Skip to comments.Doomed? Why Iran's Economic Mess Will Get Worse
Posted on 05/20/2018 1:37:48 AM PDT by TigerLikesRooster
Doomed? Why Iran's Economic Mess Will Get Worse
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.
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 ...
Bring on the collapse and regime change!
It would figure that the spineless Europeans will save Iran from herself.
They would do better if the Ayatollahs didnt steal everything.
Will the last one to leave please turn off the lights.
PS The tweeter mixed up rial and toman.
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?
Hopefully they end up with an overthrow at some point.
Riots and protests are taking place in cities outside of Tehran, media trying to clamp down on news.
That is not easy to estimate:
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.
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 $35b. per year.
Ayatollah’s only follow the koranic teachings. They are a prime example why Islam was a failure 1400yrs ago to today.
Overthrow the mullahs, free the people, get the majority of our cash 1$B+, and put it towards building the wall.
Anyone not like this idea???
Good idea !
Its called socialism.
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
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.
“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.
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