NCRI – In the second half of the month of December, the mullahs’ President brought a 6 billion dollar budget bill to compensate for the year’s budget deficit. Hoping for a quick vote, the procedures for the bill’s passage have been expedited.
According to the bill, a portion of the 6 billion dollar price tag will be acquired by cutting development projects. Other portions will be obtained by encouraging “economical” living, which in the mullahs’ parlance refers to raising commodity prices.
In the course of this year, this marks the fourth time the government has asked for the passage of a bill to deal with budget deficits. Previously it had brought bills in June, in July for imports, and in August for paying back bank loans. The most recent bill is to pay for education and fuel costs.
Since in Iran, regime officials easily manipulate or screen figures, it still remains unclear what the precise amount of the budget is. However, ministries officials say that the Ministry of Education alone has a 6 billion dollar budget deficit, while natural gas projects suffer from a 2 billion dollar budget deficit, and gasoline imports (the budget for which ended in July) face a 7 billion dollar deficit.
To counter these deficits, the government has also sold 24 percent of the country’s gold resources.
To get a better picture of the Iranian economy, one must look at the inflation rate, which according to the Central Bank, currently stands at 29%. Independent observers, however, put that figure somewhere around 40%. During the past couple of years, housing prices have doubled or tripled. In some parts of the capital, buying or renting a house is more expensive than housing prices in New York.
On the basis of government figures, the number of unemployed is close to 4 million people. This number puts in the ‘employed’ category, housewives and individuals who work at least an hour a week. Otherwise, as independent observers put it, the hidden unemployment rate surpasses 35 percent of the country’s active work force (the active work force in Iran is about 25 million people).
According to official estimates, the number of people under the poverty line is close to 15 million. However, state-run media talk about half of the population, or roughly 36 million people, who are in poverty. According to official figures, during the past 20 years, people have eliminated 50 percent of their meat and vegetable consumption due to poverty. Calorie intake in Iran stands at one of the lowest levels in the world.
All this is while the aftershock of the dive in oil prices to about 30-40 dollars a barrel has not fully manifested itself in the Iranian economy. The question, then, is how can the Iranian economy be saved?
Suppose that the US or another powerful country decides to offer an alluring economic package to the Iranian regime. And, suppose the Iranian regime would be able to accept the package and successfully shoulder the political consequences. The package would include tripling of the oil price, softening the international sanctions, flowing of various commodities into Iran from Europe and even the US (doubling Iran’s imports), and other items. What would happen in this case?
The answer is that the Iranian economy would go several levels deeper into bust and become even weaker. This is exactly the trend that was started after Ahmadinejad’s ascent to power. This was a period during which a 50 dollar barrel of oil turned into a 147 dollar barrel, which produced 250 billion dollars of revenues for the government. But, instead of economic improvement, this brought about poverty, unemployment, and inflation for the Iranian population.
To understand this situation, we must consider the infrastructure of the Iranian economy: This is an oil-based economy relying on rent, which sees a higher power, beyond government framework, channeling the bulk of the revenues toward fundamentalism, terrorism, and pockets and bank accounts of affiliated factions of robbers.
Moreover, the clout of the mullahs’ Islamic Revolutionary Guard Corps (IRGC – the regime’s ideological army) is growing over the Iranian economy year by year.
In effect, there is a complete monopoly by fundamentalists who have under their absolute control all the government and non-government spheres and even the black market.
Economists agree that the main obstacle against the Iranian economy’s progress is precisely this monopoly. These monopolies have rendered the country’s economic potentials essentially frozen.
The all-embracing privileges enjoyed by the mullahs’ Supreme Leader and his representatives, as well as the brutal dictatorship which is instituted to protect those privileges and interests, have destroyed Iran’s free economy.
The natural effects of these circumstances has brought about bureaucratic inefficiency, judicial insecurity, lawlessness and legal instability, lack of respect for private ownership and absence of transparency, all of which constitute the reasons for the Iranian economy’s dire situation.
Therefore, an Iran under the rule of the ‘Velayat-e Faqih’ (absolute rule of the clergy) is not only incapable of political reform, but it is also unable to reform the economy. There is no incentive that can save the economy.
The Iranian economy, which has lost the opportunity that was accessible to it through the extraordinary hike in oil prices, is moving toward a difficult period in 2009 with reduced oil prices and one which will also experience the after effects of the global financial downturn.
