Money laundering, falling currency and executions of businessmen – this is Iran’s 2018
Iranians remain angry at Trump over adding them to his travel ban and pulling out of the deal, but their anger towards their own government is even stronger. The reason is the steady stream of corruption cases and allegations of mismanagement by officials. The economic crisis in Iran has led to the introduction of a bill to remove four zeros from the national currency. The proposal comes from the country’s regime owned central bank as the rial has lost more than 60% of its value in 2018. Iran’s foreign trade was disrupted by the weak currency which in turn resulted in annual inflation reaching nearly 40% in November. The escalation of public discontent forced people to protest on the streets with slogans such as “It’s amazing: we have rockets, but no diapers”. In case the government approves the plan to slash the zeros, the parliament has to pass the proposal, which will then await the approval of the clerical body.
While the national currency struggles to cope with the monstrous inflation rate, the country ranks 1st in the world in money laundering by some indexes. In a recent interview, the country’s foreign minister Mohammad Javad Zarif admitted that money laundering was a fact in Iran. Some years earlier, in 2016 the Minister of Interior, Rahmani Fazli said:
“Undoubtedly part of the dirty money of drug trafficking will enter politics, elections andf the transfer of political power in the country.”
Estimates about the amount of money being laundered in the Islamic Republic vary between $35-43 billion.
“The money from organized crime or drug trafficking is now an integral element within the banking system and we do not know the source and destination of money from organized crimes,” said Jonaidi, legal advisor to President Rouhani.
The foreign minister Zarif didn’t explicitly name those who benefited from the money laundering. The reaction of parliament members, however, made it clear he was referring to Revolutionary Guard Corps (IRGC). This is a branch of Iran’s Armed Forces founded after the 1979 revolution to protect the Islamic Republic System which is under the control of the Supreme Leader. Interestingly, being the one who at the end of the day controls the whole economic empire the supreme leader, Ayatollah Khamenei has also managed to build a mini-version of it for himself with assets estimated at about $95 billion.
According to President Rouhani adoption of laws including an anti-terrorism financing bill which to bring Iran into compliance with the anti-money laundering standards of the French-headquartered Financial Action Task Force (FATC) is essential for the survival of the country’s economy. IRGC is opposed to this idea as this will force Iran to abandon support of groups such as Lebanon’s Hezbollah, with its’ military wing designated a terrorist organization by US and EU.
While a branch of the Iranian Armed Forces is accused of money laundering on a very large scale, without any consequences for its members, a businessman was recently executed for economic crimes. Hamidreza Baqeri-Dermani, convicted of “spreading corruption on earth” – which in his case includes bribery and fraud, was sentenced to death by a fast-track court set up to fight economic crimes. The special courts were established in August with the approval of Supreme Leader Ayatollah Ali Khamenei.
In November, Iran hanged Vahid Mazloumin and his alleged accomplice, Mohammad Ismail Ghasemi. The men were convicted for currency manipulation and for “spreading corruption on Earth” – a capital offense under Iran’s Islamic laws. Dozens of businessmen and traders have been jailed for up to 20 years. How is such an approach going to solve corruption and economic issues in the country and what long-term consequences will it have is difficult to say.
The Iranian economy is failing. In addition, the money laundering machine active in the country is operated by its very own armed forces, represented by the IRGC. All this is topped by the fact that the government is sentencing Iranian traders to death as if they are to be held accountable for the economic collapse. Here comes the big question – is the decision of US to leave the nuclear deal the reason for the current economic state of Iran, or it is the complete mismanagement of Iranian bank system, the money laundering and the fact that millions are spent by the government to support its Proxies across the Middle East.