By Majid Rafizadeh
February 4, 2019
The so-called moderate political party of Iran, the Moderation and Development Party, came to power by promising the people that it would be concentrating on the nation’s economic problems, as well as lifting restrictions on social and political liberties.
The moderates took pride in arguing that they had improved the economy. Although the economy was actually deteriorating, President Hassan Rouhani and his technocrat team continued to buttress their argument that it was improving. For example, when Rouhani was running for re-election, he boasted about his economic accomplishments: “The living standards of Iranians have improved … incomes of pensioners and those on welfare support have increased in the past four years.”
Rouhani and his fellow politicians were attempting to gain the blessing of Supreme Leader Ali Khamenei and score a victory against the hardliners and the Principlists. But the poor living standards of an overwhelming majority of the Iranian population and the widespread protests that have occurred among many sectors of society (including teachers, truck drivers and the unemployed) have finally forced the moderates to admit that the country is facing its worst economic challenges in four decades. According to Iran’s presidential website, Rouhani last week spoke at a ceremony at the shrine of the founder of the Islamic Republic, Ayatollah Ruhollah Khomeini, pointing out that: “Today the country is facing the biggest pressure and economic sanctions in the past 40 years.”
Indeed, Iran is encountering its most severe economic problems since the establishment of the Islamic Republic in 1979. While an acceptable inflation rate around the world is about 2 percent, Iran’s is currently over 33 percent. It follows that, while prices double roughly every 25 years in many countries, prices double nearly every two to three years in Iran.
Nafeeseh, a teacher at a high school and a mother of two children, complained that “every day that we buy groceries, the prices of food such as bread, rice and eggs are different from the day before. Prices are constantly going up and it makes it extremely difficult to budget. Within the last year, prices have risen about 70 percent.”
In order to correlate with inflation, rents have also been increasing by 20 to 30 percent every year.
A second issue is that, while the prices of basic necessities are skyrocketing in Iran, many people are jobless. This is not because people do not have skills; in fact, Iran has an educated youth population.
However, almost 30 percent of them cannot find jobs. In some provinces, the unemployment rate is over 60 percent. According to an official representative of the regime’s Planning and Management Organization, “42 percent of unemployed people in Iran have a university degree, and huge sums of money have been spent on their education.”
Even those who are employed do not receive adequate raises in their salaries in order to correspond with the skyrocketing inflation. Ashkan, a retired employee of the government, stated: “My monthly pension, 1 million toman, used to be more than enough 20 years ago. I was able to pay for rent, food and medical expenses, and still have some extra. But now the 1 million toman that I am receiving does not pay for the rent, let alone for other expenses.” Twenty years ago, 1 million toman was worth approximately $1,500, but today it is more like $80.
This brings us to the third critical challenge that Iran’s economy is facing: Drastic devaluation of its currency. It is ironic that Iran’s currency has witnessed the worst rate of devaluation under the presidency of Rouhani. The currency has lost roughly 75 percent of its value in the last year.
Some people may wonder why Rouhani boasted about Iran’s economy in 2018, but a few months later admitted that the country is facing terrible economic challenges. The first reason is the fact that there exists no political repercussion for such a move. Rouhani has already been re-elected and he is not allowed to run for another term or serve for more than eight years as president.
Secondly, the economic situation of the Iranian people has reached such a critical level that the regime can no longer turn a blind eye, since doing so will endanger the hold on power of the ruling mullahs.
But, instead of adequately addressing the underlying problems of the economy, the regime is attempting to find other state or non-state actors to blame. As Rouhani added: “Today our problems are primarily because of pressure from America and its followers. The dutiful government and Islamic system should not be blamed.”
When he argues that the Islamic Republic is not at fault for the country’s economic problems, Rouhani is either delusional or he, like the hardliners, is resorting to the regime’s classic modus operandi: Pointing fingers at others in order to dodge accountability and responsibility.