Lost Confidence in the Stock Market
The editorial of Tejarat recounts how the Iranian people were encouraged to enter the stock market, lost their money, and had to abandon it.
In the past year-and-a-half, many of those who entered the stock market on the invitation of government officials, have abandoned it. When many entered the stock market, it was like a dream come true for the market, but the market’s policymakers could not take advantage of this opportunity.
In Iran, economists and stock market officials have always desired greater public participation in the capital market as this benefits the national economy.
In 2020, public participation in the stock market increased, but was not managed properly, and, as a result of all the negative incidents which occurred in the past-year-and-a-half, a broad range of investors lost confidence in the stock market, causing several to exit the market.
During this time, the market was moving between hope and fear. While positive incidents have had a small impact on the stock market, any negative news has had a profound effect on the market.
Currently, Iran’s capital market is facing two problems: a strong decrease in investor confidence and a lack of liquidity. As long as these problems exist, this negative trend will continue. In advanced economies, a high percentage of people, directly or indirectly, participate in the financial markets, particularly the stock market. Iran’s stock market regulators hoped that greater investor participation would increase the depth of the country’s stock market.
Last year, Iran’s stock market changed from a market with 200,000 participants to a market with millions of participants, with many groups of people investing in it. It was a unique opportunity for the stock market. These people, trusting the promises made by the government and former President Hassan Rouhani, entered the capital market.
People invested their money in this market, but their trust was abused, and many had to exit this market after suffering heavy losses. Trust is earned gradually, but with the poor performance of the previous government, it was all of a sudden lost.
Why the Rush to Increase Cash Subsidies?
The editorial of Mostaghel warns Ebrahim Raisi against doubling cash subsidies paid directly to people as this will have a catastrophic effect on low-income households.
One of the main changes in next year’s budget draft is the elimination of the official rate of exchange of the dollar (now set at 4,200 tomans per dollar). Instead, the government is intent on increasing cash subsidies for people. Last week, Mohsen Rezaee, economic deputy to President Ebrahim Raisi, announced that direct subsidies would double from January. Rezaee has said that even though the subsidies were initially supposed to increase from the next Iranian year (starting on March 21), the president insists on increasing cash subsidies from this January.
It is not clear why the president personally insists on increasing cash subsidies. Does the government intend to increase people’s purchasing power or gain popularity and acceptability? In any case, it is better to pay attention to the warnings of economists in this regard, the warnings that were not taken seriously by former President Mahmoud Ahmadinejad’s government and resulted in the defective plan of paying cash subsidies to people which is being implemented now. That government implemented the plan for paying cash subsidies while Iran’s economy was in much better shape compared to now, as there were less sanctions, the country could sell more oil and the economy had more stability.
As the current government has just started to work and the outcomes of the negotiations are not clear, there is no stability in the forex market and any minor change results in great fluctuation in the rate of the dollar. While there are serious concerns about eliminating the official rate of currency exchange, no one in the government seems to listen.
The news of doubling subsidies might seem appealing to those low-income households that are struggling under the pressure of high prices, but these households will be the first to be harmed by the incorrect implementation of economic policy.
The government is expected to think twice when it comes to decisions that will have a direct impact on people’s livelihood; hasty decisions can have terrible consequences.
Creating the Illusion of Happiness
The editorial of Jahan Sanat criticizes Ebrahim Raisi’s government for trying to control skyrocketing prices by issuing orders which are unrealistic and impractical.
Four months after assuming the presidency, Ebrahim Raisi talks as if he is still campaigning for election, and instead of making decisions for resolving the growing problems of Iran, he issues self-evident, broad orders to his own senior officials, to no avail.
In his recent talks, Raisi criticized the conditions of the market, saying that the government must give priority to alleviating poverty and introduce measures to provide citizens with goods at real prices. Raisi considers real prices as those set by the Market Regulation Headquarters, and does not pay attention to the fact that this organization cannot determine the real prices of thousands of goods and services.
The Market Regulation Headquarters cannot do much, as can be seen in its inability to control the price of the dollar which is the most significant factor in determining the prices of other goods. When the government cannot determine the price of the dollar, how can Raisi expect the Market Regulation Headquarters to set the prices of thousands of goods?
Everybody knows that heads of governments, particularly in their first terms, must try to satisfy citizens by increasing welfare to pave the way for re-election for a second term. Raisi, too, thinks that he must increase public welfare or at least stop people’s descent into the mire of poverty.
If so, the head of government must know that the path he is taking is wrong and must ask his advisors to give him more accurate and efficient solutions. Raisi must know that increasing welfare necessitates continuous growth in the economy and production.
