File photo of Iran's Supreme Leader Khamenei sitting in Tehran

Iran’s Ayatollah has 99 problems and his banks might be one

As Iran waits for the results of today’s presidential elections, reports claim that the country’s true leader, Ayatollah Ali Khamenei, is wasting no time in setting new policy when it comes to the nation’s failing banks.

A woman shows the ink stain on her finger, to prove that she has voted, outside the Iranian consulate in central London

At a press conference held Wednesday in Paris by Amir Hossein Jahanshahi, a member of the opposition currently based in Europe, “secret documents” were released that tell of a looming economic meltdown, and how the Ayatollah hopes to stem it.

Whenever the presidential election is concluded, according to one document signed by Ali Agha Mohammadi, deputy vice president for economic affairs, the Supreme Leader will invoke new financial practices that are draconian even by the Ayatollah’s standards. Allegedly there will be restrictions on customers’ bank withdrawals, a limit on removing currency from the country and a 20 percent tax charged on all deposits by everyone and everything except state-run and public companies.

A document, “Operational Instructions for Combatting the Economic Crisis,” originating with the Supreme National Security Council—on which two leading presidential candidates, Saeed Jalili, the country’s chief nuclear negotiator, and Hasan Rowhan, a moderate priest, serve—allegedly prepares for any likely backlash. It includes a list of security measures the government will purportedly take, including extra security at banks and ATMs, an emergency plan for possible bank riots and, if necessary, to “draft an emergency plan for transferring the management of the country’s banking system to the IRGC,” a branch of the military dedicated to preserving the country’s Islamic beliefs.

Supporters of candidate Saeed Jalili

Supporters of candidate Saeed Jalili

Mohammadi Golpayeghani, the head of the Office of the Supreme Leader, allegedly signed off on this document, which quoted the Supreme Leader as having said, “be fully prepared to curtail any kind of disturbances or riots in the course of the presidential election.”

A woman casts her ballot with her family at a polling station at the Iranian embassy in Beirut

Another document, said to be signed by the governor of the Central Bank of Iran Mahmoud Bahmani, said that “[T]he banking system is contending with an impossible combination of credit and liquidity crisis, negative real interest and a shortage of capital.” The letter also claims the the CBI would need $40 billion to fix the issues.

In addition, the report stated that 34 million citizens owed money to the banks, which would mean that nearly 50 percent of the population is in debt.

The CBI did not respond to Vocativ’s request for comment and the email address listed on the websites of both the Ministry of Foreign Affairs and the Ministry of Industry, Mine and Trade were incorrect.

One of the main factors challenging Iran in terms of importing basic necessities and minting the required amount of money, if these documents are to be believed, is a “critical lack in foreign currency” due to sanctions.

Granted, Jahanshahi, who presented the documents, is the leader of Green Wave, which is an opposition group that is not a political party but “an umbrella organization to coordinate the activities of all national forces inside the country who are engaged in the struggle for the liberation of their homeland.” He may have other motives.

Other reports from Iran have also cited the economic hardship caused by the sanctions. According to Press TV, an Iranian news channel, Britain has banned the Anglo-Dutch oil and company Royal Dutch Shell from paying off their $2.3 billion debt to Iran, money the nation clearly needs.

The documents also cited an inflation rate of 85.4 percent. The official Iranian estimate is 31 percent, but with the cost of one pound of beef at 22,017.13 rial, or $1.79, that seems improbably low.

Steven H. Hanke, a professor of applied economics at John Hopkins University has calculated the inflation rate in Iran frequently since it began to increase. Hanke used  “free market rate and black market exchange rate data for the rial and dollar and go from there. You do the math, as they say, and you can calculate the implied inflation rate.”

The end date for CBI’s calculations was March 20. On March 18 Hanke calculated Iranian inflation at 81.1 percent, which is a lot nearer to the CBI report’s number than the Iranian estimate.

“There is a very high probability that they’re using my numbers,” Hanke said, referring to the author of the report. “That’s where they’re getting it.”

Dated April 10, 2013, the document adds specifics to the previous security instructions, such as rationing staple survival items “as seen during the war with Iraq,” and that after the election approval will be “required for publication of economic data on unemployment or inflation.”

This secrecy of inflation rates and data, according to Hanke’s article “On Iran’s Inflation Bogey,” is no surprise as “regimes in countries undergoing severe inflation have a long history of hiding the true extent of their inflationary woes.”

If the documents are true, which nobody to date has been able to verify, then the outcome of Friday’s presidential election will have little effect on the country’s economy as the changes have already been agreed upon without the consent of the new president or the Iranian people. However, the documents were released almost two months after they were written and just two days before the presidential elections, where the Green Wave clearly has a stake.

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