Iran Lifts Visa Need For Russia, 32 Other States Eying Tourism Boost

The region has no room for any more power struggles, Ashtiani said, further stressing that in case Washington’s decision is executed, it will face “extraordinary problems.”

Amid attacks by Iran-backed Houthis on commercial shipping off the coast of Yemen, he referred to the Red Sea as “our region” and warned that “nobody can make a move in a region where we have predominance.” 

While adopting a defiant and threatening tone, Iran’s defense minister did not specify the moves Tehran is ready to make if the idea of a multinational naval force is implemented.

His remarks came three days after US National Security Adviser Jake Sullivan announced that Washington is considering to beef up measures to protect shipping in the Red Sea where Iran-backed Yemeni Houthis have been targeting vessels over the past weeks. 

“We are in talks with other countries about a maritime task force of sorts involving the ships from partner nations alongside the United States in ensuring safe passage,” he pointed out.

Sullivan called this plan Washington’s “natural response” to the ongoing situation in the Red Sea. Active negotiations are being held with US allies about escorting ships in the region but nothing has been finalized yet, he went on to say.

According to reports, 12 countries may join the US-led naval coalition.

On Wednesday, Mohammed Al Bukhaiti, a Houthi official, said his group possesses “formidable leverage” against countries that participate in a naval coalition in the Red Sea. 

Though the Islamic Republic has avoided any direct military involvement in the Israel-Hamas conflict, the regime has used its allies such as Houthis and militant groups in Iraq and Syria to attack Israel and American targets in the region.

Houthis have intensified their attacks since the truce agreement between Israel and Hamas collapsed on November 1. 

On Wednesday, Yemeni Houthis fired two missiles that missed a tanker carrying jet fuel and headed to the Suez Canal.

A US Navy warship also shot down a suspected Houthi drone flying in its direction during the same incident, a US official was quoted as saying by the Associated Press.

Houthis further attacked the Norwegian commercial tanker STRINDA with a rocket on Tuesday. 

Back in November, Iran’s proxy group also seized a cargo ship called “Galaxy Leader” in the southern Red Sea as it was sailing from Turkey to India.

Houthi military spokesperson Yehia Sareea vowed that the group would continue blocking ships heading to Israeli ports until Israel allows the entry of food and medical aid into the Gaza Strip - more than 1,000 miles from the Houthi seat of power in Sanaa.

US National Security spokesman John Kirby took Iran to task last week for destabilizing the region by providing financial and military assistance to extremist militant groups, such as Yemeni Houthis. 

“We know that the Houthis are supported by Iran, not just politically and philosophically but, of course, with weapon systems,” he stressed.

On December 7, the US Department of Treasury slapped sanctions against 13 individuals and entities over their role in financing Iran-backed Houthis in Yemen.

Supported by the IRGC extraterritorial Quds force, the financing system operated through “a complex network of exchange houses and companies in multiple jurisdictions,” the Department of Treasury announced in a statement.

Despite the recent sanctions, the Biden administration is receiving more and more criticism over its failure to deter Iran and its proxies in the Middle East.

Earlier in the week, Israeli National Security Council head Tzachi Hanegbi said that Prime Minister Benjamin Netanyahu has talked with the leaders of US, Britain, Germany, and France to discuss the increasing threats posed by Yemeni Houthis against Israel-bound ships.

“Israel is giving the world time to organize and prevent it … If there is no international organization - because this is a global problem - we’ll work to remove the maritime closure,” he said in reference to Houthi’s offensives.

The Wall Street Journal reported last week that Washington has urged Israel not to respond directly to drone and missile attacks by Tehran-backed Yemeni Houthis.

Malley was placed on unpaid leave in April 2023, after his security clearance was withdrawn reportedly for mishandling sensitive information. US lawmakers have tried several times to gain information on why Biden’s top man on Iran lost his security clearance –all to no avail.

The latest hearing on Iran was held by the House financial services subcommittee on oversight and investigation. It was entitled Moving the Money Part 2: Getting Answers from the Biden Administration on the Iranian Regime’s Support for Terrorism.”

Abram Paley and Elizabeth Rosenberg, Assistant Secretary for Terrorist Financing and Financial Crimes, were the two officials testifying in the hearing.

