(Cairo = Yonhap News) Correspondent Kim Sang-hoon = All-round economic pressure, including the United States' long-term maritime blockade and 'secondary boycott' (third-party sanctions), is pushing the Iranian economy to the brink, Reuters reported on the 4th (local time).
The value of the currency plummets to an all-time low every day, prices soar nearly 70%, and the economy of the common people is on the verge of collapse.
Recently, the value of the Iranian rial exceeded 2.2 million rial per dollar. This is less than half of what it was a year ago (1 million rials per dollar). Inflation is also fatal. The 12-month average inflation rate is 69.9%, and the price increase rate of daily necessities such as food, beverages, and cigarettes is nearly twice that rate.
The average monthly salary of workers is about $125 (about 170,000 won), which is less than one-third of the basic household living expenses calculated by the government ($450 per month).
Even the job market froze, with the official unemployment rate jumping to 9.1% this spring and the number of employed people plummeting by about 450,000 compared to the same period last year. “We are becoming poorer every day,” Mahnaz (34), who works at a private company in Tehran, told Reuters.
“We are becoming poorer every day,” a Tehran office worker told Reuters.
Beyond the surge in table prices, the humanitarian crisis is also serious. Medicines and food are exempt from sanctions, but due to excessive compliance by global banks, which are avoiding payments due to concerns about US sanctions, even imports of essential medicines for cancer patients and others are virtually cut off, increasing the suffering of the people's livelihood.
◇ Tight money line… Crude oil exports plummet to 260,000 barrels per day
These economic difficulties resulted from the United States' tight network of sanctions that blocked Iran's access to the dollar. As the secondary boycott, which sanctions third-country companies, was launched, the import of essential goods and the payment network for crude oil sales were blocked.
The Iranian leadership, which in the past used shell companies, unregistered oil tankers, and smuggling to circumvent sanctions, also faced limitations. This is because the fees (premium) required for illegal bypass have soared, making it difficult to maintain a sanctions evasion network.
According to Kpler, a raw materials analysis company, Iran's crude oil shipments this month fell sharply to 260,000 barrels per day, about 15% of the 1.7 million barrels per day a year ago. Only a very small amount is exported via trucks, trains, and small ships in the Caspian Sea.
To make matters worse, even the United Arab Emirates (UAE), a key trading hub, suspended all commercial and financial transactions with Iran last month.
Iranian President Massoud Fezezhikian also admitted that overall trade volume had decreased by about 25 to 35 percent due to the hit to the import sector.
A trader in Tehran said, “As the UAE route is blocked, we have to bypass other countries, which delays delivery and makes imports much more expensive.”
◇ Protests will reignite... ‘Hold on’ by supporting China and Russia
The fact that an economic collapse could lead to an explosion of public sentiment is the biggest source of anxiety for the Iranian leadership. There are still aftershocks from the massive anti-government protests last January that left thousands of people dead. A high-ranking Iranian source conveyed a sense of internal crisis, saying, "Despite domestic oil production, we only have two months' worth of gasoline inventory left, which means we have to rely on imports due to a lack of refining facilities."
The United States is trying to induce an internal uprising in Iran through economic pressure and gain an advantage in future negotiations.
However, Iran is maintaining a strong stance of resistance, targeting the US administration's inflationary burden ahead of the midterm elections in November.
China and Russia are behind Iran's ability to withstand the U.S. sanctions network. They are trying to extinguish urgent fires by selling crude oil at low prices to small Chinese oil refineries that are not subject to Western sanctions, and are actively using Russia, with which they have been in close contact since the Ukraine War, as a way to bypass sanctions, thereby gaining some breathing space.
Recently, the United States and Iran have escalated tensions by exchanging blows against U.S. military bases in the Gulf Coast and Arab countries.
Iran claims that it still controls the Strait of Hormuz, but some analyzes say that Iran's military pressure card is gradually losing its power as international energy logistics are maintained through bypass routes.
Ali Ansari, a professor at the University of St. Andrews in the UK, predicted, “Iran is losing control of the Strait of Hormuz under severe economic pressure,” and added, “In the end, they will have no choice but to negotiate.”
