Of course, most of us have been following the critical military escalation between "Iran" and "Israel" since April 1st, as the occupying entity started it by bombing a building next to the Iranian consulate in Damascus with 6 missiles and assassinating a number of senior Iranian officers, including General Mohammad Reza Zahedi, one of the most important officers of the Revolutionary Guard and leaders of the Quds Force. After that, Iran responded on April 13th with a widespread attack in which it launched 350 drones and missiles at military targets in the occupied territories. This was the first Iranian attack from its own territory in history on the occupying entity. After that, there was a weak Israeli response [that the USA pressured to keep very limited] for no further escalation leading to a comprehensive war. An expanded war that Netanyahu needs. But before this escalation, there was another war that had been going on for years in the shadows between the Iranians and Israelis, a war in which the Iranian economy lost billions of dollars due to Israeli strikes. This war takes place here, in seascapes. The path you see ahead of you is one of the routes for the shipping and smuggling of Iranian oil, heading towards Syrian territories. This route was discovered by American and Israeli intelligence agencies in 2018, shortly after Donald Trump took office. As you can see in front of us, ships laden with oil and goods, and sometimes weapons, depart from Iranian ports in the south of the country, navigate through the Arabian Sea, the Red Sea, and the Mediterranean Sea until they reach mostly the port of Banias in northern Syria. This port is located between the two largest ports on the Syrian coast, Tartus and Latakia. This route is one of the most important routes that Iran relies on to transport some of its oil production to destinations other than China and East Asia. The transportation is done by often unknown ships to evade U.S. sanctions and continuous monitoring of maritime passages. The average cargo carried by each ship was around one million barrels, meaning approximately fifty million dollars for each shipment. When the Israelis discovered this route five years ago, they decided to target dozens of Iranian ships along the Red Sea coast and up to the shores of Syria, entrusting this mission to the "Flotilla 13" commando unit belonging to the Israeli occupation navy. This unit has already carried out at least 12 sabotage and explosion operations targeting Iranian ships by planting explosives or mines... like the tankers "Happiness 1", "Dream", "Sabiti", "Sinopa" and others, and between 2019 and 2021 Iran retaliated by targeting Israeli container and cargo ships like the MV Helios Ray and Lori. What we can notice at the time of this mutual targeting is that both sides showed a level of discipline so as not to cause serious damage to the ships themselves most of the time, but sufficient damage to prevent the ships from completing their journeys or to disable them for a relatively long time. Of course, this discipline is not out of respect or love for each other, but to prevent the situation from escalating further. However, this equation between Iran and "Israel" has begun to change recently after more than 6 months of the Operation Flood of Al-Aqsa carried out by the Palestinian resistance on the settlements in the Gaza Strip, followed by "Israel" launching its ferocious and ongoing campaign on the sector until now. And this change is through the military escalation that we all have seen. Here, we will be faced by some crucial questions regarding the nature of the Iranian economy and its main and most important product, "oil". Questions like what is the exact nature of the Iranian economy? Is it a strong economy or a weak one? What is the impact of the American sanctions that have been imposed on it for decades? If a comprehensive war broke out between Iran on one side and "Israel" with America behind it, Can the economy of the occupying entity withstand a war like this as well? An extremely important episode that you must watch until the end.. I would like to remind you that the Zionist entity has murdered more than 34,000 of our people in Gaza and injured more than 77,000 in its continuous criminal war on Gaza, so don't stop talking about them and support them in any way you can.. Let's delve into the story of the Iranian economy. I am Ashraf Ibrahim and this is the Economic Informant. In early 2017, the Israeli foreign intelligence agency "Mossad" began planning a difficult intelligence operation akin to those seen in American movies to seize a large number of archival documents related to the Iranian nuclear program. This operation, which made it difficult and like movie scenes, took place in the heart of the Iranian capital Tehran and lasted for a full night. We won't delve into more details than necessary for the sake of time in this episode. But quickly, what happened was that Mossad monitored an Iranian warehouse in a regular commercial area in Tehran for a year. This warehouse served as a secret building for storing some of the most important historical documents related to Iranian nuclear