Mardom-Salari website, Tehran, in Persian Jan. 21. 2012.
BBC Monitoring Middle East [London] Feb, 02, 2012.
Text of analytical commentary by Sorush Ershad headlined: "The fluctuations in the rates of coins and foreign currency changed from days to hours: the silence of the government in the face of the economic chaos" published by Iranian newspaper Mardom Salari on 21 January
The fluctuations in the rates of coins and foreign currency have reached from days to hours, and this occurs while the government has decided to remain silent regarding this issue; and the point that remains unclear is the response the government officials will have to the chaotic situation of the coin and foreign currency markets. At the same time, the fluctuations in the price of foreign currency, in particular coins, result in losses for the majority of the people, under the conditions that a number of people are benefitting from this tension and taking advantage of the situation when they want. Last Wednesday, the dollar broke the record at 1,800 tumans; and the new design coin broke the record of 800,000 tumans, and the coins per gram, the record of 100,000 tumans. These records stem from the chaotic market of gold and coins and the artificial prices, and the faith in the improvement of the situation of coins and foreign currency is unsteady. On Wednesday of last week, the rates of foreign currency and coins fluctuated every hour, such that the rate of the old design coins from morning to afternoon reached from 790,000 tumans to 820,000 tumans, and then 785,000 tumans. Correspondingly, the price of the new design coins on Wednesday, 28 Dey [ 18 January], reached from 770,000 tumans to 800,000 tumans and then to 775,000 tumans; the half-coin, from 390,000 tumans to 380,000 tumans; the quarter coin, from 190,000 tumans to 197,000 tumans; and the price of the coins per gram, from 90,000 tumans to 94,000 tumans, and then 100,000 tumans. In addition, the price per gram of 18-karat gold last Wednesday reached from 73,000 tumans to 71,800 tumans, then 75,000 tumans, and was finally traded at 74,000 tumans. While the buyers of foreign currency would return empty handed if they went to the foreign currency exchange stores to purchase foreign currency, despite all the threats, the street market of foreign currency was heating up moment by moment, such that the rate of the dollar on the foreign currency black market on Wednesday, 28 Dey, reached from 1,750 tumans in the morning to more than 1,800 tumans in the afternoon. The old design coin on Thursday was traded at 790,000 tumans; the new design coin, at 781,000 tumans; the half-coin, at 384,000 tumans; the quarter coin, at 197,000 tumans; and the coins per gram, at 96,000 tumans. Correspondingly, every five grams of 17-karat gold on Thursday was bought and sold at 324,500 tumans; every five grams of 18-karat gold, at 345,310 tumans; and every gram of 18-karat gold, at 74,910 tumans. In addition, each dollar in the open street market was traded at 1,820 tumans; the euro, at 2,350 tumans; and the British pound, at 2,830 tumans. The government rate of the dollar was 11,317 rials [R]; the euro, R14,555; and the British pound, R17,481. The international price per ounce of gold on Thursday was 1,651 dollars; and the full coin was presold at the Melli Bank at 546,000 tumans. The buyer, however, should the price of the coin decrease while purchasing, has no right to protest, whereas the prices of the coin in the market and at the bank have a difference of at least 235,000 tumans.
These days, the chaotic situation of the economy has resulted in the creation of much reaction in the society. The moment-by-moment increase in the prices of foreign currency and gold in the Iranian market has imposed various pressures on different arenas, especially on production; but the interesting point worthy of contemplation is that the government is remaining silent; and Ahmadinezhad, who has a habit of talking about all the issues, these days is keeping silent only with regard to this issue, and the point that remains unclear is the response the government officials will have to this lack of a plan in the economy.
The hasty decisions that are made sometimes by denial and swift correction indicate that expert work has not been done. While the brakes on the prices of coins and foreign currency have been cut, the government wants to control them with some decision, and the issue of increasing banking interest rates was raised; but with Ahmadinezhad's return from Latin America, suddenly the issue was denied.
We should wait and see the answer that Ahmadinezhad has this time with regard to the uncontrolled market of foreign currency and gold. Last week, the press once again addressed the issue of the tumult in the market of foreign currency and gold.
