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First Post
6 days ago
- Business
- First Post
Iran, hit by high inflation and threatened by Trump, seeks comfort in gold; imports triple in a year
Many Iranians reportedly keep their savings in gold and US dollars at home, avoiding banks due to fears of financial instability or government confiscation. The country itself has used gold transactions for weapons deals with sanctions-hit Russia read more Iran is turning increasingly to gold as citizens and businesses seek refuge from soaring inflation and escalating geopolitical tensions, particularly threats from former US President Donald Trump's administration. Local gold prices surged more than 80 per cent in Iranian rial terms over the past year, significantly outpacing the global benchmark's increase of 45 per cent. The West Asian nation imported a record 100 tons of gold valued at about $8 billion in the financial year ending in late March, tripling its previous annual imports, according to government data. The actual figure could be nearly double, with substantial amounts coming from neighbouring markets like the United Arab Emirates and Turkey, according to analysts cited by Financial Times. STORY CONTINUES BELOW THIS AD Sanctions spurring gold accumulation Analysts link this sharp rise to Iranians investing in gold to protect their savings amid economic instability, sanctions, and the looming threat of military confrontation with the United States and Israel. The Central Bank of Iran has reportedly accumulated large gold reserves, potentially at historic levels, as a buffer against future sanctions. While the central bank has not publicly commented, an economist familiar with the matter said, 'No one in the world can stop Iran from importing gold[…]The global gold market is opaque. Gold takes up little space and much of it arrives through neighbouring countries.' Demand high despite price volatility Price volatility has occasionally impacted investors, with gold coin prices briefly exceeding IR1 billion ($2,200) in March before retreating following the resumption of nuclear talks with the US, which briefly raised hopes for sanctions relief. Nonetheless, demand for gold remains robust due to considerable challenges impeding a nuclear agreement. US officials continue demanding that Iran halt uranium enrichment, a stance Tehran firmly rejects. Trump's ongoing 'maximum pressure' policy, combined with threats of additional sanctions targeting Iran's crucial oil exports, further fuels economic uncertainty. Many Iranians reportedly keep their savings in gold and US dollars at home, avoiding banks due to fears of financial instability or government confiscation. 'It's like wine that just sits in storage,' FT quoted Mohammad Keshtyaray, a member of Iran's Gold and Jewelry Special Committee, as saying. Gold for weapons? Additionally, gold transactions help Iran circumvent international sanctions. US analysts from C4ADS, as reported by The Washington Post earlier, revealed that Russia transferred 1.8 tons of gold bars worth approximately $104 million to Iran as payment for Shahed-136 drones. Further gold transactions between Russia and Iran are reportedly planned, though details remain unclear.
Yahoo
27-03-2025
- Business
- Yahoo
Why Economic Sanctions Against Iran Are Backfiring
How Sanctions Work: Iran and the Impact of Economic Warfare, by Narges Bajoghli, Vali Nasr, Djavad Salehi-Isfahani, and Ali Vaez, Stanford University Press, 212 pages, $24 If there's one part of foreign policy where President Donald Trump has been consistent, it's economic sanctions on Iran. During his first presidency, Trump imposed what the State Department called a "super-maximum economic pressure campaign." Throughout the Biden administration, Trump and his supporters complained that Iran had been on the verge of bankruptcy but lax sanctions enforcement was allowing the Iranian economy to rebound. In his third week in office, Trump signed an order calling for renewed sanctions pressure on Iran, although he also expressed willingness to negotiate. Sanctions have undoubtedly made Iran squirm. Iranian oil exports fell to nearly nothing in 2019, leading Iran to harass oil shipping and allegedly attack oil production in neighboring countries. The government couldn't even access its own money abroad, and it had to make complex deals to buy food and medicine. At home, Iran saw increasingly widespread uprisings and crackdowns in 2018, 2019, and 2022. Figures in Trump's orbit have flirted with the idea of full-on regime change. The way sanctions deal out damage—the chain of causation from the president's pen to turmoil in Iran—is less well understood. Even if the issue weren't muddled by heavy propaganda, the process is complicated. How Sanctions Work: Iran and the Impact of Economic Warfare presents an easily digestible set of data on sanctions. It's written by anthropologist Narges Bajoghli, economist and former Central Bank of Iran researcher Djavad Salehi-Isfahani, and political scientists Vali Nasr and Ali Vaez, both of whom have advised the U.S. government on negotiations. The past few decades in Iran have been a natural experiment in the effect of economic sanctions. Iran has more of a market economy than other targets of U.S. sanctions, such as Cuba and North Korea. It also had normal trade relations with