Western sanctions are worsening the economic crisis and austerity measures in Iran. Cutting into oil-dependent government revenue is combining with rising unemployment and a currency crisis to devastate the lives of ordinary Iranians—as food and medicine become expensive and scarce.
In a recent update, the National Iranian Oil Company (NIOC) reported that since 2010, 80 per cent of Iran’s foreign currency revenue and over 60 per cent of its overall budget depends on oil income. After Saudi Arabia and Canada, Iran has the third largest oil reserves—with 133.3 billion barrels—and is the fourth leading oil producer with 4 million barrels a day.
However, after the imposition of the new round of Western sanctions, this number was reduced by almost a third: Iran’s Oil Minister announced on October 24 that the maximum production per day is 2.7 million barrel a day, which could be an inflated number.
Sanctions are worsening the currency crisis of the rial, which had lost almost 50 per cent of its values in early 2011. Intensified sanctions in 2012, and a nervous rush to swap rials for hard currency dollars, combined to push the Rial down to 10 per cent of its original value this October—one of its worst declines ever.
Recently, Fars news agency published an open letter from Iranian technological analysts calling on president Ahmadinejad to tackle the “dangerous economic situation,” and claiming most of the country’s economic problems are caused by the weakness of the currency—as imported raw materials used by manufacturers need to be paid for in hard currency.
The rulers of Iran are trying various solutions—from total denial, to blaming each other for the economic crisis, to some efforts to control the rising prices of basic foodstuffs, inflation and the currency crisis. Ahmadinejad describes the sanctions as part of a “heavy battle” that has succeeded in driving down oil exports “a bit,” while claiming that Iran has enough hard currency to meet the country’s needs.
While the sanctions are not affecting Ahmadinejad and the 1% in Iran, they are worsening the economic crisis for the 99%. The official rate of unemployment stands at well above 24 per cent, with some estimates claiming that up to a million Iranians have lost their jobs in the past year.
The closing of small and midsize workshops and factories are a daily practice and hundreds lose their jobs every day. Basic food and medical items are scarce and expensive and the majority cannot afford their basic needs. There have been reports that gunmen have raided meat shops and doctors have fought in hospitals over the limited medical supplies.
In the midst of this grim picture, Israel’s finance minister, Yuval Steinitz, said Iran’s economy “is not collapsing, but it is on the verge of collapse,” and called for additional sanctions. But Western sanctions, which the Canadian government supports, are only increasing the suffering of ordinary Iranians, letting Iranian rulers escape blame for austerity measures. If we want to help the people of Iran against their rulers, we need to stop Western sanctions and threats of war.