ZCZC
BCN-20
IRAN-US-SANCTION-ECONOMY,FOCUS
Iran volatile on eve of US sanctions
TEHRAN, Aug 4, 2018 (BSS/AFP) – Iranians are hunkering down for the return
of US sanctions on Monday with a run on gold and hard currency as they
scramble to protect their savings, and sporadic protests over the already
troubled economy.
State news agencies reported “scattered protests” of a few hundred people
on Thursday in the cities of Shiraz, Ahvaz, Mashhad and Karaj, which police
had brought under control.
Videos posted on social media — whose authenticity could not be verified –
– have shown days of demonstrations in Iran’s third city Isfahan and minor
protests in the capital on Thursday night.
So far, they have not been on the scale of the violent unrest that gripped
dozens of towns and cities in December and January.
But anxiety is everywhere, especially over the collapse of the rial, which
has lost nearly two-thirds of its value in six months.
“We are seeing protests and they will continue,” said Adnan Tabatabai, head
of the CARPO think tank in Germany.
“The establishment knows they are legitimate but my biggest concern is they
will be hijacked by groups inside and outside the country and turn violent.”
A decision to fix the exchange rate in April and arrest unlicensed currency
dealers backfired spectacularly and triggered a boom in the black market.
The consequences have sometimes felt absurd. One expat described having to
meet a trader under a bridge in central Tehran to change $2,000 (1,700
euros).
“He told me to wear a red scarf and came up to me whispering: ‘Show me the
money’ like we were in a spy film,” she said.
Many wealthy Iranians are leaving the country, while others have been
gripped by a bunker mentality, stocking up on provisions, dollars and gold in
order to ride out the storm.
Customers were cheek-to-jowl in the narrow alleys of Tehran’s Grand Bazaar
this week.
MORE/HR/1042
ZCZC
BCN-21
IRAN-US-SANCTION-ECONOMY 2 TEHRAN
“People are worried that if they don’t buy things today, they won’t be
available tomorrow,” said Ali, who runs a kitchen store in the bazaar, adding
that wholesalers were hoarding new stock while they waited to see how the
crisis unfolded.
The US walked out of the 2015 nuclear deal in May and is bringing back
“maximum pressure” sanctions for most sectors on August 6, and the energy
sector on November 4.
Multinational firms that rushed to cash in three years ago — such as
France’s energy giant Total and carmakers Peugeot and Renault — are already
packing up.
– Loopholes –
But many smaller firms are hunting loopholes and counting on protection
from European governments who are determined to keep the nuclear deal alive.
“No one really knows how the sanctions will be. The Trump administration is
doing that on purpose to keep everyone feeling threatened,” said a Western
businessman in Tehran working in the oil and gas sector.
He said US threats are making some Europeans more furious than afraid.
“I’ve heard of four German pharmaceutical firms who are looking to come to
Iran specifically to piss off the US.”
The return of sanctions will make things only slightly harder for them, as
major international banks were already too scared of US penalties to work
with Iran even before Trump tore up the agreement.
“The nuclear deal was good for the oil sector but didn’t help the financial
and banking sectors,” said Farid Dehdilani, international affairs adviser for
the Iranian Privatisation Organisation.
“We did everything we could to attract foreign investment but without the
banks it was limited. The US election in 2016 was always a cloud over the
agreement, and in the end it produced the worst possible result.”
MORE/HR/1044
ZCZC
BCN-22
IRAN-US-SANCTION-ECONOMY 3 LAST TEHRAN
– Hitting oil sales –
A major blow for Iran will be the loss of oil sales, which Facts Global
Energy analysis firm says could drop from 2.4 million barrels per day to as
low as 700,000 by the end of the year.
Some countries like India, China and Turkey say they are too dependent on
Iranian crude to obey US orders, but many refiners, particularly in Europe,
are already cutting back.
Ironically, Iran’s government may regret cracking down on black market
operators that facilitated oil sales during the last sanctions regime, such
as billionaire Babak Zanjani who was sentenced to death for corruption in
2016.
“Because (President Hassan) Rouhani went after his opponents and targeted
people using the black market… now the US Treasury knows exactly how they
bypassed the system,” said Mohammad Reza Behzadian, former head of the Tehran
chamber of commerce.
There have been positive signs, with a new central bank governor pledging
fresh currency policies in the coming days, and an unprecedented transparency
push that has seen dozens of arrests of profiteers with political
connections.
But many say it is all too late, with the government never putting a
convincing economic plan together when it had the chance.
“It failed to take advantage when conditions were good,” said Behzadian.
“It’s much more difficult to act in a crisis.”
BSS/AFP/HR/1045