much of the world, which have been cut since the 1990s by waves of Washington's sanctions. Although the United States has the power to seriously disrupt economic life in other countries, the book argues, the consequences don't always serve American interests. Sanctions hurt the prosperity and political standing of Iran's pro-American middle class the most. They also make the government more paranoid and remove important incentives to play nice. Everyone seems worse off. The U.S. has tried to wash its hands of the policy's consequences for ordinary Iranians, blaming their poverty on domestic "corruption and economic mismanagement" rather than on sanctions. But the data are clear. The Iranian economy was booming from 1988, the end of the country's war with Iraq, to 2011, the beginning of former President Barack Obama's intensified sanctions campaign. Obama's innovation was secondary sanctions. As the flow of direct American-Iranian trade shrunk, the U.S. Treasury's Office of Foreign Assets Control punished companies in other countries that dealt with Iran. The Iranian economy became more or less radioactive, as any bank in the world that handled Iranian money and any shipping company that handled Iranian oil risked the wrath of the U.S. government. Then Obama made a deal, lifting the sanctions in 2015 in exchange for restrictions on Iran's nuclear program. Trade resumed and foreign investment flowed back in—until Trump reimposed sanctions in 2018. (Despite Trump's claims to the contrary, former President Joe Biden continued to enforce the same sanctions.) Iran has since come closer to building a nuclear bomb, and it has had more confrontations with the U.S. military. While it hasn't collapsed, Iran has gone through a nationwide belt-tightening that makes life more miserable. Cutting oil exports has meant there is less capital for new investments, so growth has stagnated. Cutting off access to foreign banks has made importing anything more complicated and expensive, leading to heavy inflation. Employment has stayed steady, and the non-oil economy has actually grown: The loss of foreign imports led to a growth in domestic Iranian industry. For this reason, some hawkish Iranian nationalists argue Iran's political isolation is a good thing. But the tradeoff hasn't been worth it for ordinary citizens: By every statistic the authors review, from consumer spending indexes to the number of calories eaten per day, Iranians have lower living standards. During the economic boom times of the 1990s and the early 2000s, the Iranian middle class grew from 20 percent of the population to more than 50 percent, almost entirely due to the poor getting richer. The millions of Iranians newly exposed to higher education and foreign culture became a base for reformist political blocs such as the Green Movement, which called for liberal domestic policy and diplomacy with the outside world. Under sanctions, the trend has reversed, with millions of middle-class Iranians falling back into poverty. The authors interview many liberal Iranians who, despite waves of protests, are not optimistic about changing their country's government. With their own lives getting worse, they have shrunken from public life. "The problems seem so much bigger than what we can solve. Everything seems absurd. So one day I just said, I'm done. I'm done with all of it," says Ali, a middle-aged chemist who has joined a hippie back-to-nature group. The Iranian government has also become more paranoid and less eager to compromise, whether internally or externally. The power of sanctions, the authors argue, "ultimately lies in lifting them." Tehran agreed to the nuclear deal in 2015 because it believed that compromise on its part would lead to compromise from the other side. Years of maximum pressure have convinced many of the Islamic Republic's support base there's no point in trying to negotiate. Reza, a university professor close to the government, tells the authors that "as long as Iran is a state that believes in national sovereignty and will not kowtow to outside forces, we will continue to be on the brunt end of destructive U.S. policy. If it's not the nuclear issue, it's our ballistic missiles. If it's not our ballistic missiles, it'll be human rights. If it's not human rights, they'll find another reason." To some degree, he's right. Beyond presidential sanctions orders, U.S. trade law has essentially been rewritten around isolating Iran. (The Iran Nonproliferation Act of 2000 even banned NASA from making payments on the International Space Station unless the president certified that Russia was not cooperating with Iran on missile production.) The sanctions machine is on autopilot, and turning it off is a heavy political lift. Look at what happened to Obama's deal. Although sanctions relief was a passive concession—the U.S. simply stopped preventing Iran from trading with third parties—opponents of diplomacy successfully cast it as a taxpayer giveaway to the Iranian government. The 2015 deal took a lot of political capital to push through Congress, and it was easily undone by Obama's successor. Without massive legislative changes, the next deal will be just as vulnerable. Maybe the architects of sanctions just weren't honest about their intentions. If the goal is to avoid war and make Iran a freer country, sanctions policy has obviously