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Iran’s Freefall Economy, Who’s To Blame?

The horror of economic disaster in Iran: This child laborer, on of tens of thousands, scavenging garbage dump to make ends meet

Nine months into the presidency of Ebrahim Raisi in Iran, it is becoming crystal clear that he has failed drastically in every respect, especially when it comes to the economy. None of the regime’s state media outlets, even those affiliated with the ruling faction associated with the regime’s Supreme Leader Ali Khamenei and Raisi, can deny the devastating economic situation in Iran.

People are grappling with despair day in and day out. Senior Raisi administration officials, unable to deny this stark reality, are placing the blame on the previous cabinet of  Hassan Rouhani.

There are two main indicators for this economic freefall in Iran: liquidity and inflation, which are both skyrocketing.

“The reason behind the current inflation rates is the $144.6 billion liquidity that we received from the previous administration,” said Bahador Jahromi, spokesman of the Raisi cabinet, on Tuesday.

Aside from the regime’s internal disputes and blame games, and the Raisi cabinet’s attempt to deny any responsibility for the country’s catastrophic circumstances, Jahromi’s remarks shed light on the disastrous economic conditions in Iran without any solution in sight.

However, if we accept these remarks from the Raisi cabinet spokesman at face value, it means that in the past nine months alone liquidity in Iran has risen by $22.6 billion. This increase, compared with the total volume of liquidity in Iran back in 1981, indicates a 2,400-fold increase.

Experts associated with the regime’s own institutions are forecasting the country’s liquidity to increase at a steady rate of around 40 percent and “most certainly surpassing the $180 billion mark… and at best it will reach just below $200 billion,” according to an article published on Tuesday, April 19, in the state-run Mardom Salari daily. This will mean an 18,000-fold increase in liquidity compared to 1981.

These mindboggling figures indicate the country is fast heading towards complete economic collapse and the destruction of production lines, generating further poverty and general disparity. The regime’s own institutions are acknowledging the fact that Iran’s middle class is melting fast, and many families are joining the country’s increasingly impoverished population which is currently estimated to be at least 60 percent.

This means the population living in utter poverty which doesn’t even have enough to eat is estimated at 30 percent, meaning 25.5 million of Iran’s 85 million population. This further explains why we are seeing more footage on social media of people across the country searching for food in trash cans. “People searching for food in the trash has spread from major cities to villages… and trash canisters in many cities cannot provide for the rising number of people searching in the trash for food,” according to a piece published on April 18 in the state-run Hamdeli daily.

The reason behind such a phenomenon, unprecedented in Iran for more than 100 years, is prices skyrocketing on a daily basis, especially those of basic food necessities. This includes meat, poultry, dairy products, rice, and bread, which are becoming too expensive for millions of people to afford throughout Iran. According to the regime’s own media outlets, the average price of Iranian rice has increased by nearly 125 percent in the past 12 months, eggs by 97 percent, various beans by more than 100 percent, and peas by 147 percent.

“Don’t be surprised to wake up tomorrow morning and see a Pride vehicle now costing 10 billion rials. In today’s volatile markets, anything is possible,” according to a piece published on April 19 in the Javan daily, an outlet linked to the regime’s Revolutionary Guards (IRGC). “There is no light at the end of this tunnel.”

This is startling, to say the least, coming from an IRGC-linked newspaper and it is only the tip of the iceberg of the disastrous economic predicament in Iran under the mullahs’ rule. It is also astonishing because Iran has the world’s second-largest natural gas and fourth-largest crude oil reserves.

Raisi and his inner circle are desperately trying to place the blame for the country’s catastrophic economic situation on Rouhani. This has been a repeating cycle in the past 43 years of the mullahs’ rule, with every new president blaming his predecessors for his failures.

However, no regime official can cloak this reality that the existing state of affairs is damning proof that Khamenei’s initiative of installing Raisi as his regime’s president has failed miserably. Recall that in the weeks and months leading to the election last June, Khamenei repeatedly said a “young and Hezbollahi Government” can tackle the country’s problems.

Indeed, the scope of this failure goes far beyond his previous schemes when he engineered the election of Mohammad Khatami and Mahmoud Ahmadinejad, in 1997 and 2005, respectively.

This becomes all the more concerning for Khamenei, and his regime in its entirety, considering that the state-run “Etemad” daily wrote on April 12: “The Raisi cabinet is the last chance for all of us.”