Iranian Official Says JCPOA Dead, Time For Western Economic Concessions

President Ebrahim Raisi made the claim during a press conference on Tuesday, stating "Providing free water, electricity, and gas to low-income families is on the government's agenda."

The president also claimed that "health insurance has been provided for six million people in the country for free."

"The government is cares about paying subsidies, providing housing for the deprived strata, as well as allocating land and providing facilities to the low-income households," he said, adding that “we have been committed to what we have said in the elections, and we will be; we have not forgotten any of those promises, and we will not forget them.”

A day earlier, Mehdi Ghazanfari, the head of Iran's National Development Fund, warned that "people are worried about the day when we become servants of neighboring countries" because they are progressing rapidly, and Iran is not.

Highlighting that the regime only attaches importance to "military strength" as an element of national power, he warned that if Iran neglects "economic development coupled with high growth rates" it might become a country "devoid of its human resources and investment opportunities."

Ghazanfari said a new type of colonialism may take place in Iran in the face of prosperous and wealthy neighboring nations. “If the current trend persists in Iran, it may become a country in the future that imports gas from Turkmenistan, wheat from Saudi Arabia, depends on Oman and Qatar for medical services and Qatar, and on the UAE for maritime and aerial logistics,” he warned.

Raisi’s remarks were reminiscent of promises by the Islamic Republic’s founder Ruhollah Khomeini, who famously promised Iranians free electricity, water and a cash share of the oil export income in his first speech upon arrival to the country after exile during the 1979 revolution. Khomeini made a variety of promises to Iranians for his Islamic regime such as a popularly elected governments that would represent the people without the interference of the clergy in addition to abolishing homelessness.

Since the historic speech in February 1979, Iranian officials have made similar promises over the years, with former President Hassan Rouhani even claiming that he had managed to achieve these goals. Rouhani claimed in December 2020 that his government had realized Khomeini’s promise, providing low-income strata of the society with water, gas, and electricity free-of-charge.

Iran has survived on oil export revenues during 44 years of clerical rule and has used the income to provide tens of billion of dollars in subsidies to the population each year, while maintaining an unproductive, government controlled economy. The lack of planned and sustained economic growth, a closed economy not attractive for foreign investment and various foreign economic sanctions have led to the current crisis marked by very high inflation, low economic growth and increasing poverty.

Rouhani officials repeated bogus claims of more subsidies, with his government spokesman Ali Rabiei saying that some 35 percent of the country’s population – about 30 million people – had access to free utilities. “We supplied people with free gas, but we became self-sufficient in gas production beforehand so that we can meet the domestic demand in winter and even be able to export,” he said in 2020, a claim that contradicted reality, as more than 30 million Iranians live below the poverty line.

Elsewhere in his press conference, Raisi made other claims about the reduction in inflationary pace, a higher growth rate, and reduction in the unemployment rate.

Over the past few years, many economists have warned about capital flight and the emigration of elites and skilled workers from Iran due to the Islamic Republic's policies.

The cost of living in Iran, including electricity, water, and gas bills, has consistently risen over the years and the majority of Iranians have fallen into poverty, no longer being able to afford meat and even fruit and vegetables, with consumption dropping by half.

The Islamic Republic has been struggling with high inflation since at least 2019, but the raging inflation in the past Iranian year which ended on March 20, was seriously different from previous years. Currently the official annual inflation rate is nearly 50 percent – the highest rate in Iran for more than 30 years-- but prices for foodstuff are most affected with some categories doubling or tripling in the past 12 months. The devaluation of Iran’s rial from 260,000 per US dollar to about 500,000 this year signals even higher economic woes for the people.

At times, they assert that all the funds have been unblocked, while on other occasions, their remarks suggest a different outcome.

The conflict between various statements is at times observed in the remarks of the same official in a matter of a few minutes. During his news conference Tuesday, President Ebrahim Raisi contradicted himself on the status of the funds.

When a Japanese reporter asked Raisi's opinion about $1.5 billion of Iranian assets in Japan, Raisi said in vague terms: "As we have declared earlier, we would welcome any hand extended to us as a sign of friendship but will cut off the hands of hostile countries." He added, "As regards the money you spoke about, one of the things we have done in my government was securing the release of our frozen assets. This is on our agenda in the area of foreign policy."

