Iranian people pay the price for crisis

Although millions of Iranians receive a monthly government payment to compensate for a cut in subsidies, the value of this is diminishing as the currency value collapses.  Over the past three months Iran’s currency, the rial, has lost 57% of its value and is down 75% compared to late last year.

A basket of shopping which cost 120,000 rials only a month ago will now cost 300,000 rials, a stark illustration of the extent to which ordinary families are having to tighten their belts and bear the brunt of the government’s economic policy and the sanctions regime.

The Iranian national currency hit an all time low at the beginning of the month with the rial dropping by 15% to its lowest ever level against the dollar on Oct. 1.  By midday trading it took 34,500 rials to buy $1 compared to 29,600 rials at close of trading on the weekend.  

Since July, when the latest U.S. and EU sanctions came into effect, the prices of basics such as chicken, milk, cheese, bread and yogurt  have been rising daily.

The mismanagement of the economy, which has perpetuated the economic crisis and generated high unemployment, has been a feature of Iranian life for many years. The government has been able to mask the consequences of this, up to a point, due to the high price of oil which generates 80% of the country’s export revenue and most of its foreign currency. However this very dependency has meant that the embargo has had a major impact.

In an attempt to fight back the Iranian government launched a counter-offensive with an appeal to non-aligned nations in India last week. Energy Minister Majid Namjoo urged non-aligned nations to develop a new structure of international relations and to resist sanctions imposed by the Western powers.

India itself has major power shortage issues and imports large amounts of Iranian oil. While it has been trying to reduce the total, under U.S. pressure, trade between the two countries is significant.  With the current sanctions regime in place however, Indian diplomats privately play down their trade links with Iran.

At a meeting of EU foreign ministers next week it is no secret that Britain, France and Germany hope to tighten already tough sanctions on Iran. While fears of an imminent Israeli military strike on Iranian nuclear facilities appear to have subsided, at least until after the U.S. presidential election, there can be no guarantee that the volatility of the situation in Iran may not tempt the Israelis to strike while they see an opportunity.

While the U.S. elections in November mark the next key watershed before any major international diplomacy is likely to be initiated, they are bookended by the Iranian presidential elections scheduled for June 2013. This period is a window of opportunity which some Western powers recognize as one in which serious negotiating with the Iranian regime, rather than sabre rattling, may have to take place. Iran is a potentially significant market as far as Europe is concerned and there is a growing recognition in the EU that the impact of sanctions is not a one way street, especially in a period of poor economic growth.

For the Iranian people the position remains one of uncertainty and fear. Living once again in what is effectively a war economy the threat of military aggression remains a fear, while the impact of economic aggression is a daily reality. For those in the peace and democratic movements across the world who are concerned with the plight of those in Iran, ending sanctions and stepping back from the threat of military action remains an urgent requirement.

Photo: A man sits by the road in Esfahan, Iran, August 2012. Elian Chrebor CC 2.0



Jane Green
Jane Green

Jane Green is the national campaign officer of the UK-based CODIR, Committee for the Defence of the Iranian People's Rights.