The problem of the Iranian economy is structural since the arrival of religious power

Par Gérard Vespierre

Gérard Vespierre, is a geopolitical analyst, associate researcher at FEMO, Foundation for Middle East Studies, founder of the web media Le Monde Décrypté. He spoke on April 26 at a conference at the Brussels Press Club, on the initiative of the European Strategic Intelligence And Security Center (ESISC), on the Iranian situation after several months of one of the most serious crises that its regime has known. since its birth in 1979. Here is the transcription of its intervention:

I'm going to rely on a few slides that have been prepared especially for you today. We will try to go through the answers to these three questions together. Is the very difficult situation of the Iranian economy linked exclusively to the sanctions or does it relate to other parameters? Second, does the situation announce socially an explosion? And third, is power in these foundations threatened? In the next quarter of an hour, we will try to go through some answers to these three questions together.

Iranian economy in 2022

A relatively low growth rate, satisfactory in the global situation, but also supported by the surge last year in energy prices. If you effectively reduce this growth rate by inflating energy prices, you see that the Iranian situation is not necessarily a situation of growth in real terms. Secondly, with regard to inflation, which is the great scourge of the Iranian economy, more than 45% inflation last year, that is to say that Iran ranks sixth in the world in terms of inflation.

This is effectively due to internal risks, therefore a distrust of the currency and the fact that the State has activated its printing press. The more banknotes you have in circulation, the greater the inflation. The unemployment rate is above 15% with a higher component among young people which is approximately double. And finally, as I mentioned in terms of inflation, the translation in terms of the exchange rate between the RIAL and the dollar, this exchange rate situation has been divided by 30. These are figures that we have hard to value, but dividing a currency by 30 in 10 years, you see the scale of the disaster. We immediately place ourselves in a process since I have just said 10 years. We are called upon to look at the Iranian economic situation, not at what it is today, but how did it become what it is now? In the next slides, we are going to look at the dynamics of the Iranian economy for, yes, 50, 60 years, so as to fully understand what the elements of the situation were before the mullahs' regime, so 1979, 1980 and nowadays.

You see that in terms of growth rate, the slope is negative overall. The regime of the mullahs, the Iranian religious regime has never created in his country a growth rate such as it had been during the 60s, 70s. The current economic situation is not related to a short term problem, but the regime's inability to generate growth. Another effectively key element of the Iranian economy is the inflation rate, again over this long period. You see the general upward trend. This is not to say that the exit, as Frédéric Encel has just mentioned, of the United States from the JCPOA agreement, from the 2015 nuclear agreement caused the upheavals of the economy, no, the worm is in the fruit. The lack of confidence of the internal agents of the Iranian people and the external agents, creates for 40 years this increase in the rate of inflation.

As the economy is doing badly, third parameter: the unemployment rate. There you actually see that over the long term, over the 40 years of religious government, that unemployment rate has increased. The social situation facing the country is not linked to incidents over the past few days, months or the United States' exit from the nuclear agreement. No, the problem is not circumstantial, the problem of the Iranian economy has been structural since the arrival of religious power. This difficulty increases with the evolution of the population. We can see that the population, over this long period, from 1980 to 2020, the population has doubled. It has gone from 40 million to more than 80 million inhabitants. In this demographic situation, you have an obligation to take care of the interior of your country, to take care of the population which is doubling. If you don't have the investments to take care of that doubling population, you're going to disaster, which is happening. And in particular, the catastrophe is all the greater since the living wealth of Iran, that is to say its energy wealth and in particular oil wealth, is much less well preserved than it was 60 years ago. years. 60 years ago, Iran produced almost 6 million barrels per day, Iran was the world's third largest producer. So, 60 years after and before the decline in exports linked to the exit and the ban by the United States on exporting oil outside Iran, production has gone down to 4 million barrels per day. Which means that production per head of inhabitants, individual wealth, has been practically divided by three in 40 years. There is three times less oil wealth per head of Iranian in 2020 than there was in 1970.

The people are in the street

The Mullahs' regime is outward oriented. We take care of Hezbollah, we take care of maintaining the Syrian regime, we take care of Iraq, we take care of the Yemenis, but we don't take care of domestic investments. There is an absolutely cruel sentence from Seyed Ali Khamenei… In 2019, when the price of gasoline increased, there was this big demonstration and Khamenei was ashamed to say: "Between the demands of the Iranian people and the goals of the Islamic Republic, I will always choose the goals. » There you have the result! The people are in the streets because the leaders, for 40 years, do not take care of the people.

Another element concerning the Iranian economy is the impact of drought and poor water management. Look at this image in Isfahan of the famous Khadjou bridge with the Zayanderoud river, the population is in the middle of this river which has become completely dry, which has disappeared. Farmers, of course, are the first affected. Iranian food, the circuit is impacted by the poor management of irrigation, diversions to supply the largest landed families, etc… Rafanjani in particular. You see the impact of poor water management on the entire Iranian economy. The difficult economic situation is not linked to international sanctions, they are not linked to the sanctions of 2018. They have a structural character linked to the decision of the Iranian power to deal with the outside and not to deal inside.

Iranian society now, after the economy, society: the demonstrations are the visible parts of the rebellion. But there is a really important activity apart from the demonstrations, from what exists in the whole country, from the resistance units. These are thousands of small groups of people organized by the People's Mojahedin Organization of Iran, the PMOI, which carry out daily, and we do not know enough about it, acts of indiscipline in Iran with posting, towing on the walls. You also have the explosion, the sending of the Molotov cocktail as you have here in the central photo, at police stations, at the representations of the judiciary, at religious foundations, you also have the destruction of billboards in the glory of the regime.

Is the religious regime threatened? Yes, indeed, it is threatened by the state of the economy, it is threatened by the state of society where you have demonstrations regularly from all segments of the population. You have the teachers as well, because the salaries are not paid or they are paid late. You have the pensioners that we forget, because with inflation rates, pensions do not follow. You have the workers in the oil industry. You have the farmers, because effectively they have no water resources.

So there is this economic and social situation and the religious power is an exception in the history of Iran and Persia. There has never been any religious power. This religious power will be a parenthesis of Iranian history. And the system inside is completely aware of it. I gave you two quotes. One from a former regime interior minister, former Majlis speaker, who said in 2018: "The problem we have is not the nuclear deal (the United States had just come out of it). The problem we have is how long we can stay in power. A prominent representative of the religious system, Nategh Nouri, said, "Our concern is to stay in power. You have the same analysis from a representative of the religious system, Jawad Amoli, who at the time was one of the preachers in the city of Qom. He said, "If the people revolt, we, the religious, will be thrown into the sea." You see, both political representatives and religious representatives of power are aware of this situation.

Let me quickly wrap up with these exceptional images that took place last week. Khamenei, speaking to hand-picked students from the Bassidjis, was interrupted. We see a boy who gets up, interrupting the guide. We have never seen that. In Tehran, April 22 was yesterday. A few minutes later, the whole room is standing. Anyway, boys.

But the room came to say "Stop your lies, we want transparency". In front of the guide. So, I will quote you this word from a Franco-Lebanese, Antoine Sfeir, creator of Cahiers de l'Orient, who, on his return from Tehran from a trip, his last trip, he died in 2018, he was returning from Tehran in 2017. He said "A country that loses its youth has to worry about its future. »