Temporary Agreement Eases Iran’s Economic Pain

Temporary agreement soothes Iran’s economic pain

According to Iran Gate, economists and economic experts are discussing the temporary agreement and its economic consequences on social media. Many experts believe that even if such an agreement is reached, it will not cure the numerous economic problems of Iran. Now the question arises whether trading oil for food and medicine can alleviate some of the living difficulties of Iranian citizens.

The release of approximately $3 billion of Iran’s assets in Iraq has intensified speculation about the possibility of a temporary agreement. Although Iranian and American parties have rejected such an agreement and consider it irrelevant, it seems that part of Iran’s blocked assets in some countries will soon be made available to the country for importing food and medicine, albeit with significant restrictions.

Qatar and the hope that did not survive

Mohammadreza Farzin’s recent trip to Doha has strengthened the suspicion that Qatar is supposed to act as an intermediary country in the process of releasing Iran’s blocked resources. This means that, for example, the Koreans will transfer the blocked resources of the country to Qatari banks so that the Islamic Republic can use these resources to buy food and medicine.

This agreement is conditional on the Islamic Republic not having access to its currency resources in Qatar for purposes other than purchasing food and medicine. Therefore, experts believe that such an agreement will not only fail to alleviate Iran’s economic pain but also Qatar, as the last ray of hope for the Islamic Republic to overcome the economic crisis, has significantly lost its influence.

Farzin’s message to exporters

As mentioned, according to the agreement, Iran’s currency resources are not supposed to be directly available to the government or the Central Bank of Iran. However, in recent days, Mohammadreza Farzin, who also holds the position of the Governor of the Central Bank, has made speeches and promises direct intervention by the Central Bank in the foreign exchange market. This is despite the fact that he was a staunch critic of any government or Central Bank intervention in the markets until his appointment to this position.

However, considering the predicted pattern for the liberation of Iran’s currency resources, how has the central bank intervened in the market and with what tools?

Among the sharp statements of the central bank’s governor, there was a very important point about putting more pressure on exporters to bring back currency to the country. He mentioned the outsourcing contracts and currency commitments of exporters to economic actors, and announced the strict measures taken by his organization to return the export revenues.

Raisi is playing a game with exporters.

Based on the codes present in Farzin’s controversial speech and the pattern of Iran’s resource liberation, it can be said that the government intends to play a game with exporters. This not only affects them, but is also a clear example of dipping into the pockets of exporters. In other words, the government and the central bank intend to impose maximum pressure on exporters to allocate the necessary currency resources for intervening in the currency market and temporarily suppressing prices.

This policy, if implemented, has many destructive consequences that economists and experts have explicitly expressed concerns about in recent days. Saeed Madani Zadeh, the head of the Management and Economics Faculty at Sharif University, has also referred to it as a warning sign for further government control of Iran’s economy. Many other renowned economists have also highlighted the dangerous nature of the ideas proposed by Farzin, considering them as a tool to further restrict the political, economic, and social environment of the country by the government led by Ebrahim Raisi.

In other words, the Raisi government intends to temporarily suppress prices using the money belonging to the country’s producers and thereby create the grounds for suppressing social movements in the country. In simpler terms, the revolutionary government wants to use the half-hearted agreement with the United States as a lever to exert further pressure on society. This could inject a sense of despair among different segments of society and, although it may briefly divert attention towards the foreign exchange market, it will not alleviate the numerous economic problems in Iran, nor will it silence the ongoing social movements in the country.