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Doomed? Why Iran's Economic Mess Will Get Worse
The Baghdad Post ^ | May 19 2018 | Simon Constable

Posted on 05/20/2018 1:37:48 AM PDT by TigerLikesRooster

Doomed? Why Iran's Economic Mess Will Get Worse

Simon Constable

The matter at hand is the decision earlier this month by the Trump administration not to certify the so-called nuclear deal, and that means Iran will soon be subject to harsh U.S. sanctions. Overall the result will be a squeezed economy.

Current situation

Even the latest official statistics for the Iranian economy don't look good. The unemployment rate stands at 11.9% and the inflation rate at 8.3%, according to TradingEconomics.com. However, at least some of the government figures may be more aspirational than actual.

Take, for instance, the inflation rate. Steve Hanke, professor of applied economics at Johns Hopkins University, makes a regular and sophisticated estimate of how much the price level is moving within the country. For May 8, he estimates Iranian inflation at 71.7%.

Hanke also says the state now has the third highest misery index ranking. The index is the percentage unemployment rate plus the percentage inflation rate. Higher index numbers mean more misery for the population.

While these figures don't exactly sound like the Iranian economy is doing well. Things will be far worse in the coming months.

What's in store and why?

It is true that the European partners to the Iranian nuclear the deal, such as Germany and the U.K. are trying to salvage some form of continued arrangement with Tehran, Iran's seat of government. However, that matters little because few significant corporations would want to spark the ire of the U.S. administration in a way that might cut off their access to the lucrative U.S. market. Remember, that in capitalist economies the government typically doesn't buy nearly as much as do corporations. It will be the latter that will shun doing business with Tehran.

(Excerpt) Read more at thebaghdadpost.com ...


TOPICS: Egypt; Extended News; Foreign Affairs; Germany; Israel; News/Current Events; Russia; Syria; United Kingdom; War on Terror
KEYWORDS: angelamerkel; bitcoin; brexit; cryptocurrency; economy; egypt; emmanuelmacron; europeanunion; france; gaza; germany; hamas; hassannasrallah; hezbollah; iran; irgc; isis; israel; jerusalem; jordan; lebanon; letshavejerusalem; macron; nato; russia; sanction; sanctions; sinai; syria; theresamay; trump; unitedkingdom; waronterror
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1 posted on 05/20/2018 1:37:48 AM PDT by TigerLikesRooster
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To: AdmSmith; nuconvert

P!


2 posted on 05/20/2018 1:38:11 AM PDT by TigerLikesRooster (dead parakeet + lost fishing gear = freep all day)
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To: TigerLikesRooster

Bookmark


3 posted on 05/20/2018 1:49:18 AM PDT by silverleaf (A man who kneels for the national anthem doesn't stand for much of anything)
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To: TigerLikesRooster

Bring on the collapse and regime change!

It would figure that the spineless Europeans will save Iran from herself.


4 posted on 05/20/2018 1:59:13 AM PDT by Netz ( and looking for a way ti IMPROVE mankind.)
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To: TigerLikesRooster

They would do better if the Ayatollahs didn’t steal everything.


5 posted on 05/20/2018 3:26:59 AM PDT by Jimmy Valentine (DemocRATS - when they speak, they lie; when they are silent, they are stealing the American Dream)
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To: TigerLikesRooster; nuconvert
Dollar is being traded at 110,000 rial to $1. A major IRGC commander and 3 others left Iran with $4 billion embezzlement money.
https://twitter.com/upuouo/status/996417135617298433

Will the last one to leave please turn off the lights.

PS The tweeter mixed up rial and toman.

6 posted on 05/20/2018 3:47:43 AM PDT by AdmSmith (GCTGATATGTCTATGATTACTCAT)
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To: TigerLikesRooster

Nothing wrong that a revolution won’t cure. How sick is it that a country run by so-called religious men are so hell-bent on nuclear weapons and hate for America?


7 posted on 05/20/2018 3:56:07 AM PDT by New Jersey Realist ( (Be Nice To Your Kids. They Will Pick Out Your Nursing Home))
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To: New Jersey Realist

Hopefully they end up with an overthrow at some point.


8 posted on 05/20/2018 4:02:40 AM PDT by Morpheus2009
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To: TigerLikesRooster

More winning.


9 posted on 05/20/2018 4:10:52 AM PDT by Psalm 73 ("I will now proceed to entangle the entire area".)
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To: Psalm 73

Riots and protests are taking place in cities outside of Tehran, media trying to clamp down on news.


10 posted on 05/20/2018 4:15:16 AM PDT by rstrahan
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To: AdmSmith
Do you have any estimate of how much money Iran poured into its overseas military adventure in Syria, Iraq, and Yemen? I have a feeling that it would create a big gaping hole in Iran's treasury.
11 posted on 05/20/2018 4:17:54 AM PDT by TigerLikesRooster (dead parakeet + lost fishing gear = freep all day)
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To: TigerLikesRooster; nuconvert

That is not easy to estimate:

1
Some estimates put the total cost of Iran’s support for the Bashar Al Assad dictatorship as running at $35 billion a year. Add to this the backing for Al Houthi rebels in Yemen, Hezbollah in Lebanon, as well as a range of other terror groups such as Hamas, and it becomes clear that the ayatollahs are paying a heavy price for their commitment to exporting their Islamic revolution throughout the Middle East.

