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April 22, 2020

Dangerous U.S.-Iran Encounters in Persian Gulf

Week of April 20th, 2020 | Iran Unfiltered is a weekly digest tracking Iranian politics & society by the National Iranian American Council


Official Says COVID-19 Deaths Higher than Official Figures

Iran’s Deputy Health Minister Iraj Harirchi has warned that the coronavirus outbreak is still not under control in Iran. While the government has allowed some businesses to reopen, Harirchi said the public at large should still stay at home.

Alireza Raisi, another deputy in the health ministry, said the real number of coronavirus infections and deaths in Iran is higher than official figures. He was responding to a parliamentary report that estimated at least 8,600 had died of the virus in Iran, roughly twice the official figure.

Raisi stated: “Given the limited number of tests, it is not possible to get an accurate number of those who have been infected in any country.”

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IRGC Blames U.S. for Military Encounter in the Persian Gulf

The IRGC’s naval force has released a statement censuring the U.S. over a recent close encounter between U.S. and Iranian military ships in the Persian Gulf. The IRGC statement blasted what it said was a “Hollywood-like” narrative given by U.S. officials and said “any miscalculation by the U.S. will be responded to decisively.”

Earlier, the U.S. Fifth Fleet released a statement accusing IRGC vessels of engaging in “dangerous” behavior close to U.S. military ships. The IRGC narrative said this was a “fake narrative” and claimed that “the continuation of unprofessional behavior by the terrorist naval forces of America in the Persian Gulf in recent weeks is threatening regional stability.”

According to U.S. military officials, the IRGC vessels responded to radio calls after one hour and then distanced themselves from the U.S. ships. Meanwhile, the IRGC statement said the U.S. ships were engaging in “unprofessional” behavior in recent weeks and alleged that U.S. military ships blocked the route of the Iranian vessel Shahid Siavashi on April 6th and 7th.

In response to this alleged U.S. action, the IRGC says it increased patrols in the Persian Gulf. The IRGC says that on April 15th, it sent 11 military ships to the area. 

The statement goes on: “They encountered the warships of America. Despite the unprofessional and provocative actions of the American terrorists and their inattention to our warnings, and with the courageous steadfastness of our forces, they [the U.S. military ships] were forced to move out of the way of the route of the IRGC’s naval ships.”

After this close encounter between U.S. and Iranian military ships, U.S. Secretary of State Mike Pompeo said Iran was “behaving in ways inconsistent with international law.” Pompeo added that the U.S. was “evaluating how best to respond and how best to communicate our displeasure with what took place.”

In April 22nd, U.S. President Trump threatened Iran in a tweet: “I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.”

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Foreign Ministry Says U.S. has “Stopped” IMF Loan Request

Iran’s Foreign Ministry Spokesperson Abbas Mousavi has said Iran’s $5 billion IMF loan request has been “stopped” by the United States. He stated: “We were informed that Iran being granted the IMF loan has been stopped because of the hostility of the U.S. and some other countries and based on fake excuses and baseless claims.”

Mousavi added that Iran was still trying to get the loan. He stated: “Consultations are underway. We have asked global organizations and institutions and the IMF to distance themselves from being politicized and we are hopeful that with these actions, we will get the benefits we need from these facilities.”

Speaking at his weekly press briefing, Mousavi also said that Iran was still open to “unconditional” negotiations with its neighbors in the Persian Gulf. He said that the coronavirus crisis was leading to greater cooperation globally, including in the Persian Gulf, and said this can be used to jumpstart negotiations.

He added: “Cooperation is a priority for Iran. With the Persian Gulf countries, in particular the one or two countries with which there is a misunderstanding, Iran is ready to engage in dialogue at any level and in any circumstances.”

Mousavi also discussed Iranian Foreign Minister Zarif’s trip to Syria this week. He said Zarif discussed a “wide range” of issues with Syrian officials and President Bashar al-Assad, including “developments in the region and on Syrian soil.”

Mousavi also said that the Astana peace process would still have its next meeting in Tehran. He said the meeting was postponed because of the coronavirus crisis. The Astana process peace talks include Iran, Turkey, Russia, and the Syrian government and some members of the Syrian opposition.

