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During my years as a political reporter in Iran, I often informally asked parliamentary members about the impact of sanctions on the country. A popular response was that the sanctions failed to impact their salaries and foreign trips, so they were not effective. Now, however, things have changed.
After the recent set of sanctions on the Iranian oil industry and the Central Bank were put in place, I conducted a number of interviews with Iranian experts and average citizens inside the country in order to gauge the impact of sanctions on their daily lives.
I spoke with Razie Sadeghi, an economic journalist, who is in regular contact with the countrys economic officials. According to Sadeghi, Iranian officials view the sanctions on the Central Bank and the countrys oil sector very differently than the previous sanctions imposed on the country. They believe that declining oil revenues could deliver a big blow to Irans economy.
I also managed to speak with an economist from inside the country who, for security reasons, would like to remain anonymous. He acknowledges that the new set of sanctions on the countrys Central Bank and disruptions in the countrys financial sector are the most effective set of sanctions thus far. The economist added that the Iranian government, in such conditions tends to print money in order increase the currency supply without backing, which is high-risk behavior.
This economist also believes that the sanctions on the countrys Central Bank will block the countrys oil revenues and will eventually paralyze the government.
Conversely, Sadeghi points to the impact of sanctions on investments in the countrys oil industry. She states, The reduction in oil production will not have an impact in the short-term, and if the government can sell the national oil, they will not face any problems in funding the current budget.
One of the consequences of the sanctions has been the refusal of many companies to sell auto parts to automobile companies in Iran. Reports indicate a 36% reduction in car manufacturing in the country, which can have unpredictable consequences in regards to labor unrest. Directly or indirectly, more than 150,000 people in Iran rely on the countrys auto industry for their livelihood.
Mohammad Sanie, an industry expert, says, The Iranian auto industry is 44 years old, but it still imports some of its key components from abroad.
According to Sanie, during the financial crisis in Europe the French ambassador in Tehran had a series of negotiations with Iranian auto companies in order to convince them to take advantage of European companies needs and purchase extra parts from France. Supposedly, the Iranian warehouses were filled with parts for a rainy day. However, it seems like the stored parts are almost all gone, and, due to lack of parts, the assembly lines are having trouble producing cars such as Peugeot Pars 206, IKCO Runna, Nissan Qashqai, Rio, and even IKCO Samand. According to Sanie, Iranian car companies have been using Chinese parts, but these parts are not useful for all the vehicles.
Sanie added, Genuine Peugeot parts for 405 and 206 models are considered to be almost 40% of the domestic car production in the country. These models are made and produced in France and they are then imported to Iran as kits to be assembled by the Iran Khodro Company. Except these vehicles, the front and rear windows of Rio and Pride automobiles, are produced under the license of a Kia [a Korean company]. Some of its parts are being made in Iran, but still we need the imports.
The impact of sanctions can be felt in many occupations. Sadeghi explains, All professions talk about the impact of sanctions. For example, the pastry and chocolate shops, that I never thought would be impacted, are facing difficulties. They import sugar and other raw materials from abroad and after the sanctions were put in place, they are having a very difficult time paying their foreign suppliers and they might face shortages of raw material.
Ali Rostami, who owns an electrical contracting company, says that in order to understand the impact of sanctions you only have to look at the web portal of Irans national database of tenders information. This website tracks all international business transactions, allowing you to look at Irans business transactions today and compare it to eight years ago. We used to have 5 interactions a day, but now we have about 2 a month, Rostami says.
The uncertain market of the U.S. dollar and other foreign currencies has even impacted the price of food, namely chicken, which is a sign of the countrys bad economic situation. But who do the people hold responsible: their own government or the Western powers?
Hadi Mohammadi is a sociologist and works in the polling field for financial companies. He states, People are witnessing the situation first hand, but the majority of them are not able to pin point the exact cause. He jokingly adds, If you do a poll and ask an average Iranian who is responsible for the economic problems and provide them with three choices of Western governments, Iranian government, and Hashemi Rafsanjani, some people will choose Hashemi Rafsanjani.
However, Mehdi Ebrahim Nejad, an electrical engineer, believes that the majority of people blame Irans leaders and believe that the governments insistence on carrying out the nuclear program is the cause of the economic problems. Nonetheless, he believes that ultimately these sanctions will hurt the people more than the regime.
