Iran sentences businessmen to death as economy feels squeeze

The challenges of managing social division will grow as the economy is squeezed.
Sunday 07/10/2018
Uncertain times. An Iranian goldsmith counts gold coins in the sprawling Grand Bazaar, on August 12. (AP)
Uncertain times. An Iranian goldsmith counts gold coins in the sprawling Grand Bazaar, on August 12. (AP)

In uncertain times Iranians turn to gold coins. In the words of a former editor of a leading business monthly in Tehran: “Gold coins are our political hedge fund. We keep them at home and they make us feel secure.”

One of three businessmen recently sentenced to death on corruption charges is known as the “Sultan of Coins.” Vahid Mazloumi, 58, who has traded gold and foreign currency in the Tehran bazaar for several decades, was arrested in July for buying and subsequently selling two tonnes of bahar-e azad coins, Tasnim News Agency reported.

These “Spring of Liberty” coins go back to one of the first acts of the Islamic Republic after the 1979 Revolution and many bear a picture of the late revolutionary leader, Ayatollah Ruhollah Khomeini. As a liquid and proven asset, the coins’ value has approximately quadrupled with the fall of the rial against the dollar since the spring. That was when expectations grew that US President Donald Trump would withdraw from the 2015 nuclear deal and re-impose sanctions, which he did in May.

Where legitimate profit-making ends and graft begins is confused by the charge of “corruption on Earth” for which Mazloumi and two others have been condemned to death and for which 33 others have been given sentences of up to 20 years in prison.

In August, Iranian Supreme Leader Ayatollah Ali Khamenei agreed to the suggestion of judiciary chief Sadegh Larijani that special revolutionary courts be established to deal with an “economic war.” These courts have extended the capital charge of “corruption on Earth,” which has usually been levelled at political enemies and against narcotics smugglers or dissident clerics charged with apostasy.

Tasnim quoted Tehran’s deputy prosecutor, Morteza Torka, that Mazloumi had “close ties to a senior manager at the Central Bank.” This may be a tie-in to Valiollah Seif, who was removed as governor in July and is facing investigation for currency abuses and has been barred from leaving the country.

Corruption is a particularly explosive issue in Iran because of an official ideology of egalitarianism. Khomeini famously rallied the “mostazafin” (the oppressed or the poor) against the “mostakbarin” (the oppressors or the rich).

Partly because of this, corruption allegations are useful barbs in Tehran’s factional battles. By and large, the political class has unified in the face of renewed US sanctions, with principlists expressing cautious support for President Hassan Rohani. However, there are always calculations of political self-interest to be made, especially with the looming contest to succeed Khamenei, 79, as leader. Larijani is seen as a likely contender.

Rohani’s central position in the political spectrum helps. The media are less critical of the government than in 2006, when reformist newspapers pilloried President Mahmoud Ahmadinejad as his renewal of the nuclear programme escalated an international war of words, stalled the economy and boosted trade in gold coins.

Since then, the rise of social media has fed public disquiet. Famously in 2014-15, Instagram accounts trailed the lifestyles of the “rich kids of Tehran,” culminating in the crash of a canary-yellow Porsche that killed a 20-year-old woman and the grandson of Ayatollah Rabbani-Shirazi, once an aide to Khomeini. A decade earlier, “Crimson Gold,” Jafar Panahi’s internationally acclaimed 2003 film about a pizza-delivery man exposed to class divisions in Tehran, was too sensitive to be shown in Iran.

It is important for the authorities to demonstrate they are taking stiff action against those enriching themselves in hard times. In agreeing to special courts to deal with economic crimes, Khamenei called for sentences to be “carried out swiftly and justly.”

Babak Zanjani, a well-connected oil trader who helped circumnavigate earlier sanctions, remains in prison after being sentenced to death in 2016. Ahmad Araghchi, a former deputy governor at the Central Bank dealing with foreign exchange, is out on bail after being arrested in August.

The challenge is political as much as legal. Judiciary spokesman Gholamhossein Mohseni-Ejei threatened “harsh penalties” against those who “block traffic on roads,” a reference to truck drivers staging nationwide strikes and protests over pay and high prices.

However, 153 deputies in the parliament of 290 have signed a letter to the government calling for dialogue to resolve the dispute. “Timely measures,” wrote the deputies, could prevent “disruptions in the transportation of fuel and goods” resulting from “failure to resolve the problems of truck drivers who make up a group of more than 400,000 people.”

The challenges of managing social division will grow as the economy is squeezed. By the time US sanctions go into force in early November against oil exports, Iran’s sales are likely to have dropped from 2.6 million barrels a day to 1.5 million, which could cost the exchequer $30 billion a year as pressure on the rial grows. It may be a long, cold winter in Tehran.