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Will a Nuclear Deal Help Iran’s Battered Economy?

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As talks over Iran’s clandestine nuclear program continues between the world powers and the mullahs’ regime, many observers ask whether a deal could help Iran’s battered economy and improve people’s miserable life?

Tehran is now experiencing an unprecedented economic crunch. People’s purchasing power has dramatically diminished, and according to state-run media, Iranians could hardly make a meager living.

Iran’s Statistic Center announced on March 22 that country’s inflation rate had reached 40.2%, marking the third time that the inflation rate has surpassed forty percent since 1979.

Years of mismanagement, corruption, and ineptitude have hobbled Iran’s economy. The regime’s insistence on pursuing its regional adventurism has led to comprehensive sanctions by the U.S. and Europe, further increasing pressure on Iran’s already-collapsing economy.

Iran’s inflation rate has increased rapidly in recent years due to the regime’s misguided economic policies.  According to the state-run Bahar website on March 26, the country’s liquidity has increased by “40% in recent years.”

Liquidity is a crucial indicator; its absence could damage the economy. Low liquidity seriously damages the production of countries with a relatively high production rate and could hinder their economic growth.

Yet, when the liquidity rate is not in line with other microeconomic factors such as the country’s Gross domestic product (GDP), it causes inflation.

“According to the Central Bank, Iran’s current liquidity is more than 450 trillion rials, but the production sector has not absorbed this liquidity. Therefore, it has not helped the country’s economy,” the state-run IMNA news agency wrote on March 23.

“Production has decreased significantly; So domestic production is less than the usual needs of society. Thus, even with normal liquidity, supply is lower than demand, so inflation grows,” IMNA quoted Morteza Afghe, an Iranian economist. “If the liquidity growth rate is faster than the GDP growth, it will lead to inflation,” he said.

So why Iran’s liquidity is rapidly rising?

To compensate for its massive budget deficit, the Iranian regime started borrowing money from the Central Bank. Since the Bank had not enough currency, it started banknote printing, thus skyrocketing the liquidity rate.

“Governments have been using tools such as borrowing money from the Central Bank,” Afghe acknowledged, adding that “there is no other way. As years passed, the economic situation deteriorated, and people’s purchasing power has decreased.”

In his New Year’s speech, the Iranian regime’s president Ebrahim Raisi blatantly claimed his government has reduced inflation, a claim that regime officials and state media quickly scoffed at.

“It has been seven months since Ebrahim Raisi took power, but there has not been a noticeable change,” the state-run Bahar website wrote on March 26.

“Raisi’s government ended the [Persian New Year of] 1401 by blaming the previous administration. He has only killed time,” Gholamali Jafarzadeh, the regime’s former MP, told Bahar News website.

Jafarzadeh mocked Raisi’s ridiculous order of “eradication of poverty,” acknowledging that “absolute poverty has expanded and will increase. We will witness skyrocketing prices, ever-shrinking tables of Iranians, and governments rhetoric and empty promises!”

He then referred to Raisi and his government’s claims of having “economic achievements,” saying, “How dare you to insult people’s intellect? They are not blind. They see their tables and how their purchasing power has decreased.”

“Just tell people what you have really done. People have nothing to eat!” Jafarzadeh acknowledged.

It is absurd to think Jafarzadeh cares about the Iranian people’s plight. He sheds crocodile tears for people out of his fear of public anger over a plunging economy. This fear has been echoed by the regime’s so-called experts and state media.

“People try to survive. How could we expect a population with difficulties winning its bread to reason with us? When one sees his family starving, would he come and try to reason with us,” Amanullah Gharaie-Moghadam, a sociologist, told the state-run Bahar website on March 18.

These comments make it easy to answer the initial question: Would a nuclear deal affect Iranian people’s lives? Would the country’s economy flourish? Let us not forget that the first significant uprising erupted in Iran in 2017, when the regime was enjoying sanction relief, and Wester powers had provided Tehran with a lifeline of cash. But people poured onto the streets because they couldn’t pay for eggs!

Tehran will surely increase efforts to pump more oil to the market once the sanctions are lifted. Yet, every dime will be spent on the regime’s machinery of repression and terrorism. A windfall of cash would not help Iran’s inefficient and corrupted economic infrastructure under the ruling theocracy.