The Bleak Future of Iran’s Economy
The editorial of Eskenas, penned by Hassan Forozanfard, member of Iran’s Chamber of Commerce, underscores that due to the lack of predictability, long-term development in the Iranian economy is impossible.
In the short run, one cannot hope that economic actors will work toward sustainable development in the future, or implement new projects for developing resources and expansion, which is why they seek to preserve the status quo, instead of pursuing reform and innovation.
Under the current economic circumstances, economic actors take all measures possible to reduce risks, and when it is impossible to assess risks, they will avoid making investments. That is why unpredictability is the primary factor responsible for impeding Iran’s economic growth, creating an adverse business environment.
We are aware of many factors which make doing business difficult, thereby harming economic development – factors like obtaining permissions, current laws, the mechanism for dissolving companies, etc. can either enhance or undermine the investment climate. But unpredictability is the most important factor in any economy.
In an economy with unbridled inflation, there is no prospect for controlling inflation. Under these circumstances, there is no point in talking of improving the business environment. Today, inflation is the most terrible disease in Iran’s economy. Because of inflation, no promising picture can be given about the future of Iran’s economy. As a result of not taking risks and excessive government control over economic activities, the idea of development will be eclipsed.
This is what has prepared the ground for the ever-weakening economy. Of course, the legal framework and the country’s budget do not contribute to creating a conducive environment for increased economic activity, while economic predictability is a necessity for any improvement.
Role of Invisible Hands in Power!
The editorial of Ebtekar argues how certain economic decisions are made by those who ignore government officials and authorities, referring to examples in which the direct orders of the executive and judiciary branches have been neglected.
The issue of the Miankaleh petrochemical project has taken a strange turn. After many popular protests, the Iranian president and attorney general intervened and issued an order to stop this project. But this project has reportedly not been ceased.
A few years ago, the same thing happened regarding the construction of a residential tower on the Fasham River close to the city of Tehran. At that time, the media got involved in the issue. But despite multiple official warnings, the tower was built, and its owner did not even care to give an explanation. Despite the public protests, the owner kept adding floors to the tower right in front of people’s eyes.
Today, we are witnessing a similar case. High-ranking officials have issued orders to stop the Miankaleh project, but it has not been stopped. It seems as if there is a power above the authority of officials in the country. For years, we have witnessed hands at work above officials, making whatever decisions they want to. Even when the executive and judicial authorities, as well as civil society, get involved in certain issues, it seems as if the mafia or a higher power has the upper hand.
Of course, the power of the mafia is not limited to the abovementioned cases; rather, Iran’s entire economy has been exploited and drained under the domination of the mafia. This mafia is so powerful that it can stand against any political resolve and neutralize it. The issue of the Miankaleh project reminds us of the invisible hands that control the country’s policies.
Why Is There so Much Pressure on Raisi’s Government?
The editorial of Aftab Yazd states that Ebrahim Raisi’s government is facing the pressure of widespread criticism in its first year, mostly because he has not been able to keep the promises he made during his election campaign.
When former President Mohammad Khatami’s government took office, his officials and managers kept saying that they had inherited the problems created by the previous government and people had to wait and be patient to see improvements. The same remark, with some changes, was later reiterated in the governments of Ahmadinejad and Hassan Rouhani. And now Ebrahim Raisi’s government too is reiterating it. Frankly speaking, it was the late Hashemi Rafsanjani’s government that received a country in ruins after the Iran-Iraq War, because his government took office after the war and was supposed to reconstruct the country.
What was said above was just to emphasize that people are fed up with such remarks and approaches. So, it is not acceptable for governments to do nothing for years, and if they are questioned, officials keep saying that they have received a country in ruins and that people should be patient.
Of course, since Ebrahim Raisi took office, we are facing a new situation which did not exist in the previous governments. The previous governments’ honeymoon period lasted for about three to four years, and then gradually criticisms and objections started. In the early years of the formation of previous governments, there was so much support for them that people could not make any criticism against them.
Ebrahim Raisi’s government has not reached its first anniversary yet, but there are so many harsh criticisms against it, suggesting that his government’s honeymoon period has prematurely come to an end. One of the reasons for this situation is that Raisi made promises during his election campaign, but he has not been able to keep them.
