The regime hopes to stabilize the market by freezing the exchange rate and limiting the need to buy hard currencies. However, U.S. sanctions will be reinstated in 40 days, and these sanctions, along with the weak policies of regime President Hassan Rouhani, mean that it is highly unlikely that economic conditions will improve. In fact, the current conditions will almost certainly devolve into further chaos.
This is bad news for the regime, which is currently reeling from a series of popular protests set off by the devaluation of the rial. Economic frustrations quickly turned to calls for regime change as merchants, youths, and others who have suffered at the hands of the policies of the corrupt regime took to the streets chanting, “Death to the dictator!” according to the MEK network and numerous witnesses who broadcast the protests on social media.
The Regime’s Failure to Prevent Economic Collapse
The regime took a series of measures in a failed attempt to prevent the free fall of the rial. They artificially set an exchange rate, banned currency trade outside of the banking system, shuttered currency exchange offices, and punished anyone in possession of more than 10,000 Euros.
These efforts have been unsuccessful because no one uses the official rate in their pricing, as it would bankrupt sellers. Instead, sellers use the market rate, sometimes increasing their rates hourly. The gap between Iran’s exchange rate and the global exchange rate makes it untenable to do business at the artificial rate imposed by the regime. Many Iranian oil and petrochemical companies are paid for their exports in hard currency. Exchanging these currencies at the official Iranian rate would cut their profits in half.
Thus, Iran’s artificial exchange rate reduces economic activity while creating a wealth of opportunity for corruption by officials in charge of its operation. Pedram Soltani, Vice President of the regime’s Chamber of Commerce, Industries, Mining and Agriculture, noted a huge increase in import permit requests, saying:
“The current Iranian year might end up with a two-fold increase in the hard currency allocations for imports compared to the previous year.”
Rouhani and his administration have done nothing to address this corruption. While the regime loots the economy, the Iranian people have given up hope that the regime can address the failing economy through policy-making. As the people prepare for increased inflation and rising prices, the regime pretends that the problem does not exist.
For the Iranian people, the only choice left is to change the regime itself. That is why protests about the economy inevitably shift focus to calls for the overthrow of the regime. That is why the uprising that began last December still rages on in streets across Iran.
Tomorrow, June 30th, the Iranian opposition will gather in Paris to raise its collective voice and demand change. The people on the ground in Iran have made it clear through their continued protests and strikes that they will be satisfied with nothing less than regime change. The Free Iran rally will present an alternative to the mullahs regime, a future in which the vast majority of the people of Iran will not be forced into poverty because of a corrupt and inept clerical regime. The NCRI, of which the MEK is the largest member, has a plan for the peaceful transition to a free Iran. On June 30th, Maryam Rajavi, President-elect of the NCRI, will give the keynote speech at the Free Iran rally. You can find more information about the event here.