The Iranian regime has a new scheme for fighting back against US sanctions. The regime’s President Hassan Rouhani began heralding its own plans as an “economic breakthrough” even before those plans went into effect. But this scheme is not working as he expected.
The Speaker of the regime’s Parliament and the head of the national judiciary have both expressed opposition to Rouhani’s plans, as well as raising questions about why it was presented to the public before the legislature had even had an opportunity to consider it. The haste and lack of consensus suggests a concerted effort to manipulate public sentiment regarding the country’s economic prospects, with little regard for whether an improved sentiment would be justified.
Among the latest sources of infighting among regime officials is a plan to sell oil bonds to the public for a two-year term, on the assumption that the government will regain access to export markets during that time, and then reimburse the public. But it clears that there isn’t’ any basis for this assumption.
Notwithstanding support from China and Russia, international pressure on the regime has been increasing. And while recent reports indicate that Iranian oil suppliers may have illegally sold roughly twice as much oil in the past year as the US estimated, the regime’s economic plan relies on further increases, which will be difficult to achieve.
In all likelihood, Iran has exhausted its options for concealing the source of its own petroleum exports. Meanwhile, mechanisms for the enforcement of US sanctions will only grow more sophisticated. So barring a major change in those sanctions or serious European defiance of them, the volume of Iran’s oil exports has nowhere to go but down. Tehran is surely aware of this, and fact is enough to expose the oil bond scheme as extortionate to the Iranian people.
But even if Iran somehow managed to offload a significant portion of its oil surplus, the economy would first have to turn around in various remarkable ways, for investment in those bonds to be profitable. The defined rate of interest for the bonds is 19 percent, while the country’s anticipated inflation rate is more than 50 percent. So even if Iran experiences no further downturns over the next two years, the increase in value for the bonds will be outpaced by the decrease in value for the money spent on them.
Rouhani’s “economic breakthrough” is actually “a disaster in the making.” This economic policy is not being guided by ignorance or incompetence so much as by self-interest.
In essence, this means that the regime’s president wants to empty the pockets of the people to address his pressing needs, knowing that he will be long gone from office when the issue of repaying the debts is brought up.
The regime authorities have a long history of indulging years of corruption and then cashing out with a final grift and leaving colleagues and successors to clean up the mess. But no one ever does. And although a handful of former officials have been tried and executed as scapegoats for the effects of an entire rotten system, no prominent voice from either factions of the has ever advocated for using the regime’s own wealth to bail out the Iranian people or safeguard the future of the nation.
This is something that Supreme Leader Ali Khamenei could do on his own, given that he enjoys personal control over a financial empire worth no less than 200 billion dollars. But these assets are only ever used for terrorist financing, repression of dissent, and other initiatives that are designed to extend and export terrorism. The regime’s commitment to this appropriation has been uniquely challenged this year by the coronavirus pandemic, but Khamenei has barely approved the release of any money to help the public through this crisis.
There’s no reason to think that this will change in the face of a looming crisis of economic collapse, least of all at a time when the government is offering false reassurances to the public while also working to transfer more of the people’s wealth into its own hands. Fortunately, though, there is a limit to the regime’s ability to deceive its people, especially while groups like the MEK are working to counter disinformation.
The MEK itself was credited with leading many of the protests that comprised two nationwide uprisings spanning from December 2017 to November 2019. And these protests make it clear that more and more Iranians are convinced that the regime’s misplaced priorities and chronic corruption are the main causes of their own hardship. The international community should recognize this as well, and should understand that it is the Iranian regime and not the Iranian people who stand to be harmed by continued enforcement of sanctions and oil embargoes.
