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The Iranian economy and foreign policy in chaos, end of mullah regime is in sight

Bond Trader, City wine bars, Bars and pubs, Fish and chips, Chicken vindaloo, Heroin dose, Kill a Jew, Sheep for intercourse, Iranian Riyal

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The Iranian economy and foreign policy in chaos, end of mullah regime is in sight

Before my journey into political activism, I enjoyed a relatively successful career in the international financial markets.  Starting out as a Bank Auditor, progressing to an International Bond Trader and latterly before retirement as a partner in an investment management company. I travelled extensively and the nature of the roles determined that the views of economists were fundamental when making personal or joint management decisions. Economists both analyze past data and attempt to predict future financial outcomes and fortunately for them they are never wrong as time flexibility and unpredictable events permit wide margins for error and excuse accountability.  Markets react to both future predictions and previous trends concerning a variety of economic data especially inflation and much can be learned from the wellbeing of a country by the inflation measurement and the relative value of the currency in an inflationary environment.

Economists are renowned for their acerbic wit and the City wine bars and pubs where are full of banter about consumer behavior related to purchasing power to gauge inflation in particular geographies.

For example, in England, the annual price increase of fish and chips, real ale or a chicken vindaloo are undoubtedly the most reliable gauges. In Scotland it’s a heroin dose; In Wales how much sheep would charge for intercourse; In the Republic of Ireland it was the fine for incest with your children; in France the cost of a Parisian prostitute. In Gaza it was the amount the terrorist Palestinian leaders would pay an intellectually backward moppet to kill a Jew. And in Iran it was and still is the cost of toilet paper. Yes, the cost of wiping between your cheeks is unanimously reckoned to be the best measurement of inflation in the Islamic Republic of Iran.  Ever since the totalitarian theocracy subjugated the Iranians to religious extremism, excrement was a natural association with Iran hence the toilet paper inflation measurement.  Perhaps these analogies are crude and distasteful but there is an old saying that many a true word is said in jest and  Iran is confirmation of this.

The official exchange rate of the Iranian Riyal against the United States dollar is currently 43,000 Riyals to the dollar. No Iranian wants Riyals as they are worthless and thus a barter system has developed. For example, barbers will charge for haircuts but do not want nor take Iranian Riyals in return for their labor and instead will take consumer goods as payment. So, lacking in demand is the Riyal that the unofficial rate is nearly three hundred thousand Riyals (300,000) to the dollar mocking and ignoring the official exchange rate set by the Central Bank. However, the death penalty awaits any Iranian found dealing in the unofficial rate. Let us repeat this fact – the unofficial exchange rate is seven times the official exchange rate and the multiples are increasing month by month. Last year the unofficial exchange rate was nearer 150,000 Riyals to the US dollar.

Thus, domestic inflation has risen to levels of hyperinflation and the economy is in turmoil. In reference to the toilet paper analogy if we reasonably assume that an Iranian would pay the equivalent of a dollar a roll it is cheaper to use actual Riyal paper currency notes to wipe one’s backside than it is to purchase toilet paper. Sanctions imposed by the United States and to a lesser but nevertheless significant extent by the European Union are relevant but not the absolute reason as to why the Iranian economy is in such a parlous state.

China’s commitment to Iran comes at a price and the Chinese are willing to ply the Iranian economy with cheap goods that have to be paid for in oil but Iran’s oil production infrastructure is decayed and unable to cost effectively produce the barrels needed to satisfy Chinese imports. Additionally, natural disasters such as floods and earthquakes have devastated the country and twenty six of thirty-one provinces are seriously affected by impassable roads, unusable rail networks and severe water and electricity shortages. Iran’s military and civil aircraft fleet are almost all grounded through lack of parts and poor maintenance. Basically, Iran’s domestic economy is in total decline exacerbated by infrastructure problems.

