Iran’s Regime: Coronavirus Quarantine an Impossible Option for the Economy

Iran's supreme leader Ali Khamenei’s main aim is to emphasize the end of the nationwide quarantine while the COVID-19 situation has not been handled and to send back workers to work under the pretext of a surge in production.
Iran's supreme leader Ali Khamenei’s main aim is to emphasize the end of the nationwide quarantine while the COVID-19 situation has not been handled and to send back workers to work under the pretext of a surge in production.

According to the Statistics Center of Iran, Tehran has the highest percentage of tenants in the country, and 51 percent of Tehran’s peoples are tenants. In addition, the regime’s Ministry of Industry has announced that nearly one-third of the country’s industries are located in Tehran, and that is why Tehran could be one of the most labor-intensive provinces in Iran.

Many of Iran’s economists said that Iran’s economy is facing a severe inflationary recession and with closures, it has almost nothing to lose.

The government doesn’t care about people’s lives. Government support for businesses is negligible, and in this economic situation the government has neither the ability to provide extensive job support nor other business-related institutions such as banks and insurance companies which most of them are affiliated with the regime have taken business support packages seriously, so business owners are forced to continue to work.

69 percent of Tehran’s residents cannot remain in quarantine

Quarantine was not taken so seriously for many Iranian businesses. The workers of the factories and industries were forced to come to work without shift and teleworking, and the employees of the private and public sectors have been called to work after the Nowruz holiday. The employees and workers while attending to work caused the bus and subway stations with crowds.

The publication of images of this scene in cyberspace was met with a reaction from the Iranians and, of course, experts and economic activists.

In addition, according to a municipal poll, 69 percent of Tehran residents say they are unable to stay in quarantine because their savings will cover their costs for up to a month.

According to the Statistics Center of Iran, Tehran has the highest percentage of tenants in the country, and 51 percent of Tehran’s people are tenants. In addition, the regime’s Ministry of Industry has announced that nearly one-third of the country’s industries are based in Tehran, which is why Tehran could be one of the most labor-intensive provinces in Iran. In addition, service jobs are mainly centralized in Tehran, and all these issues are forcing Tehran residents to leave home for their livelihood.

Tehran as Iran’s capital is playing the role of a ticking bomb. Astonishing is that one of regime’s official’s Majid Reza Hariri, President of the Iran-China Chamber of Commerce about the governments support and choosing between the people’s health and livelihood said: “We need to think of a way to address both issues, not to sacrifice one for the other. If we look at it from the people’s viewpoint, they expect more support, as in other countries, governments have provided free grants to support the people and provided cash resources for daily workers because this is very important for day or seasonal workers.”

“Cash and grants are not approved by the authorities because of inflation, but it may be necessary to accept additional short-term inflation to support the people, especially the low income of the society, or to help them by paying interest-free loans.”

“Of course, given that the inflation of the past year was 41 percent, any missteps can cause more inflation, and the exit of the inflation from the double-digit way, ultimately causing hyperinflation, it is necessary for the support of the injured stratums, that different committees, working groups, and agencies, should come together and reach a common conclusion by expressing their views”

Support packages did not reach businesses

 

In addition, economic enterprises are currently struggling with difficult conditions. Parviz Javid, a member of the Iranian Association of Economists, said: “The association has a written report from business firms that banks, insurance companies, and other related institutions have not provided any support for jobs in the coronavirus situation.

“Although the government has announced that it has provided support packages for tax breaks or deferment of bank and insurance debts for businesses, banks have easily removed their installments from the factories’ accounts and even calculated late fees. In addition, insurance companies have not cooperated with companies, and since the government must take taxes to cover its revenues, almost all businesses are confident that tax breaks will not be applied.”

The view of the regime’s government is import-oriented, and therefore several of its policies have hurt the Iranian businesses and even shut them down. Therefore, business owners in Iran are somehow confident that they will face heavy losses if they want to have hope in these support packages and promises of the regime.

On the other hand, the workers know that weakening their business means adjusting the labor force, and in this difficult economic situation, it is desirable for the workers and the personnel of the manufacturing enterprises to be adjusted or unemployed.

Adding to the regime’s bad economic situation, the fall in oil prices and Iran’s oil revenues, and on the other hand, the economic situation in Iran has been challenged by the Coronavirus outbreak, and in the coming months, the country will face a severe inflationary recession.

In addition, due to the non-injection of dollars from oil sales and of course the sanctions, and now the regime’s FATF blacklisting in the coming months, imports of goods, especially intermediate goods required by factories, will face a major problem.

About 60 percent of Iran’s factories are dependent on foreign raw materials, and if the raw materials are not provided in a timely and sufficient manner, these factories will have to reduce production capacity and lay off workers, which will exacerbate unemployment.

Economists’ forecasts for Iran’s macroeconomic indicators for 2020 are ‘high inflation over 45 percent’ and ‘high unemployment over 18 percent’ in the coming months.

These are the reasons why the Iranian regime is claiming that a national quarantine is for them impossible. But the truth is that the Iranian regime can but will not solve its economic challenges by cutting the costs of its terror proxies and injecting the money into Iran’s economy so that a quarantine would be possible with ease.

 

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