As sanctions crush rial's value, Iranians point fingers at Ahmadinejad
Western leaders may finally be seeing the result of stringent sanctions as Iranians blame their government, not the US and EU, for the precipitous economic decline of the oil-rich country.
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The International Monetary Fund is forecasting that Iran's 2012 gross domestic product will fall 0.9 percent, producing the first economic contraction in Iran since 1994. That shrinkage contrasts sharply with the IMF's overall growth forecast of 6.6 percent for all oil-exporting countries in the Middle East and North Africa in its semiannual World Economic Outlook report, according to Reuters.Skip to next paragraph
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Iran is losing $133 million per day in revenue due to sanctions – an annual total of $48 billion, or 10 percent of the economy – according to an August estimate by Bloomberg. Just one month after sanctions that banned Iran oil deals came into effect July 1, shipments from Iran were down 1.2 million barrels per day, or 52 percent.
In early October, the US dollar exchange rate that had held steady for years at just under 11,000 rials per dollar went as low as 38,000 rials per dollar on the street, hitting Iranians hard. Protests erupted around the Tehran bazaar, which partially closed for days.
"The current economic chaos is a result of irregularities, corruption, and wasting resources, not the negative impact of sanctions," says Saeed Laylaz, an economist in Tehran who has done prison time on security charges.
Government economic policies are "malfunctioning," he says. "I do not foresee any regime change as a result of unrest now and then; these riots could cause instability but not the collapse of the regime."
'The Americans are making me poor'
Iranians speak about limiting purchases of food and even critical medicines; about working several jobs – if they can be found – to make ends meet; and for those wealthy enough to send children outside the country for higher education, about trouble transferring funds to pay tuition.
"We are now paupers. It's official and irrevocable," says one Iranian trying to pay for school abroad for a son. "The Americans are making me poor. Can I love them for liberating me from my cash? Will they win my heart and mind?"
Limited though it was, the unrest prompted by the rial's tumble brought thousands of riot police into the streets, witnesses said, creating a tense atmosphere. Discontent in the bazaar is dangerous for Iran's Islamic regime, which has always counted on bazaar traders for support.
"I can't say that it is a coordinated strike to close the bazaar, but the point is that we are all suffering from the same issue. This terrible instability is harmful for all of us," says Mohammad Reza, a bazaar shopkeeper who, like others interviewed for this story, did not want to be further identified by family name.
Ahmadinejad's 'erroneous policies'
Religious leaders dismissed the financial problems as temporary and not as dire as portrayed. But they also seized on the opportunity to cast some of the blame on Mr. Ahmadinejad.
Iran has been under US sanctions since 1979. New sanctions have become increasingly severe in a bid to compel Iran to stop its nuclear program. They are joined by a host of United Nations Security Council (UNSC) and European Union measures.
1992: The Iran-Iraq Arms Non-Proliferation Act sanctions any entity that helps Iran with weapons development.
1995: A comprehensive ban on US trade and investment in Iran is passed.
1996: The Iran and Libya Sanctions Act limits third-party investment in Iran's energy sector to less than $20 million.
2000: The Iran-Syria-North Korea Non-Proliferation Act is passed.
After 9/11: President George W. Bush freezes assets of people and entities deemed to support terrorism. Several links to Iran are identified; dozens more are added in the next decade.
2006: The first UNSC sanctions ban nuclear, missile, and dual-use technologies, and freeze assets of people and entities involved.
2007: The second UNSC sanctions resolution imposes an arms embargo on Iran.
March 2008: The third UNSC sanctions resolution extends asset freezes and authorizes inspections of Iranian ships and aircraft.
June 2008: The EU freezes assets of dozens doing business with Bank Melli, accused of facilitating Iran's nuclear and missile efforts.
June 2010: The fourth UNSC sanctions resolution bans ballistic missile activities, freezes assets of Iran's Revolutionary Guard and Iran's state-run shipping line, and adds a host of banking restrictions. The EU bans investing in or assisting Iran's energy sector and develops its own list of asset freezes.
June-July 2010: The Comprehensive Iran Sanctions, Accountability, and Divestment Act boosts restrictions on Iran and prevents US and foreign companies from selling refined gas to Iran, or the means for Iran to expand its own refining capacity.
December 2011: A raft of new sanctions is passed by Congress, including some targeting Iran's central bank.
January 2012: The EU approves a total oil embargo on Iran, effective July 1.
February 2012: Citing "deceptive practices" of Iran's central bank, President Obama orders a freeze on all Iranian property in the US and closes loopholes used to transfer money.
March 2012: Iran is cut off from the SWIFT system, which facilitates all global electronic financial transactions.
June 2012: US sanctions against Iran's central bank go into effect.