一口气了解伊朗经济

Hi~~ Come on friends, today we are going to talk about a mysterious and chaotic economy, Iran.

When we talk about Iran, the first thing that may come to our mind is war.

This year, it just launched a swift and fierce "12-Day War" with Israel But in fact, Iran's economy is very interesting and particularly strange.

It has a unique political system and has been under long-term sanctions, which has spawned a set of deformed but very tenacious economic forms. It has also grown two Iranian versions of "invisible hands" to push its economic gears.

Well, today we continue the national economy series to see how Iran has come to where it is today What kind of complex political structure it has evolved and what kind of strange hands it has grown.

Let's go into this country that survives in the cracks, Iran.

In fact, Iran has a very nice name called "Persia".

When you hear Iran, it seems that there are wars all day long, but Persia is very exotic and mysterious.

Iranians are often called Persians The official language is Persian.

Of course, Iran is also a multi-ethnic country.

There are not only Persians but the majority of them are Persians which is different from most countries in the Middle East They generally speak Arabic.

The 20th century was also the era of oil hegemony.

In 1900, a British businessman named Darcy got a geological report saying that there was a high possibility of oil in the Persian region.

So he made what was probably the most successful decision of his life In 1901, when Iran had not yet dug up anything, he negotiated with the then Iranian king and with 20,000 pounds, he obtained the oil exploration rights for most of Iran for the next 60 years The Iranian government could share 16% of its annual profits.

Soon in 1908, Darcy discovered a large amount of oil in Iran and established the Anglo-Persian Oil Company which later became BP.

For the next half century , Iran's oil resources were firmly controlled.

Later, a large amount of oil resources were discovered in the Middle East which basically controlled by the Seven Sisters of the West.

The Anglo-Iranian Oil Company took advantage of its monopoly on Iranian oil to become the most profitable British company in the world at that time.

However, among these oil-rich countries, Iran was very stubborn and refused to accept it.

They thought that why should the British make money from our own oil resources So in 1951, under the leadership of Prime Minister Mosaddegh, the Iranian parliament passed a bill to forcibly nationalise the Anglo-Iranian Oil Company and establish the National Iranian Oil Company.

This was also the first resistance to the Seven Sisters' oil monopoly in the Middle East But the British were not pushovers and could not let Iran take back its oil resources so easily.

So he resorted to trickery.

His MI6 and the US Central Intelligence Agency secretly launched an "Operation Ajax" and secretly helped Iran to overthrow Mossadegh in August 1953.

He was sentenced to house arrest for treason in his own manor King Pahlavi was re-appointed, and soon after he came to power, the next year he handed back control of the oil company to the British.

The Americans also took a large piece of the pie.

It is estimated that in the next 20 years, they took about 40% of Iran's oil profits.

Iran's vigorous nationalisation resistance movement ultimately ended in failure.

Pahlavi ruled Iran dictatorially for more than 20 years with the support of Europe and the United States.

His original title was Shah, which roughly means king.

But later, he felt that he deserved better, so in 1967 he changed the title to "Shāhanshāh", which means "king of kings".

This "king of kings" gradually transformed Iran into a secular, Westernised country, which caused dissatisfaction among many Muslims. At the same time, he implemented a highly centralised rule and with the support of the CIA established a secret police organisation "SAVAK" campaigned harshly against political opponents, concentrated oil resources in the hands of a privileged minority, and was plagued by corruption.

Discontent built up among the Iranian people, and at this time a key figure emerged Ruhollah Khomeini.

He was the spiritual leader of Shia Islam in Iran.

Although he held no real political power he could be considered a religious leader.

He openly opposed King Pahlavi, opposed secularisation and opposed authoritarian rule.

He spent 14 years in exile abroad.

By 1978, public anger against the king had accumulated to a critical point.

Secular groups left-wing groups, and other groups that were originally different from Islamic forces all stood up to support Khomeini in overthrowing King Pahlavi.

The famous Iranian Revolution broke out in 1979.

It can be said that the king was driven out without much effort, and Pahlavi fled Iran Khomeini returned in triumph, and millions of people gathered at Tehran Airport to welcome the new leader.