activities. On the last day of January 2018, a team of Israeli agents arrived at this building equipped with weapons and equipment to steal the most important documents inside it. They succeeded in about 6 and a half hours in breaking into 32 metal safes and stealing about 50,000 pages of documents and 136 computer discs containing plans and archival images. They fled at 5 am before the morning security patrol arrived at the building. The Israelis waited for about 3 full months before announcing the results of this operation. In late April 2018, Netanyahu took a summary of the documents and went to Trump to show him and persuade him to withdraw from the nuclear agreement that America and Europe had signed with Iran in 2015 under his predecessor Barack Obama. To be honest, Mr. Trump did not need this Israeli heated show at all, because firstly, the documents stolen by the Israelis were old and dated back to 2003. The Americans were already aware of a lot of the information contained in them. The Israelis, as usual, exaggerated and made a big show to convince the world that they had taken important documents. To the extent that Netanyahu made a presentation on Israeli television as if he was presenting a Who Wants to Be a Millionaire show. But the most important reason is that withdrawing from the Iranian nuclear agreement was one of Trump's key campaign promises, and he described it as a flawed and humiliating agreement for America, and a security disaster for the USA and its allies in the Middle East, especially the Israelis. Indeed, just a few days later, on May 8, 2018, Trump announced America's withdrawal from one side of the agreement, and then his Secretary of State, Mike Pompeo, stated that America was on its way to imposing the harshest economic sanctions on Iran in its history. And indeed, in the same month, the Trump administration reinstated most of the sanctions that had been lifted on the Iranian regime since 2015, but in a more severe manner. The truth, my friends, is that Iran's story with American sanctions is long and old, dating back to 1979, at the peak of the popular Iranian revolution. Let's take a quick look at the American sanctions and their harsh impact on the Iranian economy. The Hammer of American Sanctions! Before the Iranian Revolution, which took place in January 1978, Iran was a monarchy ruled by Shah Mohammad Reza Pahlavi. At that time, Iran was a allied country with America and had close relations, akin to peas and carrot, with the Israelis, with various forms of cooperation between them. When the revolution took place, conflicts began and these relations were gradually severed. However, what interests us here is to discuss the history of the first American sanctions on Iran in November 1979. This was when Iranians stormed the U.S. embassy in Tehran and took some of its diplomats as hostages. This marked the beginning of intense tension between the new Iranian regime and Washington. At that time, Washington responded by banning Iranian imports to the United States and freezing $12 billion in Iranian assets there. After four years, in 1984, America officially classified Iran as a "State Sponsor of Terrorism." This was directly translated in the American dictionary to impose comprehensive sanctions to cripple any economy. As we all know, American sanctions are America's preferred tool to encircle any country anywhere in the world. In the 1990s, during the presidency of Bill Clinton, Americans officially passed the sanctions law on Iran and Libya, which prohibited any foreign entity, whether a company or a group, from investing more than 20 million dollars annually in the Iranian oil and gas sectors. Of course, Iran is one of the largest countries in the world with oil and gas reserves, so the 20 million dollars annually for any company is a very small amount that is not even enough to cover the expenses of shipping a limited number of shipments. This is why the European energy giants at that time told the Americans that this talk is nonsense and they would not implement it, and indeed they did not implement it until 2010. However, the law was effective with the rest of the world's companies. During the same period, Bill Clinton expanded the import ban, making it a ban on both exports and imports. This means that the US would not take anything from Iran and would not provide anything to them, and this applies to any American product or component in any country in the world. There was a significant change in 2010 when the US Congress adopted a law called the "Comprehensive Iran Sanctions, Accountability, and Divestment Act." This law targeted companies investing in the Iranian energy sector or selling refined oil to Iran, as well as foreign banks dealing with specific Iranian banks. The Americans pressured the European Union to compel their companies to implement the sanctions, and they were successful in doing so. Until 2013, every year the Americans would increase and expand sanctions. Instead of targeting companies dealing directly with Iran, they targeted companies collaborating through a third party. To make it easier for you to understand, imagine if one of you had a conflict