Conservative Figures Warn Raisi About Losing Public Trust

Iranian hardliners claim they have defeated US sanctions, simply because the Islamic Republic still stands, but the cost of defiance has been the economic ruin of the country, mostly borne by citizens.

Iran’s counterproductive approach in pursuing even a civilian nuclear program is evident from the Bushehr reactor, built by Russia for generating 1,000 megawatts of electricity. It became operational a decade ago. Iran spent up to $8 billion to build the reactor, which has produced around $5 billion of electricity, leaving a profit of just $3 billion in ten years. Meanwhile, its fossil fuel power generation infrastructure was neglected and no renewable energy investments, except ill-planned dams, were made. Today, Iran suffers from serious power shortages.

But this is just a small example of the damage Iran’s nuclear ambitions have inflicted on the country.

In 2020, based on World Bank estimates, Iran’s Gross National Product (GDP) reached $191.7 billion, which was one third of what it was ten years ago. The main reason for this huge economic retrenchment was international and United States sanctions against Iran since 2011, imposed to limit its nuclear program. The international community, including Russia and China, were concerned that Iran was pursuing more than a peaceful program and cooperated with the West to impose international economic sanctions beginning in 2010 and intensifying in 2011.

Calculated based on the free market rate of the US dollar in Tehran, the size of Iran’s economy in 2020 was the same as it was in 2004. After a substantial growth around 2010 due to very high oil prices, the economy began to decline from 2012 when international sanctions left their deep mark on Iran revenues.

During the period since 2011, successive Iranian governments relied on internal borrowing financed by printing money to maintain their operations. As a result, liquidity grew tenfold exacerbating inflation and in effect devaluing the national currency. People began losing their purchasing power and gradually falling into poverty.

Since early 2018, Iran’s rial has dropped to more than 300,000 against the US dollar, while just four years ago the dollar was traded at 32,000 rials. Before the Islamic Republic, one US dollar bought 70 rials.

The government has been using the central bank as a money printing machine, instead of reforming the economy, and adopting policies to attract foreign and domestic investments. Government debt to the central bank and other state or quasi-state banks has grown tenfold in the past decade.

Based on estimates by the International Monetary Fund, government debt was 6.5 percent of Gross National Product from 2,000-2017, but in 2020 it had reached 33 percent of GDP.

The impact on ordinary people has been devastating. While the minimum income needed to live just above poverty, as the rial lost value, has grown 70-fold in the past 20 years, wages and salaries have increased only 38-fold. While blue collar workers earn around $100-120 per month, office workers make $150-180. The minimum monthly income needed for a family of 3.3 people is $400.

The real numbers speak volumes about official claims that the Islamic Republic has defeated sanctions. The country has simply become poorer.

Ahmed Aboul Gheit said during the Rome Mediterranean Dialogue mentioning attacks carried out in the 2019 in the Persian Gulf and against Saudi oil installations, as well as Houthi threats to navigation in the Red Sea highlighted Iran’s policies in the region.

The Arab League issued a statement on Saturday quoting Aboul Gheit as having said that both straits are vital for the global economy and protection of navigation in these areas should be a global priority.

Persian Gulf Arab states and their Sunni allies such as Egypt are concerned at Iran’s regional policy of creating and supporting militant groups to expand its influence.

Aboul Gheit said that Iran’s behavior and actions are the reason why it is difficult to establish a security system in the Persian Gulf. Iranian officials often boast of their influence in the region, which largely rests on Shiite proxy forces.

He added that he hopes ongoing negotiations would dissuade Iran from pursuing its policies. Both Saudi Arabia and the United Arab Emirates have begun engaging Iran in talks to reduce tensions.

The free market value of the US dollar in Tehran shot up to 300,500 rials Sunday, a historic low for the battered currency. On Saturday the dollar had reached to just over 300,000 rials.

Despite government efforts to claim that the nuclear negotiations are not dead and could continue in a few days, the public remained unconvinced, buying more dollars.

The government feeling market demand restricted access to dollars at official exchange outlets earlier in the week, but the move led to demand shifting to unofficial dealers.

The current exchange rate shows the rial has fallen 4,500-fold since the Islamic Republic was set up in 1979. During the monarchy one US dollar was equal to just 70 rials.

The Iranian currency has fallen more than ninefold since early 2018, when it became apparent that then-president Donald Trump was inclined to leave the JCPOA and impose sanctions on Iran. He did so in May of that year and the rial has kept falling ever since.

The visit comes a week after negotiations between Iran and major powers resumed in Vienna to revive a 2015 nuclear deal (JCPOA), lift US sanctions on Iran and put a stop to escalations in Tehran's nuclear program.

Reports have indicated that the UAE might be hedging its bets given a desire by the Biden Administration to revive the JCPOA and by the US exit from Afghanistan. The general perception is that Washington has shifted its focus to China and east Asia.

Sheikh Tahnoon is expected to meet his counterpart, the Supreme National Security Council's Secretary General Ali Shamkhani, Noor News, affiliated with the Council said.

Sheikh Tahnoon is a brother of the country’s de facto ruler Abu Dhabi Crown Prince Mohammed bin Zayed.

Anwar Gargash, diplomatic adviser to the UAE president, said last month that his country was "taking steps to de-escalate tensions with Iran as part of a policy choice towards diplomacy and away from confrontation."

The Emirati diplomat said the UAE remained deeply concerned about Iran's behavior in Iraq, Syria, Yemen, Lebanon.

Raisi told Maduro that bilateral relations between the two countries are strategic and emphasized that ties should expand during his administration that came into office in August. He added that bilateral ties should be strengthened specially in trade and economy.

Tehran has established close relations with Caracas in the past 15 years and has defied US sanctions on both countries by shipping fuel across the Atlantic to prop up the beleaguered Maduro government. The Trump administration seized one such large shipment and auctioned off the cargo.

Raisi also emphasized the quest of both countries to defy the United States, saying that “we will continue the path of progress.” He also highlighted the need for more cooperation in the energy sector and congratulated Maduro for the recent elections in his country.

US sanctions have battered the economy of the two countries as they are unable to export oil to global markets and their national currencies have nosedived in recent years.