From currency crisis to rising inflation: Closer look at Iran’s economic turmoil

Hossein Raqfar, an economy expert in Iran, has acknowledged the drastic financial situation facing the regime. Calculations are showing difficult periods ahead even despite what seems, at surface at least, a rebounding currency following the Iranian currency – the rial – plunging to 190,000 against the US dollar.

While the dollar is claimed to sell at around 105,000 rials as we speak, experts are saying even if the rates rise to the regime’s official 42,000 rial the country would be facing deep and widespread recession.

Numerous production units will close down, leading to a significant surge in unemployment. Such developments raise concerns of more people pouring into the streets and a repeat of the Dec 2017 / Jan 2018 uprising.

Such undeniable realities on the ground in Iran leave the regime no choice but to engineer an artificial currency gain, aiming to prevent various imbalances and instabilities, economically, socially and even politically.

Saving face

The Iranian regime is the main element behind all of this country’s economic woes, including the currency crisis. There are a variety of political and social reservations taken into consideration, in line with the old saying of “Ask much to get little.”

The Iranian regime and its array of apologists/lobbyists abroad claim prices in Iran are skyrocketing due to foreign pressures and sanctions. With the currency rates rising artificially, the same voices claim these numbers are dropping due to their management.

These political and psychological schemes are targeting public opinion and seeking to calm a highly restive and potentially uprising society. A staunch reminder is the fact that the rial is hovering at rates three times that of ten months ago. Considering the various aspects in play effecting Iran’s currency rates, the economy is on path to a complete bankruptcy.

“Our equations show Iran’s economy will go bankrupt even with the U.S. dollar trading at 80,000 rials. Huge expenses will be placed on the shoulders of the country’s production lines and families will lose their purchasing powers at unprecedented scales. If rates remain above the 80,000 rial mark, the situation will be even worse,” Raqfar added in his remarks published in Iranian media.

Iranians shop in a supermarket in north Tehran on April 29, 2015. (File photo: AP)

 

Skyrocketing inflation

One of the regime’s main goals in raising the currency rates was to compensate for the government’s budget deficit and other such shortfalls in Iran’s banking system. This goal was never met, neither for the government’s concerns nor the banking system.

Fueling woes are skyrocketing prices across the board and with this ongoing trend, the regime’s experts are forecasting a rise of official inflation rates to 80 and even 100 percent. This will have drastic consequences for those making the calls in Tehran.

According to Professor Steve Hanke of Johns Hopkins University, Iran’s actual inflation rate the regime refuses to officially report stands at 170.5 percent.

These price hikes are witnessed in government goods and services, including the recent turmoil seen in increasing prices of airplane tickets. The Iranian regime actually profited from this dilemma, seeking to gain more currency to pay for government debts, including to the banks and especially private banks.

Speaking of banks, Ruhollah Khodarahmi, head of the Iranian regime’s Bank Keshavarzi (Agriculture), acknowledged the closing of 40 bank branches since late March with the goal of decreasing unnecessary expenses. In his interview with the regime’s officials IRNA news agency, this bank chief signaled the closing of another 50 further branches by March 2019.

Rest assured the actual numbers depict a far more drastic image and these remarks portray merely a tip of the iceberg for the economic dilemma engulfing the Iranian regime.

Banking system down

Iran’s banking system is literally on life support, with money provided by the regime and out of ordinary people’s pockets.

The banks are in no position to provide any support for production units, as they continue to be heavily dependent on the Central Bank and the government. Many of the country’s banks will shutdown without loans from the Central Bank.

The situation at hand for Iran’s economy is very serious and it is safe to say a soon-to-be-witnessed domino effect is prone to destroy production, ultimately leading to the crumbling of the entire economy.

To compensate a portion of their bankruptcy, the banks are charging 30 to 33 percent interest rates on production units, all with the Majlis (parliament) looking the other way. The Iranian regime’s so-called legislative body is under the control of the powerful and rich few in Iran.

As the banks continue their fraud and corrupt practices. Forecasts indicate more production lines will shut down in the months ahead and a new wave of unemployment will spread across the country. Production line owners are literally praying for a turn of events. With no positive development in sight, most of these units have been forced to shut down.

For the ruling regime in Iran this is a recipe for disaster, reminding Tehran about the very sparks fueling the late December 2017 uprising.

