• العربية
  • فارسی
Brand
  • Iran Insight
  • Politics
  • Economy
  • Analysis
  • Special Report
  • Opinion
  • Podcast
  • Iran Insight
  • Politics
  • Economy
  • Analysis
  • Special Report
  • Opinion
  • Podcast
  • Theme
  • Language
    • العربية
    • فارسی
  • Iran Insight
  • Politics
  • Economy
  • Analysis
  • Special Report
  • Opinion
  • Podcast
All rights reserved for Volant Media UK Limited
volant media logo

Iran’s Economy Is In Too Much Trouble For Half-Measures To Work

Mardo Soghom
Mardo Soghom

Iran International

Jun 9, 2023, 18:21 GMT+1Updated: 17:37 GMT+1
File photo of a mural at Tehran’s Enqelab square showing the Iranian 10,000-rial banknote worth less than two cents now
File photo of a mural at Tehran’s Enqelab square showing the Iranian 10,000-rial banknote worth less than two cents now

Iran’s battered currency has risen by more than 10 percent since early May on hopes of a foreign policy breakthrough, but the economic fundamentals remain bleak.

The rial this week broke through the important psychological barrier of 500,000 against the US dollar, as several media reports spoke of secret contacts with the United States to reach a sort of an interim agreement that would unblock more than $15 billion of Iran’s frozen funds.

The US denied the reports of a deal on Thursday, although it did not reject reports of ongoing contacts. Tehran’s currency market was officially closed on Friday, so the impact of the US announcement, if any, will be felt on Saturday.

Commentators speaking to local media in Tehran said that releasing even $20 billion will not affect the fundamentals of a weak economy and would represent a temporary respite from the pain of oil export sanctions.

Sajjad Burbur, an Iran-based economist, speaking to the reformist Aftab News website Friday warned of the fast-galloping money supply in the country and predicted that eventually the rial can fall further, reaching 700,000 against the US dollar.

Iran-based economist Sajjad Burbur (undated)
100%
Iran-based economist Sajjad Burbur

Burbur argued that the Islamic Republic has no means of addressing the economic crisis except “therapy talk”, meaning trying to put a good face on the state of affairs and present exaggerated or fake news.

He argued that the government continues to print money to pay its bills, and this will inevitably devalue the currency. “In 2018, the money supply was less than half of all liquidity, but now it is far more than that. All factors that help the dollar rise against the rial have converged together,” he pointed out.

With far less oil export income because of US sanctions, the government continues to print money and makes daily statements to calm the markets.

Promises of close economic cooperation with Russia and China and hints of talks with the United States are designed to boost confidence in the economy, but experts point out that these will not have a lasting impact and economic fundamentals will have the last word.

With annual inflation approaching 70 percent, affording housing and food has become impossible for millions of families.

Housing specially has risen more than ten-fold in the past five years, while salaries have increased at most five-fold. 

Owners see their property as a hedge against inflation and adjust prices and rents according to the value of the US dollar, while people’s income is far less.

The average price for one square meter of an apartment in Tehran is around $1,000, roughly the same as in 2018 before the rial bean to fall. People are migrating out of large cities and commuting long distances just to afford rents.

The former chairman of Iran’s central bank, Abdolnasser Hemmati (undated)
100%
The former chairman of Iran’s central bank, Abdolnasser Hemmati

The former chairman of Iran’s central bank, Abdolnasser Hemmati, in a tweet on Friday asked President Ebrahim Raisi why real estate inflation numbers have been withheld by the government in the past five months.

“Do you know anything about how much rents have gone up?” Hemmati asked the president.

Some people hold a full-time job just to pay the rent, while either they or their spouses must work a second job just to afford food. The average worker has a monthly salary of $150, down from $220 last year when the rial was higher at around 300,000 to the dollar.


