China, Russia Avoid Investment In Iran Due To Sanctions

In the past few weeks various government officials had repeatedly denied media reports about the government’s intention to increase the price of bread, supposedly because following subsidy reforms in May 2022, former Minister of Economy Ehsan Khandouzi had stated that an increase in the price of bread was “the President’s redline” and other officials had repeated it.

The increase in the price of bread has now officially been announced in several provinces including Khorasan-e Razavi (Razavi Khorasan), South Khorasan, Markazi (Central), Qazvin and Fars. 

Coming months after large anti-government protests, the higher bread prices carry the danger of renewed unrest.

Last week Iranian media reported an increase of around 40 percent in the price of bread, without any prior announcement, in the northeastern province of Khorasan-e Razavi, followed by several other provinces. 

According to Ahmadreza Keshtgar, Chairman of Bakers’ Union in Mashhad, capital of Khorasan-e Razavi, the union had proposed an increase of 110 to 115 percent but the province governor’s office did not agree to raise the prices more than 40 percent. 

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Reza Ramezani, deputy governor-general of Mashhad, told Khorasan newspaper on July 26 that the plan to increase the price of bread had been in the pipeline for a while because bakers are paying higher for labor, rents, tax, and utilities. 

Bakers say despite the lower cost of subsidized flour, other production costs (labor, other ingredients including yeast and oil) have increased so much in the past year and their sales have dropped so that they are still not able to make a profit.

Earlier in June the Bakers’ Union had revealed that subsidized flour allocations to some bakeries had dropped by more than half their quota. 

The traditional semi-flat bread called barbari, for instance, the unbaked loaf of which is supposed to weigh 400 grams, sold at 8,500 rials ($0.17) before the increase but has now risen to 12,000 rials. ($0.24). Although this might seem cheap by world standards, the average salary in Iran is about $200 a month and people’s purchasing power is severely curtailed after the currency rial fell to historic lows last year.

The subsidy was introduced in April 2018 by the government of President Hassan Rouhani when former US president Donald Trump signaled his intention to withdraw from the Obama-era nuclear agreement with Iran known as the Joint Comprehensive Plan of Action (JCPOA), and Iran’s national currency began to nosedive. Prices for imported goods skyrocketed and the government decided to provide cheap dollars to importers of essential goods including flour to keep prices low. 

On May 1, 2022, the parliament voted to allow the government to scrape an annual $10-14 billion subsidy for essential food and medicine despite warnings of higher inflation, which already stood at around 40 percent, and hardship for the most vulnerable. This led to a ten-fold increase in the price of flour. 

The government of President Ebrahim Raisi then introduced a “smart plan” to continue the bread subsidy and issued digital cards that had to be used at the time of purchase, arguing that the plan would prevent the smuggling of subsidized flour and bread to neighboring countries where they sold at much higher prices. 

Bakers complain that the ration card system is causing them many problems including disruption of trade when the internet is down. They also say the government does not always reimburse them for its share of the price of bread purchased by customers (subsidy) on time. 

The massive jump in the price of flour after removal of its subsidies has affected the price of a wide range of other goods including pasta, biscuits, and cakes. Meanwhile, non-traditional loaf breads are available at in other bakeries at unsubsidized prices.

Iranian government spokesperson Ali Bahadori Jahromi alleged that the protests, in the wake of the death in morality police custody of Mahsa Amini, led to an increase in the exchange rate and capital flight, ignoring the likes of global sanctions for its nuclear program, which have only worsened since it was revealed the regime has been supplying drones to Russia in its invasion of Ukraine.

Jahromi simply blamed the uprising on international influence, which he called a “conspiracy” by the United States, one of the country's arch-enemies. Jahromi's remarks come as the rial has experienced a tenfold drop in value over the past five years, with the economic situation further deteriorating before the protests occurred.

The rial has proven to be highly sensitive to news surrounding the nuclear talks which recently saw a closed-door revival with the Biden administration's attempts to bring Iran back to the table. The currency began to steeply fall in early 2018, prompted by former US president Donald Trump's indications of withdrawing from the Obama-era nuclear accord, known as the JCPOA.

The impasse in the talks has further strained Iran's economic situation, with its crude oil exports remaining sanctioned by the US, and its banking system isolated from the international financial system.

