Iran's Economy Is At Its 'Most Dangerous" Period In Recent History

Majid-Reza Hariri, a businessman, who has recently issued other warnings about Iran’s economy and what he called lack of oil sales, told the Iranian Labour News Agency (ILNA) on Friday that inflation is becoming a serious threat. He argued that if the inflation rate rises above the current 50-60 percent rate, it would become much harder to control it.

In the past few months, figures issued by the Statistical Center of Iran show more than 45 percent overall annual inflation, with food prices rising by almost 70 percent compared to last year.

Iran has been delaying nuclear talks with the West since June, when it suspended multi-lateral negotiations and is expanding its nuclear program. New talks are scheduled to start at the end of November, but few believe there will be a quick outcome.

In recent weeks, many other public figures, including senior clerics, have called on the government to take urgent action in containing the current economic crisis that according to some estimates has impoverished close to 50 percent of Iran’s population.

Hariri who in the past, as openly as possible, has called for resolving Iran’s disputes with the West, reiterated that rescuing the economy needs attention to improving foreign relations.

“A great part of Iran’s economy is dependent on oil exports, and it is not possible to cure this economic addiction quickly,” Hariri said, and added that removing the US sanctions should be a priority, but no matter what Iran is willing to do, the final decision, or the other side of the coin is America. Iran cannot be the sole decider in removing the sanctions. The United States must agree.

The other policy should be to shield the economy, as much as possible, from the impact of sanctions, Hariri said, and emphasized the importance of bilateral trade with many more countries than Iran’s current seven main trading partners.

Hariri, who usually speaks like a businessman rather than a government official, said that every decision the government makes it should consider the danger of uncontrolled inflation. “Any policy that could lead to higher inflation should be eliminated,” he said. If prices rise any further, the country can face hyper-inflation, which would be difficult to overcome.

He called on the government to use a wider range of economic experts for advice on inflation and not to narrow its thinking to one group of economists. Hariri mentioned the example of former finance minister Ali Tayebniya, who in the first four years of Hassan Rouhani’s presidency (2013-2017) was able to bring a 47-percent inflation rate down to 11-12 percent.

The head of the supreme labor committee said on Thursday that a basket of essential supplies for a family of 3 has reached 115 million rials. Although in today’s exchange rate that amounts to just $425, a typical worker in Iran receives much less than $200 a month.

Amid this crisis, president Raisi is seen as just issuing orders to his aides to fix a myriad of national and local economic and infrastructure problems. His critics, even among conservatives say the new government has been in power for three months and should start to put its act together.