For instance, during Raisi’s election campaign, he talked of free internet for all, but now there is not only no free internet, but the price has also massively increased. There are also problems with foreign policy, high inflation, and skyrocketing prices. Since Ebrahim Raisi took office last summer, we have seen a huge rise in prices.
So, if we are looking to understand why Raisi’s government is under so much pressure, we must look for answers in the promises he made during his election campaign.
Simple Afghan Workers or Engineers?
The editorial of Etemad discusses the threat of Afghan asylum seekers moving to big Iranian cities without proper registration and identification documents.
During the Iranian new year holiday, all parks and recreational centers were crowded with many Afghan citizens. To be fair, Afghans have been harmless and very active in the construction sector in Iran. But given the decrease in Iran’s young population and the increase in the number of Afghan immigrants, Iranian officials must feel the danger and listen to the warnings of experts.
Iranian officials probably did not imagine that the warnings of experts and academics regarding the water crisis would manifest so soon, but we all saw how this crisis enraged farmers and people in certain cities and villages.
Regarding the irregular presence of Afghan citizens, we must take experts’ warnings seriously before it turns into a catastrophe or a crisis. Citizens of this neighboring county are mostly young, single, unemployed, illiterate, and unskilled, and therefore the influx of migrants must be controlled.
In the European countries, there are camps for absorbing asylum seekers into their societies and training them in accordance with the countries’ requirements. But here in Iran, Afghans are not asked to provide any identification documents, and even their fingerprints are not taken. Who will be accountable in the future when problems and issues arise in this regard?
Perhaps, it is time to ask for help from the international community and seek assistance for establishing camps at borders for asylum seekers. Perhaps, it is time for Iranian officials to observe certain standards when it comes to admitting asylum seekers and foreign citizens into the country.
Currently, the norm is that Afghans pay human traffickers, get on fast vehicles, and are taken to big cities, including Tehran, where they start working without any documentation, identification, or medical records.
Faezeh Hashemi: Lifting US Sanctions on IRGC Not in Our National Interests
Faezeh Hashemi, daughter of the late Hashemi Rafsanjani and member of the Central Council of Executives of Construction Party, holds that the only way to send the IRGC back to the military barracks is by keeping it on the list of US sanctions, adding that “delisting the IRGC from the list of sanctions is not to the advantage of Iran’s national interests and society.”
In a virtual meeting held via the Clubhouse app, Faezeh Hashemi declared her agreement with keeping the IRGC on the list of sanctions, and pointing to some of the IRGC’s recent measures in the region, she added that “right at the juncture when negotiations are underway for delisting the IRGC from sanctions, we witness measures by this military organization like missile attacks against Erbil [Iraq], and interestingly they officially take credit for it. It means that even for the sake of being delisted from the list of sanctions, they don’t pretend that their activities are not aggressive or dangerous.”
Faezeh Hashemi stated that the outcomes of numerous measures taken by the IRGC are harmful for Iran. She held that whether this organization is on the list of sanctions or not, it will continue with and expand its activities which will make it more difficult to send this military organization back to the barracks where it belongs.
These remarks were made as currently the delisting of the IRGC as a terrorist organization has become one of the major differences between the Iranian authorities and the White House which has impeded the nuclear talks and the reaching of an agreement. Delisting the IRGC is an issue raised by Iran as a precondition for reaching a nuclear deal.
Severe Criticism in the Parliament Against High Prices; Ghalibaf Blamed Previous Governments
While according to official estimates, the inflation rate has surpassed 40 percent, Parliament Speaker Mohammad Bagher Ghalibaf has considered “the performance of previous governments” as responsible for this issue, calling for controlling high prices.
Earlier, Iranian President Ebrahim Raisi had blamed the issue of high prices on the performance of former President Hassan Rouhani’s government, saying that “ four years of high inflation of 40 percent and almost zero percent of economic growth is the main cause of high prices.”
Several lawmakers have also spoken out against the soaring prices in the country.
Khorramabad MP Morteza Mahmoudvand said that “inaccurate statistics” regarding high prices are given to the president, while high food prices have put a lot of pressure on households.