After the revolution, the Iranian Empire officially became the Islamic Republic of Iran marking the end of the monarchy.

Iran established a very unique and complex political structure called a theocracy.

Hey, let me tell you I've put a lot of effort into learning about this system, and I'm here to share my findings.

Let's take a brief look at Iran's power structure.

Its philosophy is to blend theocracy with democratic republicanism Iran's top leader is called the Supreme Leader.

He holds the highest authority granted by the constitution, with no term limit.

Iran's first Supreme Leader was naturally Khomeini.

However, Iran nominally has a democracy.

Voters elect parliament and the president, who in turn appoint and oversee the cabinet.

The president is primarily responsible for administration and is considered the country's second-in-command.

This system should be familiar to everyone, but I'm telling you, this is just the tip of the iceberg of Iran's power structure.

The people also elect a body called the "Assembly of Experts," which is made up of 88 clerics.

They have enormous power they can select and oversee the Supreme Leader and theoretically even remove him.

In reality, this has never happened The Supreme Leader directly controls the courts, the military, radio, television, the security committee, and so on.

He also oversees an evaluation committee a vast and ambiguous power that can oversee the government.

There's also a very important body called the "Guardian Council."

we're almost done here all laws must be approved by him.

Although he cannot participate in the elections he has the final say on the nomination of candidates .

And you see this includes the Expert Council .

That is to say the Supreme Leader is supervised by the Expert Council, and the candidates of the Expert Council are confirmed by the Guardian Council.

Who chooses the 12 members of the Guardian Council?

Six are selected by the Supreme Leader and the other six are selected by the court.

And who appoints the Chief Justice of the court?

Oh, the Supreme Leader Is it confusing? Don't worry

you don't have to worry about these names In short, what you need to know is that no matter how his power goes around, it is under the control of one person, the Supreme Leader.

I'm telling you those names you are not familiar with, such as the Guardian Council, the Expert Council, and the Evaluation Committee, etc. are all unique to Iran and actually have very powerful religious organizations.

In fact, there are some organizations in this picture that are very important to Iran.

I will keep them in suspense In short, you only need to take a general look at this extremely complex power mechanism.

At its core, Iran has an electoral system, independent legislative and executive organizations, etc. but the real power is firmly in the hands of the religious system.

Power is mainly concentrated in the hands of the supreme leader, forming this unique Iranian "theocracy".

Well Iran's first supreme leader, Khomeini, was a legal scholar but this legal scholarship is not the current legal scholarship nor is it the kind of legal scholarship that Han Feizi used.

It is about Islamic jurisprudence.

He was born in 1900 and studied the Quran in a seminary from a young age, mainly studying ancient Greek philosophy.

He also loved writing prose and poetry and published three poetry collections .

I've also flipped through his poems. I'll read a small passage to give you a feel for his style.

I'm nothing, nothing, because existence lies entirely in nothingness.

There's nothing except nothingness because you're staring into nothingness Feel it Of course, I don't understand Persian or Islam very well, but I'm just sharing it with you.

His most important work isn't these poems. During his exile in the 1970s, his students compiled 19 of his speeches into a book called "Islamic Government," which expounded on his theocratic ruling thought This was actually the key to his overthrow of Pahlavi.

As for him, we can see from later that he was very opposed to secularisation The reason for establishing this formal democratic republic was actually for the needs of the revolution.

But Iran is essentially a country with religious sovereignty.

About 90%-95% of Iranians are Shiites, and the rest are basically Sunnis The others can be ignored.

So Islamic law is the law.

What does this law stipulate?

For example, women must wear headscarves and men cannot wear shorts in public.

Although it is called the Islamic Republic Iran nominally accepts all religions even Jews.

He just opposes Zionism, but what's interesting is that he didn't recognise atheist It was okay to believe in Judaism, but you couldn't be without faith.

Let's go back to the Iranian Revolution.

Khomenei had just taken office and hadn't even warmed up then something happened.

Saddam, the leader of Iraq, was very worried that this highly inflammatory Khomeini would export his ideology to Iraq.

In addition, there was already a dispute between the two sides over border control, and Iran had just experienced the chaos of the revolution, its army was weak, and it was hostile to the West.

