Iran's Raisi Talks About Upcoming Hard Economic Decisions
President Ebrahim Raisi spoke at length about the economy first time after protests rocked parts of the country in response to government raising food prices.
President Ebrahim Raisi spoke at length about the economy first time after protests rocked parts of the country in response to government raising food prices.
The official news agency IRNA reported on Saturday, May 21, that “Hundreds of experts and businessmen took part in the gathering” the agency called “the first international privatization event in Iran.”
Speaking at the event, Raisi did not mention last week’s protests or the security forces violent treatment of protesters particularly in Iran’s western provinces. However, as economic journalist Maryam Shokrani has observed, he emphasized “hard decisions to be made which some people may not agree with.”
Raisi also focused on the controversial issue of privatization in Iran and opined that “Privatization does not mean abandoning industrial units. It is the beginning of the government’s supervision on privatized companies.”
The Islamic Republic’s government, religious institutions and the Revolutionary Guard (IRGC) directly or indirectly own 80 percent of the economy, amid nepotism and corruption which has led to paralyzing mismanagement.
For the past 15 years successive governments have talked about privatization, but with a fearsome security apparatus and with power concentrated in the hands of insiders, only they have been able to benefit from the sell-off of government assets.
During the past years, hundreds of workers of privatized companies, particularly in Khuzestan and in the Central Province, protested to the privatization process that has handed over many government companies to well-connected but often disinterested and non-expert individuals who only used the assets to take hefty loans from government banks with no intention to pay back.
Many of these companies including the Sugar Mill at Haft Tappeh and the Heavy Equipment Factory in Arak which used to be profitable in the past, are currently on the verge of bankruptcy according to their workers.
Post-revolution privatization during the past four decades has been criticized by the people, workers and businesses alike. Many believe that profitable businesses have been handed over to the IRGC which effectively owns the lion’s share of productive companies in Iran.
While Raisi said on Saturday that privatization empowers the private sector, many have often charged that the IRGC’s acquisition of companies has left little room for the private sector in Iran.
However, Raisi called for looking back and reviewing the privatization process that has taken place. He said, “fair and critical review of the past is essential and inevitable,” so that lessons could be learned, and corruption could be prevented.
Raisi spoke about motivating “non-government businesses” while the government’s intervention in the market has led to an increase in the price of essential commodities and inflation in Iran that led to protests, during which people called on Raisi and Supreme Leader Ali Khamenei to step down and chanted slogan in favor of a secular government.
In an interview published by Didban Iran website, Iranian sociologist Mohammad Reza Mahboobfar warned that the current economic situation, particularly the policy and eliminating food and fuel subsidies has already led to social problems such as an increase in crime including stealing food.
He said the protests last week raised the alarm for the statesmen that Iranian society is being divided into a majority of extremely poor people and a minority of super-rich individuals. Mahboobfar warned that what has been characterized by government officials as an “economic surgery” should be stopped at once as the widening gap between socio-economic classes has become cause for concern.
Mahboobfar warned: “Making the masses apprehensive is dangerous.”
Lashing out at the new generation of ultra conservatives who currently dominate the government and the parliament in Iran, Nasser Ghavami said in an interview with Didban Iran website: “They call themselves revolutionaries. But who are they revolting against? The People?”
Ghavami, a former member of the Iranian parliament’s legal committee suggested that those currently in power in Iran have already started a revolution against the poor people of Iran. Addressing the “revolutionaries,” Ghavami said: “Wake up! The revolution is over!”
After years of a declining economy, a recent government decision to stop subsidizing food imports has led to a sudden rise in prices, impoverishing millions of people.
As inflation, estimated at more than 40 percent last year kept climbing in 2022, many current and former politicians began criticizing the government’s performance.
The cleric-politician told the website: “If I begin to tell you about the root-cause of Iran’s current chronic problems, neither I am brave enough to tell you all there is, nor you are allowed to publish it. Talking about the causes of country’s economic problems is a security issue and the government’s treatment of its critics is violent.”
