After three months of promises by Iran’s president to change the economic situation in the country, nothing has changed, and the state media speaks every day about an incurable economy.
“Ghalibaf and Raisi none of them has an accurate understanding of macroeconomic issues and are unfamiliar with the behavior of economic variables and knowledge of economics.” (State-run daily Jahan-e-Sanat, November 10, 2021)
Iran’s economic crises have not been created overnight so that someone could solve them just with some hollow promises, Iran watchers argue. And the crises are the outcome of 40 years of the mullahs’ rule.
Thus, how is it even possible that people who are the causes of such a situation be able to make changes in this dramatic economic situation? Especially those, who according to the regime’s media have no understanding of the macroeconomy.
As the state-run daily Jahan-e-Sanat said, the country’s economy is like a wild horse that does not tolerate any ride. And if there is no action to solve this complicated issue, the ground will become harder and the horse wilder. The government is not able to change the people’s living situation.
Over the last three months, prices, inflation, and liquidity have been increasing despite the regime’s promises. For one month, 146 trillion tomans have been added to the country’s liquidity; about 48 trillion Tomans per day, 200 billion Tomans per hour, and 3.3 billion Tomans per minute.
Liquidity increased by 17% in September compared to March 2020 and jumped by 40.5% compared to September 2020. The main reason for this jump is the adoption of inflationary policies to cover the government budget deficit.
The inhuman policies of the regime’s governments in the field of money, which has a great impact on increasing the inflation rate and pushing more people below the poverty line, have caused a disaster, so much so that one of the economic experts named Farshad Momeni said:
“I want to compare the amount of rent in the policy of inflation and the rent in the dual exchange rate. My research shows that rents in inflation are 350 times higher than rents in the dual exchange rate, and therefore corruption and rents in inflationary policies are far higher than in the dual exchange rates.” (State-run daily Setareh-e-Sobh, November 10, 2021)
Before the start of Ebrahim Raisi’s presidency in a meeting with the country’s chamber of Commerce, he criticized money injection and highlighted the management of the currency rate. In those days, the dollar rate was almost 23,000 tomans, but now, three months after this promise, it has reached almost 28,000 tomans, which shows a 20% increase in just three months.
It seems that the government does not intend to jeopardize the interests of dollar revenuers in Iran by lowering the dollar rate. Inflation is not an inevitable event, but a policy. An inflationary economy provides the conditions for wealthy people to make huge profits without a real change in the quality and quantity of domestic production.
The country’s wealthy citizens are primarily the regime’s elements. An examination of the financial statements of many large steel, mining, petrochemical, etc. rent-seeking companies shows that these companies have suddenly experienced high profits at the same time as the dollar has risen dramatically and because of inflation. These profits are practically money that has flowed from the pockets of the poor to the pockets of the rich.
Therefore, the relationship between rising inflation and corruption and looting in the regime that has been going on for 4 decades has also been strengthened and increased in Raisi’s government.
Abbas Abdi, one of the regime’s elements, described the current economic situation as follows:
“We have been facing double-digit inflation for decades and have been deprived of sustainable long-term growth. Our share of the global economy has also declined sharply. People who run the affairs do not have the understanding and skills to achieve economic growth.
“Unscientific and irrational mindsets that severely destroyed the economy and disrupted social and economic structures have ultimately deepened corruption, pervades inefficiencies, destroyed employment, and squandered large amounts of foreign exchange earnings. Squander in the strict sense of the word.” (State-run daily Etemad, November 10, 2021)