The ECONOMIC CRISIS in Iran
Huff Post World / Masih Alinejad
08-Feb-2012 (5 comments)

...reassurances have fallen on deaf ears. ..

The Iranian people, reading the proverbial tea leaves, are anticipating a return to anticipate wartime conditions which prevailed in the 1980s during the eight-year war with Iraq. The Islamic Republic's government-controlled media outlets publish and broadcast news reports favorable to the regime. The Iranians, for example, have had no or little information regarding the economic crisis and currency fluctuations. The Iranian government has gone so far as specifically prohibiting media outlets from publishing any news articles or broadcasting any information regarding the fiscal disaster....

A site entitled 'The Tehranis' has reported of the empty shelves in food stores: "People in the Sar-Cheshmeh area of Tehran bought everything there was to buy in stores and now Sar-Cheshmeh is as dead as a graveyard, devoid of all items and products."

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FG

A darn good report

by FG on Wed Feb 08, 2012 09:21 AM PST

FIVE POLICIES THAT LED TO ECONOMIC CRISIS:

1. To limit inflation and thus public discontent, the regime came to depend on cheap imports.

2. Cheap imports destroyed domestic production, both industrial and agricultural.

3. "Enemy making" policies led to sanctions and diplomatic isolation (Such policies were pursued either in pursuit of regional empire or to distract the people from problems and abuses at home).

4. As a result of all this, merchants can't easily restock especially if they offer depreciating rials.  Even if a business managed to do so, government policy is to arrest any merchant whose prices are "too high."  Accepting rials whose values has dropped substantially in the meantime, is tantamount to accepting bankruptcy.   Thus, either the merchant can withhold goods entirely (not actually breaking the law but making shortages worse) or he can "break the law" by making the goods available under the table at higher black market prices.

5. Rather than reform and placate the public, Khamenei chose to hand the economy over to the generals not for reasons of efficiency (the generals know squat about running an economy, especially a consumer economy) but to bodyguard the regime against any discontent.

Notice that the above analysis only covers policies that contributed to economic collapse while ignoring two other major causes--the system's endemic inefficiency and corruption.  These are unavoidable in any system that, for political reasons, forbids two essential checks--a press free that can expose what is wrong and free elections which can compel governments to improve or face the consequences.   Political monopolies can "afford" to be wasteful but only up to a point. 

WOULD THE REGIME BE MORE STABLE NOW IF:

...Moussavi's victory been tolerated.  (Never forget he was the best economic manager the IRI ever had) 

...Khamenei did not spend the subsequent four years killing every proposed reform, as was the case in the Khatami era.

...The press were not prosecuted for exposing  corruption and inefficiency and demanding changes.

...The public could vote for whoever it chooses when the system fails to fix such things. 

...The regime junked schemes for a regional empire that required covert attempts at de-stabilizing neighbors.

...The regime stopped promoting xenophobia to distract attention from abuses or incompetence at home and pursued normal relations instead.

QUIZ QUESTION:  Pick the man whose stubborn intransigence and close-mindedness did the most to make this present crisis a reality:  A) Khamenei?  B) Ahmadinejad?



Balatarin
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FG

Saudis VOW to get nukes if Iran has them

by FG on Wed Feb 08, 2012 03:24 PM PST


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AMIR1973

FG, thanks for your contributions

by AMIR1973 on Wed Feb 08, 2012 11:06 AM PST

They make for interesting and informative reading. Keep up the good work. Regards.


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FG

More News: Rial falling, zero trade at bazaar

by FG on Wed Feb 08, 2012 11:03 AM PST

1756 GMT: Loyalty Watch. Ayatollah Haeri Shirazi has said that, with the Islamic Revolution, the rule of the Hidden Imam has started and Ayatollah Khamenei represents him.

1747 GMT: Currency Watch. Shargh claims
that the Iranian Rial is falling again, now at 19000:1 vs. the US dollar
on the unofficial market. That is a drop in value of about 2% for the
currency from Tuesday.

The website adds, from an official foreign exchange trader, that the
Bazaar is "half-closed" with "near to zero trade". This is presented by
authorities as "calmness has returned to market".

Source: EA

 


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FG

Speaking of shortages...

by FG on Wed Feb 08, 2012 10:56 AM PST

ENDURING AMERICA

 

--An EA source in Iran reports, "The butchers in a small town have ALL
gone on strike --- direct result of the economic climate. No one can buy
any meat anywhere is the area. The discontent is now spreading to the
rural [areas]."