As we speak, the Iranian regime is going the distance to save the banking system by further plundering the Iranian people. The people will eventually reach their threshold and this regime, weakened by powerful sanctions and escalating isolation, no longer has the capacity to confront the protesting Iranian people.

A storm is coming, to say the least.

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Why is Iran’s currency nosediving?

From late July of last year Iran’s currency, the rial, has lost 40 percent of its value against the United States dollar. This is considered a national catastrophe by many analysts.

What is the reason and roots of this significant crisis?

We are hearing a variety of answers these days, including:

  • Unknown fate of the Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA)
  • S. President Donald Trump appointing former U.S. Ambassador to the U.N. John Bolton as his new National Security Advisor after sacking General H.R. McMaster
  • Deliberate increasing of the U.S. dollar value by the government of Iranian President Hassan Rouhani to provide for a portion of the regime’s budget deficit
  • Banks going bankrupt as people are losing their trust

All these are correct. A closer look, however, leads us to this conclusion that these developments have formulated during the past two years. All the while, the rial’s nosedive began immediately after the mullahs’ regime took the reigns of power in 1979.

1980 – U.S. dollar = 100 rials

1986 – U.S. dollar = 610 rials

1995 – U.S. dollar = 2630 rials

November 2011 – U.S. dollar = 10,600 rials

February 2012 – U.S. dollar = 26,050 rials

Conclusion: The events of the past two years cannot be the root cause of the rial’s nosedive.

Iran’s corrupt infrastructure and economic foundations are the main origin of this epidemy. A country’s economic structure is based on a specific infrastructure.

For example:

Germany – Heavy industry

Turkey – Tourism and industry (in 2005 Turkey was listed as among the world’s 20 industrial countries)

Japan – Electronics and auto manufacturing

South Korea – Auto manufacturing and …

What is the Iranian regime’s economy founded upon?

Industry? Tourism? Auto manufacturing? Agriculture? …

None of the above. The Iranian regime’s economic foundation is extremely corrupt, heavily based on massive smuggling and large-scale imports. This is blocking “all paths for any efforts to heal Iran’s economy,” according to Radio France Internationale.

One side-effect of an ill-founded economic infrastructure resembles in the price of a country’s currency against the U.S. dollar. For the past 39 years of the mullahs’ rule in Iran, we are continuously witnessing the rial nosediving, people losing their purchasing power, increasing poverty and …

Of course, political developments, such as the unknown future of the JCPOA and … will render spontaneous falls in the rial’s value. However, we must keep in mind the root reason, being Iran’s deeply corrupt economic structure (or lack thereof).

The Iranian regime, in nature, belongs to a time-period dating back to the Middle Ages, leaving it without any capacity to generate necessary changes.

News from inside Iran & reports on Syria

Numerous protest rallies in Tehran, Ilam

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Retired workers of the Baharestan Steel Co. rallying outside Iran’s parliament

People from all walks of life and different ethnicities staged numerous protest and rallies on Sunday in Tehran and Ilam, western Iran, making their voices heard for their demands.

In Tehran retired workers of the Tehran Baharestan Steel Company rallied outside the regime’s parliament. The protesters demand the privatization of this steel company, their paychecks to be delivered according to schedule and retirement medical care expenses be provided as pledged.

In yet another rally in Tehran more than 250 individuals who have lost money as a result of stock fraud by the regime’s Ministry of Agriculture rallied outside the regime’s parliament.

“We have purchased our land 30 years ago, paid the entire fees and received various pledges in this regard. However, no one is providing us any answers in this regard,” they said in relation to the confiscation of their lands.

Furthermore, another group of individuals who lost money in stocks related to the Padide Company, rallied outside the regime’s judiciary ministry in Tehran demanding their money being returned.

In Ilam a group of people who also suffered losses in stocks due to the negligence reported in the Arman Institute rallied outside the office building making their demands heard.

 

 

Mass execution of 10 inmates in prison west of Tehran

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Mass executions in Iran

The inhumane mullahs’ regime sent 10 inmates to the gallows early Sunday morning in Gohardasht Prison of Karaj, west of Tehran.

State prison authorities had transferred these inmates to solitary confinement on Saturday in preparation for their executions. One of these victims was Abdullah Ghafari.

 

 

Female street vendor in Ahvaz remains under medical care

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State agents attacked an old woman with an electric shocker

The son of a female street vendor in Ahvaz, southwest Iran, who was attacked by state agents using electric shockers on Tuesday, December 6th, says he continues to take his mother to a hospital twice a day.

