Iran Officials Express Concern Over Economic Crisis, Hyperinflation
While some Iranian officials are concerned about economic hardship and fear a looming hyperinflation, others claim there are plans under way to fix the situation.
While some Iranian officials are concerned about economic hardship and fear a looming hyperinflation, others claim there are plans under way to fix the situation.
The differences in opinion among officials about the economic crisis has surfaced in the media while the current government is halfway through its four-year term of office.
Expediency Council chief Sadeq Amoli-Larijani warned in an interview with Etemad Online that Iranians are finding it increasingly difficult to cope with their financial hardships and the government needs to take urgent measures. Amoli-Larijani said that he has informed officials of the alarming state of the economy.
He said the situation is so urgent that officials must come up with immediate, short-term solutions to tackle the country’s economic problems.
Iran’s currency has lost half its value in less than a year and millions of people have sunk into poverty. Iran has refused to reach a nuclear deal with the United States, which could lift crippling economic sanctions.
Meanwhile, former lawmaker Ezzatollah Yousefian-Molla told Nasmeh News that Iran's economy will face hyperinflation starting in June. He said the rise in prices between May 2022 and May 2023 is unbelievable. According to the Iranian Central Bank, the point-to-point inflation between those two dates has been over 55.5 percent. Others have offered higher estimates approaching 70 percent.
Yousefian-Molla suggested that the government had better not announce inflation figures under the circumstances. He warned the situation is getting even worse. He even said that Supreme Leader Ali Khamenei’s latest speech to Iranian diplomats about changing Iran’s diplomacy was alluding to the fact that something needs to be done to improve the status of the economy.
He added that Iranians are finding it increasingly difficult to make ends meet although they do their best to spend less. Even prices of bread, cheese and eggs have skyrocketed. In such a situation, he said, the people will not believe government lies about economic growth.
Despite the warnings, vice president for economic affairs Mohsen Rezaei says economic reforms are on their way. However, he admitted that the current situation is “painful” for the people. Meanwhile, despite being a member of the government, he criticised the government for not keeping up with technological progress.
He also criticized Iranian governments during the past 80 years for trying to take over exisiting companies and factories rather than genuinely seeking to make Iran an industrial country. Rezaei added that the factories the government has established are on a declining course.
He maintained that Iran has been successful only in defense industries. “In other areas, we have spent a lot of money and energy while we did not have enough progress.” He further boasted that “Big powers fear our defence industries.”
He also criticized the budgeting system in Iran and said the government allocates budget but has no idea from where the funding should come. Rezaei added that Iran’s banking system also needs to be reformed to be compatible with international standards.
Meanwhile, he blamed the people for the lack of economic progress saying that the country needs economic reforms, but implementing those reforms will lead to protests.
In another development, the Speaker of the Iranian Parliament Mohammad Bagher Ghalibaf said in an interview with the IRGC-linked Tasnim news agency that “I promise to bring about economic stability with a five-year plan to overcome inflation.”
Foreign ministry spokesman Nasser Kanaani said Saturday that Zelenskyy’s comments were designed to attract more arms and financial aid from the West.
Zelenskyy in a video address on Wednesday called on Iranians to stop their slide into "the dark side of history" by supplying Moscow with drones.
Tehran’s comments came during a week when Russia again used swarms of Iranian drones against civilian targets in Ukraine.
Russia has used hundreds of Iranian Shahed drones to target Ukraine’s civilian and military targets and to overwhelm air defenses during mass missile attacks.
Iran initially denied supplying Shahed drones to Russia but later said it had provided a small number before the conflict began. Ukraine says the drones have played a major role in Russia's attacks on cities and infrastructure.
"The Ukrainian president's repeat of delusional claims against the Islamic Republic of Iran is in line with the anti-Iranian propaganda and media war aimed at attracting as many arms and financial aid as possible from Western countries," Kanaani said in a statement carried by Iranian media.
Ukraine, Kanaani said, has been refusing to allow an independent investigation into these claims. However, Ukraine has displayed numerous parts of downed Iranian drones and even one complete example in intact shape.
Russia has boosted its military cooperation with Iran since the launch of its full-scale invasion of Ukraine in February 2022. It has admitted using Iranian-made drones, but it is now seeking to boost its own production.
