Iranian Officials Clash Over Food Consumption Decline
Amid the ongoing economic crisis in Iran, politicians and officials are making contradictory statements regarding the reported decrease in food consumption.
Amid the ongoing economic crisis in Iran, politicians and officials are making contradictory statements regarding the reported decrease in food consumption.
While some have expressed concerns over people’s reduced purchasing power, the vice president rejected these claims as “baseless”.Ayub Fasahat, CEO of the Fruit and Vegetable Markets of Tehran Municipality, revealed on Friday the profound impact of the government decision in May 2022 to slash food import subsidies. Fasahat stated, "People's purchasing power has decreased drastically, and the consumption of dairy products in the country has declined between 28 to 30 percent."
However, Mohammad Hosseini, the parliamentary liaison of President Ebrahim Raisi, challenged such statements, highlighting the need for evidence-based claims. Hosseini remarked, "Some time ago, one of the MPs said that thousands of people are killed on the roads every day, or some say that inflation is 120%. What is the basis?"
Supporting Fasahat's concerns, the Ecoiran website quoted a Central Bank source in April saying that the annual inflation rate surged to 68.7 percent.
The depreciation of the Iranian rial, which halved in value in the past year, further exacerbates inflationary pressures. One year ago, the rial was trading at around 300,000 per US dollar, while currently it stands at 490,000. This depreciation tells the story of the impact of inflation on Iran's economy, as imports become more expensive.
The economic crisis has exacerbated social discontent, particularly among the younger generation. While large-scale anti-regime protests in 2022 were primarily driven by social and political oppression, the current economic challenges are contributing to mounting popular frustration.
Khabar Online website has quoted Iranian lawyer Omid Salimi-Bani as saying that the text of one ambiguous article shows the government is planning to monitor people's lifestyle to make sure that they adhere to its Islamic standards.
The lawyer said it is up to every individual to be or not be religious. But it seems the government even wants to monitor people's shopping and travel. He likened the plan to the Big Brother in George Orwell's novel 1984. He added that some of what the government is planning to do has been branded as "crime" in the Law Against Computer Crimes.
Salimi-Bani further said that the plan violates several articles of the Iranian Constitutional Law about citizens' privacy.
Meanwhile, Khabar Online also quoted lawmaker Jalal Rashidi Koochaki as saying "Why the government should want to know whether the people are spiritual? What is it good for? Why the government wants to monitor people's lifestyle?"
He criticized the plan's security approach where it says that "The Ministry of Culture and Islamic Guidance should continuously monitor cultural aspects of people's life and their lifestyles in order to pave the way for research." Koochaki reiterated that this part of the plan is an elaborate violation of people's privacy.
Another Iranian lawyer, Hamid Reza Aghababaeian told Khabar Online, "No individual or organization is allowed to invade people's privacy with the pretext of collecting information for research." He added that it violates articles 22 to 25 of the Human Rights Charter. He also said that collecting such data without permission from the court and the police and security forces is illegal.
He reminded that, based on the Iranian Penal Code, only judges are allowed to request the monitoring of people's private data.
In another development, Iran's Intelligence Minister Esmail Khatib told reporters that his ministry is considering to intervene several judiciary cases about the people's "mental or psychological security on social media.,” probably referring to a recent trend to label dissidents a threat to people’s mental wellbeing.
Asked if he did monitor social media, Khatib said: "If I do not monitor social media, then I cannot be the Minister of Intelligence." Responding to the question whether he would allow his children and grandchildren to be active in social media on their smart phones, the minister said: "We have agreed with my children that they should only use Iranian social media platforms."
Iranian social media applications are notorious for collecting and abusing people's private data, both for commercial and government intelligence purposes.
The Islamic Republic has banned all foreign social media applications, because it is afraid of the free flow of information and the likelihood of people organizing opposition using Facebook or Twitter.
Reports this week quoted hardliner commentator Mohammad Sadeq Kooshki as saying that "Instagram has become a venue to recruit terrorists." Kooshki added: "Unfortunately, social media platform including Instagram are not lawful in Iran. Terrorists can contact and recruit people on social media, so, Israeli and European intelligence agents do not need to meet people face to face for recruitment."
The government has banned foreign social media platforms in Iran, however, millions of Iranians use them by circumventing government restrictions by VPN (Virtual Private Networks) also known in Iran as filter breakers.
Earlier this week, the Biden Administration announced that some of Iran’s frozen funds in Iraq will go to Oman, acting as a conduit to release the money for purchasing non-sanctionable goods under US supervision. Iraq owes Iran around $11 billion for imports of gas and electricity, but US banking sanctions prohibit dollar transactions with Iran. In June, the US agreed to make $2.7 billion available for Iran’s humanitarian needs.
