Iran Analysis: 5 Challenges to an "It's Not That Bad" Iranian Economist

Protest over Inflation, July 2012"Thanks to the strength of the salaried middle class and president Ahmadinejad’s free spending habits, awareness of inflation has heightened in all decision making circles in Iran.”

This is a curiously blithe comment, illuminating the tendency towards rose-coloured analysis. “Awareness of inflation” does not mean “dealing with inflation”. To the contrary, the dominant political story in Iran in the last few months has been trading of allegations between the executive and legislative branches, with Parliament and Ahmadinejad facing off over the second phase of the subsidy cuts programme.

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Iran Feature: The Top 10 Stories of 2012 --- A Currency Falls, Sanctions Expand, and Political Prisoners Continue to Resist (Farhi)

Closed Cirrency Exchange, Summer 2012This year forcefully disproved the assumption that imprisoning political and civil society activists and critics silences them and fixes the Islamic Republic’s dissident problem.

Former presidential candidates Mir Hossein Mousavi and Mehdi Karroubi remained incarcerated in their homes (the former along with spouse Zahra Rahnavard) without being charged and remained mostly without any kind of access to the outside world. But letters written by political prisoners about prison conditions and solidarity among prisoners — as well as the woeful state of the country’s politics — made it out of the prisons and were sufficiently covered by external news and activist outlets for many inside Iran to become aware of them.

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Iran Feature: The Political Propaganda Around An Analysis --- "Economy Is Not on the Verge of Collapse"

Tehran Currency Market, 2 Oct 2012A very interesting media development, as Khabar Online uses its English-language website in an attempt to give the "right" view of the currency crisis....

The website reprints an article, originally published by the American site LobeLog, in which US-based economist Djavad Salehi-Isfahani pronounces, "Understanding the Rial's Freefall: Iran’s Economy is Not on the Verge of Collapse".

Salehi-Isfahani is a prominent analyst, but this piece should be read more as a political intervention than as an accurate critique of the economic situation.

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The Latest from Iran (14 June): Tough Talk Based on Bad Economics

See also Remember Iran: The Protests, the Repression...and the "Hope That Runs The World"
Remember Iran Flashback: "The Obama Administration Fails to React" (14 June 2009)
Remember Iran Flashback: 14 June 2009 Live Coverage --- "More than 100" Arrested as Greens Prepare Rally
The Latest from Iran (13 June): The Reformists and the Next Election

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Supreme Leader Addresses MPs, 13 June1515 GMT: Suppressing the Lawyers. Shadi Sadr summarises the regime's efforts to curb activism and dissent through intimidation and imprisonment of attorneys:

Between June 2009 and July 2011 at least 42 lawyers were arrested and at least 7 lawyers were forced to leave the country. Mohammad Ali Dadkhah was recently sentenced to 9 years' imprisonment and a 10 year ban on practicing law. The security officials have told him that either he will give a televised interview in which he will state that he was given money by foreign governments for defending his client or he has to go to prison....

Harassing the lawyers is not limited to their detention and sentencing. Most of the lawyers who have been detained are repeatedly questioned for having defended their clients. They are summoned and interrogated by security forces in short intervals. Many have been forced to promise not to give interviews to the media regarding the conditions of their clients. For this reason, methods of providing information regarding the conditions of the political prisoners are being blocked more and more every day. Some of the lawyers are told that they cannot accept political case files. For this reason, many prisoners of conscience are deprived of their right to a defense, prescribed by the Iranian constitution.

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The Latest from Iran (21 December): It's The Economy, Mahmoud

See also Iran Snap Analysis: The Currency Falls --- What Does It Mean?
The Latest from Iran (20 December): The Strains Within

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1705 GMT: Oil Watch. A bit of good news for Tehran amidst the economic pressure on the regime, including the possibility of a European Union ban on supplies of oil from Iran....

Turkey's biggest crude oil importer Tupras has renewed its annual deal to buy crude oil from Iran for 2012, at almost the same volumes as this year, according to industry sources.

China's top refiner Sinopec Corp said that buy less than half the crude it normally imports from Iran in January.

1655 GMT: Najmeh Bozorgmehr of The Financial Times offers valuable interpretation of the currency crisis:

The managed float mechanism has collapsed for much of this year. The central bank’s adoption of a multiple-rate system has also failed to bring back stability to the market and to foil the impact of international sanctions aimed at Tehran’s nuclear programme. Sanctions have caused the cost of financial transactions to increase, by forcing them to go through numerous back channels, and have hit foreign currency markets by reducing the supply of cash.

But there are also domestic dynamics at play. While the market remains anxious about the possibility of a European Union oil embargo and the US imposing sanctions on the central bank, local media have accused the government of Mahmoud Ahmadi-Nejad, president, of engineering a deliberate devaluation to boost the rial value of its oil income in the final months of the fiscal year to March.

Economists and parliamentarians have predicted this year’s budget deficit could be as high as $30bn, or 7 per cent of the country’s GDP.

The government is due to present its budget bill to parliament soon and some analysts believe the government is allowing the rial to weaken to reset the official exchange rate to the dollar in the budget, which has traditionally sat around the 10,000 mark.

But Iran’s minister of economy and finance, Shamsoddin Hosseini, on Wednesday denied any such intention. “The government has had no, [absolutely] no deliberate plan to strengthen the dollar rate,” he said, and promised to announce “a plan to manage the market” soon.

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Iran Feature: The Economy --- Assessing The Real Rate of Unemployment (Salehi-Isfahani)

The Statistical Center of Iran report for summer 1390 (2011) puts the size of the active labor force at 23.4 million, lower than the same figure reported for spring 1390 (24.4 million).  Assuming a small growth rate of 0.5% in the population of the 10+ age groups over one quarter, if the participation rate had not decreased we should have seen a labor force of about 24.6 million for last summer.  This leaves a rather large gap of about 1.2 million ‘missing workers’ who could be safely assumed to have been discouraged and therefore in fact unemployed.  So, instead of 2.6 million unemployed counted in the survey we could have as many as 3.8 million unemployed, in which case the real unemployment rate would be — deep breath! — as high as 15.2 percent.

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