In his Wednesday address, Zelenskiy said: "The simple question is this: what is your interest in being an accomplice to Russian terror?"
"Your Shaheds, which terrorize Ukraine every night, mean only that the people of Iran are being driven deeper and deeper into the dark side of history," he said.
Many Iranians on social media have criticized Zelenskyy for addressing “Iranians” rather than the Islamic Republic regime for supplying the drones to Russia. They highlighted that Iranians are also victims of the regime and they have actually helped Ukraine by staging anti-government protests throughout 2022 and 2023.
Western powers supporting Ukraine and supplying air defense systems have condemned Iran’s military cooperation with Russia. The United States, which has suspended nuclear talks with Iran has listed Tehran’s weapons supplies to Moscow as one of the issues preventing fresh talks.
Washington and its key European allies have also imposed sanctions on dozens of companies and individuals that they discovered assisting Iran’s drone program or involved in their shipment to Russia.
In response to a question by Iran International in February about reports that Iran has supplied new drones to Russia, State Department’s former spokesperson Ned Price said that the US has been warning about this expanding “two way” relationship since last year.
Price reiterated that “we are taking action to do everything we can to counter this relationship and to counter the transfer of technology…we have exposed this linkage and we are continuing to galvanize countries around the world to maintain focus on this.”
He went to characterize the alliance between Moscow and Tehran as a “profound threat to the people of Ukraine but also a security relationship that has the potential to be a threat way beyond.”
It was the US national security advisor Jake Sullivan who first warned in July 2022 that Iran was planning to supply military drones to Russia.
Nasser Amani said on Friday that the mayor of Tehran, Alireza Zakani has approved such a corruption in a press conference.
There are no details about the sector in which this irregularity has happened or who has been behind it. However, in his press conference earlier this month Zakani refused to announce any names saying that he is only interested in fighting against corruption.
“One of the amounts we want to get back is 400 million dollars. We do not hesitate to take back the rights of the people,” said Zakani during his press conference on May 1.
Within the past weeks, there were several reports on the arrest of people close to Zakani in his office, however the ultra-conservative mayor of Tehran tries to blame the previous government for being behind the corruption.
“The financial corruption of several employees of Tehran municipality were discovered with the admirable vigilance of security organizations, and the case was sent to the judicial authorities," claimed the Municipality Spokesman Abdol-Taher Mohammadkhani earlier this month.
Tehran municipality is known for corruption cases. A large-scale corruption was revealed during the mayoral tenure of Mohammd Baqer Qalibaf (Ghalibaf) who is currently the country’s parliament speaker.
His successors claimed that more than $5 billion was misappropriated or wasted during Qalibaf’s term as mayor from 2005 to 2017.
Qalibaf has been accused of financial corruption a few times over the last decades. But the cases have been dismissed without being investigated, with observers attributing this to his relationship with Supreme Leader Ali Khamenei.
Last year, a leaked audio file of IRGC commanders discussing massive financial corruption involving Parliament Speaker Mohammad-Bagher Qalibaf raised a storm in Iran.
The 50-minute audio-file includes a conversationbetween the former IRGC Commander Mohammad-Ali Jafari and his Economic Affairs Deputy Sadegh Zolghadr in 2018 about corruption involving IRGC's Qods Force and Tehran municipality headed by Qalibaf.
The discussion in the recording directly involved Qalibaf, former Qods Force Commander Ghasem Soleimani, IRGC Coordination Deputy Jamaloddin Aberoumand, and Chief of the IRGC Intelligence Organization Hossein Taeb in covering up the embezzlement of 80,000 billion rials (around $3 billion at the time) between Tehran municipality and a firm controlled by the IRGC.
The money was mainly intended for funding the activities of Qods Force but somehow disappeared in the dealings between the municipality and Yas Holding, a subsidiary of IRGC's Cooperatives Foundation active in services, dealership, and subcontracting in the housing sector.
Yas Holding was officially dissolved in 2018, two years after its establishment, following the arrest of some of its officials. Four of the accused, including Qalibaf's deputy in Tehran municipality, Isa Sharifi, were put on trial and were sentenced to long prison terms and returning some of the huge sums they had embezzled.