Opinion

Iran’s bankrupt economy shows signs of a regime nearing its end

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Op-ed views and opinions expressed are solely those of the author.

Ever since the US targeted the Iranian regime’s oil sector with biting sanctions as part of its ‘Maximum Pressure’ campaign, the mullahs’ economy has been in freefall. 

The value of Iran’s national currency, the Rial, has been steadily tumbling in recent months. As of last Monday, $1 US was equal to 200,000 Rials. That’s a record low and a 14 percent fall compared to the same period last month when one US dollar was worth 175,000 Rials. For background, one dollar was worth 75 Rials prior to Iran’s 1979 revolution.

The scale of Iran’s economic meltdown is also visible in its budget for the current Iranian year.  After lawmakers rejected Iran’s 2020-2021 budget bill, the regime’s Supreme Leader Ali Khamenei had to issue an Executive Order sending the bill to the Guardian Council without Parliament’s approval, using the Coronavirus crisis as an excuse.

By bypassing lawmakers Khamenei hasn’t solved Iran’s economic crisis. He has simply swept it under the carpet. But a quick look at the budget shows just how deep the mullahs’ troubles are:

The 2020 budget is about 20 quadrillion Rials – or $480 billion using the official exchange rate. The regime has nowhere near that sort of income.

Iran’s 2019 budget was based on oil exports of 1.54 million barrels per day (bpd) at $54 per barrel. Those projections were farfetched not least since US sanctions brought exports as low as 100,000 bpd. The 2020 budget is based on sales of 1 million bpd at $50 per barrel, so the projected income will be even less than last year. Total oil, gas and gas condensate revenue is estimated at $10.83 billion, far short of figures needed to balance the budget. And that figure hasn’t even taken into account the effects of sanctions. The regime’s pains don’t end there. Oil prices are currently at $40 a barrel, in part due to the Coronavirus crisis. Basically, the regime has to forget about running an oil-based economy.

To make up for low oil sales, Iran’s regime is raising taxes by 27 percent from about $36.5 billion in last year’s budget to about $46.4 billion this year, to bring in an extra $10 billion. Reality check: Iran’s starving population don’t have an extra $10 billion to fund the mullahs’ global terror agenda.

Furthermore, the last time Iran’s regime tried to extract more money from the population by raising gas prices, protests demanding “regime change” erupted in 191 cities, leaving at least 1500 protesters killed and the regime just one step from being overthrown. Khamenei knows further price hikes could cost his regime dearly.

This year’s budget includes a 15 percent pay raise to all government employees which sounds like a good thing. In fact the inflation rate at the start of 2020 was 40 percent, meaning the pay raise is not really a raise. Those employees will be 25 percent poorer overall.

In Iran the real earners – the Revolutionary Guards’ (IRGC) economic enterprises, Khamenei’s private hedge fund known as the Execution of Imam Khomeini’s Order (EIKO) and the Astan Quds conglomerate – are all tax-exempt. The opposition National Council of Resistance of Iran (NCRI) has documented how the IRGC wastes billions of Iran’s national treasures on terror and wars in Iraq, Lebanon, Syria and Yemen as millions of Iranians live in poverty.

In 2015, President Barack Obama’s infamous international nuclear deal gave the regime a windfall of cash, breathing life into a faltering regime. After President Trump pulled out of that deal, however, the regime has struggled desperately to keep its head above the water. It no longer has the funds to support IRGC Qods Force terror in the Middle East. Earlier this year, the regime asked the International Monetary Fund for a $5 billion loan, the first time in 60 years that such a request was made by Iran.

IMF forecasts last October said Iran’s economy would shrink by 9.5% by the end of the 2019/20 financial year, while the World Bank said the Iranian economy would be 90% of its size just two years ago.

These days, the Iranian regime’s apologists in the West, including Congresswoman Ilhan Omar, are pressing the US to lift sanctions on Iran’s regime, claiming they are restricting the entry of medical supplies into Iran during the Coronavirus crisis. (For the record, Rep. Omar’s senior legislative assistant happens to work for the National Iranian American Council, NIAC, the regime’s intelligence arm in the US.)

In reality, US sanctions don’t target the export of food and medicine to Iran at all. The Trump Administration has even reached out to Iran, announcing that it’s ready to help it fight the Coronavirus.  

The real intention of the Iran lobby is to once again replete the mullahs’ war chest to help keep the regime in power.

Inside Iran meanwhile, the population has grown increasingly restive after 41 years of the mullahs’ rule, which has brought them nothing but corruption, poverty and suppression. Iran’s people blame only the regime for their economic woes. A common chant in the Iran protests has been “Our enemy is right here. They’re lying when they say it’s America.”

Iranians support the Trump Administration’s sanctions against their oppressive dictators.

Today, after the failure of Europe’s special purpose vehicle for barter-based trade with Iran called INSTEX, and with the regime landing on the Financial Action Task Force (FATF) blacklist, the European Union should come to recognize that investing in Iran, under the mullahs’ rule, is not good for business.

The Iranian regime’s bleak budget for 2020 proves US ‘Maximum Pressure’ is working. But since it was Khamenei who used his authority as Supreme Leader to push the budget bill through without a vote, it’s all but certain that the regime’s inability to implement it will come back to haunt him personally as well.

The possibility of Iran’s terrorist theocracy collapsing can be seen from various perspectives. This prospect is particularly visible when looking at the regime’s bankrupt economy. For as long as Iran’s regime refuses to abandon its terror agenda at home and abroad, President Trump should keep up the economic pressure to force the regime into retreat. And the regime’s lobbyists need to be exposed for assisting a decaying dictatorship.

Hanif Jazayeri

Hanif Jazayeri is a London-based news editor and Iranian opposition activist. Twitter: @HanifJazayeri
Hanif Jazayeri

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