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Iran’s Regime Acknowledges Worsening Economic Decline but Has No Plan To Reverse It

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Last year, economic conditions in Iran landed the country in the fourth slot on a ranking based on the misery index. The underlying calculations are based on a combination of the unemployment rate and the rate of inflation, both of which have been escalating more or less consistently for several years.

Notably, this trend began before US policy toward the Iranian regime changed under the previous US administration, and at a time when foreign pressure on that regime was arguably at an all-time low. Iran’s score on the misery index was over 70 in 2020, even according to state-run media outlets like the Hamdeli daily newspaper. This marked a precipitous increase from a score of roughly 45 percent in 2019 but was also the continuation of a trend that was clearly established by a jump from 20 percent to nearly 40 percent between 2017 and 2018.

The contributing factor of inflation has been obvious throughout those four years. Before the 1979 Iranian Revolution, one US dollar was worth about 70 Iranian rials. In early 2017, the exchange rate stood at around 37,000 to one, and it ballooned rapidly from there. In the spring of 2020, the value of Iran’s national currency fell 11 percent in just two months, settling for a while at 180,000 rials to the dollar before continuing its plunge.

The most recent figures suggest an exchange rate of around a quarter of a million to one, although Iranian authorities have attempted to mitigate the economic impact, at least for wealth and well-connected individuals, by maintaining an artificial exchange rate that is separate from the market rate. If this has had any impact on the economic condition of ordinary Iranians, it has only been to accelerate the rise of consumer prices and thus exacerbate the effects of poverty upon the vast majority of the population.

Here too, Iranian state media either cannot or will not deny the situation outright. Official statistics acknowledge that fully three-quarters of Iran’s 80-million person population is currently living under the poverty line. But even this estimate fails to reflect the severity of the crisis for many of those 60 million impoverished Iranians. This is largely because the government-set poverty line of 100 million rials is around five times higher than the average annual income for working-class families in Iran.

Of course, poverty-level wages were already a source of considerable hardship prior to the sharp economic downturn of recent years. But now more and more Iranians are struggling to afford the most basic necessities. The housing, automobile, and appliance industries have seen 100 percent inflation, and the prices of various foodstuffs have increased by anywhere from 30 percent to 330 percent in just the past year. As a result, countless Iranians have been forced to subsist on dangerously restricted diets, foregoing meat, poultry, and fruit while struggling to find any means whatsoever of raising their standard of living a little closer to what they’d known in prior years.

Naturally, this desperation has made it impossible for Iranians to properly safeguard themselves against the coronavirus pandemic, least of all when the government has been actively encouraging the public to work as much as they can and to help bolster an economy that is failing as a result of rampant government mismanagement and lavish spending on nuclear and missile projects, and regime’s proxies in Syria, Iraq, Yemen, and the region.

How the Islamic Revolutionary Guards Corps IRGC plunders Iran’s economy

At the outset of the pandemic, while Iran was marking the start of the Persian year 1399 on its calendar, the regime’s Supreme Leader Ali Khamenei declared that the country’s top priority should be to boost economic production. He did not, however, present a concrete plan for overcoming the nationwide unemployment crisis, much less for confronting runaway inflation or balancing these goals against mitigating the threat to public health. Meanwhile, Khamenei continued sitting on hundreds of billions of dollars in assets contained in so-called religious foundations, while his political allies in the Islamic Revolutionary Guard Corps wielded control over more than half of the country’s gross domestic product.

Khamenei’s March 2020 proclamation reflected the general outlook of the regime’s so-called hardline faction, which is keen to lay blame for the economic crisis on “reformist” rivals led by the regime’s President Hassan Rouhani but has no plan for reversing the trend that Rouhani has overseen for the past several years. Instead, figures close to Khamenei have seemingly resolved to consolidate their own political power ahead of forthcoming presidential elections and to push responsibility for the country’s recovery onto its impoverished population.

This strategy was expressed just last month by Ahmad Alamolhoda, the Friday prayer leader and de facto representative of the supreme leader for the city of Mashhad, when he said, “Our social problems today are mostly due to the fact that the people who are running the country are not committed to jihad. If they were committed to jihad, we wouldn’t have had any of these problems.”

In fact, recent events have shown that the people actually are committed to a sort of “holy struggle,” albeit one with a much different aim than government authorities would prefer. Prior to the onset of the pandemic, Iran underwent three nationwide uprisings, with countless intervening protests in various localities.

The last of the three uprisings took place in January 2020, less than two months after the second, which authorities responded to by opening fire on crowds of protesters and killing upwards of 1,500 people. The defiance of that repression prompted statements from government officials and state media outlets alluding to the likelihood of further unrest, and they are fearful that the next uprising will overthrow the regime.

That fact has fueled speculation that the government’s disregard for the public health crisis may have been both a cost-saving measure and a deliberate effort to gain greater control over the population. However, the ongoing economic decline has all but guaranteed that these effects are temporary. In recent months, pensioners throughout the country have staged a half dozen protests over the growing gulf between their income and the cost of living; and in February, large-scale unrest broke out in Sistan and Baluchistan after Revolutionary Guards killed fuel porters who had objected to interference in their livelihood.
The following month, Maryam Rajavi, the President-elect of the Iranian resistance, referenced those protests when speaking at a virtual gathering of American lawmakers and Iranian-American activists and cited them as evidence that “the fire of the uprisings has risen from under the ashes of the coronavirus.”