2024-04-22 01:25:00
Publish a websiteDeutsche Welle“One report dealt with tensions between Iran The Israeli occupation and its potential impact on Economy Iranian, stressing that geopolitical conflicts and tensions between the two countries might lead to a deterioration of the economic situation in Iran, particularly with slowing economic growth and high inflation.
The website says, in this report, translated as “Arabi 21”: While the United States and the European Union are considering new economic measures once morest Iran, the latter is asserting its flexibility in the face of the Western boycott, according to the government of Iran. TehranThe country has exported larger quantities of oil than ever over the past six years, despite massive sanctions imposed by former US President Donald Trump in 2018.
Last month, Iranian Oil Minister Javad Ochi said: Oil exports “reached more than $35 billion” in 2023, as quoted by the Financial Times; While Iran’s enemies want to stop its exports, “today we can export oil wherever we want with minimal discounts.”
Billions of dollars in oil revenues play a vital role for the Iranian regime in maintaining its control over the country. A large part of the population is suffering from the impact of international sanctions, which have led to a decline in the value of the national currency, according to the report.
High inflation rates
The website noted that the inflation rate in Iran has recently reached new levels. It reached regarding 40% in February and, according to Javad Salehi Isfahani, an economics professor at Virginia Polytechnic Institute and State University, any worsening due to escalating geopolitical tensions will only lead to an increase in consumer prices, highlighting that the US dollar has risen. by around 15 percent once morest the Iranian riyal has depreciated in recent weeks, amid expectations of an escalation of the conflict with Israel.
According to the Middle East business expert, this drop in the exchange rate very quickly translates into a rise in prices. Since Iran imports many types of goods, many of the goods it produces in Iran also contain an import component.
Oil: main producer of money
The website explains that the main contributor to Iran’s GDP in 2022 is the services sector, with 47%, followed by industry (40%) and agriculture (12.5%), according to the German data provider Statista.
Most of the industrial sector’s revenue comes from the oil industry, with more than 90% of crude oil shipped to China, and Western sanctions have had little impact on Iran’s oil trade with Beijing.
After the initial shock following Trump’s sanctions in 2018, Iran returned to 80% of its previous export volume, and most experts attribute this to the easing of sanctions since the inauguration. US President Joe Biden.
According to Salehi Al-Isfahani, the Iranian economy has already grown, partly due to increased oil exports, and the increase in GDP is around 5 percent per year, which is not poorly compared to what happened in the region in general following Covid-19. pandemic.
Corruption and lack of transparency
The website reports that it says: Large amounts of Iranian state revenue disappear into opaque government structures, and Transparency International’s Corruption Index ranks Iran 149th out of 180 countries.
It says: The IRGC and several religious organizations control central parts of the economy, they pay no taxes, do not have to submit balance sheets and are primarily responsible to the head of state and supreme commander of the Iranian Armed Forces, Supreme Leader Ayatollah Ali Khamenei.
Although revenues from oil exports have become increasingly stable in recent years, Iran is not a strong economic competitor and its population is around 88 million, regarding ten times larger than Iran. Israel, which however has 9 million inhabitants. Its GDP in 2022 is much lower than that of Israel.
Protecting the oil industry
The website points out that Iran’s ability to continue the war with Israel depends largely on whether new Western sanctions will significantly reduce Iranian oil exports.
In the first three months of the year, Tehran was able to sell an average of 1.56 million barrels of crude oil per day, and according to data provider Vortexa, this is the largest volume since the third quarter 2018, according to the report.
According to Fernando Ferreira, head of the geopolitical risks department at Rapidan Energy Group in the United States, “the Iranians have mastered the art of circumventing sanctions.”
Salehi-Isfahani believes that Iran is “not ready” to endure a prolonged military conflict, which is why it has been careful not to get involved in the war in Gaza and, rather than having the intending to cause harm, his attack on Israel was more symbolic.
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