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Prominent Economist Gives Optimistic Economic Forecast

Saeed Laylaz, a prominent Iranian economist and former political prisoner, is optimistic about Iran’s economic growth forecast despite the coronavirus crisis. In a far-reaching interview, Laylaz discussed Iran’s current economic conditions and prospects for the country’s economy and U.S.-Iran negotiations.

Laylaz forecast that Iran will not experience a major recession in the current Iranian year due to the coronavirus crisis. He disagreed with a recent IMF forecast that projects Iran’s economy will shrink by six percent this year, saying that the trends that contributed to Iran having economic growth the previous year will continue.

According to Iran’s Central Bank, the country’s economic growth rate, not counting its oil industry, was 1.3 percent for 1398 (March 2019-March 2020). According to leading Iran-focused economist Djavad Salehi Isfahani, Iran began showing signs of economic recovery in 2019, as employment increased alongside domestic production. Other U.S.-based analysts have reached similar conclusions.

Laylaz echoed President Rouhani’s assessment that Iran could experience economic growth this year. Rouhani said during his most recent weekly cabinet meeting that the “economy and peoples’ livelihoods” this year will be “better than last year.”

Laylaz said that Iran’s economy rebounded strongly towards the last half of the previous Iranian year: “Our non-oil economic growth was positive starting from last Fall and in such a way that by the end of the year (March 2020), the entire recession from the previous year, including in the oil sector, was made up.”

He added that Iran could experience economic growth this year despite the coronavirus crisis: “It is not unlikely at all that just like 1398, when many people said that Iran’s growth rate would be negative but ultimately it was positive, that this year too the growth rate will be positive.”

Laylaz said that the coronavirus crisis will have less of an economic impact on Iran than elsewhere: “The damage that the coronavirus has caused Iran’s economy is less than what it has caused to Western economies. Iran is among the countries in the world that will bear the least economic impact from the coronavirus.”

Laylaz explained: “Because of the low productivity of our economy and the fact that it is isolated, in general our economy is less vulnerable compared to countries like France, Britain, United States or even the Persian Gulf countries. For example, Saudi Arabia’s dependency on oil exports, which there is less of a global demand for, is far higher than Iran. Saudi Arabia will have a far more difficult year than Iran ahead.”

Laylaz said that the collapse in oil prices removes any reason for Iran to negotiate with the United States. Notably, Laylaz is associated with reformists and moderates inside Iran and was imprisoned for three years after the 2009 Green Movement.

Laylaz stated in this regard: “Today, the collapse in the global price of oil is such that, first, there can be no expectation that in the next two or three years, Iran’s oil exports will return to a daily 2.5 m barrels of oil, and second, even if it reaches this amount, it won’t have any economic benefit for the country.”

Laylaz added regarding prospects for U.S.-Iran negotiations: “Any motivation or feeling of compulsion that we would have to reach a compromise with the U.S., even if it were possible last year, will decline this year. We cannot think that if there is a compromise between Iran and the U.S., the situation will improve.”

Laylaz then said that Iran should “lean on itself” and the country’s officials should focus on “domestic production and solely rely on the domestic economy.” He further said: “If before this there was hope for a compromise with the U.S. to resolve issues, the collapse of the global price of oil has destroyed this.”

Laylaz went on to say that Iran may achieve economic growth this year despite the coronavirus crisis: “Given the support policies of the government, which in my opinion were timely and appropriate, I am optimistic that we will have positive growth starting from this summer.”

Laylaz said that Iran’s main economic challenge now was not sanctions but corruption and other issues: “The economic problem in our country, as has been shown in the period of sanctions and before sanctions, is an internal problem. The problem of corruption, mismanagement, a lack of cohesion and poor productivity are among the problems [the economy faces].”

Laylaz said that Iran’s economic forecast will be worse if it starts negotiations with the United States: “Our current situation is very difficult. But the future will not be as difficult and will be brighter. I do not mean five or ten years from now, but by the end of this year. If the Islamic Republic system does not remain steadfast against the U.S., the economic forecast will be worse than today.”