Most Viewed

US blockade enters murky phase as tankers spoof signals and buyers hesitate
1
ANALYSIS

US blockade enters murky phase as tankers spoof signals and buyers hesitate

2

US tightens financial squeeze on Iran, warns banks over oil money flows

3
INSIGHT

Ideology may be fading in Iran, but not in Kashmir's ‘Mini Iran'

4
INSIGHT

Hardliners push Hormuz ‘red line’ as US blockade tests Iran’s leverage

5
VOICES FROM IRAN

Hope and anger in Iran as fragile ceasefire persists

Banner
Banner

Spotlight

  • Hardliners push Hormuz ‘red line’ as US blockade tests Iran’s leverage
    INSIGHT

    Hardliners push Hormuz ‘red line’ as US blockade tests Iran’s leverage

  • Ideology may be fading in Iran, but not in Kashmir's ‘Mini Iran'
    INSIGHT

    Ideology may be fading in Iran, but not in Kashmir's ‘Mini Iran'

  • War damage amounts to $3,000 per Iranian, with blockade set to add to losses
    INSIGHT

    War damage amounts to $3,000 per Iranian, with blockade set to add to losses

  • Why the $100 billion Hormuz toll revenue is a myth
    ANALYSIS

    Why the $100 billion Hormuz toll revenue is a myth

  • US blockade targets Iran oil boom amid regional disruption
    ANALYSIS

    US blockade targets Iran oil boom amid regional disruption

  • Iran's digital economy battered by prolonged blackout
    INSIGHT

    Iran's digital economy battered by prolonged blackout

•
•
•

More Stories

Taliban Holds War Games Near Border With Iran

Jun 9, 2023, 18:05 GMT+1

Amid rising tensions between Iran and Afghanistan, Taliban forces carried out a military drill near the border with Iran on Thursday.

According to the state-run Bakhtar News Agency, the Taliban military held a war game in Nimruz,located in the southwestern part of the country and to the east of Iran’s Sistan and Baluchestan province.

The drills came amidst growing tensions, fueled by a decades-old water dispute. Iran has accused Afghanistan's Taliban of violating a 1973 treaty by restricting the flow of water from the Helmand River to Iran's parched eastern regions, an accusation denied by the Taliban.

During May, a series of incidents escalated to bring tensions between the two countries to their worst in years, the deadliest of which seeing two Iranian soldiers and one Taliban fighter killed after shooting broke out near a border post.

Iranian President Ebrahim Raisi had earlier warned the Taliban over disregarding Iran's water rights under the 1973 treaty while the Taliban rejected the perceived threat, with a former Taliban official mocking the president in a video that went viral.

Evidence also surfaced late last month showing a convoy of Taliban tanks deployed from Herat to Islam Qala on the border with Iran with forces seen stationed in the region with heavy military equipment, suggesting a more heavily armed presence than before the water dispute escalated.

Brazen-Faced Iran Offers To Help Flood-Hit Ukrainians

Jun 9, 2023, 15:28 GMT+1

In a brazen move, Iran’s Red Crescent Society has offered to help Ukrainians who are hit by floods after Russia blew up Kakhovka dam in southern Ukraine.

The head of Iran’s Red Crescent, Pir-Hossein Kolivand, sent a letter to the president of the Ukrainian Red Cross Society, Mykola Polishchuk, expressing readiness to send relief teams and humanitarian aid to the flood-hit regions in what could be perceived as a move to save face in the wake of revelations that Iranian drones and weaponry has been sent to Russia for its invasion of Ukraine.

The destruction of the facility by Russian forces on Tuesday unleashed mass flooding, forcing thousands of residents to flee and wreaking environmental havoc.

Audaciously, Kolivand even described the destruction of the dam as a “tragic incident” as he downplayed the devastation Russia continues to deal to Ukraine's civilians. The latest attack on the dam affected the lives of a large number of innocent people, forcing the evacuations of residents of surrounding villages.

Kolivand claimed that the Islamic Republic's principled policy is to help other countries based on humanitarian grounds to protect the lives of innocent people and reduce their suffering, the gesture unlikely to be taken seriously amidst months of uprising which has seen hundreds of civilians killed by the regime's security forces and tens of thousands more arrested.

It is likely to anger Ukraine’s President Volodymyr Zelensky who said last month that “thanks to the sanctions, the number of missiles they [the Russians] produce has decreased several times. However, there are such challenges as Iran which has sold them [Russia] more than 1,000 Iranian-made drones and other weapons.”

Iran first denied it had supplied drones to Russia but in early November foreign minister Hossein Amir-Abdollahian admitted the deliveries, while claiming they were sent before the Russian invasion. Recent intelligence reports suggest that Tehran may also be planning to supply long-range missiles to Russia.

IRGC Renews Threats Against Extra-Regional Presence In Persian Gulf

Jun 9, 2023, 14:06 GMT+1

The Commander of Iran’s Revolutionary Guards’ Navy says the Persian Gulf belongs to regional countries and the presence of other countries' militaries there is illegitimate.

