Blackouts, inflation, and sanctions

The same rice that I just bought in Amsterdam for $4 a kilo is $8 a kilo in Iran. Tea, according to friends who were just visiting, is up to $30 a kilo. When a friend asked her mother in Tehran what she should bring her from Amsterdam, the mother joked "rice and tea."

When a friend told me that there were blackouts in Tehran and that the sanctions were really having an effect, I thought he was joking. I thought he thought that I had become a doomsayer, like so many who no longer live in Iran, and was just feeding my hysteria. Turns out he was not joking. You can read about Iran's economic problems in an article by Thomas Erdbrink: Oil Cash May Prove A Shaky Crutch for Iran's Ahmadinejad

A small coterie of developers, oil traders and businesspeople with lucrative government contracts are profiting from the oil boom. Shiny new BMWs crowd the streets of northern Tehran, where real estate prices have doubled or tripled and where luxury developments can command $2,000 per square foot.

But the majority of Iranians have suffered from the inflation that analysts say is partly the result of government spending. Asgar Eskandiary, 32, a teacher, said he thanked God for the health insurance he bought years ago because it paid for a sinus operation. Otherwise, he and his wife would have had to spend rent money on the operation and "we would have lost our apartment for sure," he said, drinking a warm Coke at a fast-food restaurant where a blackout to save energy had deterred other customers.

Every visit to the supermarket brings unpleasant surprises, he said. The price of milk powder, which the couple needs for their infant son, increased from the equivalent of $3 to about $4.30 in just over a year's time. He makes the equivalent of about $540 a month and "can barely cope," he said. "We spend all we have for our small baby."

The teacher said he saw only one solution. "I want to write a letter to Supreme Leader Ayatollah Ali Khamenei. He needs to bring back the experts, people who know about economy. The government doesn't know what they are doing."

...


"We simply can't transfer money, which means that we can't buy spare parts for our factories," said Bodagh Khanbodagi, honorary president of the private Iranian-German business chamber. German export credits backing trade with Iran totaled about $730 million last year, about half the value of German export credits in 2006 and one-fifth that in 2004, according to a report by the Congressional Research Service released this month.

"Nobody's coming over, and I don't see any minister visiting here in the near future," he said, sipping tea in an office decorated with pictures of himself with German and Iranian dignitaries.

In Iranian waters or not in Iranian waters?

A commentor on my last post wrote:

"and you don't have the slightest doubt that they were not within Iranian Waters..."

Let me agree with the commenter for a second that the British sailors were in Iran's water, if that is the case everybody knows that this is against international law. Iran should have the right to protest that move.

I also strongly believe, particularly in this case, that the best way to act is not to choose to use the very last option you have. It is no secret to anybody that we are living in a very tense situation. At the moment that I am writing this, the UN Security Council is probably passing another damaging series of economic sanctions against Iran. This is a time that Iranians should put their nationalistic feelings aside and not just go after what is right at the moment, but to act in a way that ensures that we prevent a new disaster in Middle East.

So dear Commenter, since we both know that every coin has two sides, what about if the British sailors were not in Iranian waters? Is right to hold them? Will Iran benefit from this action? If Iran is wrong in this case, it will only add to the feeling of people around the world that the Iranian government is out of control. You do not have to be a rocket scientist to figure that out.

I do believe that Iran is looking for ways to show that they are not joking when they say they will retaliate if they come under attack. This may mean that the Iranian government believes that the US and its allies will attack Iran..

(BTW, ET adds that there is a pretty comprehensive roundup at Slate and at Jules Crittenden

Internal Sanctions

Categories: iran, sanctions, economy

“Guess what Kaveh told me,” I say to Keivan.

“What?”

“He said that out of 140 countries, Iran ranks 133rd in foreign investment.”

“Wow. 140th must be North Korea,” Keivan responds.

Aside: I cannot find a link to this, so maybe it is not true. According to the Heritage Foundation, Iran does rank 156th out of 157 countries on economic freedom.

On our way home, Keivan mentions this to the taxi driver who laughs and says, “Isn’t that just great?”

“Why does Iran even need sanctions?” I say. “They create their own. There is not need for outside help.”