“On December 6th a group of 10 municipality agents, all armed with electric shockers, entered the Khansari Avenue and amongst the street vendors they attacked my 70-year-old mother who was selling her goods outside my store. They used electric shockers and she fell to the ground. She is still alive but is very ill. She was hospitalized for a few hours after that incident and I am still taking her to a hospital twice a day,” Samir, the woman’s son, said.

Despite the publication of scenes of this incident and attack on social media, and a huge wave of anger against the regime’s officials, the Ahvaz municipality continues to deny the incident.

“No attack on woman has been reported in the municipality. As head of the city council I do not confirm this issue,” the city council chief said.

 

 

Factional disputes amongst regime factions over currency shifts

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Iran changing official currency from rial to toman

The economic changes in Iran, with plans to change the official currency from the rial to toman proposed by the government of Iranian President Hassan Rouhani, has faced major opposition from members of the faction loyal to Iranian regime leader Ali Khamenei.

Media outlets linked to this faction have said the bill proposed in the parliament for this measure, at a time when the country’s economy is facing serious problems, is considered one of those unnatural decisions.

“This plan proposed by the government have shocked even the government’s own economic experts. Such a change would be proper for countries that are certain of having below 5% inflation for a long period. Otherwise, 10 years down the road we will have to backtrack these currently proposed changes,” a Khamenei-loyal outlet wrote.

“Even a government organization has issued a warning report in this regard saying changing the rial to the toman, without taking the necessary conditions into consideration, would only render worse economic conditions,” the report added.

 

 

Interior minister: we have 11 million living in city outskirts

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Iranian interior minister Rahmani Fazli

Iranian interior minister Rahmani Fazli expressed the regime’s concern of social damages inflicted to the Iranian population.

“Finally, five priorities have been specified by the leader. Drug addiction, people living in city outskirts, divorces, social corruption and crisis-launching regions, he said in remarks posted by the state-run E’temad daily on Saturday, December 10th.

“For the leader there is nothing more important than social damages,” he added.

“We have 11 million people living in city outskirts and the leader has issued a special order in this regard,” the Iranian interior minister added.

 

 

Two IRGC engineers injured in southeastern Iran

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Explosion rocked a town in southwestern Iran

As reported by the Tasnim news agency, known to be affiliated to the Revolutionary Guards (IRGC) Quds Force, at around 6 am on Sunday morning an improvised explosive device detonated in the town Saravan in southeastern Iran, leaving two IRGC engineers wounded.

These individuals were immediately transferred to the Razi Hospital in Saravan. One is reported to be in dire conditions and the Iranian regime had sent a helicopter for his transfer.

 

 

Syria: 40 Iran IRGC members, militias killed in Aleppo

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IRGC armored personnel carrier burning in flames

Members of the Free Syrian Army defeated a horrendous attack launched Sunday morning by Iran’s Revolutionary Guards (IRGC), Shiite militias and Russian troops in eastern Aleppo, Orient TV reported.
On Saturday FSA members were able to defend their positions and kill 25 other Shiite militias were killed in the Marje neighborhood, along with 15 others in the Ezae neighborhood. FSA rebels were also able to destroy two advanced Russian T90 main battle tanks in Ezae and Sanae.
Iran’s IRGC and Assad’s militia forces had attempted for the fourth consecutive day to make advances in Ezae and Sanae, all while enjoying heavy Russian air support. However, to this day they have faced a major defensive counterattack by the FSA rebels.

 

 


Iran MP: Above one million youths in line for Syria dispatching

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Hossein Biki, deputy chair of the Security Commission in Iran’s parliament

Hossein Biki, deputy chair of the Security Commission in Iran’s parliament, made startling and expansionist remarks recently.

“In the status quo we are in youths and even teenagers are more than eager to take part in the fronts of Syria and Iraq,” he said.

“At least more than one million youths are in line to be dispatched,” he said on Saturday, December 10th, in an interview with the state-run Mizan news agency, known to be linked to the regime’s judiciary branch.

“There are a significant number of youths and even teenagers amongst the massive wave of volunteers for Syria and Iraq,” this Iranian MP added.

“The Islamic republic has two missions in Syria and Iraq: advisory activities and training,” he added in contradictory remarks.