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Some in Iran don’t want end to sanctions

October 11-13

With tensions between Iran and the United States eased considerably in recent weeks, many in Iran are looking forward to an improved economy.

But some people have made a nifty profit off the tensions and will not be looking forward to improving relations with Washington.  Those people have every incentive to sabotage the trend to reduced tensions.

Those who have profited most off the tensions and the sanctions are believed to be Pasdaran officers and retirees.  They have access to the interior of Iran’s economy and have been able to make money off the trials and tribulations of others.

And the fact that the main criticism of the changed atmosphere of the last few weeks has come from Pasdar officers suggests they may be gearing up to stop any shift toward improved relations and reduced sanctions.

Tehran does not release timely, reliable data giving a full picture of the economic damage. But the Central Bank says gross fixed capital formation, adjusted for inflation, plunged 19.4 percent from a year earlier in the nine months to last December 20.

Reuters said this implies a massive shortfall of public and private investment during that period alone worth roughly $35 billion at the free-market rial/dollar exchange rate. 

It is not just Pasdar officers who stand to lose if life returnes to normal.

Some other countries in the region could suffer, at least initially. The shipping and banking sanctions have caused more of Iran’s foreign trade to pass through Iraq and Pakistan; those countries could lose some of that business.

Saudi Arabia has filled much of the gap left by the cut in Iranian oil sales, producing a record 10.19 million barrels per day of oil in August. It would almost certainly have to scale back its output if Iran’s sales returned to normal.

The complex picture of winners and losers would be repeated within Iran.

The middle class, restricted in their access to foreign currency because of government controls put in place to resist the sanctions, could benefit quickly. They would find it easier to travel and study abroad, and to buy imported luxuries, Reuters noted.

But it could take many months or years to reopen factories and rebuild infrastructure, so many poorer Iranians might see little immediate change. And a sizeable group of businessmen who have made money off the sanctions would suffer.

The government tightened its grip on business during the sanctions years, rationing foreign currency at preferential rates, guiding investment and getting involved in foreign trade.

Politically connected people-a large number of them former officers in the Pasdaran, said Iranian-born economist Mehrdad Emadi, of the Betamatrix consultancy in London-made money from this system. They may now have an interest in opposing action that could lead to an early end to sanctions.

“Those people have had access to monopoly contracts, foreign exchange. They are going to lose a lot,” said Emadi. “And political power is concentrated in that group.”

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