Raisi reiterated, "We would like to suggest to Japan to be independent and not be influenced by the Americans. We call on Japan not to freeze in any way any money we might have in that country, whether it is the price of goods we sold, or it is left in Japan as a trust."

Some pro-government agencies such as the IRGC-linked news agency Tasnim first reported this part of Raisi's statement, which indicated there are frozen funds in Japan. But later Tasnim retracted it and replaced it with Rais insisting on not having any frozen assets in any foreign country.

A few minutes later, Raisi reversed himself while the news conference was still in progress that "We do not have any problems with Japan. The only country where our money was frozen in an oppressive way was South Korea. Our assets everywhere else are at the disposal of the Central Bank of Iran."

This, and remarks by Foreign Minister Hossein Amir-Abdollahian in day earlier, indicate that Iran has possibly been assured by the United States that Washington has already agreed, or will soon agree to approve the release of all of Iran’s frozen funds.

So far, the United States has confirmed that it has approved the release of around $2.7 billion from Iraq and $6 billion from South Korea, but there has been no clarity about another $8 billion in Iraqi banks and up to $3 billion in Japan. In exchange, Iran has agreed to eventually release five US hostages kept in Tehran.

The official Iranian news agency IRNA on Monday quoted Amir-Abdollahian as saying, "Iran has no frozen assets in any country." He added that "Iran can now use the assets it has at its disposal." However, the Iranian Foreign Minister denied humiliating reports that said Iran was allowed to use its released assets in South Korea within the frameworks of an oil-for-food scheme under the supervision of the United States.

Amir-Abdollahian said, "The reports about oil for food are not true." Meanwhile, speaking about Iran's assets in Iraq, he said our assets at the TBI Bank of Iraq are constantly on the rise, which was a vague statement. The released funds from Iraq are supposed to be transferred to Oman from where they could be spent on Iran’s humanitarian purchases around the world.

The Foreign Minister also added that "oil for food" also does not apply to the £390 million Iran has received from the United Kingdom as London's debts to Iran dating back to the years before the 1979 Islamic revolution. Earlier reports had said that the money would be held in Oman and spent to buy food and medicine for Iran by Omani authorities.

Former Central Bank Governor Abdolnasser Hemmati said in a series of tweets about Amir-Abdollahian's statements that "If what the foreign minister says is true, it means that Iran now has several billion dollars of hard currency at its disposal." This then raises the question of why the Iranian currency does not rebound from the almost historic low of 490,000 per US dollar.

During this period, which marks the first five months of the Iranian calendar year, the total value of Iran's foreign trade reached $43.5 billion with 55.9 million tons of goods worth $19.3 billion being exported. Although Iran's exports have increased by about 27% compared to the same period last year, non-oil exports have decreased by 8.6% in terms of value.

The report shows that the amount of goods imported into Iran was 14.4 million tons worth $24.2 billion, which had a growth of 2.17% in terms of weight and 7.49% in terms of value. However, Iran's overall trade balance was in deficit of $4.9 billion at the end of these five months.

The main reason for the decrease, according to customs experts, is the decline in the global prices of petrochemical exports, which account for a big share of the Iranian exported output.

According to the customs administration, the main destinations for Iran's exports were China with $5.6 billion, Iraq with $3.5 billion, the United Arab Emirates with $2.3 billion, Turkey with $2.2 billion, and India with $845 million – with these nations accounting for over 75% of weight and approximately 75% of the total export value from March to July.

The geography for imported goods bore a similar profile with the United Arab Emirates at $7.3 billion, China at $7.1 billion, Turkey at $2.5 billion, Germany at $879 million, and India at $813 million.

Rafael Mariano Grossi, the director general of the International Atomic Energy Agency (IAEA), made the remarks during an event to address the nuclear challenges in Iran, Ukraine and North Korea, hosted by the Swedish Institute of International Affairs on Monday.

The IAEA chief stated that if Iran wants to continue enriching uranium at 60-percent level and higher, “they should know that [they] must give credible assurances to the international community about what they are doing to a stock of highly enriched uranium, for which the needs of a peaceful nuclear program are... not so clear.”

