Analysis by PMOI/MEK
Jan. 12, 2019 - In the draft budget for the upcoming Persian year (March 2019-March 2020), the Iranian regime has earmarked $800 million to deal with the crisis caused by fraudulent practices of credit institutions that have stolen billions of dollars out of the pockets of the Iranian people in the past years.
$800 million is not a small sum, given that the government’s budget will be smaller than previous years, where the regime was selling oil at more than 2 million barrels per day. The sum allocated to dealing with the financial crisis is in fact larger than the budget of some of the country’s ministries.
But this is a situation that the Iranian regime has brought down on itself, and there’s little chance that $800 million—or even double that amount—will help solve the problems the regime is dealing with. In 2017, several credit institutions suddenly filed for bankruptcy. These were institutions that had absorbed billions of dollars from Iranian investors with trumped up promises of huge returns of investments.
Interestingly, all of the institutions had been working for years and had received permits from the Ministry of Cooperatives, Labor, and Social Welfare. Caspian, one of the bankrupt institutions, had even received a permit from the Central Bank. All of them were functioning will little or no transparency and official government oversight. Some of them had dozens of branches and thousands of customers in different cities across the country.
The question is, how is it that so much financial corruption and illegal activities could continue for such an extended period of time and without government intervention. The reality is that Iranian authorities, the people who are supposed to protect the people against such fraudulent activities, are complicit in these financial crimes and benefit from them.
The collapse of the financial institutions in 2017 triggered protests by investors in several Iranian cities that have continued to this day. The Iranian regime is finding itself increasingly incapable of containing and quelling these protests, especially as they have merged into widespread protests of various segments of the society over economic woes and government corruption that started across the country in late 2017.
Fearing the situation spinning out of control, the regime has frantically resorted to different measures. Last summer, the Iranian regime had to spend $300 million to keep the institutions afloat. It has also taken other measures, such as merging the collapsed organizations into other larger financial bodies. But that too has created its own set of problems, causing unemployment and triggering even more protests.
The regime has also resorted to printing banknotes to refund investors, but the measure has resulted in inflation and price growth, doing more damage than good. Tehran is finding it increasingly difficult to find the money to remedy the situation. Of course, if the regime could slash the billions of dollars it is spending on developing ballistic missiles and conducting terrorist activities in neighboring countries, it could have solved the problem long ago. But that too will threaten the regime’s existence.