Iran’s Economy: The Rule Of Plunder And Corruption
Even if all international sanctions and any other economic barriers are lifted and Iran can export the 2.3 million barrels per day outlined in its 2021 budget, it will still have economic challenges. That’s because the mullahs have let all production other than oil waste away. Iran’s economic problems are internal and structural, resulting from institutionalized corruption and bribery that have destroyed the country from within.
Iranian officials blame international sanctions for Iran’s economic problems and the collapse of its medical infrastructure in these difficult COVID-19 times. The regime wants to make people believe that overcoming the problems will be easier if the sanctions are lifted. This won’t happen because Iran has no industries. If it's not oil, the mullahs aren't interested.
Sanctions work only when they negatively impact domestic production capacity. From 2012 onward, Iran’s production capacity deteriorated, making it dependent on imports long before sanctions were put into place. For instance, imports rose from $16 billion in 2006 to $90 billion in 2012. Iran’s domestic production could not compete.
The Islamic Revolutionary Guard Corps and the institutions affiliated with the Supreme Leader control more than half of Iran’s economy, along with the country’s imports and its ports and bases. They siphon enormous profits from these imports. Therefore, the IRGC continues to destroy the production sources in agriculture or industry by importing goods with cheap currency from China.
During Ahmadinejad’s presidency, Iran sold more than a trillion dollars of oil without creating new production sources. Instead, all kinds of militias sprang up in the Middle East, and Iran created its most advanced missile programs. Meanwhile, the Iranian people became more impoverished and underprivileged.
Iranian theocracy, which has medieval roots, has never cared about economic production. That’s why, as domestic production vanished, the mullahs made no effort to replace it. This means that, despite the vast wealth from oil sales, the Iranian economy remains stagnant. The IRGC and its affiliated institutions offset this and enrich themselves by importing almost all goods, mostly from China. They effectively hold the Iranian economy hostage.
In Iran, unlike all other countries, they gain power first and then wealth. Power is the source of wealth.
This regressive system means that almost all of Iran’s wealth is in the hands of 4% of its population, which everyone else struggling to get food. In a May 2017 presidential debate, Qalibaf, one of the candidates and current parliament speaker of Iran, said to Rouhani, the regime’s president,
4% of the society are capitalists who have money, power, media and can easily remove any obstacle, deceive and constantly turn the ball of power and wealth among themselves. On the other side, 96% include people from all walks of life who have experienced economic, social, and cultural deprivation.
Transparency International said in its latest annual report, released at the end of January, that the Iranian regime was one of the most corrupt governments in the world, ranking 149 out of 180 countries.
Unlike modern governments, the Iranian regime does not see power in terms of economics or technology. Instead, as Khamenei has openly stated, the regime measures its power by terrorism and the militias it creates throughout the Middle East.
In 2018 and 2019, the Central Bank indicated Iran exported $180 billion with no record of where those funds went. According to studies, with that currency, it would have been possible to supply Iran with basic goods and products for three years.
A member of the Health Commission of the Majlis (parliament) tweeted:
The increase of the prices of the raw materials has nothing to do with the sanctions and the exchange rate. We have heard that a consignment of 81,000 tons of corn cleared customs without the Ministry of Agriculture’s authorization, and it is not clear where that profit from the sale of this corn in the black market, which is more than 1,600 billion tomans, has gone.
Shamseddin Hosseini, head of the Production Prosperity Commission in the parliament, said in January that embezzlers pocketed twice the country’s total development budget in 2021 from the 4,200 tomans (dollar exchange rate) that were to be allocated for essential goods.
President Rouhani’s former Minister of Roads and Urban Development said that a “transnational corruption network” has been formed in Iran, which is involved in an “unofficial market” in which the value of trade is “20 to 25 billion dollars” annually. Abbas Akhundi, in an interview early in February with the ISNA state news agency, stressed that this network of corruption, which has now become international, has been formed over the past 15 years. It culminated in Ahmadinejad’s government that distributed $ 100 billion shares mainly among military institutions.
For the above reasons, Iran’s economy is swiftly contracting. Massoud Khansari, head of the regime’s chamber of commerce in Tehran, said that about $90 billion had left the country between 2012 and 2020. In the same period, 35% of the country’s population fell below the poverty line.
Massoud Khansari says that Iran has experienced a 12% economic contraction, one of the most significant negative growth seen in recent decades. Thus, Iran’s economy will have experienced negative growth for three years, becoming roughly 20% smaller. Combined with population growth, Iran’s economy will face a 25% drop in per capita income.
Iranians face complex and challenging consequences from their leaders’ decisions. From 2019 to 2021, the country’s average economic growth was close to zero percent, and inflation in Iran ranked fourth in the world after Venezuela, Zimbabwe, and Argentina (average global inflation rate in 2018 was equal to 4.2 percent). As the economy contracts, income distribution in Iran trends downward. Economic inequalities are widespread. These figures are very alarming.
President Rouhani’s former Minister of Roads and Urban Development also said that we currently have five governments in Iran and that Iran’s economy is “involved in deep-seated and complex corruption.” According to him, the corruption network “is pursuing its own interests everywhere,” and “the path of joining the FATF is also being blocked.”
The Expediency Council is currently considering the FATF bills related to money laundering. According to statements, the directors of economic institutions under Khamenei’s office and financial institutions affiliated with the Revolutionary Guards are opposed to their adoption.
After the JCPOA, more than $150 billion in blocked Iranian money was released. The regime sold at least 2 million barrels of oil daily. Then the U.S. withdrew from JCPOA, and sanctions began. However, the 2017 and 2019 uprisings, which shook the government, were formed out of poverty, inflation, and unemployment.
With its belligerent policies and growing network of militant groups throughout the Middle East, Iran’s reactionary regime has destroyed all its wealth and productive resources, and infrastructure. Instead, the regime has brought poverty to 60 million in one of the wealthiest countries in the world. The big problem of Iran’s economy is the rule of plunder and institutionalized corruption, and contrary to what the lobbies of this regime pretend, it is not because of sanctions.
IMAGE: Poverty in Iran. YouTube screengrab.