with someone, but instead of punishing just that person, you decided to punish him, his family, his friends, his colleagues at work, and the people living near his workplace. This is what the Americans were doing with Iran until early 2014. Of course, these ongoing sanctions were quite successful in weakening the Iranian economy. To give you a glimpse of the hell of American and European sanctions, you should know that Iran, for example, has been forced over the years to sell oil and gas indirectly at much lower prices than the global market. Its economy has been losing tens of billions of dollars every year during these years just because of selling oil at a price lower than the global price. Okay, how much did Iranians lose? Some estimates indicate that the Iranian economy lost over 4 trillion dollars due to sanctions between 2008 and 2023, over a period of 15 years! Can you imagine what this number looks like? This quick summary takes us to the moment of the historic nuclear agreement and its aftermath, and the impact it had on the recovery of the Iranian economy. The Iranian Ghost Economy! Between 2014 and 2015, after huge diplomatic efforts by Iranians and Europeans, the Obama administration, along with Britain, France, Russia, China, and Germany, signed the Iranian nuclear agreement. This agreement, called the Joint Comprehensive Plan of Action (JCPOA), required Iran to take organized steps to limit its nuclear program activities. In return, there would be a significant easing of the sanctions imposed by the United States, the United Nations, and the European Union. What matters here is that after Trump took office, he began implementing his electoral promises, including not renewing the American signature on the agreement in 2017. However, he did not withdraw from it but rather paved the way for amending the agreement to suit American and Israeli interests, of course. In 2018, John Bolton, one of the Washington hawks and long-time advocates for military strikes against Iran, became Trump's national security advisor. Bolton influenced Trump to the extent that he eventually led him to withdraw from the agreement in May of the same year, as we mentioned earlier. After that, the American sanctions on the Iranian economy were reinstated in full force. The truth is, I can tell you accurately that the Iranian economy has never really been able to breathe or recover since the 1970s up to this moment, but this American suffocation has greatly intensified as we clarified in the past 15 years. To understand what is happening, let me tell you that the Iranian economy relies on three main sectors representing about 82% of the Iranian economy's size. These sectors are services, oil, and industry. The largest sector is the services sector, which accounted for 55% of the Iranian gross domestic product (GDP) totaling 403 billion dollars in 2023, with 15% for oil and 12% for industry. Iran is the second largest country in the world in terms of natural gas reserves, and the fourth largest country in terms of oil reserves. This makes it a huge global power in terms of oil resources. That is why any American sanctions were primarily targeting Iran's energy sector before anything else. This sector is the main reason, in the utmost simplicity, that has kept the Iranian economy alive until today. After years of stagnation, and following the end of the coronavirus pandemic, the Iranian economy has started to recover slightly. Why did this happen? For several reasons. Firstly, there was an increase in the rate of oil and petrochemical exports after a long period of contraction. Secondly, Iran started to turn towards some neighboring countries and China, selling oil to them. Iran also began to exchange oil for essential goods and use indirect payment channels to settle transactions with these countries due to sanctions. Indeed, we have seen the recovery of oil exports when the Iranian Oil Minister, Javad Owji, stated in March of last year that Iran's oil exports had reached over $35 billion in 2023. This income, along with the revenues from the services sector, play a very important role in maintaining internal stability between the Iranians and the Iranian government. This stability is somewhat fragile because despite the recovery of oil exports and the Iranian economy surpassing the expected growth rates from international institutions in 2023, the underlying problems in the Iranian economy due to sanctions and international isolation are worsening over time. This pressure, combined with inflation, which reached 40% in February This, coupled with current regional tensions, led to a sharp decline in the Iranian rial, losing more than 30% of its value against major currencies since the beginning of January 2024. This decline increased after the Iranian military attack on "Israel," pushing the exchange rate to over 700,000 rials for one US dollar. One of the reasons for the decline of the rial and the increase in inflation is the rise in the government debt levels and the increase in currency printing as a result of increased government spending coupled with a scarcity of hard currency inflows. In this context, the purchasing