Reporting by PMOI/MEK
Iran, May 10, 2020—Relative to the U.S. dollar, the Iranian rial has lost 600 percent of its value since the mullahs took power in 1979. In recent days, Tehran initiated a plan for dealing with this situation: just drop four zeros so an exchange rate of 150,000-to-one becomes a mere 15-to-one.
The plan is an excellent example of the regime’s economic savvy—or lack, thereof—in the sense that it will have absolutely no effect other than the perpetuation of empty propaganda. The artificial change in the exchange rate comes with a change in the name of Iran’s main currency, and it is expected to take about two years to complete. That could be time enough for continued mismanagement of the national economy to erase even the superficial impact of the change.
In 2022, ordinary Iranians may find themselves struggling to purchase vital necessities with a few thousand tomans, rather than a few thousand rials. Even in the best-case scenario, the individual bills and coins in their pockets will carry more value, but their actual household purchasing power will remain unchanged, if not diminished.
But it’s far more likely that the slide into hyper-inflation will continue unabated. For that trend to reverse, the regime would need to dramatically alter its economic policies, and there is just no sign of the mullahs even considering this as a possibility. At a time when the coronavirus pandemic has greatly amplified the nation’s challenges, the regime’s only input for the Iranian people seems to be, “You’re on your own.”
Government support to the public has been virtually non-existent, and the predictable result of that situation is that huge swaths of the country’s 83 million people are now returning to work and putting themselves at severe risk of infection, hospitalization, and death. Sadly, many have no other alternative. Self-serving government policies have left them struggling to make ends meet while the authorities spend lavishly on pet projects and regional force projection.
Even in the middle of the pandemic, that spending hasn’t ceased to be a priority. And that is unlikely to change any time soon. Rather than freeing up available assets to help the Iranian people, leading authorities are actually keeping hundreds of billions of dollars in reserve, as backup for the financing of regional terrorist groups, the further development of ballistic missiles, and a range of other malign activities that define the economic interests of the Islamic Republic.
Broadly speaking, these activities serve the same purpose as the pending shift from an exchange rate based on the rial to one based on the toman. They give the false impression that Tehran is impervious to Western pressure, that it is capable of standing toe-to-toe with the U.S.
Iranian officials hope that two years from now, their supporters will take a fleeting look at the value of the toman and declare that Iran’s “resistance economy” has pulled right up alongside the economy of the United States. To them, it won’t matter whether the numbers represent anything real. It won’t matter whether a majority of Iranian youth remain unemployed. It won’t matter what they can actually buy with their sparse, over-valued tomans. It won’t even matter how many Iranians died during the coronavirus pandemic in order to support the propaganda that said the nation’s economic activity was proceeding undaunted.
But this raises questions about just how long the Iranian regime can ignore the disconnect between its own defiant reputation and the actual conditions on the ground. Presently, the mullahs’ strategy for maintaining their hold on power seems to depend on simply looking past the Iranian people and hoping that they will continue to function as pawns. Yet recent history indicates that this isn’t likely, and that continued disregard for the welfare of those people could spell doom for the regime.
Already, the regime has been rocked by two nationwide uprisings in as many years. Both of them were focused on the regime’s economic mismanagement. And at a time when some Western pundits were warning that economic sanctions would push Iranians to align behind their government, both uprisings sent a strong message about who they blame for their economic woes.
It is solely Tehran’s decision to prioritize terrorism and military development over the public welfare. The Iranian people know this, and a growing number of international policymakers are coming to understand it, as well.
If, two years from now, the regime points to a five-to-one exchange rate as a sign that Iran’s has overcome US pressure once and for all, it should be the extremely easy to point at conditions inside the Islamic Republic as evidence that the mullahs’ leadership is as damaging as ever. In all likelihood, those conditions will include domestic unrest on par with that of the 2018 and 2019 mass uprisings. And in time, Tehran’s resistance to the will of its own people will prove just as illusory as its resistance to the mounting pressures of diplomatic and economic isolation.