MEK Iran: The Underlying Reasons of Iran’s Declining Economy
Senior Iranian officials have been making the same statements over and over as negotiations over Iran’s nuclear program continue in Vienna: All sanctions must be lifted. Sanctions imposed by the US and other countries have been a rallying cry for the government in recent years. Economic difficulties including poverty, inflation, unemployment, and the depreciation of the rial are being blamed on sanctions by regime officials.
These are the result of corruption practices by mullahs
The reality is that the mullahs have irreparably destroyed Iran’s economy during their four decades of tyranny. A strong production infrastructure, factories, farms, and organizations that manufacture items, generate jobs, build wealth, hire young talent coming out of universities, and provide possibilities for new businesses are all necessary for a healthy economic cycle.
The production infrastructure in Iran, on the other hand, is threadbare and on life support. HEPCO and the Haft Tappeh Sugarcane Agro-complex, once icons of Iran’s economic might, are now a shadow of their former splendor. And their demise was not precipitated by sanctions or occurred overnight. It happened as a result of decades of corruption and damaging practices, including the false privatization of government-owned firms to individuals tied to the corrupt regime. At the same time, the regime’s harmful environmental policies have brought other critical areas of activity, such as agriculture and cattle rearing, to a halt.
Iran is seeing a significant brain drain
Meanwhile, the Revolutionary Guards’ (IRGC) monopoly on various industries and domestic production has made it more difficult for Iranian entrepreneurs to start their own enterprises and compete in the Iranian market. Through organizations like Asian-e Qods, Setad, Bonyad-e Shahid, and Khatam al-Anbiya Garrison, the IRGC and regime supreme leader Ali Khamenei control a large portion of Iran’s businesses.
At this moment, Iranians must either throw their support behind the regime and join the “mafias” that run various businesses, or leave Iran and seek their fortune abroad.
As a result, Iran is seeing a significant brain drain. Every year, hundreds of thousands of university graduates, doctors, engineers, and other professionals migrate to other nations in search of better opportunities. This is unlikely to change even if sanctions are repealed, as the IRGC will retain control over Iran’s economy. The value of Iran’s talent flight exceeds the country’s oil earnings.
The regime will struggle to attract foreign investment
Attracting foreign investment into the country’s stock market is one strategy to achieve economic growth. The stock market in Iran, on the other hand, is far from steady. The authorities and the Revolutionary Guards have strict control over it and manipulate it.
At the same time, this government-sanctioned market manipulation shattered any remaining trust in Iran’s stock market. Any logical investor would think twice about investing in Iranian equities because it has become clear that the number posted on the Tehran Stock Exchange’s billboard does not reflect the true value of the Iranian stock market.
As a result, even if all banking and commercial channels are opened to Iran, the regime will struggle to attract foreign investment and grease the wheels of the economy. Finally, even if all sanctions are repealed and all barriers are removed, Iran still confronts other issues that prohibit it from participating in global trade.
Anyone wishing to do business with Iran must first go through the Revolutionary Guards, who oversee practically all large corporations. At the same time, the IRGC is involved in a variety of illegal operations, including money laundering and financing terrorism in the Middle East, as well as human rights violations, hostage snatching, and other crimes. Because of its lack of financial openness, the regime is on the FATF’s blacklist. For their roles in illegal activities, several of the regime’s top officials and economic influencers have been sanctioned.
In remarks to Setareye Sobh daily, economist Farshad Momeni revealed alarming facts about financial corruption in Iran Momeni: “According to the Court of Audit’s data… you can earn twice the 2022 budget by closing part of financial corruption channels” This is while the regime is constantly claiming that budget deficits and economic problems are due to sanctions.