Iranians face economic uncertainty as US reimposes sanctions

August 08 2018

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 Iranians are concerned that further financial woes could be on the horizon after Washington reimposed economic sanctions on Tehran which had been earlier lifted as part of the 2015 Iran nuclear deal that incumbent US President Donald Trump despised.

Although many Iranian citizens insist that they felt little economic benefit from the internationally backed accord, which saw Tehran trade in its nuclear programme for a partial slackening of sanctions, there were growing concerns that a new economic strategy adopted by the government to mitigate the fresh US sanctions would prove to be insufficient. 

"It shames me to say it, but I don't have enough to maintain the amount of food I used to have, I don't buy meat anymore and most days I make lentils," Faride, a middle-class woman whose income depends on her late husband's pension, told Efe news. "I don't know how things will pan out with the sanctions." 

Product shortages, inflation and rising unemployment are at the forefront of many peoples' minds in Iran, where tensions boiled over last week and gave way to rare street protests in several cities. 

Trump signed an executive order for the punitive financial measures to be brought back into effect and warned on Tuesday that any country doing business with Iran would not do business with the US. 

The rial has lost almost half its value against the dollar since Trump announced he would pull out of the 2015 nuclear deal in May, which was signed by his predecessor Barack Obama, the UK, the EU, France, Russia, China and Germany. 

This has driven inflation up. Prices for dairy products rose 32 per cent in the space of a week. 

The rapid devaluation of the rial has also impacted imports, a sector that will likely also be hit hard by the return of US sanctions, which were designed to limit the Iranian government's access to gold, metals and dollars. 

Iranian President Hassan Rouhani's government said the Central Bank would maintain its official exchange rate with the dollar, currently valued at 42,000 rial, and would request that oil companies sell foreign currency reserves to companies that import basic goods like food and medicine. 

Rouhani, considered a moderate in the context of Iran's theocratic Shia regime, was in power when the 2015 deal, officially titled the Joint Comprehensive Plan of Action, was struck. 

He also granted permission for currency exchange offices to reopen, the majority of which had been closed when the exchange rate was fixed in April. 

Most of the outlets in Tehran remained closed on Tuesday. All remaining signatories of the 2015 nuclear accord have vowed to stay committed to the deal.

  • Source
  • IANS