They both confirmed that two transactions have been made from the Iranian funds held in Oman, which were made available to Iran when the US government renewed a sanction waiver allowing Iraq to pay Iran what it owes for imported electricity –reportedly up to $10 billion.

Congressman Bill Huizenga, chairing the hearing, asked if “any issues or problems” have been identified in the two transactions facilitated with the Iranian funds held in Oman. Rosenberg offered to answer “in a closed setting,” implying that the information requested was classified.

"We'll take that as a yes," said Rep. Huizenga.

Other Representatives present in the hearing expressed concerns over the fungibility of the funds made available to Iran, despite assurances by the Biden administration that transactions would only be allowed for humanitarian purposes, such as purchasing medicine or agricultural products.

“Biden’s Deputy Special Envoy to Iran insisted Iran is not to be trusted,” Rep. Dan Meuser posted on X after the hearing. “Yet, this Administration takes Iran at its word that they won’t use the billions of dollars in aid Biden is trying to give them to finance terror.”

Paley explained that the Iraqi sanction waiver has been in place for a long time to allow the country to meet its energy needs. “This is the 21st time it has been renewed,” he said. However, the waiver never allowed Iran to gain access to hard currencies in cash. Money never left Iraq and Iran could only use the funds to import humanitarian needs. For the first time, the Biden administration allowed the funds to go to Oman in June of this year.

Congressman Pete Sessions questioned the reasoning of the waiver and the choice of Oman as the custodian of the Iranian funds.

He said: “[Secretary of State] Blinken statement says France, Italy and Oman faced exceptional circumstances preventing them from significantly reducing their petroleum purchases from Iran… Oman has reserves 79.4 times its annual consumption… This secretary has chosen to fool the US Congress into believing significant and exceptional rather than providing the data and information.”

Paley was also grilled on the now infamous $6 billion released by the Biden administration in September.

This is money from Iran’s oil sales that was blocked in South Korea but was released and transferred to Qatar to help release five Iranian-Americans held hostage in Iran. After Hamas’ October 7 attack on Israel, US officials announced that Iran would not be allowed to access the money “any time soon.”

Paley was repeatedly asked to confirm that the Iranian regime has not had access to this fund. “Not one penny has been spent,” he said.

But Rep. Dan Meuser pressed Paley on this point, enquiring whether the hold on the $6 billion was permanent. Paley couldn’t give a straight yes or no answer. So the statement should really be “not one penny has been spent –yet”, Meuser concluded.

Towards the end of the hearing, Congressman Zach Nunn focused on Iran’s oil exports, noting that there’s been a significant increase in the regime’s revenue –that would be used to fund terrorism, he said.

Neither Rosenberg nor Paley managed to explain the rocketing of Iran’s oil revenue in spite of numerous restrictions imposed by a multi-layered sanctions regime.

Rep. Nunn asked about particular steps taken by the Biden administration to address this –including taking action against those facilitating the exports in the shipping industry. Yet again, neither officials could provide a clear answer.

“Mr Paley, I would like a listing of all the actions that have actually resulted in reduction of oil flow out of Iran into terrorist groups,” Rep. Nunn said in the end, demanding a written answer following the hearing.

The issue of Iran’s oil exports using “ghost fleet” was discussed at length in another hearing on Tuesday, entitled Restricting Rogue-State Revenue: Strengthening Energy Sanctions on Russia, Iran, and Venezuela.

The bill, submitted by President Ebrahim Raisi's administration last week was rejected as 127 lawmakers out of the 236 present voted against it on Tuesday, pointing out several fundamental issues including a huge deficit.

This is the first year that the government is mandated to present its budget bill in two parts: One for the expected revenues and the other detailing spendings. The government now has a seven-day window to implement revisions in the first section of the budget bill before re-submitting it for parliamentary consideration.

Lawmaker Ahmad Rastineh argued that the parliament rejected the bill due to a misinterpretation of the new regulation, suggesting that MPs were looking for data that is supposed to be submitted in the second part. “We voted on the first part of the bill, which is on the revenues. The expenditure section will be presented to the parliament after the approval of the first part and the determination on the budget's revenue ceiling.”

The main problem with the bill was the unrealistic figures that the government had projected for its revenues. Despite repeated claims by the administration about its “realistic” numbers, opponents of the bill found discrepancies in several parts of the document. The parliament’s budget committee issued a report earlier in the week, pointing out 13 problems with the bill. However, it finally cleared it for a vote in a full session, which ended poorly for the bill.

