Analysis by PMOI/MEK
Iran, Aug. 12, 2019 - On August 4, Ali Rabiei, spokesperson for the Iranian regime’s government, announced that 30 percent of people illegible to receive government subsidies will no longer be eligible, while other reports of removing four zeros from Iran’s national currency, the rial, are resulting in many controversies among officials and the ruling elite.
The Resalat newspaper, close to the mullahs’ Supreme Leader Ali Khamenei, wrote on August 6 it is necessary to increase government direct subsidies to the population by striking the foreign currency (U.S. dollar) at the fixed state-set 42,000 rial price.
Direct subsidies in Iran is money that rather poor people in Iran receive from the government to help them make ends meet. It s around 400,000 to 500,000 rials per individual (equal to around $5) and they were introduced during Mahmoud Ahmadinejad’s tenure when the Iranian regime started to remove general subsidies for some basic goods.
Foreign currency at the 42,000 rials state-set price is U.S. dollars that the government sells to private citizens for special purposes such as importing food or raw material. It costs a third of the dollar’s real market value and allegedly is designed to help the Iranian economy and the poor, but it has become a tool of blatant corruption where the politically well-connected elite makes insanely huge profits.
Resalat newspaper argues that the 42,000 rials foreign currency has created a cycle of corruption that disrupts the supply chain of basic goods, weakens the domestic production of basic goods and damages the poor more than anything else, going on to call for its abolition and direct subsidies instead.
Circles close to the faction of Iranian regime President Hassan Rouhani also raise the same issue.
Heydar Mostakhdemin Hossein, close to former regime president Mohammad Khatami and a former long-time official of Iran’s Ministry of Economic Affairs and Finance, writes: “It is necessary to work on deciding the fate of the 42,000 rial foreign currency and other currencies available in the Nima system...”
The Nima system is a domestic platform for trading foreign currencies in Iran.
Jahanesanat, a newspaper specializing in economic news and close to Rouhani’s faction, calls more explicitly for striking foreign currencies at state-set prices and writes on August 7 that instead of removing four zeros from the national currency, “it seems that stopping the foreign currency at state-set prices can be a bigger step along the line of supporting the livelihoods of poor classes of the society.”
Jahanesanat, which mainly promotes and defends the interests of parts of the ruling elite who are heavily invested in the “private” sector, reveals the behind-the-scenes struggles around the foreign currency at state-set prices. “For months now, major players and economic experts are trying to persuade the government to remove the 42,000 rials foreign currency. In a meeting of the council of dialogue between the government and the private sector held a few months ago, the issue of removing the 42,000 rials once again did not bear results and policymakers voted for keeping it for basic goods until the end of the year.”