power of a large number of Iranians has decreased with rising youth unemployment rates. In addition to that, we also have the challenges of climate drought which has created a major crisis in the agricultural sector. Moreover, among the fundamental issues are the rising cost of import bills and the increase in the quantity of imported products amidst the pressure of American and European sanctions. This pressure, combined with inflation, has raised the cost of basic food items in the Iranian markets in conjunction with the past month of Ramadan. For example, we find that prices of some legumes and rice have increased significantly by between 15% and 30%, while the prices of red meat have risen by 25%. The prices of summer fruits and vegetables have increased by 50%, and so on. Of course, there are other structural problems in the Iranian economy, with one of the most important being the prevalence of levels of corruption and the infiltration of military government entities such as the Revolutionary Guards in important economic sectors. However, these problems have details that require a separate discussion. The recovery of oil exports alone cannot solve all the mentioned issues, especially since 90% of these exports go directly to China, which is another dilemma. Why?, Because China is not easily influenced or a philanthropic actor. Let me tell you why now. Chinese influence: Teapots! Despite China's constant insistence on presenting itself to the world as independent from America, its state-owned major oil companies have almost entirely refrained from directly purchasing Iranian oil in compliance with U.S. sanctions. This results in most of Iran's oil exports to China going to unofficial private refineries known by their famous name Teapots. These refineries operate discreetly on the international scene by obtaining Iranian oil at a much lower price than the market, acquiring a barrel of oil for at least $13 less than its official global price, which ultimately leads to losses of tens of millions of dollars for the Iranian economy. Another negative aspect is that China often pays for oil in its currency, the Yuan, which cannot be easily converted without loss, and cannot be used for anything other than purchasing Chinese products. This means that Iranian consumers have no choice but to buy "Made in China" products, both on a personal and commercial level. This unregulated relationship is used by China to impose high prices on some goods, such as Chinese cars sold domestically in Iran at three times their price in neighboring Gulf countries, despite the fact that the purchasing power of Gulf inhabitants is significantly higher. China pays in Yuan as a result of its economic influence over Iran, in other words, Tehran's urgent need for it and for its oil revenues, products, centrality in Asia, and overall economic strength to break the Iranians' international isolation. On the other hand, Iranian oil represents only 10% of China's oil imports, and China understands this very well, realizing that it is the dominant party and the largest trading partner of Iran in the world, and therefore deals in this manner. On the other hand, Iranians are not as easily swayed, or else they would have succumbed fully to the Americans long ago. For example, in the last month of December 2023, Iran restricted the volume of its oil shipments and raised prices for everyone, In addition, Iran is striving to establish bilateral partnerships with blocs of Eastern and Southern countries in order to escape the European-American grip. This can be seen in its closer ties with Russia, as both countries are among the most targeted by Western sanctions in the world. For example, in 2022, Moscow and Tehran linked their banking networks in an attempt to compensate for the West's cutting off services through SWIFT for both countries. Their goal is to reach a mutual trade of $10 billion annually in the coming years. On paper it looks nice, but the problem is that on the real ground reality, as the Russians do not understand the Iranian market and what it needs in terms of goods and services. The same situation applies to Iranians and the Russian market, and that's why Campez Merkrimi, Vice President of the Iran-Russia Chamber of Commerce, said that if we want Russian-Iranian relations to move from good intentions to real trade contracts, the most important step is to remove customs barriers and establish a joint Russian-Iranian free trade market. This situation is definitely not easy, otherwise everyone would have found it acceptable. But it could very well happen if the American-European bias towards Israelis and Ukrainians continues and sanctions continue to besiege both countries. Iran has also been trying for a while to approach the Gulf countries, especially Saudi Arabia, through Chinese mediation. This was clearly evident in the Saudi-Iranian agreement announced in March of last year 2023, in the Chinese capital, Beijing. Iran tried through this agreement to end the Arab political, security, and economic boycott against it, while at the same time Saudi Arabia sought to move in a slightly different direction from its usual direction