Despite the government’s claim that its budget is balanced, there are several estimates for the deficit, with Iran Chamber of Commerce, Industries, Mines and Agriculture putting it at about 4.5 quadrillion rials or about $9 billion, even the government's over-optimistic projections. Economic website EcoIran cited a report by the parliament’s research center as saying that “the real budget deficit” will be about $22 billion.

In previous years the real deficit has been close to half of the budget. Apparently, the administration’s assessment is that in the next Iranian year (which starts on March 21), it will sell 1,350,000 barrels of oil per day at a price of €65 per barrel. This means around $32 billion annually. However, Iran is selling its oil at much lower prices due to US sanctions, at about $40 to $45 per barrel, which comes out about $22 billion per year.

The exchange rate of the Euro to the rial is considered to be 310,000 rials in the bill. Accordingly, oil and gas revenue for the next year will reach 582.7 trillion tomans (5.8 quadrillion rials or $11.6 billion), which is a 3.5% decrease compared to the current year's budget law. Additionally, tax revenues have increased from 7.4 quadrillion rials in the current year's budget law to 11.2 quadrillion rials (about $2.4 billion) in the next year’s budget.

Iran is offering substantial price reductions to its principal oil customer, China, with details kept secret. Iran has been supplying its oil to Chinese independent and small refineries, known as teapots, with payment delays extending up to three months. Reports from Reuters and Bloomberg indicate that Chinese teapots are securing Iranian oil at a discounted rate, with savings amounting to at least $10-12 per barrel. Iran's approach extends beyond offering price discounts to final oil purchasers; it involves allocating undisclosed portions of its profits to intermediaries and tanker companies involved in these diversionary oil export operations. As a result, the actual revenue realized by Iran may be closer to $40 per barrel, a substantial difference from the international price of about $70.

A point that was highlighted by Iran’s media as the final blow for the rejection of the bill was a lack of fund allocation for a long overdue rise in pensioners’ salaries. Proponents of the bill said that the government had earmarked about $1 billion for the adjustment. In recent years, retirees have held regular protest rallies to demand pension increases in par with rising prices of essential foods. They say the current payments are not in line with decrees by the Supreme Labor Council, which had stipulated a 38-percent increase in the minimum wage.

Another issue with Raisi’s budget was the estimated revenues from tax rises. According to lawmaker Mohammad Bagheri, the most significant increase in budget resources is attributed to tax and customs revenues, showing a 40% growth, while the budget's dependency on oil revenues has decreased by 24 percent. He said unions and producers are already under economic pressure and the rise in taxes will further strain businesses. Last month, Entekhab news website in Tehran reported that according to the budget bill, even monthly incomes of 100 to 140 million rials ($200 to $280) will be subject to a 10 percent tax. 

Hossein-Ali Haji-Deligani, another lawmaker, said that considering the inflation rate in the country, the new budget bill remains practically the same as the current one. Last year, the parliament approved the outlines of the budget bill without considering its unrealistic assumptions.

Deligani said during the Tuesday session that “we will not have any budget increase next year, and this lack of budget increase will lead to the halt of the country's economic growth.” He added that “Increasing taxes will lead to a halt in production, resulting in reduced wages, unemployment, and hardships.”

The government claims that the growth rate will be 8 percent next year, but no one takes it seriously. In January, the World Bank projected Iran to have a 1.9-percent GDP growth, but the figure, even if true, comes on the back of economic retrenchment since 2019.

All in all, the rejection of the bill is more of a political gesture by lawmakers before the March parliamentary elections. There is no possibility for the government to balance the budget. Abbas Abdi, a reformist commentator, suggested that “The outlines of the budget bill were rejected in the open session to convey to the government that the parliament has a say.”

“Where and when this corruption happened is not important to us. What matters is that such a thing should not happen in the Islamic Republic, whatever you want to call it, embezzlement, wasting public funds, or illegal possession,” Ghani Nazari-Khanghah, a member of the parliament’s economic committee, told moderate conservative Asr-e Iran news website Tuesday.

