Iran Economy NewsThe Twin Sides of Iran’s Collapsing Economy

The Twin Sides of Iran’s Collapsing Economy


Iran's collapsing economy

By Pooya Stone

In the power struggle between Iran’s ruling factions to win more seats in the parliament, there is revealing widespread speculation about the dire economic situation and the government’s inability to resolve it.

According to Iranian observers, the difference between these revelations and similar ones in previous phases of the power struggle is that this time the signs indicate that the regime is entering a new phase and that its consequences are untold.

Now the question is debated in government circles, what are these signs telling, and is there any solution?

Admitting the crisis in economic infrastructure is one of the first signs of economic collapse.

“The spokesman for the country’s electricity industry, calling on people to reduce fuel, said that due to the cold weather and rising fuel consumption in the country, unfortunately, a number of gas-fired power plants were having difficulty supplying fuel.” (State-TV Channel One, 16 February 2020)

The spokesman for the electricity industry said: “Gas consumption has reached more than 600 million cubic meters per day. This situation is truly unprecedented. Ten percent of it could be 60 million cubic meters, which could be a boon for the electricity industry, which mainly operates with gas… Parts of Gilan Province, Mazandaran, Khorasan, Azarbayjan, Mid part of Semnan, Tehran Province, we have a blackout now.”

Increasing liquidity and the depreciation of the national currency are other signs of economic collapse.

“The head of the central bank said this year’s liquidity growth was slightly above the nation’s 50-year average liquidity growth, which was just over 25%.” (State-TV Channel One, 16 February 2020)

In such a situation, acknowledging the inevitability of having no solution on one hand and the escape of investors, on the other hand, enhances the picture of the collapsed economy in the regime’s system.

Ali Agha Mohammadi, a security official and member of the Expediency Council on 15 February, said on state-TV Channel One: “How is it possible that on business issues we are rated 128 in the world, are we really the 128th country?

“An economy that holds the 19th place in the world, how is it possible to have the 128th position in economic issues? Does no one have any solution for it… Look, on inflation the lower classes have a very bad situation, and anyone can go to the lower class areas of his election zone and see his weakest areas, and will find out that cost and benefit are not equal…”

“Resistance economy is not just a slogan, you must sit and speak about it, now they don’t allow us to sell oil, ok, must it leave under the ground or be saved to a repository?”

“So, this is a decision, we must sit and make plans about it, on how we must store it in containers, if one time the sanctions will be lifted, we sell that oil, and use it for our economy. We can not forget so many youths.”

In the collapse of any economic system, especially dictatorships, the other side of the coin of the collapsed economy are looting and plundering of the country’s main resources. From the income of the workers to the small incomes of the deprived classes, they are all part of the looting by the ruling class. Confessions of these are also widely seen in government newspapers these days.

The state-run media Setareh Sobh on 16 February confessed about this and said: “The Iranians have a low wage. The minimum wage should be 5.8 million tomans, but the current minimum wage will cover at most 37.67 percent of the livelihood.”

“The International Labor Organization statistics show that the minimum wage in Iran is (2100), Libya (4286), Oman (10263), Saudi Arabia (9600), Turkey (7146) and Venezuela (6873) dollars.”

Forbes said the number of Iranian billionaires (in rials) is up from 10,900 people in the year 2000 to 30,100 in 2014.

State-run daily Vatan on 16 February also acknowledged another part of the economic collapse of the regime, which is exacerbation of the class division and the deprivation of the disadvantaged and the fall of the middle class below the poverty line and wrote: “Statistics released by the Center Statistics show that inequality has worsened during the administration of the so-called “Prudence and Hope” government. The trend of changes in the Gini index as a standard to measure the level of inequality in income distribution confirms this.”

“The government’s passivity about the domestic economy and knotting the fate of the country’s economy with results of the negotiations, ultimately led to a sharpening of the gap in the class division and the increasing pressure on the middle and lower classes of society, in addition to making the economy more vulnerable to sanctions.”

Thus, the economic downturn and the destruction of infrastructure, along with the robbery and looting of the people’s economic power by the ruling gangs, are the two sides of a coin of the collapsing economy of the regime.

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