TEHRAN: As the US piles sanction after sanction on Iran, it’s the average person who feels it the most.
From a subway performer’s battered leather hat devoid of tips, to a bride-to-be’s empty purse, the lack of cash from the economic pressure facing Iran’s 80 million people can be seen everywhere.
Many blame President Donald Trump and his maximalist policy on Iran, which has seen him pull out of Tehran’s 2015 nuclear deal with world powers and levy punishing US sanctions on the country.
In recent weeks, Iran has threatened to break out of the deal unless European powers mitigate what it calls Trump’s “economic warfare.” Iran also appeared ready to push back against the buildup of US forces in the region, after shooting down an American drone it says violated its airspace last week.
In response, US officials have vowed to pile on more sanctions.
But alongside Trump, many Iranians blame their own government, which has careened from one economic disaster to another since its Islamic Revolution 40 years ago.
“The economic war is a reality and people are under extreme pressure,” said Shiva Keshavarz, a 22-year-old accountant soon to be married.
She said government leaders “keep telling us to be strong and endure the pressures, but we can already hear the sound of our bones breaking.”
Walking by any money exchange shop is a dramatic reminder of the hardships most people are facing. At the time of the nuclear deal, Iran’s currency traded at 32,000 rials to $1. Today, the numbers listed in exchange shop windows have skyrocketed — it costs over 130,000 rials for one US dollar.
Inflation is over 37%, according to government statistics. More than 3 million people, or 12 percent of working-age citizens, are unemployed. That rate doubles for educated youth.
Depreciation and inflation make everything more expensive — from fruits and vegetables to tires and oil, all the way to the big-ticket items, like mobile phones. A simple cell phone is about two months’ salary for the average government worker, while a single iPhone costs a 10 months’ salary.
“When importing mobile phones into the country is blocked, dealers have to smuggle them in with black market dollar rates and sell them for expensive prices,” said Pouria Hassani, a mobile phone salesman in Tehran. “You can’t expect us to buy expensive and sell cheap to customers. We don’t want to make a loss either.”
Hossein Rostami, a 33-year-old motorbike taxi driver and deliveryman, said the price of brake pads alone had jumped fivefold.
“The cause of our problems is the officials’ incompetence,” he told The Associated Press as fellow motorbike drivers called out for passengers in Tehran. “Our country is full of wealth and riches.”
The riches part is true — Iran is home to the world’s fourth-largest proven reserve of crude oil and holds the world’s second-largest proven reserve of natural gas, after Russia.
But under Trump’s maximum-pressure campaign, the US has cut off Iran’s ability to sell crude on the global market, and threatened to sanction any nation that purchases it. Oil covers a third of the $80 billion a year the government spends in Iran, meaning that a fall in oil revenues cuts into its social welfare programs, as well as its military expenditures.
The rest of the country’s budget comes from taxes and non-oil exports, among them oil-based petrochemical products that provide up to 50 percent of Iran’s $45 billion in non-oil export.
In Tehran’s Laleh park, retired school teacher Zahra Ghasemi criticized the government for blaming “every problem” on US sanctions.
She says she has trouble paying for her basic livelihood. The price of a bottle of milk has doubled, along with that of vegetables and fruit.
“We are dying under these pressures and a lack of solutions from officials,” Ghasemi said.
Years of popular frustration with failed economic policies triggered protests in late 2017, which early the following year spiraled into anti-government demonstrations across dozens of cities and towns.
The current problems take root in Iran’s faltering efforts to privatize its state-planned economy after the devastating war with Iraq in the 1980s, which saw 1 million people killed.
But Oil Minister Bijan Zanganeh said earlier this month that the crunch on oil exports hitting harder today than during the 1980s war, when Saddam Hussein’s forces targeted Iran’s oil trade.
“Our situation is worse than during the war,” Zanganeh said. “We did not have such an export problem when Saddam was targeting our industrial units. Now, we cannot export oil labeled Iran.”
Still, many Iranians pin the economic crisis on corruption as much as anything else.