In this connection, Tehran-e Emruz newspaper wrote: Only 24 hours were sufficient to prove once again the incorrectness of the opinion of the government with regard to keeping the banking interest rate low under the conditions that the national economy is suffering from inflationary recession. From the time that Ali Aqamohammadi, one of the government officials, denied the plan to increase the banking interest rate, the foreign currency and coin markets immediately reacted to this news; and within 24 hours, with an astonishing increase, the price of coins reached up to 60,000 tumans.
According to this newspaper, the reason was that the foreign currency market was faced with law enforcement oversight in some way, and the tangible and intangible presence of the police and the economic officials of the Central Bank (Bank-e Markazi) along with a great deal of restrictions imposed on the buying and selling of foreign currency caused the floating cash flow to suddenly change course and move toward the gold and coin market, confronting that market with a frightening wave.
Sharq newspaper also addressed this issue and wrote: This rapid increase in the prices occurred under the conditions that the coin market after the low price offerings at the branches of the Melli Bank had reached relative stability and a balance had been established between supply and demand. The increase in the prices in the past few days stems from three major factors: first, the increase in the world prices; second, the increase in the rush of people stemming from the psychological climate that governs the market; and finally, the end of the [Islamic] month of Safar and the start of celebrations and weddings, which general speaking result in the growth of demand. This article states: In the recent leap of prices, the role of the governing psychological climate has been greater than that of the other factors. Indeed, after a period of calm in the coin market, with the rise in the prices once again, a large number of people began again to think of new purchases, and thought that perhaps they could benefit in the days after the price fluctuations and gain more profit. Interestingly, those who are caught up in the affliction of buying can at this time, by paying only 546,000 tumans, pre-purchase the Spring of Freedom coin for delivery next year.
The end of the article by Sharq states: Under the conditions that the open market in practice does not play a role in setting the price of the dollar, given the Central Bank's price of 1,400 tumans, and the pricing is done in the black market, the point that is not clear is the number that should be placed in this formula to take the place of the dollar figure. For this reason, the price of coins at the present time, until further notice, is determined on the basis of supply and demand. In other words, the greater the demand, the higher the prices that will be imposed on the buyers.
Also, Ruzgar newspaper wrote: From the start of the turbulence in the foreign currency market in the course of the past weeks, the rate of the dollar breaking records, and the mandated setting of the price of this foreign currency, some have offered the artificial notion that the foreign currency market has reached stability and that the government has been able to prevent the rise in the price of the dollar and other foreign currencies by making the necessary decisions. We should note, however, that this notion is as incorrect and unrealistic as saying that these days the market of gold and coins is stable and calm.
This article states: If the police conditions are removed from the foreign currency market, most certainly, the trend of the rise in the prices of foreign currencies will begin, because in addition to international conditions, the Central Bank is facing problems in connection with supplying the market with foreign currency.
The Government and the Repeated Story of the Budget Delay
Additionally, the delay in presenting the budget is one of the repeated stories of the government every year. This year, as well, again the government has delayed in presenting the budget; and even the reminder by the speaker of the Majlis in connection with the violation by the government was not effective.
In this connection, the press wrote: Indeed, what is the explanation or even the justification of the government and the Majlis regarding the delay in presenting and examining the budget bill, and what extraordinary situation has occurred that has forced the government to set the issue of the budget aside because of it and deal with the emergency issues? The government seems not to have any rational explanation regarding the delays one after another in preparing and presenting the budget bill on time; and the least effect of these delays is the freezing of the national economy and the failure to allocate the developmental budgets for the first few months of the year. At the same time, most of the mottoes of the government of Ahmadinezhad have been about increasing the developmental budgets and the allocation of these budgets on time. With the astonishing delays that it makes in presenting the budget bill, however, in practice, it is taking steps toward shutting down the developmental activities of the country in the first few months of the year; and this is indeed contrary to the mottos that it has had thus far.