https://www.telegraph.co.uk/news/2018/01/02/world-must-show-united-front-supporting-irans-protests-will/

2
Israeli officials have accused Iran of growing involvement in the Hamas-run enclave, and while Tehran froze its financial support to Hamas in the Gaza Strip after the group refused to support the Assad regime in 2012, it is now reported to be providing the militant group some $60 to $70 million.
According to Israel, two years after the nuclear deal was signed, the Islamic Republic has also increased its financial support for Hezbollah to $800m. a year.
When sanctions were in place Iran provided it’s Shiite Lebanese proxy group some $200m. Iran is also reported to be spending hundreds of millions of dollars in for their militias in Syria and Iraq as well as supporting Houthi rebels in Yemen fighting pro-government forces backed by a Saudi-led coalition.
Iran’s military budget is reported to be around $15 billion a year and its role in Syria has cost the country a great deal. In 2015 the UN special envoy for Syria, Steffan de Mistura estimated that Tehran was bankrolling embattled Syrian President Bashar Assad to the tune of $6b. to $35b. per year.
http://www.jpost.com/Middle-East/Intel-expert-Iran-protests-might-take-regimes-focus-off-Israel-522572


12 posted on 05/20/2018 4:45:00 AM PDT by AdmSmith (GCTGATATGTCTATGATTACTCAT)
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To: Jimmy Valentine

Ayatollah’s only follow the koranic teachings. They are a prime example why Islam was a failure 1400yrs ago to today.


13 posted on 05/20/2018 4:45:37 AM PDT by existentially_kuffer
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To: TigerLikesRooster

Overthrow the mullahs, free the people, get the majority of our cash 1$B+, and put it towards building the wall.

Anyone not like this idea???


14 posted on 05/20/2018 5:06:33 AM PDT by CincyRichieRich (Eric Holder works for Facebook now...let that sink in.)
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To: CincyRichieRich

Good idea !


15 posted on 05/20/2018 5:11:09 AM PDT by Eric in the Ozarks (Baseball players, gangsters and musicians are remembered. But journalists are forgotten.)
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To: TigerLikesRooster

Its called socialism.


16 posted on 05/20/2018 5:16:17 AM PDT by Brilliant
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To: TigerLikesRooster

Regarding the Europeans........ When the invoice payments stop or there are no letters of credit, trade will slow or cease.

Except for Russia. The Soviets were famous for selling but never getting paid. I think under Putin Russian companies are more attentive to getting their invoices paid

American employees of German companies like Bayer, Thyssen Krupp and Seimens should worry about their jobs


17 posted on 05/20/2018 5:22:59 AM PDT by Thibodeaux (Long Live the Republic!)
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To: AdmSmith
So 50b per year is not an unreasonable estimate. That will make a real dent. No wonder Iran's economy is such a mess. All that money they got after nuke deal has been probably either 1) stolen by officials or 2) used to pay off crooked foreign politicians or 3) blown off in the battlefield of Middle East.
18 posted on 05/20/2018 5:31:50 AM PDT by TigerLikesRooster (dead parakeet + lost fishing gear = freep all day)
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To: AdmSmith; TigerLikesRooster; nuconvert

While the Iranian regime over-committed itself and was stretched way out, sanctions have slit open the soft underbelly of its economy. Now the regimes guts have dropped out, and it is bleeding rapidly. Likely a mortal wound, if we keep the pressure on.

It has no real allies in the region (neither Russia nor Syria stood with it when the Israelis struck). Its surrogate militias are hired help. It is hated at home, and holds power only with salaried goons (Basij). The core of its power (Pasdaran) are allowed to plunder the economy wholesale to buy their loyalty. When the money stops flowing, only a tiny insignificant cult really believes in their ideology. It is all built on mercenary self interest.

Although love for the regime depends on being paid, the hatred for the regime is real and deep. Tens of thousands of political prisoners have been hung - their families smolder with a desire for revenge. Their wealthy and powerful neighbors like Saudi Arabia, Israel, and the United States; have developed an existential enmity after years and decades of murderous attacks.

Their friends are rented, but their enemies have been bought and paid for.


19 posted on 05/20/2018 5:39:25 AM PDT by BeauBo
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To: Thibodeaux

“American employees of German companies like Bayer, Thyssen Krupp and Seimens should worry about their jobs”

Siemens has already announced that it is withdrawing from Iranian investment plans, as did German insurer Allianz. French oil major Total is cancelling a big $2 billion gas deal.

The biggest blow so far is Danish shipping giant Maersk - no new contracts that were not already in process by 8 May. Maersk not only has one of the largest tanker fleets in the world (striking at Iran’s oil export revenues), they are the world’s largest container shipping fleet.

Not only is Iran hugely dependent on oil and gas exports, they are also hugely dependent on imports of most else. They can not make most of the stuff they need. Their supply chain is built around containerized imports through a single port, Bandar Abbas. Just transitioning to trucking in imports (rail connections suck) would be be epic adjustment if they had the time and money - but they won’t. Hello Venezuela.

Anything they need to buy, is suddenly going to require huge premiums and cash up front, anything they sell, they will be under great pressure to discount.


20 posted on 05/20/2018 5:59:17 AM PDT by BeauBo
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