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World Bank: Iran Likely to Suffer Worse Recession Than Previously Thought

World Bank: Iran Likely to Suffer Worse Recession Than Previously Thought

June 05, 2019 7:40 PM

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Michael Lipin

By: Michael Lipin

WASHINGTON —The World Bank says Iran is likely to experience an even worse recession this year than previously thought, as U.S. sanctions largely choke off oil exports that have been Tehran’s main revenue source.

In its latest Global Economic Prospects report published Wednesday, the Washington-based institution that provides loans to countries said it expects Iran’s Gross Domestic Product to shrink by 4.5% this year, a steeper contraction than its earlier estimate of negative 3.6% GDP growth for 2019.

“The oil industry is an important part of Iran’s economy, and its oil production is clearly going to drop because of the new U.S. sanctions,” said Patrick Clawson, research director for the Washington Institute for Near East Policy, in a VOA Persian interview on Wednesday.

The Trump administration imposed a total, unilateral ban on Iranian oil exports on May 2 as part of its campaign of “maximum pressure” on Iran to negotiate an end to its perceived malign behaviors. It had issued sanctions waivers to eight of Iran’s oil customers in November to allow them to keep importing Iranian crude for six months, but later said it would not renew those waivers and would require those customers to reduce such imports to zero.

FILE - People conduct their business at the Grand Bazaar in Tehran, Iran, Feb. 7, 2019.
FILE – People conduct their business at the Grand Bazaar in Tehran, Iran, Feb. 7, 2019.

U.S. economist Steve Hanke of Johns Hopkins University in Baltimore told VOA Persian in another Wednesday interview that Iran’s internal economic problems also are to blame for its worsening recession. “Iran is very corrupt, has very little economic freedom, and it’s hard to start a business there because Iran is not really a free market or liberal economy,” Hanke said.

Transparency International, a Berlin-based civil society organization that monitors global corruption, has ranked Iran 138 out of 180 countries in its Corruption Perceptions Index.

Iran’s other low global economic rankings include 155 out of 180 nations in the Economic Freedom Index of the Washington-based Heritage Foundation, a conservative public policy institute, and 128 out of 190 governments in the World Bank’s Ease of Doing Business index.

The World Bank’s new report also said Iran’s year-on-year inflation rate has risen sharply from about 10% in the middle of last year to about 52% in April. It said the depreciation of Iran’s rial since May 2018, when the U.S. announced it would re-impose sanctions on Iran, has contributed to the rising inflation. The rial’s slump versus the dollar in Iran’s unofficial currency market has made dollar-denominated imports more expensive for Iranians.

Clawson said Iran’s inflation is high primarily because it is relying on printing money to finance its spending. “The Iranian government is not bringing in enough revenue to pay for its expenses, so it is borrowing money from the banking system to cover the difference, and that is driving inflation,” he said.

Hanke, who says he is the only economist outside Iran to measure its inflation with high frequency, told VOA Persian that he calculated Iran’s actual inflation rate to be 113% on Wednesday, much higher than the World Bank’s latest reading.

The World Bank’s projection of a 4.5% contraction in Iran’s GDP this year is not as bad as the 6% contraction predicted by the International Monetary Fund, another global lending agency, in its latest report from April. The World Bank also said it expects economic growth in Iran to return next year “as the impact of U.S. sanctions tapers off and as inflation stabilizes.” It projected a 0.9% rise in Iran’s GDP for 2020.

Hanke declined to make his own predictions for Iran’s economic performance, saying any forecasts for a nation such as Iran are problematic because they rely on guesswork.

This article originated in VOA’s Persian Service

Michael Lipin

Michael covers international news for VOA on the web, radio, and TV, specializing in the Middle East and East Asia Pacific. Follow him on Twitter @Michael_Lipin

Mr. Azad Moradian’s speech on the KNCNA 20th Annual Conference

Mr. Azad Moradian’s speech on the KNCNA 20th Annual Conference
Washington DC, USA
May 2008

azad_moradian_01.jpgDear President of KNC, Dr. Saman Shali
Distinguished guests
Ladies and Gentlemen

On behalf of the Kurdish American Committee for Democracy in Iran, I congratulate the board of advisers, board of directors, members, and the supporters of the KNCNA on the 20th anniversary of excellent work for the promotion of the Kurdish issues in the North America. I hope that the 20th conference will be able to successfully reach its goals as it has always done.