On September 22, 1980, the Iraqi army invaded Iran, and the Iran-Iraq War broke out.

At the beginning, Iraq's attack was very fierce but Iran, which had recovered, quickly adjusted its situation.

The two sides entered a stalemate.

This war lasted for eight years until 1988, when both sides were exhausted and signed an armistice agreement with the border remaining almost unchanged.

This protracted war caused the deaths of at least 300,000 Iranians.

Ironically, the war between these two oil-rich countries led to the second oil crisis, which caused oil prices to soar.

Iran's GDP actually soared during the war , but slowly fell after the war .

Shortly after the Iran-Iraq War ended, on June 3, 1989 Khomeini, who was nearly 90 years old, died of health problems. Tens of millions of Iranians, which was about 1/6 of Iran's population at the time, took to the streets to mourn him The scale was unprecedented so you can see how high Khomeini's status was in people's hearts at the time And his successor The Supreme Leader of Iran the one with supreme power, is Khamenei, who

served as president for 8 years at that time .

If you are not familiar with this name, you can remember that Khamenei is very important There are only two supreme leaders in Iranian history.

After Khomeini Khamenei has been in office from 1989 to now.

He is the longest-serving head of state in the Middle East.

Because this person is so important, he has made countless enemies so his whereabouts are very secretive.

He is rarely seen in public let alone visiting abroad.

In 1981, when he was running for president, he was injured by a bomb placed on a tape recorder, which caused his right arm to be disabled for life.

So you can see that he usually raises his left hand.

Khamenei feels different from Khomeini.

Let's not It's too strict to say that Khomeini had a very high status in the Islamic theological circle while Khamenei 's theological achievements, at least at that time wes not particularly high.

Why do I say that his religious qualifications were not that deep?

Generally, Shiite Muslims have four levels.

Khomeini was of course the highest level, Grand Ayatollah.

The constitution also stipulates that only Grand Ayatollahs can become the Supreme Leader.

But Khamenei was only a third-level senior cleric at that time, two levels lower, which was far from meeting the standard.

Of course, this person must be very powerful.

There was no more suitable candidate at the time, but he became the Supreme Leader.

I tell you in order to make him the Supreme Leader , the constitution was even amended at that time.

However, after he took office, he quickly became the highest level.

This supreme leader has been in office for 36 years.

During Khamenei's time, Iran gradually formed its own unique diplomatic strategy.

It is well known that he is a bit of a "thorn in the side" in the Middle East.

He does not get along with many countries.

Many people cannot understand this because if you consider it from an economic perspective or from the perspective of rational returns, you will feel that his behavior is very unreasonable.

The United States cannot reach an agreement with him no matter how hard it tries.

Why do you ask?

In fact, if you analyse it, whether it is the supreme leader or the entire power framework it is centered around the Shiite Islam religion This is the core of his regime.

Therefore, many of his actions and decisions are mainly ideological struggles which is also to maintain the legitimacy of his regime.

You can see that he supports Lebanon Hezbollah supports the Iraqi Islamic Resistance Movement.

These are all Shia supporters of Hamas, which is against Israeli Zionism.

They also support the Houthi armed forces in Yemen, etc. Gradually, a so-called "resistance axis" has been formed an informal alliance of a series of organisations in the Middle East to help Iran and other forces and other religious forces to check and balance.

Of course, I would like to add that although Khamenei's position is relatively stable the factional struggles within Iran are very serious and have been exposed.

It does not mean that everyone is united in adhering to these policies.

There are reformists, moderates conservatives etc. Reformists support a free economy and support dialogue with the West to lift sanctions.

So you see, every presidential election in Iran has to face a very fierce factional struggles It's very chaotic.

I will leave this to some political and economic bloggers to discuss with you.

Iran's tough diplomatic stance will lead to it facing a lingering haze for the next half century.

A huge obstacle is sanctions , but mainly US sanctions.

In fact, Khomeini has been very unfriendly to the United States since he came to power.

When the 1979 revolution just happened, Iran broke out in a major conflict with the United States .

At that time, a group of Muslim students stormed the US Embassy in Tehran and took 52 embassy staff hostage for 444 days in order to force the United States to hand over King Pahlavi who was hiding overseas.

hiding overseas.