--Malaysian palm oil exporters have stopped supplying most of the 30,000 tonnes of palm oil they send Iran each month.

Malaysia is the world's second-largest producer of palm oil and
supplies about half of Tehran's demand for the commodity, used to make
products from bio-diesel to cooking oil.

"Payments are not coming through and no palm oil shipper wants to
risk sending the cargoes to Iran with such a tense political
situation," said a trader.

 

REUTHERS

 

--Reuthers has two economic reports on Iran which should interest folks here and they are contradictory to some extent.   One story focuses on increasing pressure sanctions are placing on the economy and adds a political contest.  Here's are three short excerpts from that one:

"international
traders saying Tehran is having trouble buying rice, cooking oil and
other staples to feed its 74 million people weeks before an election."

"Iran denies that sanctions are causing serious
harm to its economy, but Reuters investigations in recent days with
commodities traders around the globe show serious disruptions to its
imports."

"A margarine factory owner in Iran, who asked not
to be identified, said there was a shortage in supply of the oils needed
to make margarine that could halt production soon."

//www.reuters.com/article/2012/02/08/us-iran-...

The other Reuthers report is on the theme that Iran may be able to "scrape by" economically which may or may not be so.  As the article suggests, this does not mean that it can scrape by politically.  Certainly no western governmen with so many failures in so many area and
its economy close to tanked, would ever survive an election.  

Another thing if fails to take into account are how deeply the economy may be affected in the near future by developments other than sanctions--strikes, protests, etc.  These can shut down an economy.  Look at Syria, for example.  How many people have been working over the past year?  How many are working now?  What is the probability they will be working anytime soon?

Here's a link to the second Reuthers article.   Note that sometimes you may have to go down a bit and look to your left for the article.

//www.reuters.com/article/2012/02/06/us-iran-...

In the comments sections, some pro-regime posts claim Iranians will be likely to blame the West rather than their own government.   No doubt we'll see some of that but, as in Syria where people are also nationalistic, you'll see less than in the past. 

For one thing, any folks want the regime gone regardless of price (much like the French under Nazi occupation) and figure economic suffering beats civil war.  Secondly, many Iranians know how far the regime persisted in policies involving covert attacks on others, including quite a few neighbors.  

For example, this week Hezbollah, responding to allegations that it depending on drug sales for financing, admitted that Hezbollah itself and all its weapons are financed TOTALLY by Iran.

 

TEHRAN BUREAU

 

Tehran Bureau has two interesting items related to Iran--one economic, the other political.

Economic focus: Mounting Economic Challenges Force New Monetary Moves

Mostly this report focuses on how pressures applied to merchants (currency traders, stores, banks) to accept government rates that are artificially low, meaning below the natural market price determing by demand (how many people want something and had badly) and supply (how much is available). 

Anyone who has ever had a course on micro-economics will know why this always causes new troubles to replace old ones.  It always creates new problems and is akin to what happens when one places pressure on spot on a balloon.

The critical part is in this passage:

What does all these mean to the average Iranian? Vahid, a 28-year-old
engineer who works as a project manager in south Tehran, sums up the
mood: "There is no hope that the government can do anything. The economy
is finished."


Read more: //www.pbs.org/wgbh/pages/frontline/tehranbureau/2012/02/business-mounting-economic-challenges-force-new-monetary-maneuvers.html#ixzz1loddSpp4

 

Political focus: Divisions in Leader's Camp Deepen as Elections Loom

Basically this one is a round-up post.   So far as elections go, the key sentence is this one: 

"All the reformists and democratic groups are boycotting the elections,
referring to the vote as sham and the outcome as rigged. The campaign is
thus limited to a competition between two main camps: those who support
Mahmoud Ahmadinejad versus the supporters of Ayatollah Ali Khamenei."

If you must vote, if you feel that Khamenei is responsible for everything (as is the case and that includes Ahmadinejad's misdeeds since the latter would be no one today if not for the SL), ousting the mullahs is critical given their ties to security force generals and their Basilj militia.  Ahmadinejad will be easier to deal with afterwards.

Avoid the 27 candidates presently listed on the JMO slate and three others to be listed later.

//www.pbs.org/wgbh/pages/frontline/tehranbure...

 

 


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