During his visit to Iranian islands in the southern waters of the country on Friday, Commodore Alireza Tangsiri said: “Establishing security in the Persian Gulf and the Strait of Hormuz is done with the synergy and convergence of the countries of this region, and there is no need for the illegitimate presence of extra-regional countries."

He did not explicitly mention any country, but the presence of US and Israeli forces has been a thorn in the eye of the Islamic Republic.

His remarks came a few days after US and UK navies acted when a merchant ship was being harassed by IRGC’s fast-attack boats in the Strait of Hormuz. Over the past two years, Iran has now harassed, attacked or interfered with the navigational rights of 16 internationally flagged merchant vessels in regional waters.

The recent incident in the Strait of Hormuz took place against the backdrop of reports about the formation of a new naval alliance in the region with Iran being a main force. The US says it “defies reason” for Iran to be part of a regional naval alliance while the Islamic Republic is the main reason for maritime insecurity in the Persian Gulf region.

Iranian media claimed in recent days that a regional naval coalition is in the offing though this was not confirmed by any mentioned parties. Iran's navy commander officially announced that his country and Saudi Arabia, as well as the United Arab Emirates, Qatar and Bahrain, plan to form a naval alliance, that would include Iraq, India and Pakistan.


US, Saudi Arabia Discuss Iran’s Regional Threats

Jun 9, 2023, 12:26 GMT+1

US Secretary of State Antony Blinken highlighted the threats posed by Iran for the security of the region during his trip to Saudi Arabia.

During a joint presser with Saudi Foreign Minister Prince Faisal bin Farhan Al Saud on his last day his visit on Thursday, Blinken said Washington and Riyadh, together with the GCC, are “focused on Iran’s destabilizing influence in the region, including its support for terrorism and violent militia groups, the seizure of tankers transiting international waters, and nuclear escalation.”

While the United States and Iran both denied reports that they were nearing an interim deal Thursday, Blinken added that “the United States continues to believe that diplomacy, backed by economic pressure, by deterrence, and by strong defense cooperation, is the best way to avoid and counter these dangerous actions.”

He noted that the US supports efforts by Saudi Arabia to de-escalate tension and stabilize relations, without elaborating on details.

US Secretary of State Antony Blinken attends a joint news conference with Saudi Foreign Minister Faisal Bin Farhan at the Intercontinental Hotel in Riyadh, Saudi Arabia, June 8, 2023.
100%
US Secretary of State Antony Blinken attends a joint news conference with Saudi Foreign Minister Faisal Bin Farhan at the Intercontinental Hotel in Riyadh, Saudi Arabia, June 8, 2023.

Among the main points on agenda in Blinken’s trip was pushing Riyadh for normalize ties with Israel, about which his Saudi counterpart said that “it’s quite clear that we believe that normalization is in the interest of the region, that it would bring significant benefits to all.”

However, he added “without finding a pathway to peace for the Palestinian people, without addressing that challenge, any normalization will have limited benefits.”


Iranian Activist Says Regime Intends To Force Him Into Exile

Jun 9, 2023, 09:47 GMT+1

Former political prisoner Hossein Ronaghi says the intelligence ministry has requested the Prosecutor's Office to issue an order to send him into exile.

He further noted in a tweet that he has found out that based on the order his bank accounts will be blocked and he will be deprived of his citizenship rights.

Ronaghi is an Iranian blogger, human rights activist and political dissident who was arrested on September 24. 2022, along with his lawyers in front of the Evin Prison prosecutor's office and transferred to jail where he was tortured.

In protest, Ronaghi went on a hunger strike after his arrest amid antigovernment protests and refused liquid nourishment and water.

Tehran residents rushed to the hospital in November after his brother wrote in a tweet that security agents had moved Ronaghi from prison to a hospital. He said his brother “got on an ambulance fully awake after talking to his mother,” adding “whatever happens to Hossein is nothing more than a pre-planned scenario because they intend to kill him.”

Ronaghi, 37, a contributor to The Wall Street Journal, has for years been one of the most fearless critics of the Islamic Republic who has stayed in the country.

Iranian authorities on November 26 released Ronaghi on bail.

In previous rounds of torture, the dissident has lost one kidney and his second kidney is functioning at 60 percent, according to human rights sources.

Hossein Ronaghi has been arrested and jailed several times in the past 13 years. He was detained in 2009 for his role in the post-election protests. Ronaghi was arrested again in February 2022 after criticizing a bill that would limit internet access in Iran.