Despite this development, the Iranian currency, the rial, has not shown improvement and continues to trade at around 500,000 rials per US dollar, as its value has drastically depreciated in the past year.
Businessman Masoud Daneshmand expressed doubts about the impact of the released funds, stating that the Iranian government would not receive any cash directly. Instead, after Iran purchases goods like wheat, it can present invoices, and Oman will release the money following US verification. Hence, the government will not have additional funds to impact the currency market.
Others, however, disagree with this perspective. Some argue that any released funds, even for food and medicine, could free up other foreign currencies for purposes such as supporting armed proxy groups in the region or producing military equipment such as drones that are supplied to Russia for its invasion of Ukraine.
Amidst the ongoing economic crisis, Iran’s annual inflation is estimated to be somewhere between 50-70 percent, in the absence of reliable figures. However, what is certain is that food prices have risen much faster. Media and even regime politicians have been saying for months that food price inflation is around 100 percent.
Nevertheless, Ahmad Kimiyai, an economist, believes that the release of frozen funds, though not in cash dollars, is still beneficial. It allows some assets to enter the country despite sanctions and can be used for humanitarian imports, addressing shortages of food and medicine.
However, he said it is much better that the money can be used for humanitarian imports instead of cash transfers. “This is better than if the money reached the government, because it might be tempted to do populist acts,” referring to cash handout schemes to the population.
“Now we are certain that goods will be imported that can reach the people’s dinner tables,” and help with shortages of medicine, Kimiyai said.
On the other hand, businessman Kamran Soltanizadeh, who is the head of Iran’s currency exchangers indirectly criticized government propaganda highlighting that the US has released the frozen funds. He argued that there has been no official statement about exactly how much, when and how funds have been released.
He also stressed that the Iranian government is injecting dollars and other hard currencies into the forex market to support the rial, and if it were not for these interventions, the national currency would have fallen further.
The Harakat Hezbollah al-Nujaba group, a part of Iran-backed Shiite militia Hashd al-Shaabi – also known as Popular Mobilization Forces – warned of consequences to the US military presence and its dominance over Iraq's oil sector and its economy.
Akram al-Kaabi, Harakat Hezbollah al-Nujaba's leader – a US-designated terrorist who is regarded as one of the main operatives of Iran’s Revolutionary Guards' Quds Force in Iraq – said, “this is the last warning” to Americans who have flooded the country with ongoing political and economic crises. “We have repeatedly warned about the US interference in the country’s internal affairs and provoking strife,” he said.
The leader of the group -- unofficially operated by the IRGC's Quds Force that provides funding, weapons, and training to its members – added that if the US forces do not leave Iraq and Washington does not stop “blatant interference and evil in our country, there will be broad and decisive measures by the heroes of Iraq who did not and will not accept humiliation and indignity.”
The remarks came in a statement on Wednesday after 14 Iraqi private banks sanctioned by Washington over helping to siphon US dollars to Iran said they were ready to challenge the measures and face audits and called on Iraqi authorities to provide assistance.
US financial authorities last week barred the Iraqi banks from conducting dollar transactions as part of a wider crackdown on dollar smuggling to Iran via the Iraqi banking system. The latest sanctions, along with earlier sanctions against eight banks, have left nearly a third of Iraq's 72 banks blacklisted, two Iraqi central bank officials said.
Haider al-Shamma, speaking on behalf of the 14 sanctioned banks, said on Wednesday the sanctions could further weaken Iraq's currency, which has fallen from under 1,500 dinars per US dollar last week to 1,580 as of Wednesday.
The dinar tailspin against the dollar has worsened since the New York Federal Reserve imposed tighter controls on international dollar transactions by commercial Iraqi banks in November to halt the illegal siphoning of dollars to Iran.
Iraq's central bank says the dinar's depreciation is also tied to merchants, including some undertaking illegitimate financial transactions, sourcing currency from the black market rather than the official platform. Under the curbs that took effect in January, Iraqi banks must use an online platform to reveal their transaction details. But most private banks have not registered on the platform and resorted to informal black markets in Baghdad to buy dollars.
Iran International revealed in May that Qassem Soleimani, an aide to former IRGC’s Quds force commander, is a key figure in money laundering for Tehran. Earlier in the year, Iran International also unraveled some details about the inner workings of a Quds force unit tasked with smuggling money from Iraq to Iran, proving that the Islamic Republic’s embassy in Iraq is also involved in money laundering operations aimed at funneling revenues from oil and gas exports back to Iran.
This financial network is bypassing the US sanctions at the cost of the Iraqi economy. An informed source in Baghdad told Iran International late in December that Washington has received reports that Iraq is still conducting trade with Iran using US dollars despite sanctions.