Ali Safavi, Issues & Insights, 24 October 2019
Confronted with Washington’s “maximum pressure” campaign, and facing international isolation, Iranian regime officials desperately want to depict an image of strength. But, in reality, the regime has never been as vulnerable and fragile as it is today.
An important indicator of its sustained troubles is the economy. Severely mismanaged for decades and devastated by endemic corruption, the economy is in complete shambles. In just a few short months since the full adoption of “maximum pressure,” the economic situation has deteriorated even more drastically. Indeed, the International Monetary Fund said that Iran’s economy will shrink by 9.5 percent this year, more than what was projected previously. So, the continuation of this policy will certainly produce enormous challenges to the regime’s survival.
Take Iranian condensate, for example, which is a form of ultra-light and expensive oil that is extracted from gas fields. In 2017, the regime exported more than 17 million tons of condensate worth a total of about $7 billion. In 2018, condensate exports dropped by 45 percent. In 2019, a spokesman for the Iranian Oil, Gas and Petrochemical Products Exporters’ Association said that the exports have dropped to near zero.
Take inflation, as another example. The regime’s own statistics report that the rate of inflation between September 2018 and September 2019 was 42.7%. These official statistics add that the rate of inflation for imported products is triple the overall inflation or close to 150%. All this means that the purchasing power of the population has declined dramatically in a few short months.
The numbers fly in the face of the empty rhetoric produced by regime authorities, like its President Hassan Rouhani. They are desperate to tell the world that the policy of strength against the regime is not working. But, as the saying goes, “Either you deal with what is the reality, or you can be sure that the reality is going to deal with you.”
And, the realities of the Iranian economy are horrendous, pointing to an inevitable collapse. Why? Because the majority of the economic activity is controlled by unaccountable and corrupt powerhouses like the Office of the Supreme Leader Ali Khamenei and the Islamic Revolutionary Guard Corps (IRGC). The decline intensifies by the day due to systemic and widespread state corruption, astronomical embezzlement, spiraling inflation, profound structural flaws, and rapidly declining domestic production.
The largest portion of state revenues and expenses are monopolized by Khamenei and the IRGC in order to pursue their parochial interests and destructive policies that are completely divergent from the Iranian people’s interests.
Political Corruption Causing Economic Devastatation
As a result, the value of the national currency has dropped by a half in less than a year and tens of billions of dollars are taken out of Iran annually by regime officials and their associates. Meanwhile, the regime’s central bank continues to swell the money supply – triggering further inflation – by printing more bills to address short term demands without paying mind to strategic needs.
Domestic production has hit rock bottom, causing an “army of the unemployed.” Over the past decade, 50% to 70% of the country’s factories have closed down after being transferred to incompetent “private” owners, typically entities controlled by the IRGC, who plunder the assets and quickly divest. Well-established brand names in the manufacturing, textile, lumber, and agricultural sectors are among the casualties, leaving millions unemployed, according to state-run media reports.
To this situation one must add the real threat to the regime’s survival: The explosive state of the Iranian society, which is the source of the mullahs’ paranoia. They fear that economic pressure could trigger another popular uprising, which would not be contained.
Indeed, the ranks of the impoverished continues to swell in Iran and the middle class gets further decimated because of the mullahs’ corrupt and disastrous regional and domestic policies. The situation has led to increasing public outrage, percolating in the form of daily protests across the country. Most recently, thousands of protesters in the town of Lordegan clashed with security forces, chanting “death to the dictator” and setting fire to the Governor’s Office.
Like embers burning beneath the ashes, millions of disenchanted people are lurking in the streets, awaiting the right moment to rise up. And the Resistance Units of the main opposition, the Mujahedin-e Khalq (MEK) are hard at work organizing them. Sooner than anyone can imagine, that could result in only one outcome: the downfall of a medieval theocracy that does not belong to the 21st century, but to the dustbins of history.