It is known as the Iranian Hostage Crisis.

Behind it, there must be Khomeini's acquiescence and connivance.

He was very popular in Iran at that time.

This also boosted Khomeini's popularity.

His slogan at the time was "The United States can do nothing to us."

He also called the United States "the Great Satan" and Israel "the Little Satan."

This action also made the relationship between Iran and the United States very tense.

Since 1980, Iran and the United States no longer have formal diplomatic relations.

After that, the relationship between the two sides has only become more tense.

The US sanctions on Iran have never stopped.

At the beginning, they were mainly trade sanctions on energy or sanctions on arms sales.

But after 2010, it gradually developed into comprehensive economic sanctions including energy finance metals etc. These sanctions are actually very complicated.

Let's just pick the key points.

The main point here is around Iran's nuclear program.

In fact, Iran in 1 In 1970, the Treaty on the Non-Proliferation of Nuclear Weapons was signed, promising not to develop nuclear weapons.

However, in the 1990s, the AMAD nuclear weapons program was secretly launched.

and was gradually exposed in the early 2000s which made the whole world nervous and triggered multiple rounds of sanctions from not only the United States but also the European Union and UN Security Council Then, starting in 2013, Iran, the five permanent members of the UN Security Council Germany, and the European Union, after 20 months of negotiations, reached the famous Joint Comprehensive Plan of Action, which everyone calls the Iran Nuclear Deal .

Iran agreed to strictly limit its nuclear activities and accept monitoring by the International Atomic Energy Agency.

In return, naturally, other countries would lift most of the economic sanctions on Iran.

You see, everything was going well.

However in just two years Trump was elected as the President of the United States.

He was very dissatisfied with the agreement.

The United States unilaterally announced its withdrawal in 2018 and re-imposed stricter sanctions on Iran.

Especially this year after the direct conflict with Israel and the United States the nuclear agreement has basically become completely invalid.

Iran has returned to a state of comprehensive sanctions.

As for Iran, what kind of results have been brought to its economy in the face of so many years of sanctions?

Has Iran endured it?

Generally speaking, for Iran the good news is that it has withstood the sanctions and has not collapsed unlike Venezuela but the bad news is that it has just barely withstood it barely collapsing You see, this is Saudi Arabia's GDP and this is Iran's Obviously, before 2011, when the sanctions were still on smaller scale it had little impact on GDP.

After 2011, it was quickly reflected in GDP.

The key point is that this is just a comparison of total GDP.

Iran's population is much larger than Saudi Arabia's.

If you look at per capita GDP, Saudi Arabia has actually left Iran behind long ago.

As for Saudi Arabia here, I think it can be used as a very loose control group.

After all, the two countries have many similarities and are quite comparable Saudi Arabia is not said to be extremely well developed.

It is just a normal oil-rich country that has not been sanctioned.

So it is just a loose way of showing how much impact Iran has been affected by sanctions.

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First, we know that Iran is an oil power and relies heavily on fossil energy.

Its oil reserves rank third in the world, and its natural gas reserves rank second in the world.

Fossil energy exports account for 60% of Iran's government revenue and 90% of its exports We always say that Iran is an oil power, but in fact, it produces more natural gas.

60% of Iran's current fossil energy production is natural gas and 40% is crude oil and this proportion of natural gas is still rising.

You would think that Iran, as a natural gas producer, would not have made a fortune in the past two years but it hasn't.

This is Iran's natural gas production over the past half century.

The gray area here represents domestic consumption.

Green is import and export.

You see, although its production is continuously increasing the demand is also continuously growing but it is still in a state of supply exceeding demand.

In the past two years, it had to import natural gas from Russia.

And this is the crude oil production Now the production is less than before the Iranian Revolution, but more than half of it is exported.

So although Iran produces natural gas as energy it mainly makes money by selling oil The main form of sanctions used by the United States is to target your fossil energy and target oil.

I will cut off your financial resources.

You see, before 2010, Iran basically maintained an export of about 2.5 million barrels of crude oil Since 2010, the United States, the European Union and the United Nations have increased sanctions on Iran, and crude oil exports have been halved .