In a bid to disguise the dire situation where a huge portion of Iranians are now living below the poverty line while money is still funnelled across the region to the regime's military proxies, Jahromi made the unsubstantiated claim that "all indicators show we are moving towards reducing the inflation rate".

He meanwhile mockingly urged people "not to get the wrong information from Ayatollah Google", suggesting the government spokespeople are the only reliable sources to trust.

Gen. Hossein Salami claimed the countries of the region are capable of establishing the security of the Persian Gulf.

Tensions in the Persian Gulf heightened on Wednesday as the Islamic Revolutionary Guard Corps (IRGC) initiated unexpected military exercises on three Persian Gulf Islands disputed by the United Arab Emirates.

Salami speaking about security in the region stated, "The regional states are capable of establishing the security of the Persian Gulf based on Islamic brotherhood and loyalty, without the need for the presence of US or its allies."

The military exercise, conducted by the IRGC Navy, saw the participation of operational combat units, boats, missiles, drones, electronic warfare, and rapid response forces.

During the exercise, the IRGC unveiled two "advanced weapons systems" - the Qadir cruise missile and the Fath 360 ballistic missile, both claimed to be equipped with artificial intelligence capabilities. Unmanned aerial vehicles (UAVs) allegedly with AI capacity were also deployed, successfully destroying predetermined targets.

The operationalization and equipping of new IRGC boats with missiles, with a range of 600 km, was another part of the exercise.

The IRGC's military maneuvers were primarily centered around Abu Musa Island, with additional troop landings on the Greater Tunb Island, the islands disputed by the UAE.

The United States has boosted its military presence in the region following Iran's attempts to interfere with maritime traffic in the Strait of Hormuz and its surrounding waters.

In response to the US deployment, Salami issued a warning, stating, "Our nation is vigilant, and it gives harsh responses to all threats, complicated seditions, secret scenarios, and hostilities."

The visit is seen as an opportune moment for both nations to focus on regional connectivity, energy cooperation, and enhancing economic and investment partnerships.

Afghanistan holds a vital place in the agenda. Experts have underscored the importance for Iran and Pakistan to establish a common viewpoint concerning the war torn nation, ensuring the preservation of Tehran and Islamabad's interests.

Since the Taliban's ascent to power in Afghanistan, the activities of the terrorist group Tehrik-e Taliban Pakistan have escalated, leading to security concerns in Pakistan. As such, resolving the Afghanistan issue remains a top priority for Islamabad.

Iran's concerns regarding Afghanistan are equally significant due to the shared border and water resources. Experts believe that reaching a unified approach on Afghanistan's issues will be instrumental in addressing the challenges that both Iran and Pakistan have faced in recent years, including hosting Afghan immigrants.

In an official statement, Iran's Ministry of Foreign Affairs revealed that Amir-Abdollahian will meet with the Prime Minister of Pakistan. He is also scheduled to address the speaker of the National Assembly and the chairman of the senate.

Advocacy group Haalvsh, which reports on issues affecting the Baluch minority, said the executions were carried out in several prisons in the southwestern Sistan-Baluchestan province and the northeastern city of Birjand.

The report added that none of the prisoners – who had been sentenced to death over drug-related charges --had their final meeting with their families, “and the families have only been called to receive the bodies of their loved ones."

According to the Norway-based Iran Human Rights (IHRNGO),423 people – including 10 women -- were executed since the beginning of 2023.

In July, the US-based Human Rights Activists in Iran (HRANA) released a report saying that approximately 5,000 executions have taken place in Iran in the last 10 years.

With many cases of executions not officially reported, the actual number is undoubtedly higher.

According to a HRANA report, the number of executions increased by over 88 percent in 2022 compared with a year earlier. There was a sharp rise in reported human rights violations since mid-September when the 22-year-old Kurdish woman Mahsa (Jina) Amini died in the custody of the so-called 'morality police' following which protests swept across the country.

As the execution wave shows no signs of slowing, protests continue across the country, only fueled by the relentless crackdowns.

Amid a spike in executions since late April, on May 19, authorities arbitrarily executed three tortured protesters, Majid Kazemi, Saeed Yaghoubi and Saleh Mirhashemi who were convicted and sentenced to death in Esfahan without due process of law.

The deaths brought to at least seven the number of protesters hanged since nationwide protests broke out in September 2022 following the death in custody of 22-year-old Mahsa Amini.