Since November 2005 the Kurdish American Committee was established to work on the Kurdish issues in Iran, and in order to build a relationship among the Iranian opposition groups. As one of the specialized committees within KNCNA, it has a focused target objective: the issues facing the Iranian Kurdistan with all of its complexities.
The committee’s consideration is that:
Iran is home to more than 70 Million people who are linguistically, religiously, and ethnically diverse. Iran is not a homogeneous ethnic society, and formidable Iranian opposition parties are aligned with separate ethnic groups. We believe that any political opposition to the Islamic regime without the involvement of all the Iranian ethnicity such as the Kurds, Arabs, Turkmans, Baluechs, and Azeri groups would fail.
The systems in power before and after the1979 Islamic revolution indicated this statement repeatedly: “The attempts of enemies to disintegrate the country and create divisions within it will fail because Iranians have never had ethnic differences among each other”. Almost all Persian nationalist parties have vowed to side with the Islamic regime to fight minority groups and any movements towards real democracy in Iran. Since the Islamic revolution of 1979, the treatment of ethnic and religious minorities has increasingly grown worse.
The Kurdish American Committee for Democracy in Iran strongly believes that the only way to avoid disintegration of Iran, and turmoil within the ethnic minorities is to replace the Mullah regime by a true democratic government that gives federal autonomy to Iran’s ethnic regions. Persian nationalism and the deliberate resistance towards ethnic recognition, by the current opposition groups, in effect is only assisting the mullah regime and is counter productive. The opposition must learn from history and avoid its repetition by replacing the Islamic fundamentalism with a secular, federalist, ethnically diverse democracy, through offering substantial autonomy to the disaffected non-Persian regions.
Since the last KNC conference on March 2007, a new wave of violence has seized the atmosphere of Iran. Group executions are taking place at an alarming rate, and most political activists including but not limited to journalists are being imprisoned every day. Kurdish journalists and Kurdish human rights activists are among the most affected victims of this new tirade. According to the Human rights Watch, Amnesty International, US Department of State, and the EU Human Rights Department, Iran’s human rights records has worsened substantially during the past few years. More than a thousand students and women activists from the different ethnic minorities including the Kurds have been detained by security personnel and are being held at unknown locations, jailed, tortured, and some have even been killed under torturer.
Hundreds of Kurdish, and other minority journalists, bloggers, and writers are being arrested for only reporting or writing about human rights. The Islamic Regime of Iran continues to detain the most number of journalists and human rights activists in the world. The situation and condition of treatment for the journalists in the Kurdish regions of Iran has only become exponentially worse. Institutionalized racism against Kurds and other minorities, along with the systematic prosecution of religious groups, and women is a reality that the majority of Iranians have unfortunately been subject to for decades.
azad_moradian_0508.jpgThe Islamic Regime has responded to uprisings by Kurds, Azeries, Arabs, Turkmen, and Baluech populations in Iran with massive arrests, brutal suppression, and a press ban on all ethnic unrest.
The Islamic regime in Iran continues to struggle with the western and modern world through International pressure regarding their nuclear enrichment case, their support of Islamic terrorist organizations around the world, destabilizing Iraq, Afghanistan, and Lebanon as well as human right’s issues. The regime is also facing internal pressures by the ethnic divisions, women, and student movements, as well as by the undeniable poverty, and corruption. Within the regime is also a problematic conflict between the major hard liners who dominate power and the radical reformists. It seems clear that the internal strife, especially in the case of uprisings by the ethnicity in Iran, has a critical role in the destabilization of Iran. Some US politicians believe that Iran’s own domestic problems will eventually topple the regime.
This is an opportunity that must be ceased by the opposition to increase the momentum towards change.

Summary of Activities:

Since the last conference the committee, Establishing contact with different Kurdish opposition groups within Iran as well as in Diaspora.

– Communicated with the Eastern Kurdistan representatives in the US who have been involved in debates on the committees’ activities within the US.

– Formed contact with the representatives of the Non-Kurdish Iranian oppositional organizations in the US regarding a common goal against Iranian regime.

– One major goal of the committee from the beginning has been creating a unified Kurdish front, and later to establish a united oppositional front by bringing other minority groups together. We have taken major strides towards this goal.

– Unfortunately, the Iranian Kurdish organizations are on the merge of dissociating into separate groups, and no real unity is present at this moment, which seems to be the influence of the Iranian intelligence groups affecting the psychological and political problems within those organizations. We are considering that an intervention should takes place immediately before these organizations are spread apart even further and lose sight of unity.

As an organization from outside of the turmoil, we feel that we should intervene as pathologists to identify the issues that are fracturing these organizations.

– Talks at universities and other venues have been held on the issue of Kurdish political and human rights.

– Press releases as well as critical reviews of the events that somehow affect the Kurdish people in Iran have been published on a consistent basis and distributed among a vast network of concerned media.

– Acted as the lead expert consultants on Kurdish and Iranian issues for Radio news broadcasts and news websites.

– Directly and indirectly participated in various rallies and demonstrations to voice the Kurdish peoples’ cause and issues in Los Angeles and other major US cities.

– Began establishing contact inside Iran with the human rights activists and Kurdish human rights organizations.

– Researching and collecting an extensive archive of information regarding the work and activities that have taken place in Kurdistan of Iran within the past 3 decades.

Recommendation and request:

Due to the extensive archive we have collected, the connections we have made, the networking we have created to communicate with the media, as well as, because we are a specialized expert group, I request that KNCNA as well as all of our affiliates support this committee financially and professionally regarding issues of Iran.

One of the critical issues that the Kurds from Iran face within Iran as well as in diaspora is that we have been boycotted by the major media’s in the western hemisphere. However, this problem is not unique to the Kurdish minorities in Iran; it also affects the other ethnicity. It seems that the prominent mentalities of these medias are the establishment of a royal system or a republic in which there is no emphasis on the minority groups of Iran.

A statement that is important to keep in mind is that helping this committee and supporting it is a crucial aspect of a fight against injustice towards Kurds.

The new wave of violence that is taking place in Iran, which is targeting the Kurdish liberation activists is a threat not just to Kurds in Iran but also to Kurds in the rest of the world. One must realize that although this committee’s agenda is very specific and region orientated, its ultimate goal is broad and vast.

Iran as well as Turkey has both attacked the Kurds and now it is vital for the Kurds to form a unity and a Kurdish front to be able to retaliate against violent action. Any form of unity and support will be highly appreciated and can contribute greatly to the overall success of the Kurdish cause and to democracy as a whole.

Thank you so much for giving me the opportunity to give you a brief report on the activities of the Kurdish Committee for Democracy in Iran, and the Kurdish situation in Iranian Kurdistan.

Azad Moradian
Chair of Kurdish American Committee for Democracy and Human Rights in Iran
/ KNCNA

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