Iranian Banks Limit Cash Withdrawals As Financial Crisis Bites

Several videos have surfaced on social media showing people quarreling with bank clerks or officials who say they do not have enough cash for withdrawals. 

Having lost their trust on the Islamic Republic’s embattled currency after a steep fall with no prospect of bouncing back, many Iranians want to remove their money from banks to exchange them for foreign currencies or gold.

Iranian political activist, lawyer and Nobel Peace Prize laureate Shirin Ebadi urged people on Sunday to join the campaign of withdrawing money from banks, noting that state-controlled banks in Iran are not institutions to serve the people and only act as the economic arm of the “killing Republic” referring to the clerical regime. "Now it has been proven to everyone that there is no will in the regime to accept the demands of the people," she said, adding that the campaign to shun banks in daily transactions can deal a "fundamental blow" to the government.

Criticizing the government’s economic policies, Iran's former central banker, Abdolnaser Hemmati, said Tuesday that the administration of President Ebrahim Raisi was so sure about the revival of the 2015 nuclear deal that it moved to stop the indirect subsidy for essential goods, triggering more inflation. He said that now that the deal seems doomed to fail and the currency has lost its value dramatically, the authorities are looking for ways to remedy the dire situation. 

The government stopped offering cheap dollars to importers of essential goods earlier this year to save around $15 billion annually. The move immediately doubled and tripled food prices and led to shortages of medicines, medical equipment and animal feed.

Hemmati, who was a presidential candidate in the 2021 election and held heated debates with Raisi, addressed him, saying that “if you knew the problems and had solutions for them, why don’t you do anything? And if you just want to blame your predecessors, why did you even bother to run for office?”

Unfortunately for Raisi, the famous anecdote about an outgoing manager imparting his wisdom to the new one in the form of three sealed envelopes would not work here. The outgoing manager told the new one that the first time things go wrong, open the first letter. Open the second letter for the second incident and open the third letter for the third incident. “Blame Your Predecessor!” was written in the first letter, which Raisi has been doing since the day he took office. “Blame Your Employees!”, read the second one, which is a strategy exhausted by the current administration. The third letter instructed the manager to “Prepare three Letters!”, something Raisi has not done yet because he has no scapegoat ready yet as the next election is in more than two years. 

In addition to critics of the government, a 25-percent fall in the value of Iran’s currency in three months and a more than 50-percent drop in 15 months has led to sharp criticism even among conservatives. Conservative politician Mansoor Haqiqatpur has accused Raisi of sharply reducing the value of assets held by rich and ordinary Iranians.

“Less than 18 months ago, when Raisi took office as the President of the Islamic Republic one US dollar was equal to 230,000 rials in Tehran markets. Now the value of every US dollar is over 380,000 rials. The devaluating Iranian currency is now as cheap as straw. This means Iranians have lost half of their assets during this period." In fact, since Haqiqatpur spoke the rial has dropped further and on Tuesday it was close to 400,000 against the US dollar.

Ehsan Khandozi, the government spokesman for economic affairs who doubles as the minister of economic and financial affairs, said on Tuesday that Supreme Leader Ali Khamenei has agreed to dedicate 11 trillion rials (or about $31.4 million) from the National Development Fund to the government’s treasury to be used for its unfinished projects. He added Ali Khamenei has also given the go-ahead to bartering oil in exchange for railroad and transit projects across the country.