Then in 2015, the Iran nuclear agreement was reached, and it immediately rose again.

Later, the United States resumed sanctions, and it was even worse, with the lowest point dropping to only 500,000 barrels per day.

what did Iran do when facing a complete embargo on oil and natural gas?

It secretly built its own "ghost fleet" called Ghost Fleet this fleet is made up of a group of aging and retired cruise ships.

Overseas shell companies hold the flags of third countries and turn off the positioning devices to secretly transport Iranian oil.

There may be multiple transfers in the process usually on the high seas Sometimes, in order to avoid tracking, the ship's name is changed and the hull is repainted, etc. just like in Mission Impossible, all kinds of methods are used to cover up the truth.

In fact, this ghost fleet model is not Iran's patent.

It has formed a particularly large smuggling network.

For example, Iran, Venezuela, and Russia, which are under sanctions , use this method to smuggle crude oil You can see that there are so many ships.

In fact, you can tell which ship is doing this ship-to-ship transfer at a glance on the satellite.

It is not difficult to detect, but most countries and most organizations are also turn a blind eye and have no incentive to eradicate this matter.

This is why you can see that after 2018, after experiencing a more comprehensive and severe financial and energy blockade, Iran's crude oil exports are still slowly recovering.

We just said that oil is only sold abroad.

Iran's internal situation is even more interesting.

Because of its special constitution, this theocratic republic has evolved two very special and very large organisations, like two huge Iranian versions of the "invisible hand", which truly control more than half of Iran's economic activities.

The first hand is called the Bonyads Religious Charity Foundation.

Bonyads means foundation in Persian, so we simply call it a foundation.

There are about 100 foundations of all sizes in Iran.

Don't be fooled by the fact that it sounds like a "foundation" and it seems to have no sense of existence.

In fact, 30% of the Iranian government's budget expenditure goes to these foundations.

They control about 20% of Iran's GDP and employ 10% of Iran's labour force.

Almost all of them are clergy.

Its nature is very special.

You can think of it as some companies or state-controlled state-owned enterprises.

On the one hand, they will carry out some charitable projects but more importantly, they involve agriculture, manufacturing, real estate, transportation, tourism automobile manufacturing, etc. However, it can be regarded as neither a private enterprise nor a state-owned enterprise let alone a traditional foundation .

First of all, one of their most important characteristics is that they are not short of money do not have to pay taxes, and receive government subsidies.

Their main purpose is not to make money but to control the lifeline of the economy.

After the Iranian Revolution in 1979, the new regime took over these foundations.

In fact, they were originally used to support and rescue some vulnerable groups.

Including helping revolutionary martyrs and their families.

But gradually, it was discovered that these foundations had an extremely high degree of financial freedom and no pressure to make money.

The more they developed, the bigger they became.

They started to do all kinds of business and formed a huge economic group.

And how can these foundations grow so large without being restricted or constrained?

This brings us to their second and more important characteristic.

They are directly led by the supreme leader.

That is to say, they are backed by religious forces and are not controlled by the government.

We just said that they are like a state-controlled company, but that is not entirely correct.

It should be a company controlled by the supreme leader, so it is not a "state-owned enterprise" but a "supreme enterprise."

You see, they are the supreme leader's people and what they do is nominally charitable, so no one can check their accounts and they don't have to pay taxes.

There is no official trace it is a complete black box.

But at the same time, the government has to spend the national budget to support these foundations.

The donations they can actually give to the poor are actually very limited.

Internal corruption is also very serious.

They will also transfer money and benefits to make government officials and the elite happy to help maintain the stability of the supreme leader's position.

They can even use vicious competition to curb the excessive growth of private enterprises.

You think they don't have the pressure to make money, so I can completely lose money in price wars especially there are government resources behind them.

How can ordinary private enterprises compete ?

Therefore, if private enterprises in Iran do not have a strong backer behind them it is impossible for them to grow big.

Even foreign capital dare not invest in Iran's private enterprises.

A very important worry is that even if they grow big, they may either be absorbed by the government or be suppressed by the foundation.

The largest foundation is called "Mostazafan Foundation of the Islamic Revolution" It is Iran's second-largest enterprise after the National Oil Company.