failed. But if the goal is to prolong conflict and weaken Iranian society, the sanctions are working just fine. The chaos and suffering may be features, not bugs. U.S. officials know what's happening. They have access to the same information that the authors of How Sanctions Work have. In 2018, frustrated Iranian father Nader Shokoufi fired off an angry tweet at Richard Nephew, a former Obama administration official who wrote The Art of Sanctions. "My son was 1yo. He had fever. I went through 16 pharmacies to find the paracetamol suitable for his age. I hope you experience it once and then tell me how 'moral' that feels," Shokoufi wrote. Rather than ignoring the message, Nephew wrote back, "I am sorry that happened." He can plead remorse, but not ignorance. Others are less shy. Mark Dubowitz, head of the neoconservative Foundation for Defense of Democracies, complained when Iran elected a "more soft-spoken, cosmopolitan, and diplomatic president" in 2013. During the Trump administration, when the Foundation for Defense of Democracies was a key architect of the maximum pressure campaign, Dubowitz openly stated that the Islamic Republic "will turn their guns on their own people" under pressure. In December 2024, shortly after How Sanctions Work was published, the government of Syria—another sanctions target—collapsed. The Syrian sanctions failed on their own stated terms. They did not empower what the Obama administration called the "moderate opposition." They did not push the Syrian government to reform. In fact, the opposite happened; the Syrian government grew more corrupt and repressive, then fell to rebels whom the United States considers terrorists. But that seemed to suit officials just fine. Then-President Joe Biden bragged about the "historic opportunity" that came with the fall of a U.S. enemy. If the new regime turns out to be hostile, after all, it can be sanctioned, just as the old one was. Sanctions "work" by making the world a poorer, less connected, and more dangerous place. They strangle the human spirit. Peaceful exchange between nations is a win-win proposition. When those things are cut off, everyone is worse off. The post Why Economic Sanctions Against Iran Are Backfiring appeared first on
Saba Yemen
21-03-2025
- Business
- Saba Yemen
Iran's Economic Growth Rates 3.7% in 9 Months
Tehran - Saba: The Iranian economy grew by 3.7% in the first nine months of the past Iranian year (ended on the 20th of this month). Statistics and indicators from the Central Bank of Iran indicate that the country's economy grew by 3.7% during the first nine months of last year (1403 AH). The Central Bank added that fixed capital formation during this period grew by 3.4%, while the volume of non-oil trade exceeded $116 billion, an increase of 11.2%. General economic indicators indicate that the country's sustainable economic growth trajectory during the past Iranian year continues. Whatsapp Telegram Email Print
Al Jazeera
27-02-2025
- Business
- Al Jazeera
Iran's government hits out at crypto again as currency freefalls
Tehran, Iran – Iranian authorities have again been cracking down on cryptocurrencies and online exchanges as the value of the national currency plummets in an economy in turmoil. Last month, the Central Bank of Iran (CBI) suddenly stopped rial payments in all cryptocurrency exchanges, leaving more than 10 million crypto users unable to spend rials on Bitcoin and other global online currencies. The goal was to counter further depreciation of the embattled national currency by stopping it from changing hands for foreign currencies. The crypto market grew significantly last year and leans towards a bullish 2025 as countless young Iranians turn to a growing global market to make money in a largely isolated economy straining under harsh Western sanctions. The move had been tried before at limited junctures, but never for so long and at such a scale, seeming to be part of a larger governance effort by an establishment that wants stringent levels of control and oversight on the burgeoning crypto community. The economy has been plagued by inflation rates of more than 40 percent for years, and remains disconnected from the global payments system. CBI establishes authority After imposing the block, the central bank mostly maintained radio silence, not offering clarifications to the public. The CBI also did not respond to an Al Jazeera request for comment. In a public statement, it merely noted that CBI governor Mohammad Reza Farzin participated in a meeting of the heads of government, judiciary and parliament last month and that CBI was given 'full authority to monitor and manage the cryptocurrency market' during that meeting. President Masoud Pezeshkian also sent a letter, published in the media, to Farzin last week, emphasising that CBI is the 'sole trustee to manage' the crypto market. The meeting last month also concluded that the government wants to see more export trade bringing cryptocurrencies into the Iranian market, but did not indicate how this was to be accomplished. The new restrictions appear to be part of strict measures to prevent currency depreciation, coming as CBI pumps more foreign currency into the volatile local market and police periodically announce the arrest of illegal currency traders in the streets of Tehran and other major cities. The Iranian rial