Iranian Economy on Verge of Collapse, Due to American Sanctions, Pandemic
COVID-19 deaths continue to climb as Tehran accuses US of trying to starve it into surrender
The Islamic Republic has seen a surge in coronavirus infections; its Health Ministry puts the death toll at more than 29,000, making Iran the hardest-hit country in the Middle East.
Even before the health crisis, the Iranian economy had been battered by low oil prices and crippling US sanctions reimposed by Washington after President Donald Trump withdrew in 2018 from the nuclear deal with major powers.
Iran’s unemployment rate has skyrocketed in 2020, and on Monday, its rial currency plunged to its lowest point ever against the US dollar, having losing more than 60% of its value in two years. Consumer prices have risen by 37% in 2020.
The fragile economy has also been battered by a temporary shutdown designed to contain the pandemic, border closures and a halt in non-oil exports.
Prof. Mohammad Marandi, head of American studies at Tehran University, told The Media Line that the government does not have the “luxury” of imposing a broader closure. “Iran is having a difficult time because shutting down the economy is very difficult due to the sanctions.”
Maysam Behravesh, intelligence analyst and policy adviser on Iran, told The Media Line that the regime’s “massive failure to rein in the pandemic is mainly due to the government’s general disregard for scientific warnings in the early stages of its spread, its prioritization of geopolitical interests over public health, and systemic mismanagement and corruption.”
But he also blames the Trump Administration’s punitive measures for adding to the misery of Iranians. “US sanctions have denied the Iranian healthcare community the essential resources it desperately needs to confront the crisis.”
And last week, the US administration imposed sweeping new sanctions on the Islamic Republic’s banking sector.
“Our sanctions are directed at the regime and its corrupt officials that have used the wealth of the Iranian people to fuel a radical, revolutionary cause that has brought untold suffering across the Middle East and beyond,” US Secretary of State Mike Pompeo said.
He said the Iranian leadership was to blame for devoting funds to the military when there was a health crisis.
“Our maximum economic pressure campaign will continue until Iran is willing to conclude a comprehensive negotiation that addresses the regime’s malign behavior,” he said.
Iranian Foreign Minister Mohammad Javad Zarif accused the US of trying to “blow up our remaining channels to pay for food and medicine.
“Iranians WILL survive this latest of cruelties. But conspiring to starve a population is a crime against humanity,” Zarif wrote on Twitter. “Culprits & enablers − who block our money − WILL face justice.”
Amid Covid19 pandemic, U.S. regime wants to blow up our remaining channels to pay for food & medicine.
Iranians WILL survive this latest of cruelties.
But conspiring to starve a population is a crime against humanity. Culprits & enablers—who block our money—WILL face justice. pic.twitter.com/n0fnXPNik8
— Javad Zarif (@JZarif) October 8, 2020
Last week, Trump issued a stern warning.
“Iran knows that, and they’ve been put on notice: If you f*** around with us, if you do something bad to us, we are gonna do things to you that have never been done before,” the president told conservative radio host Rush Limbaugh.
Marandi said the US is trying to “impose hunger, starvation, death and despair on ordinary Iranians.”
Tehran accuses Washington of blocking its request for a $5 billion emergency loan from the International Monetary Fund, meant to fight the virus.
Marandi accuses the US and its allies of war crimes.
“The Americans want to prevent the Iranians from obtaining medicine to fight cancer; it’s clear as day what the Americans are doing. The sanctions are a war crime, a crime against humanity, and western countries are all complicit in this.”
Sina Azodi, a nonresident fellow at the Atlantic Council, told The Media Line that the government in Tehran bears part of the blame for the rise in infections. “The government mismanagement in the initial stages of the pandemic increased the vulnerability of the country.”
He acknowledges the role the US sanctions have played in devastating the economy in the country of 80 million people.
“I cannot deny the critical role of economic sanctions in the severity of the pandemic. The US government is arguing that food and medicine are not sanctioned. But [international] financial institutions are very hesitant to process transactions related to Iran and tend to stay away from them. This increases the price of medicine in Iran, which under the current economic circumstances is making them less affordable for people,” Azodi said.
He argues that the latest round of sanctions is meant to “completely cut off Iran’s financial system from the rest of the world.”
Tehran has always been able to maneuver around sanctions, but with the strict closure measures imposed due to the coronavirus pandemic, Behravesh said this time Tehran will have a hard time keeping its economy afloat.
“In order to revive its economy, the Islamic Republic needs to fundamentally reconfigure and reform its methods of governance at home, as well as the way it is conducting foreign policy.”
Getting the Iranian economy back on track is important not only for the country’s financial stability, but also for the regime’s survival.
“It [the US] aims to crush the Iranian economy so that the people go out to the streets. If you pay attention to recent protests, they are no longer politically motivated, they are mostly because of economic conditions with workers demanding their wages and protesting deterioration of their living standards,” said Azodi.
“Whether this leads to street protests, that’s irrelevant,” Marandi said. “The point that is the Americans and their allies are attempting to make Iran suffer, and to make people go out to the streets out of desperation. This is cruel, crude and inhumane as well as barbaric, and the silence of the Democrats and the mainstream media [in the US] makes them just as complicit.”
Azodi believe that Tehran will eventually have to come to terms with Washington.
“Tehran had an opportunity to quickly make a deal with Trump Administration, and I believe that Trump is genuinely interested in some sort of ‘Trump Comprehensive Plan of Action TCPOA!!’ but the problem is people around him. Secretary Pompeo’s 12 demands are in fact a demand for total capitulation of Iran, which is not going to happen. The best way to revive its economy is to reach a deal with Washington,” Azodi said.
Behravesh on the other hand argues that “any such change” to Iran’s policy “is highly unlikely as long as the US ‘maximum pressure campaign’ threatens the government, compelling it to prioritize its survival by any means and at the expense of Iranian people.”
The leadership in Tehran is playing for time, hoping the US presidential election will lead to Trump’s replacement and that “the next US administration will adopt a more reasonable policy on Iran,” Behravesh said.