It has more than 350 subsidiaries and over 200,000 employees, and its business scope is very wide.

It does everything.

There is also a very famous foundation called Setad, whose full name is "Execution of Imam Khomeini's Order" When you hear the word "Khomeini" in the name, you know it must be no ordinary It can be said that it is the foundation most closely tied to the Supreme Leader among all these foundations and it can even be regarded as half of his personal wallet.

The other big hand in Iran's economic system or even a bigger hand, is the Islamic Revolutionary Guard Corps abbreviated as IRGC.

Some people may have heard of it more or less.

It is an armed force of Iran, but it is independent of Iran's regular army.

Iran's regular army has about 400,000 people, and the IRGC is estimated to have about 120,000 people.

Traditional national defense may be participated by regular troops while IRGC participates in more religious actions mainly defending the regime and confronting hostile forces at home and abroad.

There is a "Quds Force" within it.

Although it is estimated to have only about 20,000 people whether it is direct external conflicts or contact with proxy organisations to support proxy wars, it is the Quds Force that is mainly responsible.

Therefore, it is also notorious in Europe and the United States.

Anyway, the IRGC is defined as a "terrorist organisation" by countries like the United States, Canada, Saudi Arabia, Bahrain, etc. We don't usually talk about the military, but why do I want to talk about the IRGC?

Because it is indeed special.

It is more like an army with an engineering team.

Its influence on the economy is so great that it even exceeds that of state-owned enterprises and the first-hand foundation we just mentioned.

It is estimated that it controls 30%-50% of Iran's economy.

The IRGC was first established by Khomeini during the Iranian Revolution in 1979.

At the beginning, it was an ideological militia organization, but it gradually grew Not only did its military strength grow, but it also began to get involved in business and entered key areas such as construction, agriculture, energy, and communications.

Many government infrastructure projects can be directly won without the need for a bidding process as long as the IRGC intervenes they'll get it.

Another point is that it very similar to the Bonyads Foundation we just mentioned.

They are all directly responsible to the Supreme Leader and can even cooperate with each other.

This is not the end.

The IRGC also control a very important thing That is Iran's border customs. They control both the above-and-behind ones.

There are a lot of smuggling activities in Iran such as the smuggling of oil products and even drugs, which are all handled by the IRGC.

So Iran's huge underground transactions, black market transactions, and the most critical links in dollar transactions are all controlled by the IRGC Why does Iran have such a large amount of smuggling and such a large underground economy?

On the one hand, it is indeed because of its complex power system and corruption problems but another major point is to circumvent U.S. sanctions

US openly sanctions Iran on everything so many of Iran's trades can only be carried out through the black market through some secret operations, so that these goods can be transported in and out without anyone noticing .

For example, we mentioned due to sanctions Iran's ghost fleets are mainly operated by the IRGC This is why the IRGC especially the Quds Force, have become the core of Iran's illegal financial network.

You see, Iran's two economic lifelines , the two "invisible hands" are not under the control of government finances and are directly under the supreme leader.

There are checks and balances between the IRGC and the regular army and there are checks and balances between foundations and state-owned and private enterprises.

It is this system of combining politics and religion this theocratic republic system, has given rise to the fact that everything has two sets of checks and balances.

But in fact, in most cases, the supreme leader is obviously more powerful.

Iran has such a large underground economy, which is subject to increased sanctions, material shortages and serious corruption.

It is almost inevitable that an economic monster will be released.

What is it?

That's right, Inflation Iran's inflation has never been below 10% for many years.

In the past five years, it has exceeded 30% making it one of the countries with the highest inflation in the world.

Generally speaking, if an economy continues to have inflation exceeding 20% there is basically no need to talk about development.

At the same time, the government or the central bank has limited the loan interest rate to below 23%.

Note that this is the loan interest rate, and the deposit interest rate is even lower which means that the real interest rate is negative.

If you deposit money in the bank, the money is shrinking.

This is not completely bad but it will stimulate the economy to an extreme extent and further fuel inflation.

In fact, it makes life very difficult for banks.

They can only make money through some gray businesses, such as some real estate-related businesses or foreign exchange-related businesses to make money to make up for their traditional credit business.

