Following the five-day talks in Vienna last week that turned out to be fruitless in agreeing on the future of the 2015 Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA), a dramatic drop in the value of rial occurred within a matter of hours.
From every U.S. dollar being exchanged at 300,000 rials, it suddenly reached 310,000 rials a few hours later. The argument that the talks were to blame was fair, considering that many people had hoped that a breakthrough in the deal would rekindle trade with Iran and open the country to the international market.
The reality is that Iran is suffering from a much deeper economic crisis, one that goes beyond the nuclear program and the ongoing talks with world powers.
For the past four decades, the Iranian economy has constantly been on the decline. Following the 1979 revolution, when the Iranian regime came to power, the price of a dollar was equal to 140 rials. By the early 1990s, this figure had reached 1,420 rials. A decade later, the exchange rate was sitting at 7,920 rials.
The 2010s is when the pace of the rial’s value escalated. From 19,000 rials to every dollar in 2011, this figure almost doubled within five years, before hitting a record 150,000 rials in 2018. As Ebrahim Raisi was sworn in as the regime’s president in August of this year, the figure sat at 230,000, before reaching its latest figure this month.
The real reason behind Iran’s fast-declining economy is the annihilation of production in the past four decades. Hundreds of factories and thousands of workshops have been shut down due to the regime’s destructive economic policies.
Today, Iran has been swarmed with imports and smuggled goods and runs on a corrupt network of economic enterprises that are run by regime officials, or by the Revolutionary Guards (IRGC). Regime experts have even referred to the situation as a ‘parasitic economy’.
While these imports are costing the regime vast amounts of money, another drain on the country’s finances is their funding of their nuclear programs and their terrorist proxy groups across the Middle East.
This is why there’s not enough money left in the government’s coffers to pay government employees, teachers, workers, doctors, healthcare staff, and millions of other Iranians who are trying to make ends meet.
In an attempt to temporarily address the country’s budget deficits, the regime resorted to printing absurd amounts of banknotes, at the expense of the Iranian people. An article in the Etemad newspaper last month stated that around 48 million rials’ worth of banknotes is printed every day in Iran. This led to a rise in inflation and skyrocketing prices of basic goods. As a result, a large part of society in Iran is living below the poverty line.
The real culprit behind the nosediving economy and currency is the regime itself, which has only looted the country’s resources and brought nothing but corruption, death, and destruction to the people of Iran and the region. And we can only expect the trend to continue in the coming months.