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Iran: Can the Current Regime Recover the Collapsing Economy?

Iran: Can the Current Regime Recover the Collapsing Economy?

By Mahmoud Hakamian

The Iranian economy is going through major changes and the past few months have been turbulent. To say the least. This is especially true in terms of the Iranian gold markets and the foreign exchange. The country’s regime has also been unable to control the runaway prices. Experts are referring to Iran has having a “bubble economy”.

A bubble, in economics, comes about when there are high hopes for the values of a certain commodity (this could be gold, a country’s natural resources, property, and so on). In Iran, the economic bubbles are present because of the misguided regime policies and unsustainable financing practices. The anticipation of inflation also plays a big role.

Economic players in Iran do not know where they stand. The Central Bank of Iran (CBI), for example, has lost the trust of many. And quite rightly so. When the country’s currency devalued a few months ago, the CBI announced that exchange rates were to be unified and clamped down on the foreign exchange bureaus. However, it did not provide the hard currency that the market needed. A situation that was supposed to result in a unified two-tiered system has now resulted in a three-tiered exchange rate system.

Iranian society is beginning to see that the situation really is a crisis and it will not be long before there is a major movement towards parallel markets. The regime is completely incapable of managing the economic situation and its attempts to rectify certain aspects of it have just made everything worse. Furthermore, the Iranian regime does not want to accept responsibility and passes the blame over to other networks described as corrupt.

This is laughable and ironic because there is corruption at all levels of leadership in the country. As the economic situation worsens and the people find it harder and harder to afford the most basic of amenities, the regime officials find themselves as rich as ever.

For as long as the quick gains are sought in the market, the economic bubbles will continue. This is dangerous for the economy because it does not open it up to medium or long-term stability. It can only be described as a vicious cycle that the regime refuses to control.

There is no doubt that the situation as a whole would improve if the regime took decisive action and put in place preventative measures to stop the situation worsening. Furthermore, the corrupt parties need to be prevented from taking further action that will harm the economy. However, this is very unlikely considering that the regime is involved in much of the corrupt practices.

Even if the regime takes advice from economic experts, the situation in Iran will never fully recover for as long as the clerical regime is in charge. The National Council of Resistance of Iran (NCRI), the main opposition, stands behind the Iranian people in their calls for regime change. On 30th June it will hold its annual rally in Paris where its supporters, including numerous political figures, human rights activists and lawmakers from around the world will discuss the current situation in Iran.