towards America. This agreement encouraged the UAE, for example, to end the economic downturn in its relations with Iran because the UAE is the second largest trading partner of Iran after China due to geographical proximity. In 2022-2023, bilateral trade between them reached 24 billion dollars, and it is expected that this number will reach 30 billion within the next two years. What could happen to the Iranian economy if there was a full-scale war between Tehran and Tel Aviv? Of course, this question could warrant its own discussion, but let me give a brief answer to not keep you waiting: most likely not. The Iranian economy will not survive. Why? The truth is that most people do not want a widespread war. America is not ready for any vital region like the Middle East to ignite, and consequently, maritime trade will be greatly affected if it were not to cease completely due to the security of important waterways and navigational areas such as the Strait of Hormuz, the Arabian Sea, and the Arabian Gulf. As all economic analysts and followers know: playing in maritime trade equals constant increases in the prices of almost everything, foremost among them oil, and inflation rates soaring. The neighboring Gulf countries definitely do not have any desire to see an Israeli-Iranian confrontation on the ground, and this is to maintain their own stability and that of their citizens. European and Asian powers share the same desire as the United States to prevent a war like this. No one wants to strike Iran except Netanyahu and his government of extremist crazies in order to prolong their stay in power after their failure to break the Palestinian resistance to this moment despite all the insane bombardments they have inflicted on Gaza. The extremist Israeli party is the only one who wants to lead America into a direct war with Iran by all means. But America has practically proven that it will not do so, when it pressured the butcher Netanyahu and his government to respond to the Iranian strike symbolically. Well, why wouldn't the Iranian economy survive if the world went crazy and a war like this broke out? Because then America would go for the option that could completely destroy the Iranian economy and make it unable to recover except after very long decades, which is the option of pressuring China. At that time, America might not directly hit Iran and let the occupying entity do so and give it weapons abundantly, as it is currently doing in Gaza. But alongside its ongoing sanctions for many long years, America will likely lean towards the Chinese and pressure them in every possible way to stop buying Iranian oil and selling Chinese goods to Tehran. Furthermore, America has actually started doing this without war or sorrow. How? On Monday, April 15th, the US House of Representatives passed a law called "Iranian Energy Sanctions Chinese Act" as an American response to the Iranian attack on the occupying entity. It was passed with a overwhelming majority of 383 votes in favor versus 11. Thus, the law went to the Senate for approval before being presented to Biden for final approval. As is evident from its name, the goal of this law is to make it difficult for China to purchase Iranian oil, especially after Iran's increased exports to one and a half million barrels per day. This is the highest rate of Iranian oil exports in four years. As we can see, the Americans are not even taking shortcuts before any comprehensive war. So, can the Chinese respond to pressure like this? In fact, it is possible at the moment. China is still not in a position to confront the United States directly in a regional crisis in a distant area for them. All that matters to China is to maintain a regular flow of oil from Saudi Arabia, which is its second largest source of oil after Russia. In addition, it will not want to directly get involved against the United States in something like this and threaten its commercial interests worldwide. On the other hand, the Iranian economy, as we have clarified, is fragile and full of weaknesses due to years of accumulated international sanctions, along with poor governmental management systems. With inflation on the rise, currency devaluation, increasing prices, decreased purchasing power, and widespread unemployment, it is very difficult for Iran to survive without the lifeline that China is currently providing in every possible way. The economic collapse would lead to broad and potentially violent internal popular unrest, and inevitably set the country back fifty years. This is not an exaggeration at all, as some conservative estimates suggest that the purchasing power for Iranians, for example, has declined to a level similar to twenty years ago. I may have taken up too much of your time, but this topic is of significance and we needed to cover it extensively so you can revisit it at any time for evaluation. We ask Allah for the safety of our people in Gaza, never stop supporting and helping them in any way possible, and we also ask Allah for the safety of our Arab nations, and to keep the region away from the hellfire of the Zionist entity and the American war machine. See you soon, take care.