Tehran MP Zohreh Lajevardi also stated that skyrocketing prices, particularly automobiles, have made people miserable, and despite warnings, no measure is taken in this regard.
Another lawmaker criticized what he called a “tsunami of high food prices,” emphasizing that no one cares about vulnerable groups.
Raisi had previously called inflation his government’s redline, ordering government organizations to not take any measures that would result in increasing the inflation rate.
Experts and economists have always been skeptical of the inflation rate announced by government organizations, saying that the real rate of inflation rate is higher than the official statistics.
As food prices are on the rise, Massoud Daneshmand, member of Iran’s Chamber of Commerce, has warned that if the current trend goes on and there are no transactions with the global banking system, Iran must expect a three-digit inflation rate.
Further, Daneshmand went on to criticize the policies of Raisi’s government in controlling the inflation rate, underscoring that prices cannot be changed by issuing orders and by force.
The policies of Raisi’s government have failed while Iranian Oil Ministry officials have reported the doubling of oil exports and a 42 percent increase in non-oil exports.
Massive Increase in Liquidity and Government’s Debts to the Central Bank
Despite the promises of Ebrahim Raisi’s government to stop borrowing from the Central Bank of Iran (CBI), new statistics show that the process of borrowing has continued, with liquidity showing a leap of 70,000 billion tomans in the first months of Raisi’s government taking office.
The new CBI’s report, issued on Monday, April 18, shows that Raisi’s government started borrowing since it took office, and the government’s debts to the CBI have reached roughly 212,000 billion tomans, showing a 42 percent increase compared to the same period last year.
When his government took office, Raisi promised to stop the process of borrowing from the CBI which results in an increase in liquidity and inflation.
Since January 2019, the government’s debts to the CBI have almost doubled, while in the past three years, the government’s massive budget deficit has been covered through borrowing from the CBI – an issue which resulted in a sharp increase in liquidity and rampant inflation in the country.
Raisi’s government had promised to control liquidity levels in the country. In recent months, public officials have announced that the increase in liquidity and the high inflation rate are outcomes of the performance of the previous government, the effects of which can still be felt, urging that the outcomes of the measures taken by the Raisi government for controlling liquidity and inflation will become manifest in the future.
Meanwhile, a report by the Institute of Trade Studies and Research forecasts that the average currency exchange rate in Iran will be 30,000 tomans per US dollar in this Iranian year (starting in March 21).
Last year, the rate of the dollar fluctuated between 21,000 to 30,000 tomans, but the average rate in the Iranian market was about 26,650 tomans. The average rate of the dollar in 2019 and 2020 was about 13,000 tomans and 23,000 tomans respectively.
Thus, it is expected that the currency rate will keep rising this year.
This institute added that, in the short run, the future of the currency rate depends on the nuclear talks between Iran and world powers, but a decrease in the currency rate should not be expected even if a nuclear agreement is reached.
Kian Tire Company Closed; 1,200 Workers Lost Jobs
Tire manufacturing company Kian Tire, which was considered the biggest producer of dump truck and mining tires in the country, was closed because of uncertainty of ownership, financial issues and a scarcity of raw materials.
The factory gates have been reportedly closed on workers and about 1,200 households are now facing the issue of unemployment.
An informed source told IRNA that Kian Tire factory, located in the Chahardangeh area in Tehran Province, was entrusted to the private sector in the 1980s, but even at that time, it seemed that the buyer was more interested in the valuable land of the factory than the factory itself.
This factory, which manufactured tires needed for the mining sector, was also known for producing tires for agricultural machines, cars, military vehicles, and even large tires, but no particular investment was ever made in it.
According to IRNA, because of outstanding debts to Sepah Bank and Keshavarzi Bank, the factory was transferred from private ownership to the public sector. It was even rumored that the owner was detained.
This factory could produce 15,000 tires annually, and was working with limited capacity until January.
While this factory declared bankruptcy two years ago, the workers said that it produced about 70 tons of tires per day.
This factory’s workers have held assemblies in front of the office of the Iranian president in recent days, calling for making a decision about the ownership of the factory.