Growth in GDP is not achievable without an increase in investment, foreign trade, and more importantly, without controlling the inflation rate. Currently, Iran’s economy is suffering from negative growth in investment which is why there is no economic growth and increase in domestic production. Iran’s foreign trade, particularly exporting crude oil as the highest source of forex revenues, is blocked or its markets have considerably diminished.
In order to solve structural problems, the only path is positive cooperation with the world; any other suggestion is just an illusion. Raisi must know, and perhaps knows, that threatening factory owners to follow the prices set by the Market Regulation Headquarters is not the solution. Setting prices by giving orders is nothing but an illusion and has never led to positive outcomes.
Out of the Frying Pan and Into the Fire!
The editorial of Arman Melli, penned by reformist academic Sadegh Zibakalam, reasons that Ebrahim Raisi’s decision to increase direct subsidies is a populist move with no economic justification.
In terms of populism, the decision to increase direct subsidies to people will be certainly justified. Perhaps, Mohsen Rezaee, economic deputy to President Ebrahim Raisi, was asked to implement this decision, as during his presidential campaign, Rezaee used to propose such ideas, saying he would give even more subsidies.
But what is surprising is that economists like Dr. Farhad Rahbar and others who are knowledgeable about the economy have relented and agreed with such a decision. This decision to pay subsidies is not only not unjustifiable, but was also flawed from the beginning. It was called “targeted subsidies” but since 2010 when Mahmoud Ahmadinejad’s government started to pay cash subsidies to people, it has been anything but targeted.
More than 70 million people are currently receiving 45,500 tomans per month, while many of them deserve to receive two or three times more, and some do not deserve to receive anything at all. Because the establishment cannot pay targeted subsidies, they are paying 45,500 tomans indiscriminately to all per month.
The same will be true for new subsidies, meaning that many will receive it who do not need it, while many who are in desperate need and entitled to more subsidies will only receive the same amount as the rest of the population.
The payment system which indiscriminately allocates subsidies is fundamentally flawed – be it 45,000 tomans or 100,000 tomans or even more.
Unfortunately, we cannot distinguish between those who really need to receive the subsidies and those who do not. And as long as we cannot make this distinction, such decisions are populistic and have no other benefits.
Vienna Talks Resume: Tehran’s Urgent Request Is Selling Oil
Another round of the so-called “revival of the JCPOA” talks started in Vienna on December 27. Iranian officials say that they have started this round with a new approach and have put a new “joint document” on the negotiating table.
After a halt of 10 days for what is called a “recess,” the negotiations were taken up at Palais Coburg in Vienna with the attendance of representatives from Iran, the E3 – France, Germany, and Britain – China and Russia, as well as the EU’s representatives. As usual, the American delegation is present in Vienna but does not negotiate with the Iranian side directly.
Just before the beginning of the new round of talks, Iranian Foreign Minister Hossein Amir-Abollahian explicitly said that the most important and urgent issue for Iran is selling oil. He asserted, “We must reach the point when Iran’s oil is sold easily and without limits, and oil money must be deposited into Iran’s bank accounts in the form of forex.”
More than anything else, Iran desires the lifting of US sanctions. But the Western countries insist that Iran must immediately stop its “sensitive” nuclear activities. A few days ago, Robert Malley, US special representative for Iran, said that if Iran continues its nuclear program with the same speed, there will only be a few weeks left for saving the nuclear deal (JCPOA). The Europeans too insist on accelerating the talks.
More than anyone else, Israel is impatiently waiting to see the outcomes of the negotiations with Iran, while its political, security, and military officials denounce Iran almost every day.
But Iranian officials hold that this insistence is just for exerting more pressure on Tehran. Some unofficial sources have stated that America has set a deadline for the nuclear talks, but Iranian state news agency, IRNA, has described the deadline as the “new codename for pressure on Iranian negotiators.”
Human Rights in Iran in 2021: 2,541 Assemblies and Strikes, Worker Arrests Increase by 53 Percent
Human Rights Activists in Iran (HRAI), in its annual report, has stated that in 2021, 2,541 union and labor assemblies and strikes were held in Iran, including 1,261 union assemblies, 192 union strikes, 618 workers’ assemblies, 339 workers’ strikes, and 131 cases of prisoners’ strikes.
These assemblies have routinely faced confrontations and crackdowns from government bodies, while big assemblies like the popular protests in Isfahan were ruthlessly suppressed by the Iranian government. According to this report, in 2021, 64 labor activists were arrested and labor activists or defenders of workers’ rights were sentenced to “276 months of imprisonment, 124 lashes” and paying fines. The arrest of workers increased by 53 percent compared to last year.