He also expressed concerns about Iran not coming clean about several issues regarding traces of uranium at several older sites. Without explicitly mentioning Israel, he said concerns about Iran’s nuclear program has prompted certain regional countries to hint at “taking some action about what is going on in Iran.”

Israel has repeatedly warned of action against its archnemesis Iran, highlighting that it will not be deterred by the Biden administration's efforts to restart any nuclear deal with Iran. "Israel will do what it needs to do to defend itself by itself against the threat of Iran to annihilate it with nuclear weapons,” Israeli Prime Minister Benjamin Netanyahu said earlier in August. He was referring to a recent unwritten prisoner exchange agreement between Washington and Tehran that many – such as Qatar – hope to expand to a multifaceted accord that contains the regime’s nuclear program and restrains its proxy militias in Iraq and Syria. There are also speculations by Iran-based media about a comprehensive deal in the making with the United States.

Grossi stressed the necessity of “a system, a program, be it JCPOA (Joint Comprehensive Plan of Action) or any other agreement or understanding that would allow the IAEA to have the visibility on Iran’s nuclear program, which is commensurate with the capability that Iran has.”

“Iran has accumulated enough nuclear material for several nuclear weapons,” Grossi said, emphasizing that “I must say Iran does not have nuclear weapons... It is important that we make the distinction between having the capabilities and having nuclear weapons.”

He underscored that it is also important not to lose sight of the fact that “we need to come to a point where Iran’s nuclear program is stabilized and where we have the diplomatic conditions and systems to provide credibility there.”

He added that it is a regrettable situation that the Russian invasion of Ukraine and its consequent worries have pushed concerns about Iran’s nuclear program out of the media and politicians’ attention. “We have not been able to come to a point where we can say that everything is ok.”

Grossi highlighted that following the US withdrawal from JCPOA under then-president Donald Trump in 2018, Iran gradually abandoned the restraints imposed by the agreement. “At the moment, although this agreement has not been declared as obsolete or dead... it is an empty shell,” he said, noting that “nobody is observing any commitment, provision, or obligation in this agreement.”

He pointed out that Iran is currently enriching uranium at 60 percent, underlining that back in January the IAEA sampled from a cascade of centrifuges at an enrichment plant in Iran and reached to the conclusion that Tehran is enriching at 84 percent. “Weapon level is 90 percent,” he explained.

In February, Iran’s Nuclear Agency Spokesman Behrouz Kamalvandi implicitly accepted the accusation, claiming that finding the highly-enriched uranium particles in the pipes connecting centrifuges was a “normal issue.” “It’s a natural thing in enrichment... The machine is spinning fast. If the amount of the feed decreases for a moment, the enrichment will increase by a few percent,” he said.

Despite recent reports saying that Iran has slowed the buildup of uranium needed for weapons, the regime’s nuclear chief said this week that enrichment is going on in accordance with a domestic law. 

Mohammad Eslami, the head of the Atomic Energy Organization of Iran, was referring to the bill passed by the parliament in December 2020, dubbed the “Strategic Action Plan to Lift Sanctions and Protect Iranian Nation's Interest.” The bill obligated the government to step up Iran’s nuclear program and enrich uranium beyond the limits set by the 2015 nuclear agreement until US sanctions would be lifted.

"Japan should act independently from the US by releasing our blocked funds," Raisi said when asked by a Japanese reporter about $1.5 billion of blocked funds in Japan.

He then appeared to contradict himself, saying, "I must clarify that our Central Bank earlier said we only had unjustly frozen funds in South Korea. All other assets abroad are at the disposal of Iran's Central Bank.”

Tehran and Washington have reached an agreement in which five US citizens held in Iran will be freed in exchange for $6 billion of Iranian assets frozen in South Korea.

On August 10, Iran allowed four detained US citizens to move into house arrest from Tehran's Evin prison. A fifth was already under home confinement. They are expected to leave Iran when the money reaches accounts in Qatar.

The deal has led to sharp criticism and questioning by US lawmakers and many Iranian Americans, who say the Biden administration made a deal in secret and it is not clear what other concessions it has made to the Islamic Republic. Many critics also say that payment of ransom for hostages will endanger the lives of other Americans by emboldening the Iranian regime and other adversaries.

(With reporting by Reuters)