continued its slide this week, hitting a new all-time low of more than 940,000 per US dollar. A dollar fetched less than 600,000 rials in October last year, and less than 40,000 in early 2018. The national currency has been experiencing a sharp decline in recent weeks amid escalating regional conflicts, blows to the Tehran-led 'axis of resistance', and Donald Trump's insistence on a 'maximum pressure' campaign. A 4 percent cap for USDT? Days after its sudden decision to ban rial purchases of cryptocurrencies, CBI imposed conditions on online exchanges and started negotiations with them. Many smaller exchanges were forced to accept at least some of the conditions, including providing proof of reserves. Some have had their rial gateways restored at limited capacities, while others are still negotiating. Some of the 'proposed measures' by CBI comprised top levels of access to customer information, including real-time access, constant updates, and an ability to block users whenever deemed necessary, according to documents reviewed by Al Jazeera. Similar to the artificial limits regulators have set for trading on Iran's stock markets, CBI envisions imposing daily caps on how much the rial-price of cryptocurrencies can change. If the currencies move beyond defined limits, their rial trade would be suspended for a short time. The central bank is especially eyeing the dollar-pegged stablecoin Tether (USDT), which many Iranians have been buying as a hedge. It wants to ensure that if USDT prices surge by more than 4 percent in a day, Iranian traders would be temporarily blocked from buying it. 'Rationality not on the agenda' As a result of the abrupt block of rial gateways, some crypto exchanges were forced to start looking for temporary alternatives, such as using different bank accounts to facilitate rial payments. Incoming and outgoing crypto transactions were unaffected, and users could still take rials out of their accounts if they chose. The central bank is facing criticism and Economy Minister Abdolnaser Hemmati, a former central bank chief and presidential candidate, is now being targeted for impeachment by hardline lawmakers. The government maintains the impeachment effort is politically driven as lawmakers want to remove the minister mere months after he started. Rather than addressing its own imbalances in a rocky economy, CBI has adopted a strategy of deflecting attention and trying to make money through online exchanges, said the director of a local exchange. 'Repeated warnings about the adverse political, social and economic impacts of such moves, provided by stakeholders and the media, have not been heeded. The central bank closed the payment gateways with a businesslike, unethical and biased approach,' Ubitex CEO Eisa Keshavarz told Al Jazeera. He said the establishment is, on the one hand, blocking foreign services like social media platforms to force Iranians towards local platforms, while on the other hand, it pushes people towards foreign exchanges with its restrictive moves against local counterparts. 'These double policies show that rationality, clear thinking and empathising with the people are not on the agenda, which widens the gap between the people and the government.' Keshavarz said people will turn to unofficial, underground activities as a result of the restrictions. 'I believe it is the people's inalienable right anywhere to turn their hard-earned money into gold, greenbacks, crypto, housing or anything to preserve their purchasing power,' he said. 'Minimising risks', but for whom? CBI and others have made past attempts at regulating the burgeoning crypto industry – almost all were measures that perplexed or frustrated stakeholders. The government made crypto mining – the process of generating new coins using computational power – legal in 2019 under strict conditions. Many miners were driven out, especially due to repeated cutoffs of mining rigs because of electricity shortages. Observers and experts now believe that regulators, faced with a widening government budget deficit, will move towards taxing crypto transactions. The Supreme Council of Cyberspace, Iran's top internet governance body, released a regulatory roadmap last month that observers say does not bode well for the crypto community. It discusses 'facilitating international trade' through crypto, which, according to crypto and blockchain researcher Saeed Khoshbakht, could be interpreted as attempts to circumvent sanctions on Iran. 'Especially after Mr Trump's election, this could expose crypto users to risks of being blacklisted or having their transactions flagged on international exchanges,' he told Al Jazeera. The expert said using international transactions as a keyword in the document could also leave major domestic crypto transactions unaudited because they may be deemed confidential, decreasing transparency. At the same time, the regulatory document adopts a policy of 'active control and countermeasures' in dealing with global cryptocurrencies, purporting to 'minimise risks', but does not say exactly how or for whom. 'If they said minimising risks for citizens, at least some level of support could be envisioned. But without this word, 'minimising risk' appears focused on the state rather than the people, and this means a host of new restrictions masked as control and management,' Khoshbakht said.