In the meantime, of course, mention must be made that the interesting point in the economic behaviour of the government is that Mahmud Ahmadinezhad, after his six-day visit to Latin America and upon entering the country, immediately raises the issue of increasing the cash subsidies and reports on depositing more subsidies than the present amount in the accounts of the households by the end of the year; but at the same time, neither he nor any other government official is prepared to show even 10 per cent of the eagerness that they show for increasing cash subsidies and depositing them in the accounts of the households for their most important economic duty, which is to prepare and present the budget bill on time. Everything seems to have been overshadowed by the election slogans; and no government or Majlis official is prepared to sign any bill or proposal that could possibly in any way result in discontentment regarding that proposal or bill in the two months remaining until the elections.
Futility of Manipulating the Economy
As discussed, the level of turmoil in the foreign currency and gold markets had astonished everyone; in addition, the press tried to examine these changes from various angles. Also, Farshad Mo'meni in an article stated: Those who imagine that by manipulating only one variable, the complex problems of the Iranian economy can be solved should clarify, under the conditions of the instability of the policies, whether with displaying that the greed of the speculators is uncontrollable in addition to the chaotic situation of the producers one could expect any motivation to be created for investment in production by increasing the banking interest rate, or whether the poor could imagine prospects for their future.
In the opinion of these economists [as published], these individuals, especially those who inside the government recommend or pursue such policies, should explain to what extent the manipulation of the banking interest rate by the monetary authority without regard for the realities of the actual sector, from the perspective of Islam, is defensible. From the perspective of looking at the economic realities of Iran, as well, the point that must be made clear is: From which source should this level of return on the monetary assets be provided under the specific conditions of production in our country? Do the realities of productivity in the national economy show such a prospect, or does following such a policy mean the intensification of the dependence of the national economy on oil revenues in order to respond to the insatiable appetite of those who do not want to work or make an effort and do not want to accept risk and endanger themselves but would like to have everything?
The Duty of the Majlis
The Majlis elections will be held in Esfand [ 20 February-20 March], while one of the most important criticisms that is made concerns the lack of the necessary reaction of the Majlis to the government.
Jahan-e San'at newspaper in an article discusses the position of the speaker of the Majlis in protecting the place of the legislative branch in connection with overseeing performance. This article states: According to the budget law of this year, which was implemented after a delay, the government was mandated to distribute stocks; but today, while only two months remain to the end of the year, we see no sign of stocks. As a result, the volume of floating cash flow instead of appearing in stocks is caught up in the vortex of foreign currency and coins.
Jahan-e San'at newspaper then wrote: These days, many politicians have also become involved in economic problems and analyzing the markets of foreign currency and coins. Yesterday, Ali Larijani, the speaker of the Majlis, mentioned the reason for the chaos in the foreign currency and coin markets as the result of the floating cash flow.
Larijani believes that because the government has not implemented the law, the floating cash flow has created problems for the economy.
While Mr. Larijani speaks as the speaker of a Majlis the term of which will soon end, then he, as well, as the overseer of the implementation of the laws that the government has not implemented, has an important share [of blame] regarding the present economic situation; because, if he had taken steps on time by making use of the oversight instruments that he had at his disposal, perhaps today such chaos would not be seen in the foreign currency and coin markets. Undoubtedly, Mr. Larijani has heard the voices of the economic experts and has read the letter of the economists to the government; and today he knows that those predictions have turned out to be true. If only the speaker of the Majlis in those days had paid more attention to those recommendations and, as the speaker of the Majlis, he had made use of the oversight instruments that were available to the legislative branch, or had blocked the way to the preparation of laws that would prevent such astonishments [as published], even though this is not the duty of the speaker alone but that of all the Majlis deputies; but perhaps the weight of the responsibility of the speaker is greater than that of the other members.
Sanctions from a Different Perspective
The issue of sanctions is also being discussed these days in the arena of the international policy of Iran. While Europe is trying to ratify more sanctions against Iran, Iran is also engaged in various discussions for the start of negotiations with the G5+1.
