There is wealth of experience of countries to learn from. Tehran visibly needs to move away from ersatz reforms, sooner rather than later. The writing is on the wall. Multiple currency rates have long been a bane of the economy, the sooner this despairing and dysfunctional policy ends the better.
Likewise, decision and policy makers have come to realize, albeit belatedly, that the economic world is fast changing and governments that do not rise to the occasion can do so at their own peril. The least is that they will be left behind.
Donald Trump has undermined Iran’s economy and says he will continue to do so until his unacceptable and irresponsible demands are met, Financial Tribune reported.
The US president is burdened with more internal problems than he can possibly resolve. But when it comes to his imprudent and dangerous anti-Iran policy, he refuses to budge, thanks to the wrong advice he gets from the likes of Mike Pompeo and John Bolton -- two rabidly pro-Israel politicians looking for a fight with Iran and who never make a secret of their policy of “regime change.”
The two aides plus Israel and the House of Saud were instrumental in pushing Trump to abandon the 2015 Iran nuclear deal last summer.
That was then and this is now.
It would be fair to ascertain that President Hassan Rouhani and his government were not unaware about how the Trump White House would look like in terms of its hardline, provocative and hostile Iran policy even before he won the controversial 2017 presidential election.
High on Tehran’s agenda has been a roadmap to lessen the potential impact of the belligerent policy of the United States on its economy and foreign currency earnings.
Focus on Export
Ever since the latest rial currency crisis emerged a year ago, the government appealed to Iranian exporters to return their overseas earnings and sell it via a special (integrated system for hard currency transactions) system known locally as the Nima system.
Official reports say of the $40 billion in non-oil exports last year, barely a quarter of the amount was repatriated back home.
But here is the major hitch! There is a huge difference between the Nima and free market rates, the latter being much higher. And this is said to be the primary reason why manufactures and businesses in the export sector are averse to bringing their money back home.
It has become abundantly clear that the government and Central Bank of Iran appeals have fallen on deaf ears as few if any of the exporters are willing to sell their hard currency below the open (free) market rates.
Small wonder that Farhad Dejpasand, the economy minister, visibly disappointed with the unending currency and associated problems, brought it up once again last week. He castigated business owners, entrepreneurs and stakeholders in the critical non-oil export industry for failing to play by the rules.
Going straight to the real and pressing government concern, he asked “Why is it that out of $40 billion in non-oil exports only $10 billion has been brought back to the country?”
Unmoved, unimpressed and uninterested as they seemed by the minister’s pleas and petitions, Dejpasand moved to another subtle subject that has created immense anxiety among large sections of the society.
“Are you willing to see the disintegration of the national currency at a time when the value of the rial is a central pillar of the economy? Are you aware what would (can) happen if half of this ($40b) amount is repatriated?”
The rial has lost almost 60% of its value since last spring.
One need not be a rocket scientist to understand an unwritten covenant: When the value of a national currency declines the best and most profitable business is export. This is true from Afghanistan to America.
China is one relevant example. When it first opened up its economy in the 1970s and 1980s, it was in the country's interest to keep the yuan artificially low to make its export industry competitive against Asian rivals.
Leaders in Beijing have often been accused by many western countries of undervaluing their currency to make China’s exports more competitive and push out the other big players from the international marketplace.
China’s total exports rose to $2.46 trillion last year, gaining 9.9% from the previous year.
It is not the intention, for obvious reasons, of this piece to draw parallels between countries and their performance.
The purpose, indeed, is to take a closer look at the focus and direction in the two nations and learn the proper lessons.
Addressing, without hesitation, the legitimate grievances and concerns of manufactures and businesses is, after all, the responsibility of governments. And by the same token, the business community should also be held accountable to the highest standards for their actions or the lack of it.
Delays and denials have not helped and never will.