In the context of the Iranian crisis, the mullahs’ president’s name, “Ahmadinejad,” has become a pseudonym for internal repression, adventurism and export of fundamentalism, all of which are used to cover up the political instability in Iran. In the context of Iran’s economy, Ahmadinejad represents disorder, chaos and disastrous policies.
During thirty months of Ahmadinejad’s presidency, oil revenues alone have reached at least $150 billion. The figure amounts to more than half of Iran’s total oil revenues for the 16 years before his presidency. One might have expected that all this money would rejuvenate domestic production, reduce unemployment (which has hit 6 million people, or one fourth of the working population), and improve education and public health.
But, in reality, the opposite of this has been the case. For example, economic growth has fallen by 2%; Liquidity has doubled in two years; Inflation has risen from 11 to 23% (according to the research center of the Iranian regime’s parliament); Housing prices jumped 50% and in some districts of the capital, they have doubled; The closures and bankruptcies of many factories have provoked a new wave of unemployment.
In a bid to control the situation, the Iranian regime has suddenly decided to reduce bank interest rates by 4%. This decision has heightened inflation in Iran and increased corruption in government circles.
In a separate move, low interest loans were awarded to applicants to create small businesses and provide jobs for the unemployed. Despite of the heavy costs associated with it, this plan failed because small businesses could not withstand competing with imported goods. As a result, former employees are now in debt.
Ahmadinejad also spoke about privatization: He distributed a portion of the shares of public enterprises to persons loyal to the regime and veterans of the Iran-Iraq war. It was promised that the plan would increase the income of a section of the population. However, as it turned out, the transferred shares belonged to companies that had gone bankrupt.
The mullahs’ policies have been devastating for the Iranian economy. Consider the case of sugar imports. In a sudden move, the mullahs decided to lower the tariffs on sugar. The officially announced goal was to provide consumers with more sugar. But, in reality and behind the scenes, contracts were signed with merchants close to the ruling mullahs. Ahmadinejad reduced the tariffs from 130% to 4%. Shortly thereafter, imported sugar flooded Iran. As a result, domestic sugar producers have not been able to sell their products and resorted to lay off their employees. The unemployed in turn have waged their own protests to such decisions. In the end, consumers who were promised sugar at lower prices, had to pay even more. Despite of the fact that warehouses were full of sugar, prices increased.
Another example concerns arbitrary decisions with regards to economic organizations. In recent months, Ahmadinejad dissolved the Management and Planning Organization (the organization with the most economic planning experience and expertise in Iran). He also gave orders to dissolve the Iran Audit Organization and the Council of Money and Credit (which made decisions on monetary policy). Ahmadinejad chose to transfer economic decision making powers to his own advisers instead of specialized institutions. As a result, specialized economic organizations have been severely weakened.
Ahmadinejad has sent all those who have written a letter to him, irrespective of the content of the letter, an amount equivalent to 40 euros. Some government officials ridicule him by saying that it would have been much more beneficial for the Iranian economy had Ahmadinejad dispersed money all over the country from helicopters.
Clearly, international sanctions have created some problems for the ruling mullahs in Iran. But, this by no means can explain why the mullahs have decided to shatter the entire edifice of the Iranian economy.
The mullahs adopt strange overnight policies on a monthly basis. The following month, they pursue measures to repair the overwhelming damages caused by the previous month’s policies.
In fact, the Iranian regime is facing a critical situation in the context of profound political instability. The implementation of cataclysmic policies has made it possible for the mullahs’ cohorts and relatives to join the club of billionaires while millions of Iranians have sunk below the poverty line.
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Mohammad Amin, is an expert on Iranian affairs who writes for international news media and journals