“I hear that even the Chinese are having a hard time making a profit here,” Keivan says.

“Iranians think that they are doing foreign companies a favor by letting them do business in Iran and then they just bleed you dry. No foreign company can survive here.”

“They are wolves,” Keivan says.

To illustrate our point, we have an acquaintance who has been working on a 3-month project for the past three years. “Every time I come back to Iran I think that I will finish the project in these three months. But it never gets done. I don’t know what happens.”

Every few months, he reports, a new Iranian contractor appears onsite. They freely tell him that they greased a few palms to get the contract and then proceed to blackmail his mother company for a bigger monthly payout. “You can’t keep your contract without a local partner,” they tell the foreign project managers. Suddenly they disappear: just as suddenly as they showed up.

So you see, Iran has its own very effective sanctions regime.

Closing Time

All over Iran, businesses are closing early again today for a chance to say farewell to the world cup team. Keivan predicts a 3-0 loss for Iran. “Don’t say that,” Mohamad protests. “Everything you’ve said has come true.”

“It’s all Keivan’s fault,” I respond.

---

Was in a meeting with some Iranian businessmen. One was telling us that he went to Dubai to buy some hardware for his business. “They didn’t sell it to me. They won’t sell to Iranians.”

“Sanctions?”

“No, it’s not sanctions. They just won’t sell to Iran. The Arabs do not want to sell to Iran.”

“You’re sure it wasn’t sanctions?”

“I’m sure. They said to me: we won’t sell to Jews. I said, hey, I’m a muslim. My name is Mohamad, how can I be Jewish? They kept telling me they don’t sell to Jews.”

All of the men laughed. That was the end of that.

I was left thinking of the Brooklyn Mullah. He appears on Iranian tv every once in awhile and lectures on scripture. He has a really thick Brooklyn accent that shifts into what sounds to me like perfect Arabic when he needs to quote something. Last time I saw him he was speaking of the sheitan (devil) and identifying his works. It’s all so disorienting for me: the accent, the sermon, the black turban: I keep thinking he is a rabbi, but then what’s all this about hadith?

I think it was Lenny Bruce who said that all New Yorkers are Jewish. I guess the Brooklyn Mullah is no exception.

Waiting for Sanctions

Tagged as: Iran: WMD

We have been trying to think of sanctions that would actually work. Here are a few targeted at the ruling classes:

1. Force the Iranian team to negotiate with itself. (Oops! They already are!)
2. Make them source all materials and services within Iran. (That’ll teach them.)
3. Have the regime try to get money from itself without bribing anyone.
4. Force them to meet deadlines.
5. Don’t serve tea to any Iranian officials.
6. Make them use the Iranian medical system themselves (no intermediaries allowed! Let them see what it’s like to find out the drug they need is only available on the black market.)
7. Don’t let them watch football until they meet the EU’s demands.
8. Force them to drink only homemade Iranian vodka.

Isolation…

Iran: politics

I need to reopen the conversation on isolating Iran through sanctions. Let’s start with this presumption: the mullahs are not going anywhere. They will not be overthrown or pushed out because of a few puny sanctions. In fact, the political-fundamentalists among them will be strengthened by sanctions because it will mean that most of the population will become dependent on their good graces. Sanctions also mean that the group in power will become the lone voice inside of Iran. It’s already hard enough to have any diversity of opinion.

The regime welcomes the threat of attack. The only way for them to unite is against a common enemy. Unity is what they long for. Unity is what they do not have. Achieving unity presupposes a common enemy.

So, isolating Iran plays into the hands of the political-fundamentalists by making them an even stronger voice in this country and by giving them an enemy. Hurray.

Iran is not waiting to become America or Europe. Iran minus the regime does not equal freedom or democracy as much as Iranians would like you to believe. You need to have a public debate and free speech before you get democracy. That’s a lot harder than it might sound.

The publicly sanctioned arguments are those of degrees here in Iran. They do not represent true opposition. Those involved meticulously filter the voices that get heard. When they fall out with those in power, their voices are also filtered. Lo and behold! They are surprised that after a career of keeping others quiet, they can longer be heard.