IRAN’S ECONOMY IN FREEFALL

The Plunge of the Rial and its Impact on Citizens

Iran’s economy is facing a severe crisis as its local currency, the rial, continues to plummet in value against the US dollar, causing significant financial distress for the Iranian population. As 87 million beleaguered Iranians welcome the Persian New Year, they don’t have much to celebrate. Many have witnessed their life savings evaporate as the rial’s value has dwindled. On March 24, the currency fell to a record low, plunging to 613,500 to the dollar, reflecting a sharp decline from previous levels. This drastic devaluation has eroded the purchasing power of the Iranian people, leading to a loss of savings, and making it increasingly difficult to afford basic necessities. The rial’s record low came less than a month after a parliamentary election that saw the lowest turnout since the 1979 Islamic Revolution, with only an estimated 8.2% of the population participating in what was a sham poll, dominated by hand-picked hard-line candidates who regularly chant “Death to America” inside parliament. The mullahs have further angered Western countries by supplying armed drones to Russia that have been used in its illegal war in Ukraine.

The downward spiral of the rial is particularly stark when compared to the period following the signing of Barack Obama’s deeply flawed nuclear deal in 2015. At that time, the exchange rate stood at 32,000 rials to the dollar, highlighting the magnitude of the currency’s collapse in recent years, following Donald Trump’s unilateral withdrawal from the accord in 2018. The rial’s decline has been relentless, with the exchange rate now exceeding hundreds of thousands of rials per dollar. The impact of the currency crisis extends beyond the financial realm, affecting various aspects of daily life for Iranians. Inflation has soared, prices have skyrocketed, and access to imported goods has become increasingly constrained. The government’s Statistics Center put the country’s inflation rate for February 2024 at 42.5 percent, while the Central Bank said it was more than 46 percent. There was no explanation for the discrepancy. The erosion of purchasing power has heightened economic uncertainty and social unrest, compounding the existing challenges faced by the Iranian population.

Iranians are dismayed that while they suffer economically, the theocratic regime continues to spend billions backing Bashar al-Assad in Syria, the Houthi rebels in Yemen, the Shi’ite militias in Iraq, and the terrorist groups Hezbollah in Lebanon and Hamas in Gaza. The mullahs have also secretly accelerated their construction of a nuclear weapon. The organization responsible for all of this is the Islamic Revolutionary Guard Corps (IRGC) and its extra-territorial Quds Force. The IRGC controls more than 70% of the Iranian economy, pays no tax and is answerable only to the autocratic Supreme Leader, Ayatollah Ali Khamenei. Its leaders are venally corrupt, enriching themselves at the expense of the poor, while increasing suppression at home, sponsoring terrorism and waging proxy-wars abroad. Repeated nationwide uprisings have been met with lethal force. Iran is now a powder keg waiting to explode.

Amid escalating economic challenges and rising poverty rates in Iran, several Iranian cities witnessed protest gatherings on Saturday, March 9, involving retirees, workers, nurses, and temporary contract employees at the National Drilling Company.  The protesters were giving voice to high levels of public dissatisfaction with the current conditions, as many Iranians find themselves unable to meet their basic needs because of the collapsing economy. In Tehran, retired government employees organized a protest in front of the Ministry of Education, complaining bitterly about low and delayed pensions. 

In Shiraz, the scope of the protests expanded to include healthcare workers, where nurses and medical staff organized angry gatherings in all the city’s hospitals, demanding improved working conditions and higher wages. The protesters highlighted their struggles with mandatory overtime and the government’s failure to fulfil promises to improve wages and working conditions. Nurses in Iran are faced with increased pressure and declining working conditions, especially since the coronavirus pandemic, when the regime completely abandoned the healthcare sector. With declining conditions of work in hospitals, many nurses have been driven to suicide, while hundreds of others are leaving the country. The continuation of these protests, on the heels of the regime’s sham parliamentary elections, indicates that the people of Iran have become irreversibly disillusioned about the role that the government and legislature play in their lives. No matter who is in the Majlis or the Presidential palace, they know that the only way to fight for their rights is to raise their voices in the streets and to demand regime change.

Tough Western sanctions, and decades of corruption and economic mismanagement, have plunged the Islamic Republic into near bankruptcy. The regime increasingly has to rely on billions of dollars of dirty money laundered by the IRGC on behalf of international drug cartels. Countries that previously imported Iranian crude oil or condensate, such as India, South Korea, Japan, and some EU nations, have stopped, because of US sanctions. Nevertheless, oil exports have been higher during the Biden administration than during the Trump administration, largely due to a lack of aggressive sanctions enforcement by the Americans. Joe Biden’s administration has taken a lighter touch, in effect tacitly accepting Iran’s exports. The regime’s main oil exports are primarily to China with smaller volumes to Syria and Venezuela. It has also shipped some oil to the United Arab Emirates (UAE), which was probably re-exported to Asia. Last year, Iran’s exports of crude oil grew by roughly 50% to a five-year high of about 1.29 million barrels per day, with the vast majority going to China, helping to prevent a sharp increase in prices triggered by conflict in the Middle East. 

Meddling in the internal affairs of other countries and particularly exporting terrorism and fundamentalism, has for years been a strategic pillar for Tehran’s survival. For far too long Iran and the IRGC have taken advantage of the West’s appeasement policy, not only engulfing the entire Middle East in flames, but also oppressing the Iranian people through atrocious and repeated human rights violations and crimes against humanity. Blacklisting the IRGC in the UK and Europe is long overdue and will be a first and necessary step in actually curbing Iranian atrocities. As 87 million Iranians know, there can be no hope of reform within the theocratic dictatorship. The only solution for the Iranian people, their economy and also for peace and stability in the region, is to back the Iranian Resistance and fight for regime change in Tehran.