According to HRAI’s report, these protests were basically held to demand higher wages, protesting against poor economic conditions and mismanagement by public bodies. In recent weeks, multiple groups of teachers, retirees, and workers have held protests and went on strike in different cities of Iran.
This annual report points out that the pressure on citizens from ethnic groups increased by 55 percent compared to 2020, adding that 445 citizens from ethnic groups have been arrested in 2021.
Furthermore, it is reported that 299 individuals were executed in 2021, showing a 26 percent increase compared to 2020, adding that 88 percent of executions were carried out secretly or without announcement in official or domestic media.
The issuance of death sentences also continued this year and 85 individuals have been sentenced to execution. According to this report, in 2021, four child criminals were executed, and 4 percent of those executed had security and political charges.
Another part of the report addresses the conditions of women and children’s rights in Iran, citing at least 20,187 cases of spousal abuse and 24 cases of honor killings, 2,117 cases of child abuse, 15 cases of sexual harassment and rape of children, 54 cases of child suicide, 29 cases of children selling drugs, and more than 9,000 cases of child marriage. In 2021, 25 individuals under the age of 18 were arrested by security bodies.
Iranian Agricultural Produce Returned, Poison for Neighbors and for the Iranian People
In recent months, neighboring countries have rejected Iranian agricultural produce because of contamination with pesticides and other dangerous chemicals. Experts say that there is no oversight of agricultural practices, and selling agricultural produce within the country puts people’s lives at risk.
Iranian potatoes were returned from Turkmenistan, while previously Uzbekistan had also returned Iran’s potatoes. This country returned 3,500 tons of imported potatoes from Iran and Pakistan, citing dangerous contamination as the reason, while destroying 775 tons of potatoes as well. In these potatoes, high levels of poisonous chemical fertilizer had been found.
In recent months, the following food items were returned to Iran from target countries: kiwis from India, potatoes from Uzbekistan, paprika from Russia and Iranian watermelons from the Gulf countries. A while ago, Qatar also did not allow palm trees from Iran to enter the country. This has heavily damaged Iran’s deteriorating trade and troubled economy.
While some Iranian officials have confirmed that Iran’s agricultural produce, both locally supplied and exported, is unhealthy, Iranian President Ebrahim Raisi has asserted that the issue of returning these food items from neighboring countries is politically motivated.
Zabihollah Azami, a member of the Parliament’s Agricultural Commission, however, has confirmed that Iranian agricultural produce is unhealthy, adding that in the future, too, Iranian agricultural produce is going to be returned to Iran by different countries.
Iran imports chemical fertilizers from China, which are not of high quality. As a result of the excessive use of fertilizers, the chemicals have been absorbed by the land and the roots of crops, which is very concerning.
Unsustainable development policies in the last four decades in Iran have resulted in the destruction and contamination of both water resources and agricultural lands in the country. These policies which have sought to increase agricultural output at any cost have now put both exports and the health of domestic consumers at risk more than ever.
Sri Lanka Settles Oil Debts With Iran by Bartering Goods Like Tea
The head of Iran’s Trade Development Organization says that tens of millions of dollars of Iran’s blocked money in Sri Lanka will be paid to Iran in the form of goods like tea. According to Alireza Payman Pak, $250 million of Iran’s revenue from selling oil has been blocked in Sri Lanka for almost nine years.
He stated that Iran and Sri Lanka have reached an agreement for the monthly repayment of this outstanding amount with interest in the form of goods like tea.
Payman Pak added that in addition to tea, certain raw materials and goods like rubber can also be imported to Iran from Sri Lanka.
While Iran is going to import tea from Sri Lanka, Iranian officials have repeatedly warned about the fact that Iran’s tea industry is on the verge of destruction, and tea planters are facing numerous problems.
Earlier, the Pakistani government had suggested bartering Pakistan’s rice with Iran’s oil and petrochemical products.
In the meantime, the head of the Iran-Swiss Chamber of Commerce expressed his regret about bartering tea for oil and called it a method of going back to the time before the invention of money, while urging that with this bartering method, it is impossible to import technology.
Sharif Nezam Mafi criticized the bartering policy used by Iran, saying this is a short-term method and cannot resolve the problems that exist in the industrial and production sector.
Pointing to bartering Sri Lanka’s tea for Iran’s oil, the head of the Iran-Swiss Chamber of Commerce called tea a “consumer good,” adding that this could have been used for bartering medicines for cancer patients or other goods that could be used to advance the economy.
Because Iran has no banking relations with many countries, it can resolve the issue of banking transactions through bartering oil, but many experts and some officials maintain that bartering oil for goods is to Iran’s loss.