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Op-ed views and opinions expressed are solely those of the author.
More than two-thirds of the population in the rich country of Iran are living below the poverty line. Coronavirus is raging, killing more than 450 people daily, according to official figures. The Iranian regime claims that it cannot supply medicine due to sanctions and blames Washington for all the unrest in Iran.
With Biden coming to power, some hope that a return to JCPOA could change the country’s appalling economic situation. Over the past four years, the U.S. imposed maximum pressure and extensive sanctions on Iran, and Iranian oil sales have reached their lowest point in decades. This list of sanctions included banks; insurance companies; oil, gas, and petrochemical companies; shipping companies; and several individuals. The exertion of the maximum pressure posed severe challenges to the Iranian economy. Biden’s election has led to the idea that he could be the saving grace for Iran and solve the country’s economic problems related to the increased sanctions.
In its latest report on Iran’s economy, the Economist says that the country will experience a 12 percent drop, one of the most significant negative growths in recent decades. Thus, Iran’s economy will experience negative growth in large numbers for three years and will be about 20% smaller. If we combine this with population growth, Iran’s economy will face a 25% drop in per capita income in three years. Without a significant change or intervention, the negative economic impact on the Iranian people will only continue to grow
These large numbers have complex and challenging consequences for Iran and the lives of Iranians. Considering that the country’s average economic growth from 2011 to 2019 was reportedly close to zero percent and inflation in Iran, after Venezuela, Zimbabwe and Argentina, is fourth in the world ranking (average global inflation rate in 2018 was equal to 2.4 percent). At the same time, Iran has one of the worst trends in income distribution. And economic inequalities are widespread. These figures are very alarming. Negative economic growth in the last three years has dramatically increased the dimensions of poverty.
The main problem of economics based on lies and wrong projections
Emphasizing that the economy’s main problem is not the United States and sanctions, an economist, Hossein Raghfar, a professor of the university and close to Iranian regime, stated: “The economy’s main problem is lies and projections to divert the public mind from the bitter realities the regime has brought to the people. The United States has consistently been cited as the leading cause of its problems, while these problems are due to its government’s functioning. It has nothing to do with sanctions, but the rulers’ dominion over Iran’s economy has brought about a problem of domestic performance.”(Resalat News, October 14, 2020)
Regarding the impact of the U.S. election on the state of Iran’s economy, Raghfar said: “Biden or Trump’s victory has nothing to do with the state of the country’s economy, because U.S. foreign policy towards the Middle East, especially Iran, is based on U.S. interests in the region.” There will be no significant change for Iran because the government is the root of many economic ills and inflation in the country. Even if Biden returns to the JCPOA, this reversal will not change how the Iranian regime handles its funds and the lack of care it has for the Iranian people.
Sanctions are effective when domestic production capacity is destroyed as a result. Production capacity from the ninth government onwards deteriorated, and the country became dependent on imports. The volume of imports increased from $16 billion in 1984 to $ 90 billion in 1990. In this way, sources of production are lost every day. It made the country more dependent on foreign supply chains and promoted consumerism. The foreign exchange gains from these imports went mainly into their pockets, which control more than half of Iran’s economy and its imports and all the country’s piers: the IRGC. However, the IRGC is unwilling to give up these vast profits and continues to destroy the sources of production by forcing goods from China, etc., and thus leads the people further into poverty.
In 2018 and 2019, according to the Central Bank, Iran received $180 billion for its exports, but how it was used is unclear. According to studies, with the same currency, it was possible to supply essential goods and products for three years, up to $ 35 billion each year.
These strange incomes have entered the pockets of private enterprises unwilling to lose those substantial financial resources. This year, 600,000 billion tomans of rent have gone into the pockets of steels, petrochemicals, and mine owners. Unfortunately, mafia networks in the economy pursue specific interests and do not allow any change. Who can be this mafia network except for the IRGC and the circles close to the government?
After JCPOA came into effect, the agreement released over $150 billion of blocked Iranian money. The Iranian regime sold at least two million barrels of oil a day until the U.S. withdrew from JCPOA and sanctions began. However, the 2017 and 2019 uprisings were rooted in poverty, inflation, and unemployment. Those uprisings shook the government. Questions regarding how these funds were used continue to swirl as the regime claims it lacks resources to address Iran’s critical issues, particularly related to the environment and the COVID-19 pandemic.
With its belligerent policies and the creation of various militant groups throughout the Middle East, Iran’s reactionary regime has destroyed all the country’s wealth while destroying its productive resources and infrastructure. Instead, it has created exemplary poverty in one of the wealthiest countries in the world.
The Iranian regime and its lobbies worldwide pretend that sanctions cause the current poverty and misery of more than seventy percent of the Iranian people. That is why the big problem of Iran’s economy is the institutionalization of false rule and corruption.