China’s developing relationship with Iran has created chaos on the Iranian health system too as the Chinese origination and spread of COVID has overwhelmed Iran’s hospitals and the general population is suffering enormously. It is estimated by the BBC and Iranian opposition organizations that official COVID deaths and cases are being understated by three to five times the official daily figures. There is a parallel here with the currency and COVID both of which are being recorded at mythical rates by the Mad Mullahs.

Unsurprisingly given their economic reliance on China the Iranian Islamic leaders remain silent on the genocide committed by the Chinese on their Islamic brethren, the Uighurs. The excrement analogy attached to the hypocritical and morally indecent Iranian Mullahs is entirely appropriate is it not?  If the Chinese support our economy then we really don’t care about the genocide our Muslim brothers in China are experiencing.

Moreover, the funding of terrorists in Gaza, Yemen, and Lebanon, Iran’s commitment to the murderous Syrian regime and propping up Shia militants in Iraq is coming at a financial cost that Iran is unable to maintain.

Hezbollah in Lebanon, Houthis in Yemen and Hamas in Gaza do not want worthless Iranian Riyals but good old-fashioned dollars printed by Uncle Sam. More worrying for the regime is that the costs of Iranian expansionism and support for Islamic terrorists is wholly unpopular domestically and being challenged on the streets.

The recent increase in riots most notably in Tehran and Southern Iran, originating from the water and electricity shortages created by the inability to repair broken infrastructure so shook the regime that the Revolutionary Guard was deployed and hundreds were killed.  These riots have escalated now opposing Iranian foreign policy and paradoxically supporting Israel against the Palestinians.

In Western democracies after street protests the damage to infrastructure is usually repaired within reasonable time. Not so in Iran where resources are simply unavailable. Protests domestically are increasing and gaining momentum and it is reasonable to assume that a potential Government downfall will be caused by internal dissatisfaction and dissent.

According to data available from the International Monetary Fund, Iran’s gross international currency reserves are currently one eighth of what they were in 2016 and oil exports are down by eighty five percent in the same period. The Iranian economy is in freefall and on a spiraling, downward trajectory. Given that Iranians abroad are ignoring their Government’s demands to remit hard currency back to Iran and there are numerous individuals successfully attempting to smuggle tradeable currencies and metals out from Iran the economy must be near to collapse.

The expansionist policies of the Mullahs are not going to plan. The Houthis are being driven back by the Saudis and their Sunni Gulf State allies; the funding of Hezbollah has been catastrophic for the Lebanese and the Iranian influence on Hamas has resulted in Arab countries developing military and commercial relationships with Israel for the first time since Israel’s existence. Iran’s foreign policies costs related to these foreign interferences are ruining their economy and creating growing, violent domestic dissent.

If we consider too the possibility that external elements are successfully damaging Iranian infrastructure such as the Nuclear Reactor in Natanz, it is abundantly apparent that the Iranian Government is under severe pressure on many fronts.

Will the Mullah’s survive? The odds are stacked against them.

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Peter Baum, Editor (International Political Affairs) to Blitz is a research-scholar, who writes extensively on Israel, Holocaust, Zionism, Middle East, Anti-Semitism, and other issues. Peter Baum has worked for four decades in the International Financial Markets specializing in the Capital Market. He held directorships at large International Financial Institutions and ended career as consultant to an Investment Management company. Baum is a member of the Institute of Directors. He has worked extensively abroad in the Asia, Africa, the USA and Europe and after retirement spends his time as a political researcher, activists and columnist. In addition to his engagement with Blitz, Peter Baum has also been writing for the Gatestone Institute, Conservative Woman and Decisive Liberty and has appeared numerous times on TV and radio mainly talking about Israel and the Middle East.

1 Comment

1 Comment

  1. Ken Price

    September 14, 2021 at 00:19

    Iran’s economy and military may yet be saved and strengthened as Sec’y of State Blinken. WH COS Klain and other Rasputins in the O’biden administration are on the verge of shoveling tens (hundreds?) of billions of U.S. dollars to Iran in return for the photo op of Iran rejoining the faux nuclear deal. Perhaps Israel will save the world again for the third time when it ends Iran’s nuclear proliferation.

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