Iranians are evaluating the significance of the Supreme Leader’s shift on the economic crisis, with Ayatollah Khamenei focusing on internal problems — rather than emphasis on the foreign “enemy” — for the first time.
Khamenei’s comments on Monday, made to an audience in Tehran, appeared to put blame on the Rouhani Government for the difficulties with production, trade, investment, the financial sector, and a falling currency:
Today’s livelihood problems do not emerge from outside; they are internal. If actions are taken more efficiently, more prudently, more swiftly and more firmly, sanctions cannot have much effect and they can be resisted.
Since it took office in 2013, the Government has grappled with long-term structural problems as well as mismanagement and corruption, as well as seeking — and achieving — the nuclear deal with the US and other powers to remove a central obstacle to progress.
But hardline elements in the regime have always challenged President Hassan Rouhani’s approach. The US always maintained some sanctions despite the July 2015 nuclear agreement, and the Trump Administration withdrew from the deal in May and began the expansion of restrictions in pursuit of regime change.
The Supreme Leader and elements such as the Revolutionary Guards had been framing the crisis as one of a US “war” through economic measures. Threatened by the hardliners, Rouhani appeared to buy some space and time by adopting a harsher rhetoric towards Washington this summer.
But Khamenei’s shift on Monday appeared to put Rouhani back in the dock. The Supreme Leader focused on the 60% drop since January in the value of the Iranian rial v. the US dollar, blaming the devaluation not only on “abusers” but also on “overspending and neglect of the country’s currency“.
He specifically criticized the Government’s steps with the foreign exchange market as “imprudence and neglect”:
When they distribute foreign currencies and coins in the wrong way, this distribution has two sides: one who takes it and one who gives it. We are all after the one who takes it, while the main fault rests with the one who gives it. We do not call it treason, but it is a big mistake.
Khamenei confirmed his weekend approval of steps by the judiciary for extraordinary prosecution of “economic corruptors”, including special Revolutionary Courts and convictions and sentences which cannot be appealed.
And while a passage of his speech condemned the US — his office used a Trump-style, all-caps tweet to summarize, “THERE WILL BE NO WAR, NOR WILL WE NEGOTIATE WITH THE U.S.” — the Supreme Leader issued a sharp put-down of Rouhani.
Khamenei said that he made a mistake by allowing Rouhani to enter negotiations: “Red lines were crossed.”
The Supreme Leader concluded by calling on other parts of the regime, such as Parliament and the judiciary, to exercise “effective oversight” of the Government.
Rouhani, who was in Kazakhstan for a Caspian Sea summit with the leaders of four other states, offered no reaction on Tuesday as he returned to Tehran. Other Ministers have been silent.
Iran Discounts Oil Price for Asia Sales
Seeking a buffer against forthcoming US sanctions on its energy sector, Iran is discounting oil and gas prices for Asian customers.
An “informed source” in the Oil Ministry told State news agency IRNA of the reductions, but downplayed their significance: “Discount is part of the nature of the global markets being offered by all oil exporters.”
The National Iranian Oil Company has cut official prices for September sales to Asia to their lowest level in 14 years, relative to that charged by Saudi Arabia.
Full US sanctions come into force from November 5. Iran is hoping to maintain exports to customers such as China, India, and Turkey, but some analysts expect a 40% fall in Iranian sales of 2.5 million bpd this spring to about 1.5 million in the autumn.
The current level is 2.3 million bpd. China and India have pledged to continue purchases, but Indian refiners are drawing down imports of Iranian crude and the European Union — facing US punishment on any companies and financial institutions with American links — has been wary of any commitment.