Iran's national security adviser has warned that the rapidly deteriorating economy has pushed the country into one of the most difficult periods in its history.
The Secretary of the Iranian Supreme National Security Council, Mohsen Rezaei, made this rare declaration during a high-level government meeting to discuss ways to achieve economic stability, after more than seven months of war, according to what the New York Times reported.
The Iranian currency (riyal) has plunged since the United States and Israel launched war on Iran in February. This decline has accelerated sharply in recent weeks, after the United States tightened sanctions and imposed a naval blockade. This led to a rise in the cost of imports and exacerbated the years-long high-cost crisis, which sparked nationwide protests in December, before security forces violently suppressed them, resulting in deaths.
Analysts say that the US naval blockade has also largely prevented Iran from exporting oil, depriving the country of its main source of revenue and leading to a fuel crisis.
Oil Minister Mohsen Paknejad resigned on Sunday, after he had said in July that Iran would continue to export oil despite US sanctions. Seyed Mehdi Tabatabai, spokesman for President Masoud Pezeshkian, said on social media that Hamid Bouvard, CEO of the National Iranian Oil Company, will take over Pakinejad's duties temporarily.
In recent days, employees in the government and private sectors, including nurses and teachers, have taken to social media to announce their resignation from their jobs, saying that their salaries are no longer enough to support them. Local Iranian media reported that retired government employees have organized protests over the past few weeks, saying they have not received their full pensions.
In addition to Rezaei, the government meeting included President Masoud Pezeshkian and other senior Iranian ministers, according to official media.
Iranian official news agencies did not report Rezaei's statements directly. But the official Iranian News Agency (IRNA) reported that he “described the conditions as among the most difficult periods the country has gone through,” and told the meeting that the Iranian National Security Council would provide all the support it could.
Pezeshkian acknowledged the deteriorating economic conditions in a statement he posted on social media on Saturday, and said that the government “adopted a new approach to managing special circumstances.” But he did not explain what that meant in practice.
Economic pressures on Iran have increased as negotiations between Tehran and Washington faltered, at a time when both sides refuse to make concessions, and each sends signals that it is able to bear the economic pain for a longer period than the other.
In recent weeks, American officials have said that they are making progress in the economic confrontation. Recent data showed that oil shipments from the Middle East have almost returned to pre-war levels.
But oil prices are still higher than they were before the conflict broke out, and some analysts have warned that the crisis facing the global economy is still far from being resolved. Crossing the Strait remains risky, and damage to energy infrastructure has limited refining capacity and natural gas exports. Analysts believe that Iranian leaders hope that the pressure will harm President Donald Trump before the US midterm elections.
In addition to the blockade, the United States disrupted most civil air traffic between Iran and the rest of the world, adding a new layer of economic isolation, which some sanctions experts said could harm essential imports, including medicines.
* New York Times service
Iran is facing increasing economic pressure due to the repercussions of the war and US sanctions, at a time when the value of the riyal is declining, the cost of imports is rising, and the cost of living crisis is worsening. These developments come as the government struggles to maintain the flow of revenues, amid restrictions on oil exports, and a tightening naval blockade of Iranian ports.
The crisis also affected vital sectors, with increasing complaints about poor salaries and delayed pensioners’ entitlements. In an indication of the difficulty of the situation, Iranian officials acknowledged the deterioration of economic conditions, warning that the country is going through one of its most difficult stages. The continuation of the war and external pressures further complicate Tehran's options, as it looks to ease international sanctions and restore economic stability.
While Washington asserts its control over the Strait, the Iranian Revolutionary Guard escalated its tone, announcing the imposition of navigation rules in coordination with the Sultanate of Oman, and threatening to target ships that violate it. In parallel with the escalation on the ground, attention is turning to a diplomatic move led by Pakistan, with the support of the United Nations, to revive peace talks between Tehran and Washington, amid worsening economic pressures on Iran.
The alleged withdrawal of American forces
In light of this atmosphere, the Iranian Revolutionary Guard claimed that American forces withdrew to a distance of more than 1,000 kilometers from the Iranian border, and that American ships were absent, for the first time, from the waters of the Gulf, the Strait of Hormuz, the Sea of Oman, and the northern Indian Ocean.
Ali Fadavi, one of the leaders of the Revolutionary Guards, said in statements to state television on Monday that this withdrawal was not an American choice, but rather came as a result of what he described as the strength of the ground forces of the Revolutionary Guards.
He added that the United States failed to achieve any of the goals it set for the war, stressing that the Strait of Hormuz has been under Iranian control for several months.
