Despite the Lifting of Sanctions, Why Iran's Economy Has Plunged Into Recession? – Part 4
- Tuesday, 20 December 2016 14:00
NCRI - A year after signing the nuclear deal, while significant problems such as export restrictions and the prohibition of the international bank transfer (swift) have been resolved a transparent atmosphere is created to identify the radical economic problems of Iran.
In previous parts, to answer the main question: “why the recession is becoming deeper while the sanctions are lifted and the international transaction with Iran has been opened.” We examined ‘Internal issues’ like, ‘the lack of security and stability’ , the ‘domination of the Guardianship of the Islamic Jurist in the country,’ the power struggle mainly between Iranian regime’s Revolutionary Guards (IRGC) and Rouhani’s government and its disparaging effects on oil contracts, the financial instability and widespread corruption, the following is Part 4.
Part Four
Lack of competition and cumbersome regulations
Overnight decisions, confusion and instability in banking policies and regulations (money market) as well as instability in management of large state-owned companies, have intensified the instability and distrust in Iran’s economy.
Mahmoud Lahouti, president of the Exports Confederation, explains that “there are currently about 1600 cumbersome rules in the country’s trade laws, which shows that we are faced with rules inflation; rules which sometimes are interfering and conflicting with each other. At the moment, there are difficult regulations regarding foreign investment and company registration.”
In Iran, starting any official economic activity in private sector requires going through the furnace of acquiring numerous permits. Besides, when a business comes into operation, dozens of bodies, in addition to those associated with the tax office and social security, claim their shares. If a business could overcome all these barriers through establishing special relationships with numerous officials, still the government pricing authorities could always make it difficult for the manufacturer under the pretext of fighting against profiteering and inflation. As a matter of fact, Iran’s economic activity at all its levels is dominated by “special wills and commands” of government bureaucrats. The crushing domination of the state over the whole economic system and a confusing abundance of too cumbersome regulations, has taken any kind of space away from economic actors, leaving no room for competition in Iran’s economy.
2. International Barriers
the Vali-e-faqih Khamenei said in his public speech in March this year that ”Today, throughout the western countries and those influenced by them, we still have difficulties performing our banking transactions, getting our money back from their banks, and doing business deals which require involvement of their banks; once investigated, it turns out that they’re afraid of the Americans. This is what we see today in front of our eyes; a total loss.”
To be continued
