shaheed” foundations, the “Setad Ejraiye Farmane Hazrate Emam” – Headquarters for Executing the Order of the Imam, and other institutes linked to the regime’s inner power circle, with the number of such illegal entities topping 6,000… have all played roles in the status quo establishing in Iran.

Inflation, skyrocketing prices and increasing profits by the banks making goods even more expensive have all lead to a trend of decreasing competition from domestically manufactured goods. The result is none other than factories and workshops going bankrupt.

Industrial unit owners raised specific demands in a meeting with Iranian Vice President Eshaq Jahangiri.

“Industrial unit owners have many complaints over this administration’s last year in office. They protested their shortcomings, of the lack of coordination amongst various apparatuses to set aside all obstacles set before production… They said administration decisions have caused such damages to this sector,” the state-run media reported. “Recession has deepened to such an extent even the Vice President, with all his executive powers, cannot get the industries’ wheels rolling.”

Results such as an 18% tax increase on the production sector, 32% in 2014 and 23% in 2015 is the report card of Iranian President Hassan Rouhani in relation to taxes, and 2016 has no prospect of providing any improvement in this regard.

The banks in Iran, never loyal to set interest rates, obviously controlled by the regime, are increasing facilitations and other measures to increase their own benefits, further reports indicate.

In such conditions media inside Iran are reporting on a daily basis of the country’s industry going down the drain, giving a small picture of the utterly chaotic status of Iran’ economy.

Despite all this, entities linked to the regime and wealthy individuals involved in this regard, are importing goods into the country in colossal quantities.

While supporting the import of foreign goods and profiting from this phenomenon, Mohammad Reza Nematzadeh, Rouhani’s incumbent Minister of Industry has even called on Iran’s customs to lift all restrictions placed over a “famous Korean brand,” going as far as demanding the cancellation of an $850 million fine. Iran’s customs officials, however, believe the ministry has no authority to make any such demands.

The Korean company had sidestepped custom regulations and imported parts and fined for not having any reservation for the ruling government’s rights, and as a result fined $850 million. However, Nematzadeh wrote a letter to the customs chief demanding this fine be cancelled, reports show.

Analysts believe such concessions to South Korea by Iran has roots in the mullahs’ utter isolation by foreign investors. This is especially concerning for Tehran following the recent U.S. elections, as far less foreign investors are now willing to take such a risk of signing contracts with Tehran. Despite all this, such concessions by Rouhani’s cabinet have catastrophic effects on Iran’s economy.

While the Iranian regime may argue the speed of sanctions relief has been too slow, even in violation of the agreement, it would be hard to claim Tehran has a positive intention with such money after the parliament recently called for expanded military spending.

“Iranian lawmakers approved plans on Monday (January 9th) to expand military spending to five percent of the budget, including developing the country’s long-range missile program… The vote is a boost to Iran’s military establishment – the regular army, the elite Islamic Revolutionary Guard Corps (IRGC) and defense ministry – which was allocated almost 2 percent of the 2015-16 budget,” according to Reuters.

This comes at a time when a high degree of malnutrition due to poverty has literally become part of life in some Iranian provinces.

“Malnutrition in the central Zagros areas has been completely forgotten. Poverty has become a way of life for villagers here,” according to salamatnews.com.

“30% of the people are hungry, meaning they lack any guaranteed food source,” said Iranian Deputy Health Minister Ali Akbar Sayari.

It is quite obvious why industrial units are closing one after another, and why production comes to a major halt under a completely corrupt economy in Iran, run a regime with foul intentions. This allows senior regime officials and their close elite to pocket huge profits through importing cheap goods.

This is the very reason why the Iranian people are living under such economic hardships, with so many suffering due to poverty, unemployment and …

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