In a related context, Fadavi said that Tehran, in cooperation with Muscat, has established new rules for navigation in the Strait, and has begun implementing them, despite Washington’s attempts to influence the situation in the region. He noted that ship captains are forced to use the southern part of the strait due to insurance obligations and financial requirements, but warned that ships taking this route could face “actions” from the Iranian armed forces at any moment.
These statements come at a time when the United States continues to assert that it controls the Strait of Hormuz, in light of the competition between the two parties to impose navigation arrangements in one of the most important strategic sea lanes in the world.
Expanding the range of missiles
Fadavi's statement is in line with what Iranian army spokesman Mohammad Akrami Nia announced on Sunday, that his country intends to increase the range of its missiles, in response to field developments and the deployment of American forces near its coast.
Akrami Nia said, in statements reported by Fars News Agency, that the war demonstrated the necessity of expanding the range of Iranian missiles, adding that Tehran had already begun taking steps in this direction.
He pointed out that American forces are currently stationed up to 1,000 kilometers from the Iranian coast, which, according to Iranian statements, reflects the magnitude of the changes that the confrontation imposed on Tehran’s military calculations.
On the ground, the escalation was reflected in a new maritime incident, after the British Maritime Trade Operations Authority reported, on Monday, that the “Revolutionary Guard” threatened to target an oil tanker while it was crossing the Strait of Hormuz, and ordered it to turn back, which the ship’s captain complied with.
The authority said that the tanker, which was heading into the strait, received a warning from the Revolutionary Guard that it must return, otherwise it would be targeted, stressing that its captain reported that he complied with the order. The incident occurred 11 nautical miles north of the coast of Khasab in the Sultanate of Oman.
The strait, through which about a fifth of the world's energy supplies passed before the war, had become a major axis of the conflict that broke out on February 28, with the start of the American and Israeli attacks on Iran.
Since then, Tehran has been obstructing navigation in the waterway and firing at ships it accuses of using unauthorized routes, while Washington imposes a naval blockade on Iranian ports in response.
The blockade exacerbates the economic crisis
In parallel with the military and naval escalation, economic pressures on Iran are increasing, in light of the decline in the value of the riyal, the acceleration of the high-cost of living crisis, the continuation of the US naval blockade, and the tightening of sanctions.
Since the outbreak of the war on February 28, the Iranian currency has lost a large part of its value, while its decline has accelerated in recent weeks, with Washington tightening its measures against Tehran and continuing the blockade on its ports, which raised the cost of imports and exacerbated the burden of living.
Analysts believe that the US blockade has greatly limited Iran's ability to export its oil, which represents the main source of state revenues. This contributed to the exacerbation of the fuel crisis inside the country.
The isolation measures were not limited to maritime trade, as the United States imposed restrictions on most civil aviation flights between Iran and the rest of the world, in a move that added more pressure on the Iranian economy and affected the country’s ability to import its basic needs.
The crisis affected social conditions, as employees in the public and private sectors, including nurses and teachers, announced via social media platforms that they were leaving their jobs due to their salaries being insufficient to cover living expenses.
Local Iranian media also reported that retired government sector workers have organized protests in recent weeks, demanding the full payment of their retirement benefits.
Guterres is in Islamabad to mediate
On the diplomatic track, the Secretary-General of the United Nations, António Guterres, is visiting Islamabad, for 4 days, to support Pakistani mediation efforts between the United States and Iran, and to discuss ways to strengthen negotiations aimed at ending the conflict.
Guterres left New York on Sunday evening, heading to the Pakistani capital, at the invitation of the government, on a visit that focuses on Islamabad’s role in bringing the views of the two parties closer together, in addition to a number of other issues.
The Secretary-General is scheduled to meet Pakistani Prime Minister Shehbaz Sharif, Deputy Prime Minister and Foreign Minister Ishaq Dar, and President Asif Ali Zardari, as well as senior government officials.
In statements to the Associated Press of Pakistan, United Nations spokesman Stephane Dujarric praised the role played by Islamabad in international mediation, noting that Pakistan used its diplomacy and efforts to bring the parties to the dialogue table when it was needed most.
Dujarric said that the Secretary-General has witnessed, over the years, Pakistan’s contributions to supporting the efforts of the United Nations, whether by sending individuals to work under its banner or by employing diplomacy and mediation to bring the conflicting parties closer together.
Guterres had repeatedly praised the extensive diplomatic efforts made by Pakistan regarding the conflict in the Middle East, which resulted in a memorandum of understanding that paved the way for a ceasefire.
The Secretary-General is expected to leave Islamabad to return to New York next Thursday, at a time when Pakistani and international efforts continue to push Washington and Tehran towards resuming negotiations, amid continuing military and naval tension and the worsening repercussions of the war on the Iranian economy.