In the meantime, Keyhan newspaper, with its peculiar outlook regarding all the issues, discussed the sanctions from another angle. Pointing out that the issue of the sanctions on Iran is a redundant and tedious issue, Keyhan wrote: The efforts and the actions of the United States for the implementation of the oil sanctions on Iran have thus far failed.
The editorial writer of Keyhan wrote: "The Americans tried very hard in connection with the issue of the oil sanctions on Iran to gain the cooperation of China, because of the economic and political position of that country; but interestingly, they heard the results from Gary Locke, the U.S. ambassador to Beijing, who clearly admits that the lobby of his country to gain the cooperation of China regarding the oil sanctions on Iran has failed."
Keyhan newspaper also wrote: "In addition to the fact that Moscow officials have frequently and repeatedly declared their opposition regarding the issue of oil sanctions on Iran, that which requires more contemplation is the comment by Gennady Gatilov, one of the senior officials of the foreign ministry of that country, who recently pointed out that they will veto any resolution concerning sanctions on Iran." The editorial writer then concludes that the "point regarding which the slightest doubt does not exist is the inability and the conditions of the United States regarding the imposition of sanctions on Iran."
Also, in an article explaining the differences of opinion between Iran and the West, Ruzgar wrote: In these years, the extremists on both sides have taken charge of the field and brought the relationship to the most dangerous point, such that in addition to the Western extremists, in the course of the past six or seven years of the ninth and 10th governments, some people inside the regime, with their extremism and aggressive rhetoric, have even inflected a serious blow on the efforts of the previous governments on the course of creating understanding through protecting the national interests, and eliminated the possibility of returning to conditions in which one can solve the problems of Iran with effective negotiations and strengthening its position.
This article states: At one juncture, by raising the issue of dialogue among civilizations, an exceptional opportunity was created that, with the reception of the West, was going to create suitable grounds for relations between the two sides; but in this government, relations between the West and Iran went through the most unfavourable period, such that today the language of threats has replaced the language of diplomacy.
Emphasizing that the situation is not that simple, the Ruzegar article has suggested that in order to build trust, Iran should prove to the world that it is pursuing legal frameworks for making use of nuclear energy, and should reduce the role of the extremists on this course. At the same time, the unique opportunity of the election that is available to the regime should not be disregarded, through which by holding sound elections without problems and by providing the grounds for the presence of all political groups it can eliminate any pressure by the West. This important matter can be achieved as the result of the conditions in the country becoming suitable by reforming the government treatment of its opponents and changing the policies in dealing with human rights issues, the press, and so on.
Under this climate of the country, however, which is affected by the momentary prices of gold and foreign currency, election campaigns are also slowly beginning. Giving impractical promises has always been one of the issues that are seriously criticized in Iranian elections. Ebtekar newspaper has discussed the behaviour of the candidates in the elections and writes: "The experience of the past elections and the failure to respond to many of the demands of the people is a clear analogy that reveals that, for some Majlis candidates, the artificial promise of creating a flower garden in exchange for occupying a seat in Baharestan is easier than drinking a glass of water." Ebtekar newspaper wrote: "Of course, many of the Majlis candidates are thinking about building a better future for their city and country, and the idea of serving all the members of the society resonates in their subconscious; but this does not mean at all that all the candidates in the recent elections have come to the election scene with such a praiseworthy outlook. 'Seeking fame' and gaining power through the green seats of the Majlis is so tempting that some Majlis candidates have turned to the familiar discourse of 'harvest time promises.'" Quoting one of the sources of emulation, who had said that ruining the reputation of other candidates is a violation of religious law, Ebtekar wrote: "In any case, regardless of the results of the Esfand [ 20 February-20 March] election, we should say that passing the test at the ballot box does not always mean passing test of election ethics. The case often occurs that a candidate is not accepted as a Majlis deputy by the people; but during the process of the elections, he does not spend from the treasury on political blackmail and does not speak anything but the truth. Ultimately, at that time, he will certainly pass the test of 'election ethics' proudly before God and the people."
Credit: Mardom-Salari website, Tehran, in Persian 21 Jan 12
Mardom-Salari website, Tehran, in Persian 21 Jan 12/BBC Monitoring/(c) BBC
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