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Iran’s Struggling Economy Suffering from Corruption

The Teachers Investment Fund Corporation of Iran is the center of a large corruption scandal of 11 trillion Tomans (U.S. $3 billion), as reported by Tasnim News Agency, which is affiliated with the IRGC.

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“We have never had a situation in which the managing director of a bank gets fired due to not listening to some bank debtors. Nevertheless, these issues are happening today. For instance, some of those who used export facilities also bend the rules. The export of commodities is confirmed on papers, while no such thing has occurred. As a result, the person does not pay the 9% VAT,” said Hoseinali Haji Daligani, an Iranian MP and member of the Parliamentary Plan and Budget Commission.

He noted that information had been provided to the Minister of Economy regarding this matter. Among the issues are individuals who get loans from Iranian banks at a lower interest rate and then deposit the money into international banks to collect a higher interest rate on the money. Haji Daligani also noted that “people are plundering and looting in different sectors of this country and the responsible authorities do not have the will to confront them.”

The Ministry of Economy “commits major violations of far-fetched salaries” and Haji Daligani believes that limited its ability to confront corruption in other industries.

Various agencies have noted that there seem to be no will to clean up the corruption that is found running rampant throughout the current Iranian government. Fraud is also a problem, as domestically made goods are sold as foreign imports.

Haji Daligani also noted that the economic growth rate of 7.4% does not accurately reflect the economy of Iran. “I asked one of the official representatives of the government how much our investment growth was in 2016. In response, he said that the rate reached to 115.7% and it became -10% in the first 3 months of this year,” said Haji Daligani.

He noted that promised investments in the Iranian economy had not been fulfilled and that inflation was reported as being lower than it actually is. Haji Daligani and his team asked organizations to investigate and track these issues, then report their findings autonomously.

For many in Iran, the economy doesn’t appear to be improving, despite the lifting of various sanctions as a result of the nuclear deal made with Iran and the international community. Additionally, laws are being passed to reduce tariffs, which favor commercial enterprises at the cost of the farmers and ranchers. Rouhani’s government claims that the reductions will reduce prices in the market, but terrorist Qods Force News agency questions that claim.

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Tariff reductions can spell the death knell to domestic manufacturing in Iran, as importers can bring in a cheaper product and also bring in more imports, thus flooding the Iranian market with foreign goods.

An Iranian MP noted in October 2016 that rice imports were higher than what was needed for the country and has been quoted as saying, “The 400 tons of rice imported into the country has provided benefit to specific people.”

Imports, moreover, are entering the country at a rapid pace and often of poor quality. Experts argue that these measures kill domestic production and increase the number of unemployed, especially among the young.

Becoming porters has become a necessary profession in the current Iranian economy and rising unemployment. These porters are paid by the load to smuggle goods into Iran. They face not only the dangers from the weather and nature, but also avoiding the IRGC, which targets these porters. Many have been killed or arrested as part of the crackdown on smuggling. The Iranian government argues that this smuggling has a negative impact on the economy.

International leaders point out that Iran has continued to spend money on its nuclear activities and exporting terrorism, instead of working to improve the economic situation of its people. Key government officials benefit from the focus on the region versus dealing with the real problems facing the Iranian people and its economy.

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According to the National Council of Resistance of Iran (NCRI), the economic policy of the Iranian government is also negatively impacting the currency market within Iran. For example, foreign currency is being offered at four different exchange rates by exchange offices, banks and even the official exchange rate offered by the government. It is a sign of a lack of control and coordination within the government. For individuals looking to purchase foreign currency, more tomans are needed to purchase less.

While Rouhani made a campaign promise to minimize the difference between multiple rates for foreign currencies, he has failed to bring it about. The Iranian media have noted that it is unlikely that Rouhani’s government will be able to institute a single rate currency policy, despite promises to do so. Government intervention has not been able to make a significant difference as the value of the Iranian toman versus the U.S. dollar continues to fluctuate wildly.

This movement also impacts inflation, as the purchasing power of Iranian currency continues to spiral downwards. While it remains the second largest economy within the Middle East, its GDP continues to go down, reflecting an economy that is struggling in terms of domestic production and exports.

Overall, the Iranian economy continues to struggle, with the larger population taking the brunt of the turmoil. Unemployment remains high and families struggle to meet their basic needs. Young people are educated by find themselves with no place in the current economy. Growth has stopped and it appears that Iran is heading toward a financial crisis. Even as individuals struggle financially, reports are leaking out of the vast corruption within the government that is the financial lifeline of the IRGC and their exportation of terrorism into other countries within the region, most notably Syria and Iraq.

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On Friday, February 3, the U.S. Treasury Department have announced that they are publishing a list of 13 Iranian figures and 12 entities that will be facing new economic sanctions.

“Today’s action is part of Treasury’s ongoing efforts to counter Iranian malign activity abroad that is outside the scope of the JCPOA,” the Treasury said in a statement, referring the nuclear deal between Iran and the P5+1 group of countries.

While this nuclear deal was thought to provide economic stimulus to Iran, the corruption throughout the government has meant that the people are feeling little of the effects of a loosening of various international restrictions and sanctions. The economy also relies heavily on its oil reserves, but the oil market has seen prices stay low for several years, making their oil reserves worth significantly less.

About Siavosh Hosseini (212 Articles)
My background is in the visual arts, particularly in photojournalism. I have had the opportunity to cover scores of international artistic and news events in the US and across Europe since the mid-1980s. I was active in television newsrooms and production as a graphic designer and producer for more than 12 years in different television and news outfits in Europe.

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