Ayatollah Khamenei calls for ‘economic jihad’ in Iran

Iran’s supreme leader Ayatollah Ali Khamenei on Wednesday called for an “economic jihad” to mobilise his country against the effect of international sanctions over the nuclear programme.

Setting out his vision for the economy, the Ayatollah, who has the last say in all decision making, focused on what he called the economy of “resistance” and urged the government of centrist president Hassan Rouhani to “monitor sanctions and increase the costs [of imposing sanctions] for the enemy”.

His statement, which was published in local media, was a clear indication, say analysts, that the Islamic regime is not counting on a swift end to sanctions, despite the negotiations over Tehran’s nuclear programme that began this week in Vienna with the six major powers – the US, UK, France, Russia, China and Germany.

US banking and EU oil sanctions have slashed Iran’s oil revenues by more than half over the past two years, creating a financial crisis and weakening the national currency, the rial, by about 50 per cent.

To counter the measures, the supreme leader said Iran should “choose strategic customers; diversify export methods; have the private sector participate in oil sales; increase the exports of gas, electricity, petrochemicals and oil by-products”.

His statement called for the country to decrease its energy consumption; use barter deals in foreign trade; increase domestic production in a number of basic commodities; diversify the origins of imports; increase food and health security; reform financial markets; encourage foreign investment to increase non-oil exports; use diplomacy, especially with neighbouring countries, to improve the economy; and increase in tax revenues.

The policy aims were initially drafted by the Expediency Council, which advises the supreme leader on policy. The council is headed by Akbar Hashemi Rafsanjani, the influential former president, who is a strong supporter of Mr Rouhani.

“All branches of the Islamic regime must immediately carry out these policies within a specific timetable and should devise laws and regulations for a road map in various fields so that people and the business community can take part in this holy jihad,” the Ayatollah said.

Mr Rouhani has already announced that his government – which inherited an economic crisis caused as much by the populist policies of his predecessor, Mahmoud Ahmadi-Nejad, as by sanctions – was drafting policies based on the assumption that sanctions might not be lifted in the near future.

“In Iran, we make all our plans based on a framework called the economy of resistance and act accordingly, but at the same time lifting of sanctions will have an impact,” the president said in Davos last month.

Although Mr Rouhani’s government has created some stability in the currency market and has curbed consumer prices since taking office last summer, ordinary Iranians are struggling with inflation running at 39.3 per cent and an unemployment rate of 24.3 per cent, according to official estimates – analysts say the true figures are even higher.

Iranian economists believe the hardship cannot be reduced without the easing of sanctions. The country needs the estimated $60bn-$100bn of funds blocked in overseas banks to be released, and it needs foreign investment to help revive its industries, including oil and gas, which are operating far below capacity.

The authorities are in the meantime keen to reduce reliance on oil revenues and to slash imports. Imports of consumer goods, which increased over the past decade from less than $20bn a year to about $60bn thanks to record oil revenues, have hit domestic industry and the agricultural sector.

Brigadier General Mohammad-Reza Naghdi, commander of Basij – the voluntary force of the influential Revolutionary Guards – said the decrease of crude exports from 6mpd more than three decades ago to 1mpbd after oil sanctions came into force showed the regime was “successful at cutting its dependency on oil”.

Financial Times