Iran on the brink of economic collapse
Big News Network.com
Monday 1st October, 2012
"Iran is teetering on the brink of collapse as biting sanctions strangle the
country's economy, while talk of an imminent attack on its nuclear
facilities is causing people to fear Iran will become another Iraq.
Iran's currency, the rial, has plunged nearly 60% in the past few months,
six percent of that in the last two days as Iranians and foreign investors
cash out in a classic flight to safety situation. Inflation is escalating
with the market rate of the rial considerably more than double that set by
the Iranian Central Bank of 12,260 rials to the dollar. Despite being less
than 100 rials to the dollar prior to the 1979 revolution, it now takes
nearly 30,000 rials to buy a dollar. Manufacturing exports, particularly in
the auto industry, have dived by around 50% resulting in tens of thousands
of workers being laid off. Elsewhere, oil workers recently lodged a letter
with the oil ministry claiming they haven't been paid in months. Until last
year Iran was the world's fourth largest oil exporter.
Iran has been cut off from accessing the global banking system SWIFT,
stranding huge numbers of banks, companies and private individuals from
doing business and managing their assets.
Israel, the driving force behind international sanctions, and a potential
invader, concedes the sanctions are working but wants to tighten the screws
even further.
An internal Israeli foreign ministry report which was leaked last week and
published in Haaretz newspaper says Iran's oil exports have been cut in
half by the sanctions. The report says the sanctions have had a far greater
effect than previously understood.
The puncturing of oil exports has already cost Iran $45 billion to $50
billion, according to Israeli finance minister Yuval Steinitz, who said on
the weekend Iran's economy "is not collapsing, but it is on the verge of
collapse,"
"The Iranians are in great economic difficulties as a result of the
sanctions," he told Israel radio.
Despite the internal foreign ministry report disclosing the effect the
sanctions are having, Haaretz newspaper has quoted an Israeli official as
saying his country has stepped up its efforts for more sanctions, including
an appeal to the European Union to impose a fresh round of sanctions.
"The situation in Iran and the feelings of the man on the street is one of
economic catastrophe. There's a shortage of basic goods, a rise in crime,
and people are trying to flee the country, sending money abroad," Avigdor
Lieberman, Israel's foreign minister told Haaretz.
The events unfolding in Iran are a stark reminder of what happened to
Germany after the first World War when its economy was driven to ruin by
demands for reparations which caused hyper inflation, and many say brought
Adolph Hitler to power.
Certainly what is happening is the sort of stuff that leads to world wars,
particularly as there is no clear cut evidence Iran is seeking, let alone
has nuclear weapons. The United States, Israel, and the European Union
insist the Islamic Republic is on the way to developing a nuclear bomb, or
to having the capacity to do so, while Iranian leaders are equally
insistent their nuclear program is for peaceful purposes.
Iran has a population of around 75 million people, most of whom have
nothing to do with the current state of play. What is occurring right now
is what the United Nations often criticizes as "collective punishment," and
as such is a breach of "international law." The only difference with Iran
is the UN is one of the bodies through which the sanctions have been
imposed.
Canada, Japan, India, Australia, Switzerland, and South Korea, along with
the United States, the European Union, and Israel have imposed sanctions
directly."
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