Keyvan Shahrayeeni, a civil engineer, believes that the people do not have a clear picture of the sanctions and they believe the Iranian officials incompetence is the cause of the problems rather than the sanctions.
When I ask Sadeghi who is responsible for the current economic situation, she answers: Double digit inflation has always been one of the shortcomings of Irans political structure, but the truth is that until now and even during the governments subsidy reform program, we had never experienced such price explosions.
Will the sanctions change the governments behavior?
Sadeghi says: This possibility is almost zero. The Iranian leaders believe that any flexibility shown against foreign pressures will result in entering a process, which will ultimately result in their demise. On the other hand these sanctions have not directly harmed the officials. They continue to live comfortable lives. They have not even reduced the number of their foreign trips.
An Iranian parliamentary member, who is not willing to mention his name, uses the Iran-Iraq war experience as an example and states, If it is ever felt that the nuclear program will result in the demise of the regime, naturally, the officials will change their minds. Ultimately, protecting the regime is more important than anything else.
Does the Iranian government have any plans to circumvent the sanctions?
Razieh believes that the officials do not have any plans for eliminating the effect of sanctions. She adds, It became apparent this week that they do not have any serious plans to combat the sanctions. The prices are out of the governments control and it appears that besides promises given behind microphones, they do not have any practical plan.
The anonymous Iranian economist adds, It is not possible to find the root causes of the current situation. One of the reasons is that myself and many other colleagues of mine believe that the [Ahmadinejad] government during its last years in power has virtually abandoned the countrys economic situation.
He adds, Clashes between the government and other institutions, coupled with disputes over the nuclear program, have caused the government not to take any serious attempts to eliminate the effects of sanctions.
Ehsan Mehrabi is a distinguished Iranian journalist who has written about the Islamic Republics military, parliamentary politics, and various other socio-political issues for more than a decade. He has worked as the parliamentary reporter for the reformist newspapers Etemad Meli and Toseeh, and as a reporter and political editor for Hambastegi newspaper. He left Iran a few months ago.
insideIRAN | Report from Tehran: How Sanctions Hurt the Lives of Ordinary Iranians
After the recent set of sanctions on the Iranian oil industry and the Central Bank were put in place, I conducted a number of interviews with Iranian experts and average citizens inside the country in order to gauge the impact of sanctions on their daily lives.
I spoke with Razie Sadeghi, an economic journalist, who is in regular contact with the countrys economic officials. According to Sadeghi, Iranian officials view the sanctions on the Central Bank and the countrys oil sector very differently than the previous sanctions imposed on the country. They believe that declining oil revenues could deliver a big blow to Irans economy.
I also managed to speak with an economist from inside the country who, for security reasons, would like to remain anonymous. He acknowledges that the new set of sanctions on the countrys Central Bank and disruptions in the countrys financial sector are the most effective set of sanctions thus far. The economist added that the Iranian government, in such conditions tends to print money in order increase the currency supply without backing, which is high-risk behavior.
This economist also believes that the sanctions on the countrys Central Bank will block the countrys oil revenues and will eventually paralyze the government.
Conversely, Sadeghi points to the impact of sanctions on investments in the countrys oil industry. She states, The reduction in oil production will not have an impact in the short-term, and if the government can sell the national oil, they will not face any problems in funding the current budget.
One of the consequences of the sanctions has been the refusal of many companies to sell auto parts to automobile companies in Iran. Reports indicate a 36% reduction in car manufacturing in the country, which can have unpredictable consequences in regards to labor unrest. Directly or indirectly, more than 150,000 people in Iran rely on the countrys auto industry for their livelihood.
Mohammad Sanie, an industry expert, says, The Iranian auto industry is 44 years old, but it still imports some of its key components from abroad.
According to Sanie, during the financial crisis in Europe the French ambassador in Tehran had a series of negotiations with Iranian auto companies in order to convince them to take advantage of European companies needs and purchase extra parts from France. Supposedly, the Iranian warehouses were filled with parts for a rainy day. However, it seems like the stored parts are almost all gone, and, due to lack of parts, the assembly lines are having trouble producing cars such as Peugeot Pars 206, IKCO Runna, Nissan Qashqai, Rio, and even IKCO Samand. According to Sanie, Iranian car companies have been using Chinese parts, but these parts are not useful for all the vehicles.
