Iran’s Central Bank Denies Losing Money In Currency Scheme
Reports about a money-losing foreign currency trading scheme at the central bank of Iran has surfaced as the media is abuzz with another large corruption case.
Reports about a money-losing foreign currency trading scheme at the central bank of Iran has surfaced as the media is abuzz with another large corruption case.
The Central Bank of Iran issued a statement Monday rejecting reports that the bank bought foreign currency at a higher rate and sold it to a cabal of insider businesspeople. The government’s foreign currency policy has been one of the chronic problems in Iran’s economy. The central bank allocates discounted foreign currencies supposedly for essential goods, but they end up at the hands of regime insiders who mainly sell them in the black market for profit.
The parliament's research center released an analytical report on the recently submitted budget bill of President Ebrahim Raisi’s administration, inadvertently revealing that in the first seven months of the Iranian year (started March 21), the government has spent $4.5 billion more than the foreign currencies obtained from oil revenues, but giving out cheap dollars for the import of five essential goods.
The current exchange rate for the US dollar against Iran’s national currency rial is about 500,000 rials. According to the report, the government has taken $4.5 billion with the rate of Iran’s National Currency and Gold Exchange Center – at about 400,000 rials per dollar -- and given to its cherrypicked businessmen at the rate of 285,000 rials per dollar.
According to calculations by Iran’s leading economic daily Donya-e Eqtesad, the difference between these two rates amounts to about 600 trillion rials (about $1.2 billion at current rate at free market) that has been added to the country’s monetary base, further feeding soaring inflation. Essentially the government printed money to buy the dollars at a higher rate and sell it cheaper to importers. The daily predicted that the current trend will lead to an annual rise of about one quadrillion rials ($2 billion), whose inflation will affect the entire society.
“It seems that the insistence of policymakers on promoting welfare policies through currency policies is still in force, with no significant changes in sight. This is happening while currency fluctuations and corruption in the currency allocation process are among the most recognized consequences of welfare-driven currency policies,” Donya-e Eqtesad said. “These policies not only fail to achieve welfare goals but as seen in the tea industry's foreign currency corruption case, they lead to a multitude of damages to society.”
In fact, 'welfare' is just a buzz word, justifying the provision of cheap dollars to people with influence in the political system. Prices for essential goods such as foodstuff continue to rise despite the discounted dollars provided to importers. The justification for cheaper dollars is to keep prices low and prevent higher inflation, but that has not worked as food price inflation stands at around 70 percent.
Iranians are still in shock about recent revelations about a huge corruption case involving nearly $3.5 billion and key Islamic Republic figures. Whenever such cases are revealed, the authorities usually cope out of responsibility by blaming former administrations or officials from the opposing political camp. However, the $3.5 billion embezzlement case of Debsh Tea Company involves officials from both the current and the previous presidential administrations -- including ministers of agriculture, industry as well as the governors of the Central Bank of Iran and the chiefs of Iranian Customs Administration. It has also led to discord between the judiciary and the presidential administration as well as the parliament.
In her acceptance speech –sent from the notorious Evin prison, read by her teenage daughter in Oslo– Mohammadi said the Islamic Republic is in a state of “unstable equilibrium” with very little popular support, and will give way to democracy sooner rather than later.
“But the reality is,” she added, “that [foreign] governments and the UN have not had the conviction, the practical coherence, and the proactive approach that seemed necessary and fitting for the kind of support that wills the victory of the people of Iran.”
Iranian dissidents often cite lack of foreign support as a contributing factor to their nonsuccess in getting rid of the Islamic Republic. When it comes to defining the nature and the scope of such support, Western governments are mostly unclear and divided, dissidents argue.
“Western governments should not delay democracy and human rights by adopting confused strategies that are concerned with the continuation of the Islamic Republic's rule,” Mohammadi said.
Her words seem to be directed at Western leaders who consider it to be wiser –or see no alternative but– to deal with those who rule Iran as long as they’re in control.
“The policies and strategies of Western governments have been too superficial to give priority to the will of the Iranian people to achieve their goals,” Mohammadi said.
The Norwegian Nobel committee awarded Mohammadi for her "fight against oppression of women in Iran" and the promotion of human rights for all, in what has been read by some as a decision to aggravate the regime in Tehran.
Narges Mohammadi has spent much of the last decade in prison, serving multiple sentences on charges including spreading propaganda against the Islamic Republic. She was symbolically represented on stage in Oslo by a portrait of her and an empty chair.
Mohammadi’s husband, Taghi Rahmani, and their twins –who live in exile in France– attended and received the reward on her behalf.
The event, supposedly a universal source of joy for Iranians, became yet another trigger for heated debate on social media when Rahmani said in an interview on the sidelines of the ceremony that Iranians inside Iran do not want sudden change.
Some read this as a statement in support of Reformists and attacked Rahmani, accusing him of betraying his wife’s suffering and promoting the regime’s agenda.
Others, including some prominent voices on social media whose loved ones have been killed by the regime in recent years, created a double-hashtag (which would translate in English as #DeathToIslamicRepublic and #DeathToReformMovement) with no reference to Rahmani but coinciding with the event.
Taghi Rahmani, a renowned journalist and political activist, had spent more than 13 years in prison before he left Iran in 2012. He’s been a vocal critic of the Islamic Republic for many years but believes any sudden political change in Iran to be a “strategic mistake.”
Unlike his Nobel winning wife, Rahmani used his platform Sunday to decry foreign influence, citing the examples of the 2003 invasion of Iraq and President Donald Trump’s unilateral abandonment of the JCPOA nuclear agreement with Iran.
Mohammadi, although vague in her language, seemed to be welcoming –or even encouraging– outside help in her Nobel speech.
“It is expected that the global civil society provides more tangible support to the Iranian people's efforts towards democratic and non-violent transition to achieve peace, democracy, and human rights.”