"Why do they pay so much for importing tea if there is no money? It is a tragedy that so much money is allocated to [import] tea when tea is not an essential commodity," he said, adding that he is always told there is no money when he asks for a budget for things such as the removal of dangerous road curves in his constituency. "Obviously, there is a strong group with influence in the government behind the allocation of so much foreign currency."

Debsh Tea company sold $1.4 billion of the more than $3.3 billion cheap foreign currency allocated by the government at much higher rates in the black market between 2019 and 2022. This substantial amount of foreign currency was designated for importing tea and tea factory machinery.

As of now, the government and the judiciary have not provided the public with significant information about the case, such as the individuals responsible for the corruption. Not any notable arrests have been made except for the CEO of the company, Akbar Rahimi. There are serious allegations that the government is shielding the culprits.

Chief Justice Gholam-Hossein Mohseni-Ejei has affirmed that the current administration, led by President Ebrahim Raisi, allocated the majority of the funds to the company.

In response to reports indicating thousands of schools in need of urgent repairs, renovation, or replacement nationwide, lawmaker Mohammad Vahidi asserted that the embezzled funds could have aided in constructing "at least 100 thousand classrooms." He emphasized, “If this money had been allocated to education, we would not have any rundown schools.”

Heshmatollah Falahatpisheh, a former conservative lawmaker and the chairman of the parliament’s National Security and Foreign Policy, describes the case as one of the biggest corruption cases in the country, mainly happened under the watch of the Raisi administration.

Meanwhile, Iranian tea farmers and factories frequently voice their grievances, expressing a lack of government support to enhance and boost domestic tea production. Domestic production of around 30,000 tons of dried tea leaves only meets about one-third of the country’s total needs with the rest being imported from India, Sri Lanka and other countries.

Tea cultivation in Iran boasts a rich history of over 100 years. The majority of the country’s tea plantations, spanning over 32,000 hectares, are situated across the mountain slopes of Gilan Province, particularly in the city of Lahijan, which is also home to some of the largest tea processing factories.

Farshid Mohebbi, the chairman of the Northern Tea Farmers’ Union, alleges that major importers like Debsh Tea wield influence over policymakers' decisions regarding import tariffs, ultimately impacting domestic producers. Mohebbi emphasizes the need for accountability, saying that government entities such as the Minister of Agriculture, the Central Bank, the Customs Organization, and supervisory bodies should be held responsible for the allocation of substantial foreign currency to the company and its corruption.

“To promote domestic tea production, the tea tariff in countries such as Turkey sometimes reaches 150%. However, they reduced the import tariff from 20% to 5% in Iran,” he said.

Tea import tariffs were reduced in 2019, with authorities claiming it was to offset the increase in the cost of imported tea and stabilize prices after the allocation of cheap import dollars to tea imports ceased.

Debsh has also been accused by the head of the State General Inspection Organization of exporting lower-quality Iranian tea, importing it again mixed with inexpensive Kenyan tea and selling it at a significantly higher price as good-quality imported tea.

With inflation estimated to around 50 percent, Ehsan Khandouzi said he hopes for a future where vulnerable groups can meet their daily needs without anyone going to bed hungry.

But acknowledging the current situation is dire for many families, he said: "Some individuals in the country cannot even afford to buy three loaves of bread."

As the nation grapples with an inflation rate exceeding 46 percent, the Iranian government has proposed a 20 percent pay raise for civil servants in the upcoming calendar year, commencing on March 21.

Economic experts view the modest salary increase as a strategic move to control expenditures and avoid a higher budget deficit, currently estimated at a minimum of 50 percent. A report from the parliament’s research center suggests that this year's budget deficit may reach $13.5 billion, constituting 30 percent, while independent analysts believe the actual deficit could be closer to half of the budget.

The proposed pay raise has raised concerns among workers, particularly civil servants and those employed in companies owned by or linked to the government. With annual inflation at staggering levels, simply affording basic necessities has become an increasing challenge for many people.

The economic crisis in Iran has fueled anti-regime protests and workers' strikes since 2017. Ongoing economic challenges are perceived as a significant factor behind the discontent, especially among the younger population.

Official figures from the Statistics Center of Iran (SCI) and the Central Bank indicate an annual inflation rate of 45.5 percent. However, experts caution that these numbers may be underreported. Independent reports reveal that food prices have surged much faster than the official inflation rate, with some items experiencing a 100-percent increase in 2022.