Ghavami added, it is natural that some leaders even in the United States fail to meet all the promises they make during their election campaigns, but if a reporter writes about President Ebrahim Raisi’s broken promises, he or she might find himself in jail like many others. He added that “We cannot tell the truth about the government’s performance as long as people get arrested without any prior notice and no one knows where they are kept.”
Ghavami was probably referring to the detention of Kayvan Samimi, the editor of Iran Farda magazine who was arrested on Wednesday, May 18. Samimi was released from jail recently, but his new detention came after a new interview.
Ghavami explained: “Activists and reporters know about the problems and their causes, but they often cannot say anything because they fear detention and torture.”
Ghavami claimed that Raisi wishes to solve the problems but individuals such as his Vice President Mohammad Mokhber obstruct any solution. “Why they do not say what are they doing with the oil revenues while they say they are selling oil at $100 per barrel?” he asked.
Speaking about recent protests, Ghavami tried not to appear as a rabble-rouser, saying that “not all problems can be solved by taking to the streets.”
He also suggested, like many other critics, that “Iran should maintain acceptable relations with other countries if problems are to be solved.”
Other Iranian politicians, including former Vice President Mostafa Hashemitaba have also been criticizing the government’s economic policies as protests have taken place in many provinces. Hashemitaba said in an interview published on Thursday that a major economic plan such as doing away with food subsidies “should not have been implemented before seeking the people’s views.”
Meanwhile, he criticized the government for cutting off Internet access as a way of controlling the protests to rising prices. He also lashed out at the government for preventing freedom of speech.
Hashemitaba went on to say that instead of seeking public approval for its policies, “the Raisi administration’s actions and words were uncoordinated and wrong news dissemination at times leads to chaos and unrest.”
Speaking with Sharq newspaper in Tehran, Reza Shahrestani, a member of Iran’s steel producers’ associationsaid that Iran’s steel exports have stopped in the past two months as China, Afghanistan, Thailand and South Korea, Iran’s biggest customers have shifted their orders to Russia. He emphasized that this development has deprived Iran of more than $5 billion in steel exports so far.
Shahrestani warned the same scenario is being repeated in case of other metals and could also endanger petrochemical exports, which provide larger export revenues.
Iranian media and analysts have voiced concern in recent weeks that following international sanctions against Moscow, Russian oil has become cheaper and specially China will be enticed to buy crude from Russia instead of Iran.
Despite United States sanctions on oil exports, Tehran has been able to boost crude shipments since the Biden Administration began nuclear talks with Tehran and less enforcement of Trump-era restrictions against third parties doing business with Iran.
Iranian officials have been taking credit for the increase in crude deliveries and revenues, although it is not clear how much foreign currency has found its way into Tehran’s coffers. Some say China is paying Iran with deliveries of merchandise and not cash, which would not be easy with US banking sanctions in place against Iran.
In the four years since former president Donald Trump withdrew from the 2015 nuclear agreement and imposed oil export sanctions, Iran has tried to compensate for loss of oil revenue by boosting non-crude exports of petrochemicals and steel. In the last 12 months, Iran’s non-oil exports have reached close to $50 billion.
Shahrestani told Sharq that Russia is offering discounts of 15-20 percent on its steel and already the impact on Iran’s traditional markets is clear. Russia is reportedly also offering a $20 per barrel discount on its crude, which on world markets has climbed above $110 a barrel.
Iran’s steel industry also faces internal hurdles according to Reza Mohtashamipur, an official in the ministry of industry and mines, who told state television last month that a 17-22 percent tax on steel exports hurts the industry. He argued that the tax makes Iranian steel less competitive on international markets. While Iran had offered 15 percent cheaper steel to foreign buyers, Russia is now offering more discounts.
Another impediment for steel producers, according to Shahrestani is lack of electricity in peak seasons. With the approach of hot summer months, electricity is usually rationed, and steel mills receive less energy, which impedes production.
Reduction in export revenues come at a sensitive time for Iran as it has stopped food import subsidies to save foreign currency, triggering a sudden jump in prices. Many analysts and former politicians have been warning of mass protests as millions of people face hunger. Already sporadic anti-government protests have been taking place in smaller cities and towns, but large cities have not erupted.