February 22, 2023

Raisi in China, Dr. Mohsen Renani speaks out, record-setting inflation and more

Week of February 20th, 2023 | Iran Unfiltered is a digest tracking Iranian politics & society by the National Iranian American Council 

Raisi in China

On Tuesday, February 14, Iranian President Ebrahim Raisi arrived in China for a three-day visit. The visit was organized by Chinese President Xi Jinping on his official invitation and focused primarily on economic issues and the 25-year strategic cooperation agreement signed between the two countries in March 2021. 

Iran’s turn toward the East has brought it closer to China in recent years. Iran’s success in this area has included its membership in the Shanghai Cooperation Organization (SCO), which consists of China, India, Kazakhstan, Kyrgyzstan, Pakistan, Russia, Tajikistan and Uzbekistan. The Iranian government is also interested in joining BRICS, a group of countries that currently includes Brazil, Russia, India, China and South Africa.

Iranian security cooperation with Beijing has also increased, and Raisi wants to expand it. Iran and China participated in joint military exercises with Russia last year. 

However, while the Chinese president welcomed his Iranian counterpart to Beijing, he did not go to Iran during his recent trip to the Middle East. In December, Xi visited the region and called for “deepening relations” with Saudi Arabia. In a joint statement, China and Saudi Arabia urged for Iran to cooperate with the International Atomic Energy Agency as well as to resolve territorial disputes with the United Arab Emirates. In Tehran, the statement was received extremely negatively, and Raisi’s visit appears aimed at delivering more from the China relationship.

Dr. Mohsen Renani: “revolution from above” is the only remaining way for government

As Dr. Mohsen Renani points out in his recent article “The Fall”, published on February 16, four steps must occur in order for a company, organization, or political or social structure to fall. Regarding the Islamic Republic, Dr. Renani argued that it has passed the three stages of its fall, and it is currently in its fourth stage, and resistance, violence, and securitization will not stand in the way of a collapse. 

In such a scenario, Dr. Renani argues that the choices are between “revolution from above” and “revolution from below.” The government can still prevent a “collapse” by “revolution from above” even though it is on track for an eventual “revolution from below.” Notably, Dr. Renani argued that the opportunity for “correction from above” has passed.

Dr. Renani asserted that Iran would be a more advanced country today if the Qajar and Pahlavi governments had initiated serious reforms and reached an understanding with the revolutionaries.

Rather than suppressing and humiliating this generation, Renani encouraged the government to understand, respect and talk with the new generation to create a transformation in the government structure. With “revolution from above”, Iran’s development path will be much less costly.

Record-setting inflation

Tehran’s open market has reached a historical record of over 50,000 Tomans for each US dollar. The rate was also 53,500 tomans for a Euro and over 60,000 tomans for a pound. The rate last April was 26,300 Tomans to the dollar. In the first weeks of February, the dollar’s price increased by 11.31 percent, equivalent to an increase of 4,820 tomans in one month. 

The continued fall of the Iranian currency has pushed the price of gold coins in the Tehran market to increase by 122% since March 2022. Each gram of 18 carat gold now costs over 2,200,000 tomans.

The inflation has been consistent across recent weeks. In spite of the efforts of the country’s monetary institution, the Central Bank, to stabilize the currency price, the price of the American dollar has increased to a record-high rate.

As a result of the market turmoil, Mohammad Reza Farzin, Director General of the Central Bank of Iran, announced a new exchange method to combat the rising exchange rate. “With the establishment of the foreign exchange center, it will be possible to discover the exchange rate by paying attention to the sources of foreign exchange expenses and fundamental factors,” said Farzin. 

Based on a resolution of the Monetary and Credit Council, the center aims to “create price authority, increase the volume of official transactions, and ease access to foreign exchange and gold market applicants.” The center has two currency remittance halls, one for importers and exporters, and the other for the allocation of currency to those seeking medical treatment abroad, students, and travelers. The Central Bank plans to offer some of the foreign exchange resources previously offered through the NIMA currency market in the currency remittance hall; including steel currency, petrochemicals, food, and special products.

As a result of previous experiences, however, experts are not optimistic about these kinds of solutions.

More criticism of plan to sell state assets

Critics noted that the brokerage fee charged for the sale of government property in the recently-approved plan to sell state assets in manufacturing is 10 times greater than the brokerage fee charged for real estate.

A second criticism of the production decree concerns the bonuses and profits that should be awarded to sellers. In the past, experts have pointed out the astronomical fees associated with government property sales. Because of the high value of the property, the one percent fee for each assignment is regarded as a generous donation from people’s pockets. Following the decree, critics fear we may see more corruption in Iran’s economy in the future.

The government also listed charitable schools in the most deprived provinces of Kesho as surplus property to be on sale. The government has ignored donors’ gifts and efforts for the schools. According to the Mehrgiti Institute, selling these properties without the consent and permission of philanthropist benefactors is unlawful according to Shariah, morality, and law. The Mehr Giti organization has begun the process of pursuing this matter.

Mohammadreza Niknejad, an education expert warned “It has been heard that some schools and educational properties with a commercial position that can be sold and have significant customers are being overbuilt. Generally, the old schools that were built in the late Qajar and Pahlavi period are now located in the center of the city. The center of the cities is generally commercial and has a huge real estate value.”

At the same time, due to the severe shortage of schools, every year the government reaches out to school benefactors, thousands of newly built and old schools were placed as “surplus property” for sale on “Generating the State’s Assets” website. As a result, many schools were put up for auction in Khuzestan and Balochistan. (more than 200 schools in each province).

Planning to attract non-Iranian investors and innovators

A plan is being implemented to enable non-Iranian investors and innovators to receive certification services, SIM cards, insurance services, and establish companies. Additionally, authorities advertise that they will be able to enter and exit Iran with the same ease as Iranian nationals.

Mohammad Mokhber, Ebrahim Raisi’s deputy, announced the “Regulations for the Protection of Non-Iranian Elites” on Monday 13th. This regulation grants citizenship privileges to non-Iranian citizens who meet the conditions, with the exception of receiving Iranian citizenship and holding important government positions.

As stated by the vice president, non-Iranian elites eligible for employment permits and business licenses can also use all banking services available to Iranian citizens. There are millions of immigrants living in Iran, including a large population from Afghanistan. The plan is likely aimed at ameliorating concerns from immigrant business leaders at a time when many are migrating away from the country.

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