Accueil > Articles in English > Iran : EUROSTAT Report puts iranian economy in the red

Iran : EUROSTAT Report puts iranian economy in the red

In order to push Iran to halt their nuclear activities, the United States imposed financial and commercial sanction on Iran in September 2006. The sanctions have heavily penalised the Iranian economy. In the absence of a riposte, they also proved that Iran has very little nuisance capacities. To resist to the sanctions, Tehran has created a network of lobbies acting mostly in Europe in order to maintain some economic havens for their trades. The Iranian lobbying has been a failure, for the statistics regarding Iranian exchanges with Europe in 2008 and 2009 are alarmingly low.

In less than two weeks the Mullah Regime has to reassure the International community regarding their nuclear activities through negotiations with the P5+1. If Iran cannot give an illusion of their will to suspend their nuclear activities and give signs of an appeasement with the United States, the Six will wave the menace of heavier economic sanctions.

It is clear that Tehran will categorically reject the International demands. Partly because further sanctions will be ineffective, mostly because an appeasement process is incompatible with Iran’s regional strategy of terrorist menace on Israel and its allies. To accept to negotiate in fear of sanctions would undermine the Regime’s Jihad threats and show that they have been nothing but thin air. Tehran would lose its intimidating capacity ; lose the support of the Arab public opinion ; and the backing of their anti-American allies who appreciate the Mullahs’ capacity to intimidate the United States. To accept to negotiate under pressure would shatter Iran’s aggressive image.

We can affirm that the Regime has always known that it has no option but to refuse any appeasement, aware that their refusal would lead to further sanctions penalising their economy, reducing its financial means to support their nuisance strategies through terror. That is why Tehran had very quickly formed their lobbying networks of pretended economic experts to neutralize the sanctions doubly dangerous for their survival.

The Regime has funded publications in English and French addressed to European investors in which the experts explained the certain failure of the sanctions to come thanks to the incredible vitality of the Iranian economy. They pursued with publishing encouraging GDP statistics trying to attract investors into their economy quickly with the promise that they were losing opportunities in a very lucrative economic environment to their direct European competitors.

Tehran was not aiming small investors but was hoping to excite the European business circles against the American sanctions. A good part of their lobbying was directed towards the French Sovereign political spheres (we do not question their motives). The object of this lobbying was not only economic but also political, for by countering the sanctions, the Mullahs would ridicule the American strategy against them.

To reach a larger public, and take advantage of a large anti-American European audience, the Iranian-paid experts paraded on television programs reciting the same positive statistics. Their analysis was always that economic sanctions were ineffective and that in consequence a new policy engaging dialogue and void of any menace of sanctions had to be adopted towards Iran.

Tehran’s strategy was smart but did not meet the results hoped for. Eurostat’s latest statistics on Irano-European commercial trade for 2008 and 2009 are disastrous to a point that even the major Iranian economic daily publication Sarmayeh had to publish the alarming decrease in volume of exchange with Iran’s ten principal European trade partners.

Iranian exports (mainly crude oil and natural gas) towards Europe have decreased by an average of 45%. Italy who was Iran’s main client has decreased their imports by 58% from 1901million Euros to 811million Euros, placing it only second in the list of Iran’s top partners. With 884million Euros, Spain is now the top partner but still with a decrease of 38% in the total volume of exchange with Iran.

The rest of the partners do not rate any better : 3rd is The Netherlands with 690M€ (-53%) ; 4th France with 395M€ (-59%) ; 5th Germany 126M€ (-32%) ; 6th Greece 79M€ (-55%) ; 7th Portugal 73M€ (-85%) ; 8th Belgium 71M€ (-24%) ; 9th UK 60M€ (+13% [1]) ; 10th Austria 31M€ (-66%).

Imports are not any brighter for they have also decreased drastically over the past two years. In the first semester of 2009 Iran has imported for 1627M€ of German goods, a decrease of 25% in volume, mostly due to the reduction of export guarantees.
The exchange balance is extremely unfavourable to Tehran. Iran has not only lost clients in 2009, but has also increased their deficit and thus their national debt to newer depths.

This tendency is visible in the exchanges with other European countries except for Belgium. Imports from Italy have decreased to 894M€ (-15% compared to 2008). France exported for 775M€ to Iran in 2009 (-10%). From 4th to 10th in exports to Iran are : Netherlands 226M€ (-14%), Belgium 199M€ (+11%), Spain 179M€ (-21%), Poland 50M€, Denmark 49M€ and Romania 45M€.

During the first semester of 2009 Tehran’s trade deficit with Europe is at 1083M€. In the light of these statistics it is understandable that Europe wishes to maintain this regime by putting its moderate factions into light.
Obviously, Europe is not Iran’s only economic partner. China is Iran’s major partner. Our estimates for 2008 show a perfect balance in trades with China. With 8 billion dollars exported and the same amount imported, it is doubtful that the volume with China would make Iranian statistics any better. Iran also has another important partner in the United Arab Emirates. However, the UAE is just an import platform for Tehran in order to detour the sanctions and allow Tehran to purchase boycotted goods. The exchange statistics were slightly in favour of Tehran in the past. The American banking sanctions have irremediably turned around the numbers in the favour of Iran’s partners.

The result is that Tehran is in lack of cash, and therefore incapable of paying a several million Euros in bills. Iran now risks a sudden halt in its suppliers’ deliveries until its debts are paid off. The impact will cause political instability and more demonstrations as the ones in June that nearly threw the regime out.

This deficit will create shortages in essential goods pushing inflation even higher and thus discontenting the population furthermore. The regime as in its habit has been distributing care packages (sugar, tea, butter…) to the population and subsidies in cash. Tehran is under the obligation of importing essential food products at very large numbers and very low prices. It is also continuing its frenetic printing of money with no funds to back it. This strategy is hurting the local producers and feeding the inflation, a vicious circle. According to sources in the Bazaar, inflation has passed the 60% bar. The economic crisis in Iran has reached such proportions that it can no longer be masked.

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The french version of this article :
- Iran : Les comptes sont dans le rouge d’après Eurostat
- (10 septembre 2009)

| Mots Clefs | Enjeux : Sanctions Ciblées en cours d’application |
| Mots Clefs | Instituions : Politique Economique des mollahs |

| Mots Clefs | Résistance : Lobby pro-mollahs en France et ailleurs |
| Mots Clefs | Décideurs : Analystes & Experts |

| Mots Clefs | Enjeux : Intérêts Européens en Iran |
| Mots Clefs | Pays : Europe (UE, UE3, union européenne) |

[1Only the United Kingdom, an occult ally of the Mullahs, has increased the level of commercial exchange with Iran. However, UK’s major transaction are carried through the UAE Platform in an invisible mode. It is therefore, extremely difficult to evaluate the exact volume of exchange betweeen the Mullahs and the Windsors.
| Mots Clefs | Pays : Grande-Bretagne |
| Mots Clefs | Pays : Emirats Arabes Unis |