In short, this whole operation is very twisted.

The Iranian foreign exchange market is also twisted.

If you search for the exchange rate of Iranian rial to US dollar on Google or some mainstream financial platforms, you will see that it is 1:42,000.

And this number has not changed since 2018.

Friends, don’t you feel that it is very unreasonable?

We just said that its inflation is so high and has remained above 30% in recent years.

How can its exchange rate be tied to the US dollar?

The answer is that it does not have a real free market exchange rate.

The US dollar to rial is not 1:42,000 but 1:1 million.

The government does not want to let the rial collapse It still hopes to control inflation as much as possible.

So he also tried to introduce a multiple exchange rate system , using different exchange rates for different commodities.

For example, at the end of last year, the exchange rate for imported medicines was 285,000 rials per dollar, while the exchange rate for food was 468,000 and the exchange rate for household appliances and mobile phones was 630,000.

This multiple exchange rate system may be a good idea but it is simply impossible to implement in Iran.

You can imagine that its power structure is so complex, there are many underground transactions, and the central bank has weak control over the economy.

There are countless loopholes that can be exploited.

For example, some businessmen use cheap exchange rates to import things like tea, rice, and tires, and then sell them at free market exchange rates to make tens of billions of dollars.

Some people are even more simple and crude without even establishing trade relations.

They directly buy dollars at the cheap official exchange rate and then sell them on the black market to make a profit.

Such operations are very rampant.

And I think there is another point.

There is an exchange rate system here with an unlucky name called NIMA.

"Ni Ma" Hey, this exchange rate is called "Ni Ma", right?

Anyway, this multiple exchange rate mechanism was implemented for only a few years and was cancelled in 2024.

Now Iran has no choice but to gradually liberalise the market-based trading of exchange rates.

Of course, its rapid inflation is exposed.

Faced with such severe inflation, material shortages economic stagnation, and emotional turmoil, if the government wants to temporarily stabilise the economic order and calm everyone's dissatisfaction.

what will it usually do?

I'll give you four options.

A. Tax cuts

B. Subsidies

C. Reforms

D. None of the above Which one will you choose?

The answer is B. Subsidies

Do you think it is D?

As for our anti-routine Iran has started a large number of subsidy policies since the Iraq War, subsidising daily necessities and some items that are more convenient for the government to provide, in order to try to alleviate public discontent.

It has tried every trick and the scale is getting bigger and bigger.

Basically, most of the subsidies are directed to one thing that is, energy.

According to IMF estimates, In 2022 subsidies for energy alone will reach 100 billion US dollars, which has become a huge expense for the Iranian government.

Many people may not have any concept of how much is $100 billion You must know that Iran's GDP in 2022 was less than $400 billion which means that it spent 27% of the country's annual GDP on energy subsidies.

If it were in China, it would be equivalent to the government giving you 26,000 yuan per person per year.

If it were in the United States, it would be equivalent to $23,000 per person per year.

You see, this energy-rich country is different.

In fact, it is not only Iran, but also Saudi Arabia and Russia, which have subsidised more than 25% of GDP, but Iran has the most.

Why did Iran choose to do such drastic energy subsidies?

There are many ways for a government to stimulate economic development For example, you can stimulate consumption investment the technology industry, etc. But these stimuli all have a problem which is that they can easily stimulate inflation.

Iran's inflation is already so high that it can't withstand further stimulation.

But the effect of subsidies is different.

I can make energy cheaper through subsidies.

On the one hand, it stimulates the economy.

On the other hand, energy prices are connected to everything, so it can lower prices That's why many energy-producing countries, especially those with high inflation and stagnant economies, usually choose very drastic energy subsidies.

Look at Iran and Venezuela, which are two very typical examples.

Iran has long been one of the countries with the cheapest gasoline prices in the world.

Subsidies are certainly fine, but does it need to subsidise so much and so harshly?

After all, the Iranian government is not rich.

To be honest , such extreme economic subsidies don't even require economists.

Most people know that it has side effects on the economy and distorts supply and demand. There is rent-seeking and corruption, which increases the financial burden on the government.

For example, in Iran, the price of gasoline may be only 1/5 of that in neighbouring countries.

