The Iranian regime is in turmoil thanks to the "maximum pressure" policy implemented by US President Donald J. Trump against the ruling mullahs. Iran's currency, the rial, lost more than half its value so far just in 2020. Pictured: A currency exchange shop at the Grand Bazaar in Tehran, Iran on February 12, 2020. (Photo by Atta Kenare/AFP via Getty Images)
The Iranian regime is in turmoil thanks to the "maximum pressure" policy implemented by US President Donald J. Trump against the ruling mullahs.
Iran's currency, the rial, lost more than half its value so far just in 2020. That decline makes it one of the most worthless national currencies in the world. As of October 25, the rial traded on unofficial markets at 300,500 to the US dollar. The rate has pushed the Iranian authorities to agree on removing four zeros from its currency, which has gone into a virtual free-fall. Two years ago, one US dollar was worth nearly 30,000 rials.
The plummeting currency has also increased the demand for US dollars and gold. Even Iran's state-run Mardom Salari Daily warned:
"We have an extremely failed and fallen economy. The main reason is the currency shock and the plundering of the economy by semi-private companies and banks. Sanctions have become an excuse for some people to plunder the country. We suffer from both foreign and domestic sanctions and those who profit from this situation."
Since the Trump administration pulled out of the nuclear deal, which by the way Iran never signed, Tehran's oil exports have shrunk from nearly 2.5 million barrels per day to approximately 100,000 barrels per day.
As a result, the ruling mullahs are facing one of the worst budget deficits in their four-decade history of being in power. Iran's regime is currently running a $200 million budget deficit per week and it is estimated that if the pressure on Tehran continues, the deficit will hit roughly $10 billion by March 2021. This deficit will, in return, increase inflation and devalue the currency even further.
The decrease in revenues directly impacts Iran's Islamic Revolutionary Guard Corps (IRGC) and its affiliates, the Office of the Supreme Leader, and the regime's associates who control considerable parts of the economy and financial systems. The IRGC reportedly controls more than half of Iran's GDP and owns several major economic powerhouses and religious endowments, such as Astan Qods Razavi in the northeastern city of Mashhad.
Iran's militia groups are subsequently receiving less funding to pursue their terror activities. This shortfall may be why, for the first time in more than three decades, Hezbollah's leader, Hassan Nasrallah, made a public statement asking people to donate money to his group. "The sanctions and terror lists," he pointed out, "are a form of warfare against the resistance and we must deal with them as such. I announce today that we are in need of the support of our popular base. It is the responsibility of the Lebanese resistance, its popular base, its milieu," to battle these measures.
He also acknowledged that the US sanctions are the primary reason behind the group's financial problems: "financial difficulties that we may face are a result of this (financial) war" and not due to "administrative defect". The Yemeni militia group, the Houthis, has also been sending people SMS text messages asking for donations.
Facing significant financial problems, Iran's Supreme Leader Ayatollah Ali Khamenei, in October 2020, surprisingly ordered all factions of Iraqi armed groups to stop attacking US interests in Iraq, according to Middle East Eye. A senior commander of an Iranian-backed armed group involved in the attacks told Middle East Eye, "Khamenei's orders were straightforward and clear. All attacks targeting US interests in Iraq must stop".
The Trump administration also triggered snapback sanctions against the Iranian regime. That act will put further pressure on the ruling mullahs in spite of the fact that other members of the UN Security Council opposed Washington's move. As a prominent cleric, Saidd Lavasani, head of Lavasan's Friday prayer, acknowledged regarding the regime's defeat:
"Activation of the trigger mechanism means the defeat and complete death of the JCPOA, which means the path that we went with for seven years and on which we put all the facilities of the nation, now we must return that way. The mechanism of the Security Council is such that it allows the United States to take such an action, which, although China and Russia have formally opposed it, implicitly acknowledges that a new legal challenge is emerging in the Security Council that will lead to long discussions, of course, it is not in our interest."
Iran's ruling mullahs desire to maintain the JCPOA. It not only provided their regime with many benefits, including economic relief and global legitimacy; at the same time, it ignored Tehran's military adventurism in the region, its ballistic missile program and its support for terror groups across the Middle East. Most importantly, the JCPOA also paved the way for Tehran ultimately to become a nuclear state.
In short, the Iranian regime is now in a much weaker position compared to four years ago, before Donald J. Trump became president. The "maximum pressure" policy against Iran's ruling mullahs is working and must absolutely continue.
Dr. Majid Rafizadeh is a business strategist and advisor, Harvard-educated scholar, political scientist, board member of Harvard International Review, and president of the International American Council on the Middle East. He has authored several books on Islam and US foreign policy. He can be reached at Dr.Rafizadeh@Post.Harvard.Edu