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All by Maziar Motamedi
Iran’s business community is taking stock after the assassination of Major General Qassem Soleimani as the possibility of a direct conflict with the United States threatens serious consequences for an already beleaguered Iranian economy. Both the currency market and stock market saw further losses on Monday, the final day of a three-day period of mourning.
◢ Despite sharp criticism from the private sector, the Rouhani administration has delayed a key reform to Iran’s currency policy, frustrating the country’s beleaguered business leaders. In late June, government spokesman Ali Rabiei stated definitively that the administration has no plans to eliminate the subsidized foreign exchange rate made available to importers of essential goods.
◢ Reform-minded Iranians, especially those inside the ailing banking system, are worried that the US government’s step to designate Iran’s Islamic Revolutionary Guard Corps (IRGC) as a terrorist organization has doomed a years-long effort to get the Islamic Republic off a consequential global blacklist.
◢ Despite mounting evidence that the Iranian government’s policy of allocating subsidized foreign currency for the importation of essential goods has failed, the Rouhani administration has signaled that it plans to maintain the policy for at least another year. But lawmakers and Rouhani’s own cabinet ministers may force the administration to change course.
◢ A new draft framework put forward by the Central Bank of Iran proposes a ban on the use of global cryptocurrencies for payments within the country, disappointing members of Iran’s burgeoning “crypto” community. The central bank has given the community one month to offer feedback on the proposed rules and now members are hard at work trying to reach a consensus to solve a thorny problem of monetary policy.
◢ Bank of Kunlun, the state-owned bank at the heart of China’s trade with Iran, has made a dramatic change in its policies, informing clients that it will no longer process payments that contravene US secondary sanctions on Iran. Kunlun’s change in policy cuts a longstanding financial lifeline for Iran’s automotive, shipping, petrochemical, and steel industries.
◢ China has halted its financial transactions with Iran as part of an unexpected gamble on the future of its trading relationship with the Islamic Republic. According to Majid Reza Hariri, deputy president of the Iran-China Chamber of Commerce, China is hoping to sustain its trade with Iran without putting its financial system in the crosshairs of US authorities by joining the special purpose vehicle being devised by Europe for this purpose.
◢ In an exclusive interview with Bourse & Bazaar, CEO of Iran’s Parsian Bank, which was sanctioned last week by the US Treasury, has described the designation of the bank as a Specially Designated Global Terrorist (SDGT) a “mistake.” The move against one of Iran’s leading private sector banks by has many in Iran’s banking sector worried about the ongoing viability of humanitarian trade.
◢ Over the last six months, the public debate in Iran around FATF-related reforms has reached a surreal crescendo. Seldom do countries experience such intensive political debates over measures as technical and obtuse as financial regulations. But 143 lawmakers voted bravely to pass the final of four bills required by the FATF action plan, in a landmark vote that may increases chances that Iran maintains ties with international financial institutions in the face of returning sanctions.
◢ The second and final sanctions deadline of November 4 is drawing near. After this date, unilateral US sanctions on Iran’s financial sector will once again come into force. According to Iranian bankers and government officials, this could mean that Iran struggles to import humanitarian goods, including basic foodstuffs, despite longstanding exemptions for trade in these goods.
These are stressful times in Iran and people are seeking relief. According to a recent study, 80 percent of Tehran residents experience at least one major stressful event per year and 45 percent report feeling stress due to the economic situation.
◢ Iran is battling a paper crisis. Gradual price hikes have been increasing pressure on book and newspaper publishers over the last year, but the scale of the crisis became clear when Culture Minister Abbas Salehi announced on August 4 that the country has just enough newsprint paper in storage to meet two months worth of demand. The government has rolled out a support package that includes importing paper as an essential good. But the move defers real reform that is needed to address a decades-long problem of corruption and inefficiency.
◢ According to data compiled by IranSalary, the country's first specialized online platform for remunerations, Iranian women earned 27 percent less than their male counterparts in the previous Iranian year (ended March 2018). The wage gap has widened in recent years, rising from an average of 23 percent three years ago. For Aseyeh Hatami, Founder of IranTalent and IranSalary, bringing greater equality to Iran’s job market is a personal and professional mission.