The profit from smuggling is very high and there are indeed a lot of similar phenomena.

This subsidy is also a huge burden on the government so it is obvious that it's not that the government does not want to cut it but it cannot cut it.

The Iranian government has really mustered up the courage to try many times.

For example, the most recent one was in November 2019 when it suddenly announced a cut in gasoline subsidies.

The national oil price immediately jumped by about 50%.

As a result, protests in more than 100 regions across the country were triggered and it evolved into the largest anti-government movement in Iran since 1979.

Some demonstrators burned government buildings and gas stations to express their dissatisfaction with poverty and corruption.

The Iranian government was forced into a desperate situation and implemented a nationwide Internet blackout that lasted for a week.

Please note that this does not mean cutting off the external network but cutting off the entire network which means that you can't watch it on any platform.

Who can bear this?

This can be said to be the heaviest oppression on the Iranian people .

In the end the government quickly suppressed the riot within a week, resulting in at least 1,000 deaths and at least 7,000 arrests.

Actually the subsidy reduction was only a fuse for this riot but no matter what the reason was, it would be difficult for the government to cut subsidies when the public discontent is high Although Iran 's economic development is relatively distorted under the pressure of sanctions it has still developed some good industries.

One of the most eye-catching industries you may not have imagined is automobiles.

It accounts for 10% of Iran's GDP and is second only to oil and natural gas.

It is Iran's second largest industry.

In 2024, Iran produced more than 1.36 million vehicles.

Those of you who often hear about the production figures of the United States, China, and Japan may not feel much but in the Middle East, it is already an absolute "auto hegemone".

In terms of quantity, Iran is the 12th largest automobile producer in the world, producing more than the United Kingdom, Italy, and Russia.

Its two main car companies are Khodro and Saipa.

You haven't heard of them.

Indeed, it mainly produces and sells its own products domestically and rarely exports.

So given the large quantity it's hard to say how the quality is, But anyway, automobiles are one of its pillar industries.

Besides that, Iran has another very distinctive industry.

It is one of the world's leading caviar producers.

A large amount of the world's top-quality sturgeon caviar is produced in Iran Oh, and that's not all.

It is also the world's largest producer of saffron and a major exporter of high-value-added agricultural products like pistachios, carpets, and dried fruits.

Okay, let's quickly summarise Iran's economy.

Iran has a population of approximately 92 million and is expected to have a GDP of $340 billion in 2025 making it the 44th largest economy in the world GDP is $3,900, ranking 128th globally.

Iran has established a unique theocratic republic system.

The supreme leader holds real power and controls institutions including religious foundations and the IRGC Iran is highly dependent on energy and is a major oil exporter.

Under high-pressure sanctions from the United States, inflation exceeds 30%, it relies heavily on energy subsidies, and the underground economy is rampant, forming such a deformed and tenacious economy.

In recent years, Iran, a major energy powerhouse, has unexpectedly faced its most serious energy crisis in decades Many areas in Iran have implemented rotating power outages.

At the peak, about half of the factories stopped production.

The government closed many shopping malls, government buildings, and schools From June 13 to 25, 2025, Iran and Israel launched a war.

The brief but intense direct conflict was called the "12-Day War."

The United States used B2 bombers and Tomahawk missiles to attack three Iranian nuclear facilities.

The confrontation between Iran and the United States has further escalated.

On July 2, the Iranian president ordered the suspension of cooperation with the International Atomic Energy Agency.

The energy crisis and war are dragging Iran into the abyss of recession.

It is experiencing the longest and most serious economic crisis in modern history.

From the external environment, economic sanctions are tightening and international relations are tense.

Internally, inflation is high, the energy crisis continues, and corruption is rampant.

You may not think these problems are fatal but for a country's economy, they are like slow-acting poison.

According to IMF estimates, Iran's per capita GDP will be less than $4,000 in 2025 less than half of what it was 14 years ago and one-eighth of Saudi Arabia's.

Judging from the current situation, Iran's economic development does not see a clear way out.

The internal economic and political structure is in chaos.

Will it climb out of the quagmire step by step, or will it fall into the abyss bit by bit?

Only time will tell.