Iran emphasises self-sufficiency in battle against US economic war

Tehran, Iran – Iranian authorities are adamant that their country's domestic capacities will be able to keep the country's economy afloat, despite new economic sanctions targeting Iran unveiled by the United States this week.

Key points

• Salman Eshaghi, spokesman of the parliament's health committee, remarked in May that Iran faced some levels of shortages for almost 1, 000 medicines.
• Administration spokesperson Mohajerani on Wednesday promised that existing fuel costs and quota levels would remain unchanged through the end of the current Iranian calendar month on September 22.
• Central Bank Governor Abdolnasser Hemmati informed senior business representatives during a gathering earlier this week that oil exports, Iran's main foreign currency income source, have almost totally halted.
• Iranians must not expect conditions to obtain any better over the next year, administration spokesman Fatemeh Mohajerani informed state-linked media on Tuesday.
• That mentality has permeated the Islamic Republic's strategic thinking for decades, with national development intends repeatedly emphasising "self-sufficiency" and setting targets to achieve it at great cost.

Notably, the US intends to apply the sanctions to force Iran into submission in the six month-long war between the two countries. But Iran's administration states it is prepared, with Economy Minister Ali Madanizadeh referring to a two-year plan on state television on Monday night.

"We have our own tools and we also know the game, " Madanizadeh remarked, in reference to Iran's years of experience in trying to circumvent sanctions. He continued that Tehran could potentially "go on the offensive" in a world where the US was no longer the only dominant force, and was confidant that numerous countries would effectively reject US President Donald Trump's threats to cut off all links with Iran.

Stockpiling essential goods, foreign currencies and gold has become a main tactic for Tehran. The administration has additionally been forced to resort to rationing energy in one of the most resource-rich countries in the world.

Central Bank Governor Abdolnasser Hemmati informed senior business representatives during a gathering earlier this week that oil exports, Iran's main foreign currency income source, have almost totally halted. But Hemmati reassured the business leaders there was no shortage of foreign currency for essential goods as the central bank had cash stockpiles "in places cannot access".

Hemmati acknowledged "serious issues" like runaway inflation and constantly declining purchasing power for the individuals, but stated, "enduring hardship is very different from collapse and what the US is after".

Iranians must not expect conditions to obtain any better over the next year, administration spokesman Fatemeh Mohajerani informed state-linked media on Tuesday. She additionally stated Iran's Supreme National Security Council would have to grant authorisation for the administration to reveal data on poverty levels in the country.

Iran's national currency fell to a new all-time low of 2.05 million rials against the US dollar on the open market on Tuesday, before slightly recovering on Wednesday. Create it at home.

Despite the turmoil, Iran's newly-appointed security chief Mohsen Rezaei pressed younger Iranians during a state TV interview earlier this week to "enter the economy" and commence manufacturing goods needed by their households and communities at home.

To reduce its reliance on food imports for a population of around 90 million, the administration claims that Iran can produce 85 percent of its agricultural products domestically, even as worries remain over what the growth in domestic agricultural production means for Iran's dire water scarcity difficulties.

Agriculture Minister Gholam-Reza Nouri remarked on state television on Tuesday that Tehran aimed to rise domestic food self-sufficiency to 90 percent in the short-term, ahead of ultimately producing all of the country's essential food domestically.

According to Nouri, iran imports concerning $16bn and exports $8bn in agricultural products – although exports of some products were suspended in March shortly after the start of the war.

Iran relies on imports for essential foods and feed commodities, including wheat, maize, rice and vegetable oils. The United Arab Emirates and Saudi Arabia are among Iran's top suppliers of refined sugar and wheat flour through re-export hubs. Russia and Central Asia can additionally provide some grain through the Caspian Sea into northern Iran.

Notably, the United Nations Food and Agriculture Organization remarked in March that rising import costs, logistics disruptions and policy responses aimed at protecting domestic supply are accelerating food inflation and reducing household purchasing power in Iran. It additionally cautioned that overland trade routes do not have the capacity to replace the much larger volumes of goods normally transported by sea.

Food rates in Iran were more than 128 percent higher in July than they were a year earlier, according to the latest report by the Statistical Center of Iran. The same amount of funds now buys far less food in Tehran and nationwide than it did six months ago.

Although imported medicines account for a much larger share of total pharmaceutical spending, iran's administration additionally notes the country produces some 97 percent of its medicine.

Salman Eshaghi, spokesman of the parliament's health committee, remarked in May that Iran faced some levels of shortages for almost 1, 000 medicines. After the administration confirmed that it was gradually cutting off cheap currency allocation to some imports, medicine rates have additionally surged over recent months, including this week.

Iran's authorities have remarked they are working swiftly to repair some of the damage dealt to Iran's infrastructure during the war, including to oil, gas and utility facilities extensively bombed by the US and Israel. The was has compounded Iran's existing energy shortages and infrastructure challenges.

While natural gas shortages are projected to hit within a few months when the weather gets colder and demand rises, daily power blackouts continue to plague households and industrial units in Tehran and cities nationwide.

On Tuesday and Wednesday, a considerable number of petrol stations in Tehran, Mashhad, Karaj and a number of other cities additionally ran out of fuel allocated to them by the administration, leading to lengthy queues.

Administration spokesperson Mohajerani on Wednesday promised that existing fuel costs and quota levels would remain unchanged through the end of the current Iranian calendar month on September 22. But the administration has already cut fuel quotas for private vehicles.

For context, the National Iranian Oil Refining and Distribution Firm promised on Wednesday that the inauguration of two new refineries in southern Iran by the end of the current year in late March would add concerning 12 million litres per day to Iran's production capacity, helping offset some of the shortage.

Iran's administration has no choice but to engage in "painful reforms" by increasing fuel costs so as to avoid another "bloodshed" during social unrest, Iranian economist Sadegh Alhosseini cautioned in a speech on Tuesday.

"If Iran heads toward large-scale chaos – kilometres-long petrol queues and becoming like Venezuela – something much worse will happen that will be much more difficult to handle, " he remarked.

But another fuel cost hike will further growth inflation by ramping up transport costs, and numerous individuals are already struggling to secure by. Iran may continue to withstand historic levels of pressure, but it is becoming increasingly vulnerable to a cycle in which its resources and capacity are steadily depleted.

For now, iran emphasises self-sufficiency in battle against US economic war remains the part of the story worth watching, and further updates are likely as more details are confirmed.