As Iran braces for U.S. sanctions that target its oil sales, Tehran is resorting to a series of extraordinary steps to try to insulate the country’s increasingly restive working class from the likely economic fallout, the Wall Street Journal reported.
According to the Journal, Tehran is moving ahead with plans to provide financial support to 20 million lower-income people, or about a quarter of the population, and extra relief to 11 million of the country’s poorest.
As a second round of U.S. sanctions is set to come into effect on November 5, Iran is standing over a precipice. With an unsteady economy, a sharp drop in the value of the currency and the prospect of more economic pain ahead, the cost of living in Iran has soared.
The U.S. measures come after President Donald Trump withdrew the U.S. in May from a multinational accord that lifted sanctions in exchange for curbs on Iran’s nuclear activity. A first round in August targeted Iran’s foreign-currency trade, auto industry and other sectors; the next round, targeting the oil industry, will follow a 180-day wind-down period set by the Treasury Department to give companies time to get out.
After that period, anyone trading oil with Iran without a waiver from the U.S. government could face penalties. The Journal notes that the sanctions plan has already had an impact – as the International Monetary Fund (IMF) now expects Iran’s economy to shrink by 3.6 percent next year, in an October 9 forecast that drastically reversed the prediction it made in April, before Mr. Trump pulled out of the nuclear accord, of more than 4 percent growth.
The economy had been shaky even before the sanctions, mainly because of inflation, which the IMF forecasts at almost 30 percent this year. But the U.S. measures aggravated the fall of the Iranian currency against the dollar; it takes roughly 138,000 rials to buy a U.S. dollar today, compared with 42,000 in January.
And if things weren’t bad enough for Tehran, China will also cut some of its oil trade with Iran after vowing for months to resist U.S. sanctions on the exports, providing Washington with an unexpected boost to its efforts to isolate the Islamic Republic, the Journal writes in a separate report.
The shift by Beijing, Iran’s top customer, gives the U.S. a building block in an economic barrier around Iran. China’s largest oil refineries, China National Petroleum Corp. and China Petrochemical Corp., haven’t booked any Iranian cargo for November, according to people familiar with the matter. China has been importing about 600,000 barrels of Iranian crude a day, the Journal notes.
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