Iran enters fragile peace with economy near breaking point
The US has temporarily allowed Iran to export oil and indicated it will provide billions to relieve the crisis triggered by the war. With ordinary
The US has temporarily allowed Iran to export oil and indicated it will provide billions to relieve the crisis triggered by the war. With ordinary Iranians at their limit, however, Tehran already fears new protests. As Washington and Tehran negotiate the implementation of an interim peace deal that ended the Iran war, the US has lifted restrictions on Iranian oil trade until August 21. The sanctions relief is a central pillar of the peace framework that the two sides signed last week. At the same time, the US and Qatar are looking into the release of around $6 billion (around €5.3 billion) from frozen Iranian oil revenues. According to US President Donald Trump, the money will be "used for the purchase of food and medical supplies, exclusively from the United States, including Corn, Wheat, and Soybeans from our great American farmers. These are things that are desperately needed by Iran." Tehran denies any obligation to buy food from American farmers. But it is clear that Iran badly needs the money — according to preliminary estimates by the Iranian government, the war with the US and Israel caused around €229 billion in damages. The Memorandum of Understanding between Iran and the US also mentions a $300 billion payout for reconstruction, but the details on that remain unclear. Republicans balk at deal Donald Trump struck with Iran To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Inflation expected to rise as government borrows money Iran's government has already been forced to borrow large amounts of money from the central bank in order to cover war expenses, according to Iran's Economy and Finance Minister Seyed Ali Madanizedah.
The loan is expected to boost inflation in the coming months. "An agreement with the US will not fully normalize the Iranian economy," said Madanizedah, who got his PhD from the University of Chicago. Economy expert Ahmad Alavi does not expect any noticeable short-term improvements. Talking to DW, Alavi pointed to the now-defunct JCPOA deal from over a decade ago — increased oil revenues and lower outside pressure kept Iran's economy on "life support," but without deep structural reforms, the effects remained limited and short-lived. Eggs in Iran three times more expensive than a year ago The roots of Iran's economic crisis reach deep into years of sanctions, mismanagement and corruption. On top of that, the war and the recent US blockade of Iranian ports have made the situation even worse. The crisis is most noticeable in grocery shops — a carton of 15 eggs that used to cost 70,000 toman (€0.37, $0.40) just a year ago is now at over 200,000 toman. Prices of cooking oil and imported rice have also gone up sharply. "The prices are rising literally every day," a 28-year-old Iranian told DW. "My husband and I both work and we have a small child. We still need to give up so many things. I don't think the prices are ever coming down again." The dollar exchange rate, according to Iranian news outlet Tabnak, is now at around 150,000 toman for one US dollar. That marks a noticeable drop from the recent rate of 190,000 toman per dollar, but the reduction seems not to have translated into any economic relief for the customers.
The BriefWire