While in Kuwait as part of his Middle East tour, Iran’s Foreign Minister said that none of its neighboring Arab states would allow Israel to use their territory or airspace for any planned attack on Iran.
"All of our neighbors have assured us that they will not allow their territory or airspace to be used against the Islamic Republic of Iran," Abbas Araghchi stated in a press conference.
As part of his regional mission, Tehran's top diplomat has been intensifying efforts to rally support from Arab nations in response to the looming threat of an Israeli attack, visiting about a dozen states.
Iran’s diplomatic outreach to its neighbors has intensified following its own missile strike on Israel on October 1, during which over 180 missiles were launched. This marked the second missile strike initiated by Tehran against Israel this year. Israel has said it will retaliate against the missile barrage and is preparing its military for such an eventuality.
Iran's attack followed Israel’s assassinations of top leaders of militant groups backed by Iran, including those of Hezbollah and Hamas, and the Islamic Revolutionary Guards (IRGC).
As Tehran continues its efforts to engage with its neighbors, a report by the US-funded news outlet Alhurra this week cited a senior Israeli source stating that Arab nations along the Persian Gulf have urged Israel to deliver a decisive blow to Iran.
The report further suggested that the Arab nations also view this moment as an opportunity to weaken Tehran through support of Israel’s military actions.
Arab nations are aware that Iran could retaliate against their oil facilities if they are seen as supporting attacks on its oil or nuclear sites by Washington or Tel Aviv – particularly, in light of the 2019 Saudi Aramco attacks, which inflicted significant damage on the kingdom's oil-dependent economy and were widely attributed to Iran. Their willingness to engage with Iran in recent weeks could be an attempt to lessen the likelihood of any Iranian hostile act during tit-for-tat attacks with Israel.
Iran's Foreign Minister, however, claimed there is a shared understanding to prevent tension and escalation.
"The Islamic Republic of Iran does not seek war in the region, although we are prepared for war. We have made every effort to reduce tensions, but we are both ready and capable of confronting any scenario,” Araghchi stated.
The foreign minister of the Islamic Republic, which has faced accusations of international crimes since coming to power in 1979, also expressed hope that international laws would prevent Israel from attacking its nuclear facilities.
He further claimed that "all the countries" in the region have informed Tehran of their opposition to any attack on Iran, particularly targeting its nuclear infrastructure.
"I emphasize again, however Israel attacks Iran, Iran will respond in kind," he said.
The data shows that these entities were the primary recipients of foreign currencies from the Central Bank that is the repository of US dollars, euros and other stable currencies importers need to conduct business. As large-scale currency trading is controlled by the government, it has set up various rates. For essential imports it provides dollars at half the free market rate, subsidizing food and medicines.
Meanwhile, customs data reveals that the majority of the country's exports come from government-controlled petrochemical, steel, oil and gas products, indicating the gradual exclusion of the private sector from Iran's foreign trade.
The latest Central Bank statistics show that since the beginning of the current fiscal year (March 20), a total of $37.2 billion has been allocated for the import of goods.
On October 15, Mohammad Rezvani-Far, the head of Iran's Customs Administration, announced that during this period, non-oil exports reached $29.5 billion, while imports amounted to $37 billion.
The key point here is that the Central Bank recently reported that in the first half of the current fiscal year (March 20 to September 20), it allocated $32.4 billion to the ministries of Industry, Agriculture, and Health for imports. Customs data also shows that the total value of imports in the first six months of this fiscal year was $32.5 billion. In other words, the private sector has been effectively sidelined from the country’s import activities.
The Central Bank plans to allocate a total of $55 billion to the ministries of Industry, Agriculture, and Health for imports during this fiscal year. Last year, Iran imported $66.2 billion worth of goods, $1.9 billion of which was gold bullion. If Iran's imports remain at last year's level, 85% of the total imports will be handled by the three government ministries, leaving only 15% to be managed by other government and semi-governmental entities, including the Islamic Revolutionary Guard Corps (IRGC) and the real private sector.
Approximately, $8.13 billion of the foreign currency allocated by the Central Bank for the import of food and medicine was provided at the rate of 285,000 rials, or less than half of the free market rate. The rest was supplied at higher, but still preferential rates. The remaining imports were made at the free market exchange rate, which stood at around 600,000 rials per dollar.
Central Bank and customs data show that the real private sector lacks access to the government's subsidized currency at the rate of 285,000 rials and has very limited access to the higher preferential rate. As a result, the private sector must rely solely on the free market exchange rate to import goods, severely limiting its ability to compete.
$7 Billion Trade Deficit in the First Half of the Year
Iranian customs data indicates a $7 billion deficit in the country’s non-oil foreign trade during the first half of the current fiscal year.
Last fiscal year, Iran’s non-oil trade deficit also reached an unprecedented figure of $17 billion. Customs data shows that in the first half of the current year, non-oil exports amounted to $25.8 billion, while imports reached $32.5 billion.
Although Iran earns revenue from oil exports, capital flight from the country is also significant. Since 2018, coinciding with US sanctions, Iran's capital account has been negative.
For instance, last year, Iran exported $36 billion worth of oil and oil-related products, and the overall trade balance of the country was a positive $18 billion. However, the latest Central Bank report indicates that during the first nine months of last year, over $20 billion in capital fled the country.
Additionally, Central Bank data shows that Iran's service trade balance is consistently negative by around $7 to $8 billion each year.
It is unclear exactly what the state of Iran’s foreign currency reserves is, given the trade imbalance and widespread capital flight. However, in an effort to slow the decline of the rial, the Central Bank has been forced to inject large amounts of foreign currency into the market.