“Our problem is the embezzlers and thieves in the government,” said Nasrollah Pazouki, who has sold clothes in Tehran’s Grand Bazaar since before the 1979 Islamic Revolution. “When people come to power, instead of working sincerely and seriously for the people, we hear and read after a few months in newspapers that they have stolen billions and fled.”
He added: “Whose money is that? It’s the people’s money.”
Sanctions do cause some of the problems, said Jafar Mousavi, who runs a dry-goods store in Tehran. But many of the woes are self-inflicted from rampant graft, he said.
“The economic war is not from outside of our borders but within the country,” Mousavi said. “If there was integrity among our government, producers and people, we could have overcome the pressures.”
Yet people come and go each day to work on Tehran’s crowded metro, seemingly earning less each day for the same work. In one train car, Abbas Feayouji and his son Rahmat play mournful-sounding traditional love songs known as “Sultan-e Ghalbha,” or “King of Hearts” in Farsi.
“People pay less than before,” said the elder Feayouji, a 47-year-old father of three, as he took a short break to speak to the AP. “I don’t know why they do, but it shows people have less money than before.”
Iranians say their ‘bones breaking’ under US sanctions
Iranians say their ‘bones breaking’ under US sanctions
- More than 12 percent of working-age citizens are unemployed
- A third of Iran’s national spending comes from oil revenues
Saudi Arabia unveils Green Finance Framework in sustainability push
RIYADH: Public and private participation in climate financing in Saudi Arabia is poised to receive a boost with the introduction of the Green Finance Framework.
This initiative, launched by the Ministry of Finance, is aimed at propelling the nation toward its sustainability goals and achieving net-zero emissions by 2060, Saudi Press Agency reported.
The framework is expected to contribute to the efforts aimed at reducing emissions through a circular carbon economy approach, along with positioning Saudi Arabia as a regional leader in sustainable finance.
It was in October 2021 that Saudi Arabia announced its ambitious goal to achieve net-zero emissions by 2060.
With this framework, the Kingdom aims to significantly reduce greenhouse gas emissions by 278 million tonnes annually by 2030, aligning with the commitments under the Paris Agreement.
The Paris Agreement is an international treaty on climate change that was produced in 2015 and compels signatories to work toward limiting the global temperature increase to 1.5 °C above pre-industrial levels.
The Kingdom has been spearheading several initiatives including the Saudi Green Initiative to combat the adverse effects of climate change over the past few years.
On March 27, the Kingdom celebrated its first Saudi Green Initiative Day highlighting the importance of fostering a sustainable legacy for future generations.
The celebration was organized under the theme “For Our Today and Their Tomorrow: KSA Together for a Greener Future” and it highlighted the collaboration of more than 80 public and private sector projects that are part of the SGI.
To date, Saudi Arabia has deployed 2.8 gigawatts of renewable energy to the national grid, powering more than 520,000 homes, with additional projects underway to increase capacity.
Moreover, more than 49 million trees and shrubs have been planted throughout the Kingdom since 2021, and extensive land rehabilitation efforts have been undertaken.
Additionally, energy giant Saudi Aramco, in collaboration with the Kingdom’s Ministry of Energy is building a carbon capture and storage hub in Jubail, which will have 9 million tonnes annual storage capacity upon its completion in 2027.
Closing Bell: Saudi main index slips to close at 12,565
RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Thursday, losing 42.09 points, or 0.33 percent, to close at 12,565.89.
The total trading turnover of the benchmark index was SR10.53 billion ($2.8 billion) as 54 stocks advanced, while 170 retreated.
Similarly, the Kingdom’s parallel market, Nomu, dropped 385.72 points, or 1.43 percent, to close at 26,622.88. This comes as 20 stocks advanced while as many as 42 retreated.
Meanwhile, the MSCI Tadawul Index rose 7.54 points, or 0.47 percent, to close at 1,599.02.
The best-performing stock of the day was Modern Mills for Food Products Co. The company’s share price surged 9.46 percent to SR68.30.
