Iran Unveils Budget of 'Resistance' Against US Sanctions

Iran's President Hassan Rouhani announced Sunday what he called a "budget of resistance" to counter crippling US sanctions, weeks after a fuel price hike sparked nationwide protests that turned deadly.

Rouhani said the aim was to reduce "hardships" as the Islamic republic has suffered a sharp economic downturn, with a plummeting currency sending inflation skyrocketing and hiking import prices.

The US sanctions imposed in May last year in a bitter dispute center on Iran's nuclear program include an embargo on the crucial oil sector whose sales Washington aims to reduce to zero in a campaign of "maximum pressure.”

Rouhani told parliament that the budget, which includes a 15 percent public sector wage hike, "is a budget of resistance and perseverance against sanctions".

It would "announce to the world that despite sanctions we will manage the country, especially in terms of oil," he added.

Rouhani said the 4,845 trillion rial ($36 billion at the current street rate) budget was devised to help Iran's people overcome difficulty.

It would benefit from a $5 billion "investment" from Russia which was still being finalised, he said, without giving further details.

"We know that under the situation of sanctions and pressure, people are in hardship. We know people's purchasing power has declined," said Rouhani.

"Our exports, our imports, the transfer of money, our foreign exchange encounter a lot of problems.

"We all know that we encounter problems in exporting oil. Yet at the same time, we endeavour to reduce the difficulty of people's livelihood."

Rouhani said that despite the US sanctions his government estimated that Iran's non-oil economy would "be positive" this year.

"Contrary to what the Americans thought, that with the pressure of sanctions our country's economy would encounter problems, thank God we have chosen the correct path... and we are moving forward," he said.

The budget announcement comes after fuel price hikes Iran announced in mid-November triggered deadly demonstrations across the country.

Officials in Iran have yet to give an overall death toll for the unrest in which petrol pumps and police stations were torched and shops looted.

London-based human rights group Amnesty International said at least 208 people were killed in the crackdown, but Iran has dismissed such figures as "utter lies".

'Reducing Hardships'

US President Donald Trump began imposing punitive measures in May 2018, after unilaterally withdrawing from an accord that gave Iran relief from sanctions in return for limits on its nuclear program.

The United States has continued to ramp up its sanctions this year as part of a stated campaign of "maximum pressure" against the Islamic republic.

Iran's economy has been battered, with the International Monetary Fund forecasting it will contract by 9.5 percent this year.

The sharp downturn has seen the rial plummet and inflation running at more than 40 percent.

In his speech, Rouhani only touched on a few areas of the draft budget for the financial year starting late March 2020, which must be scrutinised and voted on by parliament.

"All our efforts are geared towards reducing these hardships to some extent so it can be more tolerable," he told deputies.

"I deem it necessary here to tell the honourable representatives that the criteria of our budget is still based on maximum pressure and continuation of America's sanctions," he said.

"This does not mean that the government will not take other steps, but at the same time this is our criteria and based on this criteria we have devised and executed the budget."

The budget comes ahead of parliamentary elections in February.

Photo: IRNA

Iran Presents Budget to Counter 'Cruel' US Sanctions

President Hassan Rouhani on Tuesday unveiled Iran's first annual budget since the return of US sanctions, saying it had been adjusted to take account of Washington's "cruel" measures.

The president announced a 20 percent increase in public sector wages in a sign of the economic challenges the Islamic republic has faced since the United States pulled out of the 2015 nuclear deal earlier this year. 

The speech gave only a few general points of the budget—which will now be scrutinized and voted on by parliament—but acknowledged the pressure Iran was under. 

"Last year we faced some problems," Rouhani told parliament in a televised speech, referring to the widespread protests that hit the country almost exactly a year ago, sparked by anger over economic and political conditions. 

"Those events caused the Americans to change their position regarding the Islamic republic and the nuclear deal," he said. 

"The real objective of the US in all of this conspiracy and sanction and pressure... is to bring the powerful Islamic republic of Iran to its knees," he said, vowing that the US "will definitely be defeated."

The renewed US sanctions include an embargo on Iran's crucial oil sector. 

The new budget did not say how many barrels of oil Iran hopes to sell in the next financial year, which starts in late March, but analysts believe it will be considerably less than the approximately 2.5 million it sold per day prior to Trump's withdrawal. 

The US granted waivers to eight key buyers of Iranian oil—including China, India and Turkey—though this has been a double-edged sword for Iran since it also helped push down the global price. 

Forex 'Practically Zero'

Rouhani came to power in 2013 representing the more moderate side of Iran's ruling elite, hoping a compromise on the country's nuclear program would reduce tensions with the West and allow foreign investment to boost the stunted private sector. 

The return of sanctions has ended that hope, and forced Rouhani more towards the self-sufficient "resistance economy" preferred by supreme leader Ayatollah Ali Khamenei. 

Concern over the economy pushed many Iranians to secure their savings in dollars and gold, triggering a run on the Iranian rial, which has lost around half its value since Trump announced the pullout.

"At one point early this year our foreign exchange cash reserve was practically zero, forcing the government to take hard decisions to save the country," Rouhani told parliament.

The government has pressured exporters to return their dollars to Iran, and Rouhani said they would lose tax incentives if they failed to repatriate their cash.

The central bank has used the returning dollars to shore up the collapsing rial, which has recovered to around 110,000 per dollar on unofficial exchanges. 

The rial's fall drove up prices across the board, with food and drink costs up 60 percent in the year to November according to the central bank. 

The judiciary launched a fierce crackdown on currency speculators, dubbed "economic disruptors" that has seen dozens of traders put on trial and at least three businessmen executed. 

The so-called "sultan of coins", Vahid Mazloomin, was hanged in October after being found guilty of amassing two tonnes of gold coins.

But sanctions and fraud are only part of the story in an economy with many long-standing problems. 

Its banking sector is riddled with bad loans, while many key industries from oil and gas to construction are dominated by semi-state groups with opaque links to the government and military.

The budget was delayed several times in recent weeks, with reports that Khamenei had demanded unspecified changes to the final document. 

Photo Credit: IRNA