Iran's Zimbabwe experience

Oct 2, 2012

Iran is besieged by economic sanctions by the western world because they are not happy about its desire and plans to be nuclear-armed, just like the sanctioning countries. There are strong parallels between what Iran is experiencing now and what Zimbabwe went through in the several years up to the beginning of gradual economic normalization in 2009.

Those sanctions are reportedly beginning to really bite. According to a report in the Guardian (UK), "Iranians are suffering their worst financial crisis since the Iran-Iraq war in the 1980s, with the national currency hitting an all-time low and the prices of staple goods soaring. The rial was sent into a tailspin on (October 1, 2012), dropping by more than 15% to its lowest-ever level against the dollar. At midday, 34,500 rials bought $1 on the open market, compared to 29,600 rials on (September 30th's) close, according to Iranian currency-monitoring websites. The prices of chicken, milk, cheese, bread, sugar and yogurt, among other staples, are now rising almost every day."

Zimbabweans can say 'been there, done that.' Fortunately these experiences are now in the past, but the Guardian's article about Iran's western sanctions-caused economic squeeze brought back keen memories of some of the worst periods of Zimbabwe's crisis years.

A Britain-based Iranian economist invokes the Zimbabwe parallels. He says, "The enormous difficulties experienced could in the worst-case scenario result in a freefall for the currency (like in Zimbabwe) and result in hyperinflation (again as in Zimbabwe)."

From the events in Libya, Cuba and elsewhere, it is now clear that the hostile action of economic sanctions is not just applied to change the behaviour of the sanctioned governments. A central or additional 'benefit' is to cause disaffection by the population against their government.

An Israeli minister recently said the Iranian economy was 'on the verge of collapse,' but coming from Iran's most bitter enemy (on whose behalf the western sanctions on Iran are being applied) this could be part of psychological warfare.

As the Guardian's quoted economist points out, "Talk of collapse as the Israeli minister of finance has recently mentioned is inaccurate and emotive. Even unpopular governments in such harsh situations survive."

Zimbabweans would be well familiar with both of these statements by the economist. Zimbabweans are well familiar with the meaninglessness of loosely throwing about  the word 'collapse' . In Zimbabwe's crisis years, one had the feeling that some of the people who used the word 'collapsed' to refer to various aspects of the country were not simply describing what they perceived, but were actually expressing a wish.

Many British papers, including the Guardian, had their share of 'Zimbabwe collapse' stories. One would have thought from reading those reports that Zimbabwe was a zone of anarchy like Somalia, where there is no center to hold anything together, or a war zone like Iraq or Afghanistan.

So one reads the reports of the economic troubles in Iran with a familiar interest and empathy for ordinary people there, but also with a certain sense of wariness based on the sources of those reports, again based on the Zimbabwean experience.

During the most miserable and stressful time of Zimbabwe's economic trouble sit was very difficult to see the bigger picture from inside the crisis, so pre-occupied was one with getting from day to day. But in hindsight, it seems obvious that there were many colluding forces to bring the economy to its knees. There were disastrous political and economic decisions, but it appears much more apparent now than it was then that there were also foreign forces who squeezed the economy even harder, for the self-inflicted problems to be made worse to achieve certain desired political outcomes.

Reading about Iran's problems in 2012, from one Zimbabwean perspective that country is undergoing a very similar mix of local and foreign pressures, only ten-fold because of the bigger international stakes involved in the Iran versus Israel/western world standoff.

Zimbabwe was brought to its knees in the years up to 2008, but as hard as things were, it never 'collapsed' in the sense conveyed by (mostly British/western) reports of the time, and has stabilized considerably since the hyperinflationary .years. Iran is a much bigger and stronger economy. Despite the also greater pressure on it than smaller Zimbabwe experienced during its crisis years, one Zimbabwean will take reports of Iranian dysfunctionality and 'collapse' with a grain of salt.

Other Zimbabwe crisis-years parallels with what Iran is said to be going through now, according to the Guardian's article:

* ''For certain items you have to queue up and some are not available anymore."

Many Zimbabweans will have life time memories of shortages of and long queues for almost everything, from bank service to bread to fuel.

* 'The rial has lost 57% of its value in the past three months and 75% in comparison to the end of last year. The dollar is now three times stronger than early last year.'

These levels and rates of depreciation are nothing compared to the worst of Zimbabwe's hyper-inflationary period. May Iranians never have to experience that kind of inflation, bad as they may think things are for them now.

* "It's not only the prices of imported items that are increasing but domestic products have also been affected."

Been there, seen that in Zimbabwe. All 'domestic products' have an imported component or cost factor of one kind or another. Besides, almost all sellers of any good or service are caught up in the price-raising spiral, both to try and survive, and also spurred by shortages, greed and profiteering. Zimbabweans could write many books on this.

*Iran's Haemophilia Society, for example, has blamed the sanctions for risking thousands of children's lives due to a lack of proper drugs.

Refer to Zimbabwe's shrunken health system during the crisis years.

* The government has repeatedly attempted to bring the currency under control with no success. Last week it launched an exchange centre aimed at stabilising the rates, but the rial's fall has since increased.

Zimbabwe's currency 'exchange center' at the beginning of the economic cris was the central bank, but its rates stabilization efforts failed dismally, until it was felt necessary to take the extreme measure of pulling the Zim dollar out of circulation altogether. Even before that was made official, the 'exchange center' had moved from the central bank to the street, and the US dollar was already the defacto 'ruling currency.' The government simply moved to catch up with market reality.

* In the wake of the currency crisis, many Iranians who have lost faith in the rial are now contributing to its instability by rushing to convert their assets and properties to foreign currency and gold.

See prior point. Long before the Zim dollar was officially decommissioned, the U.S. dollar had become the stored-value refuge of choice for those who could access it.

* Iran's economic weaknesses – perpetually high unemployment and government mismanagement – have been masked in recent years by the high price of oil but its very dependency on oil means the embargo has had a significant impact.

Zimbabweans will be well familiar with high unemployment and poor government management. Those domestic problems just make the country more vulnerable to external economic, diplomatic and other pressures.

Will the sanctions break the back of the Iranian government, causing it to go pleading for mercy to the sanctioning countries? Will economic hardship cause Iranians to rise up against the government? Will the Iraninan government succeed in rallying its people against the foreign forces arrayed against it? Do the sanctioning countries have any moral authority to strangle the Iranian economy? Are sanctions the equivalent of a declaration of war, and does the sanctioned country have every right to retaliate in any way available to it? What exactly is economic 'collapse?' Who does the defining- an Iranian, an American, an Israeli? How much of what we read in the 'international media' is fairly objective reportage, and how much is propaganda to accompany the sanctions effort?

For people who have never lived through the kind of economic-political-diplomatic crises that Zimbabwe went through and that it is now Iran's turn to undergo, these sound like strange, academic questions. But if you lived through the Great Zimbabwe Economic Crisis, and if you looked back in hindsight to all the forces that came together to cause the crisis, they will be very 'real.'

As its economic crisis gets more dire, does Iran have Zimbabwe's past in its future?

The Zimbabwe Review


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