“این عکس مربوط به یک منظره زیبا از کوهستان است”

“This photo is of a beautiful landscape of mountains.”
Conversation with Ali Kalai

Amir Bagher Madani is an elderly professor of economics and Iranian thinker who has books such as “How Japan Became Japan?” and “Obstacles to Economic Development in Iran (A Comparison with Japan)” in his resume. Many of his articles have been published in reputable newspapers and journals both inside and outside the country. In a conversation about the recent inflation and economic problems in the country, he mentions that in addition to the existing economic sanctions, there is also the issue of theft and corruption that needs to be addressed.

This economics professor believes that: “One of the reasons for the increase in prices is the printing of new banknotes by the government.” He criticizes the country’s economic managers, saying: “Unfortunately, those who really know how to do the job are not put in charge. They bring in people who only know a few things about economics but have neither experience nor sufficient knowledge.”

The following conversation with this experienced economist goes as follows according to your opinion:

Based on your latest information, what is the average increase in price (inflation) for subsidized goods and non-subsidized goods, approximately?

The government has announced a 42% inflation rate and my statistics are the same as what the government claims. However, there are two types of statistics; one is the one provided by the government and the other is what foreign media outlets say. These two are different. Even among government institutions, there are differences regarding these statistics; for example, between the Central Bank and the Statistical Center of Iran. Outside the country, there are also statistics that are sometimes documented and accepted.

The government has considered a 4200 toman currency in order to prevent the increase in prices of essential goods for the people. For example, livestock feed is imported with the government’s 4200 toman currency. Considering that this issue has not been effective in controlling prices, who do you think benefits from this type of currency and why does the government not have strict supervision over it?

The problem here is that in the past, some people have taken this government dollar and sold it at the free market price. But today, the government has gained experience and wants to monitor it. If it does this, prices can go down and people can be less burdened, but if it cannot control the middlemen and they do their own work, they will still profit. This depends on how much experience Mr. Rouhani’s government has gained in dealing with this issue.

It is true that prices have had a significant increase in the past few months, but this issue has its roots in the past and is not related to recent issues. One of the reasons for the price increase is the printing of new banknotes by the government. The government is currently printing banknotes and this increase in liquidity in society leads to an increase in prices. This issue needs to be monitored. The parliament must oversee that the government does not print so much money without permission.

In your opinion, until when is the government currency supposed to be distributed in Iran? Don’t you think distributing this type of currency has fundamentally harmed the country’s economy?

Governance needs to provide people with food and has no other option but to allocate the oil money to the people. As long as the US sanctions are in place, we will continue to face this problem and it will only worsen month by month.

I think if these sanctions are lifted and Iran is able to export oil and gas as it did in the past, the dollar can return to its previous value of five to six thousand tomans or even less. The reason for this expensive dollar is not the lack of dollars or exports. Our main export is oil, which has also been affected. So the expensive prices are a consequence of this issue.

Does it mean you think the only problem is sanctions?

It’s not just sanctions, there are also abuses and thefts. Even on radio and television, reports of thefts are announced. This corruption must be stopped. In fact, the main problem in Iran is corruption. If it weren’t for this, the country could still be managed with the same low oil exports. Corruption must be stopped.

What is your opinion about the increase in meat prices? The Minister of Agriculture says that the increase in meat prices has no relation to the volume of imports or livestock smuggling. This is because 58 million livestock are produced, while the volume of smuggling is only about one million. This amount cannot have a significant role in prices. So what is the reason?

Of course, the reason must be asked from Mr. Minister himself. But I believe one reason is the weakening of the national currency. As the government imports sheep, on the other hand, some people export it and as a result, we face a shortage of meat in the country. When there is a shortage, some people take advantage of it and raise prices. All of this is due to the high price of the dollar. If the issue of the dollar is resolved, our other problems will also be solved. The fundamental issues are the high price of the dollar and corruption in the country.

Why have the government’s solutions for reducing the prices of essential and necessary goods not been effective so far?

As I mentioned, the problem with work is the same corruption that exists in the country. Of course, there is also a weakness in management and there is no doubt about it. I have been teaching economics for over forty years. I know some of these people who come to work and take on economic jobs in the country very well. I don’t want to name names, but for example, one of the people who is now in charge of important economic decisions in Iran was my student years ago and got the lowest grade in economics from me. I know these people well. Unfortunately, those who really know how to do the job are not allowed to work. They bring people to work who only know a few things about economics but have no experience or sufficient knowledge.

One of the advisors of the president, whom I have known for years, was also knowledgeable in economics and he also resigned and left.

Regarding the solution to the problem of high meat prices, the idea of distributing meat coupons has been raised. How much do you agree with this solution?

Rationing is common during times of war and for a limited time. This practice does not yield results now and the work must be done correctly from the beginning. As I mentioned, in order to solve the problem of inflation, the government must truly tackle corruption.

Thank you for the time you have dedicated to the peace process.