Iran: Sorry State

Iran is a right old sorry state (of affairs).  Plunged into recession, inflationary pressure that Abenomics wouldn’t mind having a bit of and Bernanke might just be getting if he carries on printing the greenbacks at the rate they are churning out of the Federal Reserve faster than a Ford-T in 1908.

Iran: Hassan Rohani

Iran: Hassan Rohani

Anyone standing from the outside world looking in on Iran would have probably thought that elected President Hassan Rohani, the moderate cleric, would be a blessing for the country that has just decided to make a move away from the sorry state in which President Ahmadinejad has left the country.  But is that possible? Can the country be turned around?

Rohani won in a landslide victory on Saturday 14th June 2013. Outgoing President Mahmoud Ahmadinejad was legally prevented from holding a third-term of office after the last fiasco in election rigging in 2009 (he was elected with 63% of the votes). He probably didn’t act quickly enough or have access to international television; otherwise he might have taken a leaf out of the book of the Medvedev-Putin / Putin-Medvedev confidence trick of musical chairs.

Iran: Outgoing President

Iran: Outgoing President

Rohani gave his first press conference today after being elected on Saturday. He will take office at the start of August 2013.he has promised to answer the people’s call for wide-ranging reforms.

Ahmadinejad is the leader of the ‘Alliance of Builders of Islamic Iran’. But, it looks like he forgot one or two essential things to the building trade though. He forgot the bricks. He forgot the mortar. He forgot to build anything except inflation and recession, despite the wealth that the nation possesses. The US and the EU hot the country hard with economic sanctions, isolating them as they bid to become nuclear-active.

  • Inflation reached the dizzy heights of sometimes 30%. It is currently at over 23.6% today.
  • The Iranian currency (IRR) lost almost 70% of its value at its worst.
  •  In 2005, when Ahmadinejad took power, the exchange rate was 9, 000 Iranian Rials to the Dollar.

    Iran: Rial

    Iran: Rial

  • In 2012 it was over 12, 200 Rials to the Dollar.
  • Unemployment currently stands at 15.5% (2012) in a country which has a population of 75 million people (last census taken in 2011).
  • It has a GDP of $483 billion. GDP is predicted to increase to $598 billion (2014) and $676 billion (2015). Between now and 2016 it is estimated that it will rocket by $308 billion in total and reach $779 billion.
  • Health expenditure represents roughly 3.9% of GDP (since 2009). The USA spent 18% of its GDP (2011) on healthcare costs. Although money doesn’t always equate with quality, does it?
  • Education is roughly 4.7% of GDP (since 2009). In the UK and the USA that figure is just over 5.5% of GDP.
  • It has a labor force of 27 million people but 25% of them work in agriculture.
  • Approximately 20% of the population lives below the poverty line.

Will the changes that Rohani wants to bring in mean that the situation will be reversed for the Iranian people? Some experts believe that Iran is ready to shock the world. But transformations are not quick. Turning a dying economy on its head after years of pummeling it into the ground means that Rohani will have difficulty bringing about changes as rapidly as the people might expect. But, the oil reserves in Iran are estimated to be the third largest in the world (150 million barrels), although it is only the fourth largest producer in the world at the moment, with a total oil production of over 4 million barrels per day in 2011 falling to just 209 million in 2012. They certainly have the potential. They certainly have the population waiting to arm themselves with wealth from that petrol.

It’s doubtful if Rohani, despite his moderation (although let’s be honest, with the full-in-your-face competition from Mahmoud Ahmadinejad everybody would look moderate, even the world’s worst), will manage to draw Iran closer to the Western world. The Iranians are not going to go from Ahmadinejad to buddy-buddy relations with the west in one swoop. They are not going to hop off the roller-coaster to nuclear power acquisition and they are hardly likely to stop supporting Syria’s President, Bachar Al-Assad (for the moment). The Supreme Leader is still the Ayatollah Ali-Khamenei and that means national security and international relations are (in theory) still his domain. But the economy is that of the President. Bye, Bye, Ahmadi! Hello capitalism in Iran?

Can they do it?

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1 Comment

  • Pat

    Reply Reply June 18, 2013

    Just a quick note about Ahmadinejad, he did try to pull a page from the Medvedev-Putin / Putin-Medvedev playbook, with his boy Esfandiar Rahim Mashaei. However, the Guardian Council rejected Mashaei's application to run for the office.

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