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“Super Inflation” in Iran as New Sanctions Hit

“Super Inflation” in Iran as New Sanctions Hit

By By Amir Taghati

On Monday, the US sanctions hit Iran’s energy and bank sector. Meanwhile, officials in Iran dismiss concerns about the impact of the sanctions on the economy, and claim that nothing serious has happened.

Tasnim state-run News Agency cited the Managing Director of the Iran Export Guaranty Fund as saying, “given the foreign exchange reserves and the country’s economic capacities, even if we do not have three years of oil exports, the country will be managed.”

At a meeting broadcast live on state television, Iranian President Rouhani told economists, “America wanted to cut to zero Iran’s oil sales … but we will continue to sell our oil … to break sanctions.” He added “This is an economic war against Iran but … America should learn that it cannot use the language of force against Iran … We are prepared to resist any pressure.” Rouhani also said, “Today the enemy (the United States) is targeting our economy … the main target of sanctions is our people.”

Some Western media, as well as critics of America’s tough policy on Iran are concerned by remarks such as these, but Iranians know who to blame for their misfortune. Their economy has been dire for a long time.

In fact, state-media reports daily about factories and industries closing down due to bankruptcy, leaving more people unemployed.

Economic experts call the high inflation rate “super inflation”. It has all but eliminated the Iranian middle class, and resulted in 80% of the population living in poverty. According to economist Professor Steve Hanke, Iran’s inflation rate is 265%.

According to state run ILNA News Agency, only about 14 million people in Iran have permanent jobs and a stable income. “This is while only 23 million people are employed in Iran and 9 million of them do not have a permanent, stable job,” the new agency wrote on November 4th. Iran officials lack accountability for the economy, ILNA wrote, “The energy of politicians in the sectors of industry, services and agriculture is used exclusively in political and factional infighting.” The news agency added, “Factions are merely thinking of consolidating power rather than boosting employment.”

An NGO that tracks global corruption, Transparency International, writes Iran is one of the most corrupt countries in the world. It is ranked 130 out of 180 world countries on the global Corruption Perceptions Index (CPI) 2017, published by Transparency International on February 2017.

In an interview with ILNA, Hassan Sadeghi, the head of a trade union cited 498 manufacturers in Iran that were in crisis adding that the “factories needed urgent aid and support.” He said, “The rest of the factories are also concerned about future crises.” Sadeghi said that the country’s factories were running on old technology and that they were behind some 40 years. “For example right now, Saudi Arabia’s poly acrylic production line technology is 40 years ahead of ours, so it’s natural that our obsolete technology adds to the crisis,” he explained.

“Officials are feigning sleep when it comes to the problems of factories because this is the cheapest option for them,” Azizeh Sharifi said regarding the closure of tile and ceramic factories and the crises that other factories face.

As well, the prices of dairy products in Iran has also made headlines in Iran recently. The head of the Board of Directors of the Association of Dairy Farmers says that the high price of dairy products is due to the high price of raw materials. “The cost of packaging and materials needed by factories has increased fourfold. As our expenses go up 2 to 3 times every day, so does the price of other products,” he said in an interview with ILNA.

Many factories and manufacturers have not paid their workers for months, despite daily protests and strikes by laborers in various sectors.

In short, Iran’s already shaky economy that is the result of corruption and mismanagement is likely to crumble under the new US sanctions.