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Government Audit Spurs Controversy

A top oversight body has spurred controversy by finding that $4.8 billion of government funds has not been accounted for. On April 14th, Iran’s Audit Court, an oversight body within the parliament, said in a report that the fate of $4.8 billion from the budget for the Iranian year 1397 (March 2018-March 2019) was unknown.

President Rouhani and senior officials in his administration have criticized the report and denied that the money has been “lost.” According to the audit report, the money was part of $31 billion the administration had allocated to give to importers at a cheaper government-subsidized exchange rate.

The Iranian currency began depreciating dramatically in late 2017 as the Trump administration signaled its intent to renege on the nuclear deal. The depreciation of the currency led the government to create a separate subsidized exchange rate in addition to the free-market rate. The government-subsidized rate was set at 42,000 rials to a dollar, which would be offered only to importers of “essential goods.” The free-market rate has skyrocketed in recent years, at one point nearing 200,000 rials to a dollar.

The audit report now states that no foreign goods have been imported with $4.8 billion of the $31 billion allocated for the government-subsidized exchange rate in 1397.

The Audit Court is tasked with finding discrepancies in the allocation of the national budget that is set by the presidential administration every year. However, President Rouhani, in denying that the $4.8 billion has been “lost,” said the Audit Court should also exercise oversight over other institutions, including “the judiciary, the legislature, and military, revolutionary and cultural institutions,” whose budgets are not audited.

President Rouhani has said that the Audit Court did not consult with his administration prior to releasing the report. Rouhani’s chief of staff Mahmoud Vaezi has blasted the report as being “inaccurate” and “one-sided.”

Central Bank Chief Abdolnaser Hemmati has said that most of the $4.8 billion has been used to import goods. Hemmati said the report is based on data from last November and that as of now only $1.5 billion of the money has not been accounted for.

Hemmati stated that the money was not “lost” just because no foreign goods had yet arrived for it. He said there were delays in some imports due to different factors, including “sanctions blocking imports, the goods taking a while to build and arrive, or customs issues.”

However, Hemmati also said that $1.5 billion of the money was given to importers who have failed to follow through on their commitment to import the necessary goods. Judiciary chief Ebrahim Raisi has said this issue will be investigated, which Rouhani’s chief of staff supports.

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Friday Prayer Imam Resigns

The Friday Prayer Imam of the city of Iranshahr in Iran’s Sistan and Baluchistan province has resigned. Shojaholdin Abtahi spurred controversy after he posted a video online showing him handing out cash to unemployed workers. His resignation has been accepted by Iran’s “Policymaking Council of Friday Prayer Imams.”

In the video, Abtahi is sitting in the passenger seat of a car and asking people how many children they have. He then hands out cash to several people.

Abtahi’s driver is filming him and says that he is giving cash to “day workers” who are unemployed. The driver says he is doing this so “they don’t return empty handed home tonight and become ashamed in front of their wives and children.”

Abtahi’s actions created controversy in Iranian social media. Many said his actions were “humiliating,” damaged the “honor” of the workers, and were aimed at “self-promotion.”

The Islamic Republic newspaper also strongly rebuked Abtahi. Masih Mohajeri, the newspaper’s editor-in-chief, said Abtahi’s actions were “against religious law” and “far from moral principles and human dignity.”

Mohajeri added: “Many of our Friday Prayer Imams speak well and like to serve God’s creation and the people appreciate them. But some of them seemingly think of themselves as being the principals of religion.”

In his resignation letter, Abtahi said his intention was to help the workers and apologized to the people of Iranshahr “if his actions had bothered them.” Notably, Sistan and Baluchistan is one of Iran’s poorest provinces.

Public Friday Prayer ceremonies in Iran have not been held since the middle of February because of the coronavirus outbreak.

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IRGC Launches Satellite into Space

The IRGC has reportedly successfully launched a satellite into space. The “Noor” satellite has been described as Iran’s first “military” satellite.

Amir-Ali Hajizadeh, the head of the IRGC’s Aerospace Force, gave the specifications of the rocket that launched the satellite. The satellite was launched with the “Ghased” rocket, which is a three-stage rocket that uses a combination of solid and liquid fuel.

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