Other top performers include the Mediterranean and Gulf Insurance and Reinsurance Co. as well as Al Yamamah Steel Industries Co.
On the announcements front, Red Sea International Co. announced its annual consolidated financial result for the period ending Dec. 31.
According to a Tadawul statement, the entity’s revenues reached SR1.37 billion in 2023, reflecting an increase of 241 percent when compared to 2022 figures.
The rise in sales is mainly attributed to the strategic acquisition of a 51 percent stake in Fundamental Installation for Electric Work Co., or First Fix, with the recognition in RSI’s consolidated financial statements starting in the final quarter of the year.
Additionally, the company has tactically increased its focus on enhancing its supply chain and adopting competitive pricing strategies while advancing procurement techniques.
On a similar note, the firm’s net profits during the same period hit SR2.17 million, up from a net loss of SR198 million, which was recorded in the same period in 2022.
This rise is mainly linked to positive impact of the First Fix acquisition, in addition to the improvement in revenues and operating performance.
Moreover, Riyadh Steel Co. has also announced its annual financial results for 2023.
A bourse filing revealed that the firm’s net profit reached SR11.14 million in the period ending on Dec. 31, reflecting an increase of 118.8 percent compared to the corresponding period a year earlier.
The increase in net profit is primarily attributable to a reduction in the cost of revenue and secondarily to a rise in other income in comparison to the previous year.
Furthermore, Al-Baha Investment and Development Co. also announced its annual financial results for the period ending on Dec.31.
According to a Tadawul statement, the company’s net profit hit SR4.94 million in 2023, up from the net loss of SR8.09 million that was recorded in 2022.
The increase was owed to a 39 percent surge in the group’s revenues and reduced financing costs by 73 percent, among other reasons.
Saudi Arabia leads the charge toward energy transition: report
RIYADH: Saudi Arabia is emerging as a proactive leader, pioneering green initiatives to mitigate economic challenges posed by the transformation toward sustainability, according to the International Monetary Fund.
A recent report by the IMF highlighted the intricate dynamics at play and underscored the Gulf Cooperation Council and Saudi Arabia’s strategic positioning in this evolving scenario.
Titled “Key Challenges Faced by Fossil Fuel Exporters during the Energy Transition,” the study discussed climate change mitigation efforts in many fossil fuel exporting countries.
As Saudi Arabia and its GCC counterparts continue to lead the charge toward sustainability, they set a precedent for the global community.
By embracing green initiatives, investing in renewable energy, and fostering economic diversification, these nations are paving the way for a sustainable future, balancing economic prosperity with environmental responsibility.
The report emphasized that the Saudi Green Initiative launched in 2021 aimed at combating climate change and reducing carbon emissions.
It explained: “The Green Initiative is centered around three objectives, including targets for increasing the share of renewable energy in electricity generation up to 50 percent by 2030 and the deployment of circular carbon economy technologies, including carbon capture utilization and storage.”
Key challenges
The IMF stressed the need for economic diversification to effectively mitigate the impact of declining fossil fuel revenues.
Highlighting Saudi Arabia’s progress in economic diversification, the report explained: “The non-oil sector growth has accelerated since 2021, reaching 4.8 percent in 2022 spurred by strong domestic demand, especially in the wholesale, retail trade, construction, and transport sectors.”
Similarly, Bahrain, Qatar, and the UAE are diversifying their economies away from hydrocarbons, the study added.
In the UAE, non-hydrocarbon GDP was expected to grow by 5.3 percent in 2022, driven by tourism and FIFA World Cup impacts.
Progress on the Comprehensive Economic Partnership Agreements will further boost trade, attract foreign direct investment, and enhance integration with global value chains, according to the report.
The IMF highlighted that in Saudi Arabia, “the share of high-skilled jobs has increased to more than 40 percent in 2022, and female labor force participation doubled in four years to reach 37 percent in 2022.”
