Iran on November 4 announced a 10-fold increase in its enriched uranium production. The move, declared on the 40th anniversary of the seizure of the US embassy in Tehran which sparked the Iran hostage crisis, is another step in increasing the pressure on remaining major power signatories of the 2015 nuclear deal to offer the Islamic Republic meaningful protection from US sanctions if they want the Iranians to stay in the accord unilaterally abandoned by the Trump administration in May last year.
Ali Akbar Salehi, head of the Atomic Energy Organization of Iran, said enriched uranium production was now at 5kg per day. Two months ago it only stood at 450g per day.
The EU said on November 4 that its backing for the nuclear deal depended on Tehran fulfilling its commitments. German foreign minister Heiko Maas said the announcement as regards the centrifuges was unacceptable and was putting the whole deal at risk.
After giving up on a period of “strategic patience” during which Tehran waited in vain for Europe to come to its assistance in helping to protect the Iranian economy from the US sanctions, Iran has been gradually stepping up its non-compliance with the nuclear deal. The policy is designed to pressure Europe to help secure good reasons for Iran to stay in the nuclear deal, under which Iran commits not to pursue the development of a nuclear weapon in return for a shield against heavy international sanctions.
So tough are the US sanctions that Tehran describes them as an “economic war” and “economic terrorism”. Iran’s Supreme Leader Ayatollah Ali Khamenei remarked that the “US is now wilder and ruder” than it was 40 years ago as he reflected on relations with Washington on the eve of the anniversary of the hostage crisis, Fars News Agency reported on November 3.
Khamenei, who referred to Iran and the US as “implacable foes” also said that Tehran would maintain its ban on talks with the US. That comes as another blow to efforts by the Trump administration to force Iran to the table with its sanctions-led “maximum pressure” campaign to renegotiate the nuclear deal, partly to place ultra-tough controls on Tehran’s nuclear and ballistic missile development programmes and partly with an eye on greatly restricting Iran’s role in Middle East affairs. Khamenei also poured scorn on French President Emmanuel Macron for trying to arrange talks between the foes on the sidelines of the UN General Assembly in New York in September.
The impact of US sanctions on Iran’s economy is projected to peak this year, with growth resuming in 2020, according to the October issue of the World Bank’s twice-yearly Global Economic Prospects report. Iran’s economy is set to shrink by as much as 8.7% in 2019/2020 following on from the 2018/2019 contraction of 4.9% as crushing US sanctions continue to exact a heavy toll. It added that the Islamic Republic may eke out growth of 0.1% in 2020/2020.
Iran’s economy is expected to contract by as much as 9.5% this year, the International Monetary Fund (IMF) said on October 15 in the latest edition of its World Economic Outlook. Early this year, the Fund was forecasting that the GDP decline would be around 6%, but that was before May’s introduction of the US policy to attempt to drive all of Iran’s crude oil exports off world markets.
Some international economists put Iran’s inflation rate a good deal higher than what is portrayed by the country’s official statisticians. Iran’s annual inflation rate rose sharply from about 10% in mid-2018 to about 52% in April 2019.
The Central Bank of Iran (CBI) on September 21 updated the official exchange rates. The pound edged up to IRR51,875 while the euro declined to IRR46,408 on the official CBI exchange rate board. The US dollar, now essentially on official lockdown in Iran, remained fixed at IRR42,000. Iran continues to remove the greenback from daily transactions, partly to get around the US sanctions.
Iran should work to eliminate the gap that currently exists between the Iranian rial (IRR) market exchange rates and official exchange rate, according to the IMF, which will help tame and control inflation and reduce pressure on the exchange rate. The IRR is around two-thirds weaker against the dollar on the unofficial market compared to where it stood before it became clear early last year that the US was switching its Iran policy back to a sanctions-led approach.
Meanwhile, Iran’s redenomination bill was sent to the Iranian parliament by the cabinet on August 21 for debate among MPs, according to ICANA.
Iran is set to remove four zeros from its currency, the Iranian rial (IRR) in the next two years, provided all relevant bodies, including the Guardian Council, government committees and parliament give their blessing. As part of the new currency, to be officially called the “toman”, a new sub-currency named the “parseh”, equal to 100 toman, will be legislatively introduced.
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