Sanie added, Genuine Peugeot parts for 405 and 206 models are considered to be almost 40% of the domestic car production in the country. These models are made and produced in France and they are then imported to Iran as kits to be assembled by the Iran Khodro Company. Except these vehicles, the front and rear windows of Rio and Pride automobiles, are produced under the license of a Kia [a Korean company]. Some of its parts are being made in Iran, but still we need the imports.
The impact of sanctions can be felt in many occupations. Sadeghi explains, All professions talk about the impact of sanctions. For example, the pastry and chocolate shops, that I never thought would be impacted, are facing difficulties. They import sugar and other raw materials from abroad and after the sanctions were put in place, they are having a very difficult time paying their foreign suppliers and they might face shortages of raw material.
Ali Rostami, who owns an electrical contracting company, says that in order to understand the impact of sanctions you only have to look at the web portal of Irans national database of tenders information. This website tracks all international business transactions, allowing you to look at Irans business transactions today and compare it to eight years ago. We used to have 5 interactions a day, but now we have about 2 a month, Rostami says.
The uncertain market of the U.S. dollar and other foreign currencies has even impacted the price of food, namely chicken, which is a sign of the countrys bad economic situation. But who do the people hold responsible: their own government or the Western powers?
Hadi Mohammadi is a sociologist and works in the polling field for financial companies. He states, People are witnessing the situation first hand, but the majority of them are not able to pin point the exact cause. He jokingly adds, If you do a poll and ask an average Iranian who is responsible for the economic problems and provide them with three choices of Western governments, Iranian government, and Hashemi Rafsanjani, some people will choose Hashemi Rafsanjani.
However, Mehdi Ebrahim Nejad, an electrical engineer, believes that the majority of people blame Irans leaders and believe that the governments insistence on carrying out the nuclear program is the cause of the economic problems. Nonetheless, he believes that ultimately these sanctions will hurt the people more than the regime.
Keyvan Shahrayeeni, a civil engineer, believes that the people do not have a clear picture of the sanctions and they believe the Iranian officials incompetence is the cause of the problems rather than the sanctions.
When I ask Sadeghi who is responsible for the current economic situation, she answers: Double digit inflation has always been one of the shortcomings of Irans political structure, but the truth is that until now and even during the governments subsidy reform program, we had never experienced such price explosions.
Will the sanctions change the governments behavior?
Sadeghi says: This possibility is almost zero. The Iranian leaders believe that any flexibility shown against foreign pressures will result in entering a process, which will ultimately result in their demise. On the other hand these sanctions have not directly harmed the officials. They continue to live comfortable lives. They have not even reduced the number of their foreign trips.
An Iranian parliamentary member, who is not willing to mention his name, uses the Iran-Iraq war experience as an example and states, If it is ever felt that the nuclear program will result in the demise of the regime, naturally, the officials will change their minds. Ultimately, protecting the regime is more important than anything else.
Does the Iranian government have any plans to circumvent the sanctions?
Razieh believes that the officials do not have any plans for eliminating the effect of sanctions. She adds, It became apparent this week that they do not have any serious plans to combat the sanctions. The prices are out of the governments control and it appears that besides promises given behind microphones, they do not have any practical plan.
The anonymous Iranian economist adds, It is not possible to find the root causes of the current situation. One of the reasons is that myself and many other colleagues of mine believe that the [Ahmadinejad] government during its last years in power has virtually abandoned the countrys economic situation.
He adds, Clashes between the government and other institutions, coupled with disputes over the nuclear program, have caused the government not to take any serious attempts to eliminate the effects of sanctions.
Ehsan Mehrabi is a distinguished Iranian journalist who has written about the Islamic Republics military, parliamentary politics, and various other socio-political issues for more than a decade. He has worked as the parliamentary reporter for the reformist newspapers Etemad Meli and Toseeh, and as a reporter and political editor for Hambastegi newspaper. He left Iran a few months ago.
insideIRAN | Report from Tehran: How Sanctions Hurt the Lives of Ordinary Iranians
why US can't do anything ? 