In its report, the Washington-based lender said the governments heavily reliant on revenues from fossil fuel exports face challenges in maintaining fiscal sustainability as these revenues decline.
“Countries with significant exposure to the fossil fuel industry may experience higher financial sector risks, including balance sheet effects, asset devaluation, and increased vulnerability to international market fluctuations,” it said.
The report added that transitioning away from fossil fuels may result in job losses in the fossil fuel industry, necessitating retraining programs and support for affected workers.
It called for structural reforms to address all the issues. “Accelerating structural reforms to diversify export bases and develop alternative industries is critical for mitigating the adverse macroeconomic effects of the energy transition,”the report said.
The IMF stressed the need for coordinated global efforts to overcome all these challenges. “Collaborative efforts can help ensure a smooth transition, mitigate transition costs, and support affected countries in diversifying their economies,” the report said.
New service at Jeddah port to boost Saudi-India trade
RIYADH: Saudi and Indian traders are set to benefit from Jeddah Islamic Port’s new service, bolstering trade connectivity between the nations.
The Saudi Ports Authority, also known as Mawani, on Thursday said that Unifeeder, a Danish logistics company, has introduced the “RGI” shipping service at the Saudi port. This initiative connects the Kingdom to Indian checkpoints, facilitating trade between the two nations and offering expedited and secure solutions for exporters and suppliers.
In a statement, Mawani affirmed that this undertaking showcases investors’ confidence in the Kingdom’s terminals, bolsters maritime transport and logistics services, and solidifies Jeddah Islamic Port’s status.
It added that the seaport is the Kingdom’s first dock for exports and imports, and the first re-export point in the Red Sea, with 62 multipurpose berths and a capacity of 130 million tonnes.
The new shipping service connects the Jeddah terminal to the ports of Mundra and Nhava Sheva in India, Jebel Ali in the UAE, and Sokhna in Egypt through regular weekly trips, with a capacity of up to 2,824 twenty-foot equivalent units, Mawani noted.
Mideast sets record in renewable energy capacity, Saudi Arabia reaches 2.6 GW: IRENA
RIYADH: Renewable energy capacity in the Middle East soared to a record high in 2023, with the addition of 5.1 gigawatts, marking a 16.6 percent increase from the previous year.
According to the latest data released by the International Renewable Energy Agency, this new addition brought the region’s total renewable energy capacity to 35.54 GW, with Saudi Arabia accounting for 2.68 GW.
The data showed that global green power capacity reached 3,870 GW in 2023, marking a 13.9 percent increase over the previous year. This represents the largest surge in sustainable energy capacity to date, with the addition of 473 GW.
Green sources constituted a record-breaking 86 percent of global power additions, primarily driven by substantial expansions in solar and wind energy.
Solar power alone contributed nearly three-quarters of renewable additions, totaling a record 346 GW, while an additional 116 GW of wind energy was incorporated, the report added.
Francesco La Camera, director general of IRENA, said: “Despite these unprecedented renewable additions in 2023, the world is still falling short of what is required to achieve the goal adopted at COP28 to triple installed renewable power capacity by 2030 to reach 11 TW.”
With one less year to meet the goal, he emphasized that the world now requires additions of approximately 1,050 GW each year for the remainder of this decade to align with the World Energy Transitions Outlook scenario and maintain a trajectory toward limiting global warming to 1.5 degrees Celsius.
The growth of sustainable energy is unevenly distributed globally, with Asia leading the expansion with a 473 GW increase, primarily propelled by China’s 63 percent surge to 297.6 GW. This highlights a notable discrepancy with other regions, particularly developing countries. While Africa saw some growth, it was modest at 4.6 percent, reaching 62 GW.
By the end of 2023, Camera said, renewable energy sources comprised 43 percent of the global installed power capacity.
“Yet, as we draw closer to a world in which renewable energy accounts for half of total capacity, many energy planning questions still need to be addressed to establish renewables as the most significant source of electricity generation - including in the context of grid flexibility and adaptation to variable renewable power,” he added.