Mismanagement hurting Iran's economy most

Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei says while foreign sanctions hurt Iran's economy, most of the country’s economic problems are the result of internal mismanagement.

"Economic experts and many officials believe the cause of this issue is not foreign, it's internal. Not that sanctions do not have an impact, but the major impact is related to performances,” the Leader told ordinary Iranians at a meeting in Tehran Monday.

Iran’s national currency has lost much of its value since the beginning of the year, especially after US President Donald Trump abandoned a nuclear deal with Tehran and announced new sanctions on the Islamic Republic.

 

“All people feel livelihood problems today. A section of the people is really under the pressure and the high prices of food, housing and other things are pressuring them,” Ayatollah Khamenei said.

“The devaluation of the national currency is one of the current economic problems. When the price of the rial comes down, it is the daily-paid employee who ends up with nothing left,” the Leader added.

Iranians are bracing for new US sanctions, the first wave of which was unleashed by Trump last week, targeting Iran's financial, automotive, aviation and metals sectors.

The US president also pledged that the second wave will “ratchet up to yet another level" on November 4, hitting Iran’s oil and gas and banking sectors.

 

Ayatollah Khamenei said, “If the actions [by government officials] are better, more prudent and timely and stronger, the sanctions will not have much effect.”

The Leader touched on the turmoil in the foreign exchange and gold coins market, calling it the result of “imprudence and neglect” by certain officials who caused government dollars to end up in the hands of manipulators.

 

“This problem is related to management and executive policies,” Ayatollah Khamenei said.

“When they distribute foreign currencies and coins in the wrong way, this distribution has two sides: one who takes it and one who gives it. We are all after the one who takes it, while the main fault rests with the one who gives it. We do not call it treason, but it is a big mistake,” the Leader said.

 

Rial’s devaluation has presented the government of President Hassan Rouhani with possibly the most serious quandary.

In April, the government lowered the official value of the rial versus the dollar in order to stamp out the free currency market, unifying official and free-market rates at a single value of 42,000 to the dollar.

However, the strategy badly backfired as it generated an underground network of forex sellers who stoked further depreciation of the national currency.

 

A sharp rial drop resulted in a jump in inflation rates as consumer prices grew. It also prompted a registration flurry of new companies which had access to government dollars at concessionary prices.

Those new companies started importing high-demand commodities with dollars at a rate of 42,000 rials and selling them at inflated prices for profit.

 

On Sunday, the Judiciary said Iranian authorities have arrested 67 people in a drive against financial crime. 

Special courts are being set up to try suspects quickly after Ayatollah Khamenei agreed with a request by Judiciary chief Ayatollah Sadeq Amoli Larijani to swiftly deal with financial criminals.

Ayatollah Khamenei said on Monday the judiciary chief’s request is “an important positive step to tackle corruption and those involved in economic corruption.”

“I wrote a letter to the leaders of the three branches of powers several years ago and told them that corruption is a seven-headed dragon that must be fully confronted. Let me tell you, anyone involved in corruption will be firmly dealt with without any leniency.”

Ayatollah Khamenei, however, reminded that the campaign should be carried out justly without political noise.

“Some are saying extreme things and claim that all are corrupt and use such descriptions as systematic corruption; that’s not the case. True, even minor corruption is too much but extremism is wrong in all fields.”

The Leader also dismissed talks with the US after President Trump called for direct negotiations with Tehran, saying Washington is only after concessions.