Iran Arrests Currency Dealers As US Dollar Climbs To New Heights
While Iran’s currency is losing value every day, Iran’s Economic Security Police has arrested more than 30 people over allegations of market manipulation.
While Iran’s currency is losing value every day, Iran’s Economic Security Police has arrested more than 30 people over allegations of market manipulation.
Deputy Chief of the Economic Security Police, Brigadier General Sohrab Bahrami, announced Sunday that several “other such criminals” have been identified and will be dealt with soon.
Police will deal with these people for "disrupting the economic system," he said, and claimed that these people create false demand for the US dollar in the Iranian market, hence disrupting the market stability.
The Islamic Republic facing continuing economic crisis in the past 4 years often arrests dealers and businessman accusing them of rigging demand or supply, in an effort to show the public that it is proactive.
Last week, the police announced the detention of 16 so-called criminals in coordination with the judiciary and the Central Bank.
Iran’s rial is hitting new lows against the US dollar daily amid runaway inflation and economic chaos, with one US dollar surpassing 333,000 rials on Sunday.
The drop comes as the last rays of hope for reviving the 2015 nuclear deal between Tehran and world powers are fading away, with multilateral talks in Vienna paused since March.
Food prices have soared since early May when the government lifted import subsidies for essential goods to save foreign currency, and anti-government protests have become a regular scene in several cities.
Arab countries such the United Arab Emirates and Bahrain that established full relations with Israel in 2020, have expanded ties, including close intelligence and security cooperation.
Admiral Alireza Tangsiri said, “Today there is satisfactory security with cooperation among neighboring countries in the geographical area of the Persian Gulf,” but if for whatever reason someone allows “the number one enemy” into the region, it will create “chaos and instability” both for itself and for the region.
Israel and Persian Gulf Arab states have long been concerned over Iran’s nuclear program and adventurist regional policies, as well as its rapid expansion of missile technology. They supported former US president Donald Trump’s withdrawal from the Obama-era nuclear agreement and imposition of tough sanctions on Tehran.
But President Joe Biden’s entrance into the scene in 2021 changed the close coordination that existed during the Trump administration, especially between the US and Saudi Arabia, the main Arab power in the region souring.
Biden announced early on that he wanted to revive the nuclear deal with Iran known as the JCPOA and reduced support for Saudi Arabia in the Yemen war, a proxy war with Iran.
Tangisir’s speech on Saturday was not the first instance of warning issued to Arab states in the region. He had also made a similar statement in April, but since then Israel’s cooperation expanded with the Persian Gulf Arab states.
News also emerged on June 9, that a group of US lawmakers calling themselves supporters of the Abraham Accords, or the deal to establish ties between Israel and Arab countries, announced an initiative to create a united fron against Iran with Americans playing a central role.
The legislation proposes that the Pentagon works with Israel to integrate air defenses of six Gulf Cooperation Council countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates with Egypt, Jordan, and Iraq with the aim of thwarting threats from Iran and Iranian backed-militias across the region.
Reports also speak of secret talks to establish relations between Israel and Saudi Arabia, which has so far remained cool to the idea.
These efforts in effect would create what observers have long dubbed as an anti-Iran NATO and put further pressure on Tehran which remains largely isolated and under the pressure of US economic sanctions.
A year-long diplomatic process between Iran and world powers to revive the JCPOA and lift the sanctions stalled in March, as Tehran insisted on removing the IRGC from the US list of terrorist organizations.
In recent days other Iranian officials have also made statements emphasizing Iran’s military power and readiness to defend the Islamic Republic against threats.
The signatories, mostly professors of economics in Iranian universities and many who have held government posts, suggest the government’s “economic surgery” since March has led to “social chaos and worsening economic instability.”
With the new Iran year beginning March 22, President Ebrahim Raisi with the backing of parliament began a plan to phase out state subsidies on food imports that had been costing $9-15 billion a year.
While in part a response to global food inflation sparked partly by the invasion of Ukraine, the move, quickly dubbed “economic surgery,” was officially portrayed as a serious reform of Iran’s state-dominated economy.
‘Quick measure in face of global price crisis’
The economists charged in their statement that the motivation was purely fiscal, easing a shortfall in the government budget, and that real reform required more serious change: “[The move was] a temporary and quick measure for addressing the budget deficit amid sanctions and a global food price crisis. We cannot consider this an economic reform.”
The economists argued that this “economic surgery” would lead to a further fall in the value of the Iranian rial and lead to “repeated economic shocks,” and said the government had not engaged with the public about where the policy would lead.
The economists noted Raisi’s election campaign promises to form an inclusive government, utilize experts to draft economic plans, slash “the 50-percent inflation rate,” and build one million housing units each year.
But the economists argued it would not be possible to fulfil such promises without an early agreement in talks with world powers to revive the 2015 nuclear deal and accession to international transparency and related regulations demanded by the Paris-based inter-state Financial Action Task Force (FATF), which blacklisted Iran in 2020.
Despite various restrictions on non-governmental media, many experts and business figures had warned over “the horrible” results of “inaction” in foreign policy and ill-designed policies, the economists said. Economic shocks and the pausing of nuclear talks in March had fed instability, social chaos, and widespread concern among the people over their livelihoods, creating an “explosive” situation.
They went on to warn that “the country’s situation is extremely fragile,” given the elimination of food subsidies. “People’s patience will run out and will place the government and the regime face-to-face with the people.”
Three recommendations
The signatories made three recommendations.
First, the state should have sufficient oil and non-oil export revenues and foreign currency reserves to ensure secure handling of economic fluctuations.
Second, the government should have clear and effective policies to foster macro-economic stability, with control over inflationary budgets.
Third, the government should ensure low-cost access to global markets for goods and services.
The last recommendation is related to extra costs Iranian government and businesses have to bear to do international transaction, given US sanctions and FATF’s blacklisting.
Low growth
The economists warned that Iran had lost ground economically compared with most other countries since 1980, with average growth of 1.6 precent, whereas growth in China, India, Turkey, Malaysia, the United Arab Emirates, and Pakistan had ranged from 4 to 10 percent.
The economists spoke of vanishing hopes, growing poverty and a widening income gap that have led to vengefulness in society. The resulting disorder exhibited itself in destruction of the environment, systematic corruption, widespread emigration, capital flight and brain drain.
The 61 signatories called for “fundamental change in foreign policy” aimed at peaceful coexistence, cooperation with neighbors, and interaction with the world’s economic powers. They also urged improvement in governance, with respect for law, minimizing corruption, establishing an independent judiciary, dialogue and transparency, and allowing “true economic competition” in society.
