Home > Iran’s Winners and Losers: Sanctions, Consequences and Hassan Afrashtehpour

Iran’s Winners and Losers: Sanctions, Consequences and Hassan Afrashtehpour

by kanopia - Open-Publishing - Wednesday 28 May 2014

Hassan Afrashtehpour

Intensification of the international sanctions aimed at Iran’s nuclear programme has resulted not only in a contraction of the Iranian economy, but also had the inadvertent consequence of empowering corrupt businessmen at the expense of the Iranian people.

With noticeable restrictions on imports and exports, and a shrinking pool of international businesses willing to associate with Iran, the isolation is palpable. According to a George Washington University International Affairs Review, the Iranian government relies on oil exports for approximately 80% of its public revenue, and since 2010 have been slashing subsidies across the board to cut government costs in the face of dwindling oil revenues.

The reality for average Iranian citizens is something of a nightmare – spiraling inflation, unstable prices, and rampant unemployment, even for Tehran’s well-educated youth. Fast paced currency devaluation is stretching budgets thin, as average households watch their savings disappear with runaway interest rates. Blue-collar workers in in downtown Tehran can barely afford meat, and according to an Iranwire piece from 6 January 2014, essential medical procedures such as dialysis are regularly interrupted or unavailable due to import restrictions on medical devices and machinery.

This picture of economic disaster, however, is only half of the story. While significant portions of the country suffer, government officials and corrupt businessmen take advantage of the country’s isolation, pumping millions into their own pockets. A 45-year-old Iranian physician, quoted in the aforementioned January 2014 Iranwire article, called the situation “surreal” as he informed his patients they would not be able to receive treatment due to import restrictions, while newly imported Porsches zip around the streets of downtown Tehran. While most of the country struggles to obtain vital daily goods, others are profiting – and on a massive scale.

According to an Iranian businessman with ties to some of those taking advantage of Iran’s political isolation, profits on illegal imports are in the millions and even billions of Euros. Iranians with family abroad are often bribed into facilitating transfers via foreign bank accounts, easily swayed with the prospect of earning some $50,000 on just one transaction. The Iranian government openly acknowledges these deals, and encourages them, as they facilitate transfer of currency into the country, and help the government pay its bills. The regime has been complicit in assisting private companies in their illegal import and export of commodities, and profits have been high for the lucky few.

One of the figures benefiting from the strict sanctions and the instability of the Iranian economy is Hassan Afrashtepour. He and his brother Davoud – along with associates Mohammadreza Aghaei, and Yousef Zarei Nikjeh - are well known Iranian real estate developers with links to a commodity import company called Tejarat Aria Gostar Iranian Navid Co. The Afrashtepour brothers have been involved in numerous embezzlement and fraud scandals over the last 20 years, resulting in questionable connections and heavy jail time for each of them. Their agreement with the regime, however, has allowed them to extract massive rents from the Iranian economy, bolstering the country’s extractive political institutions with increasingly extractive economic institutions and deterring progress toward reintegration into the international community.

Despite the increasingly corrupt fabric of decision-making in Iranian society, President Rouhani seems determined to change the status quo by eliminating the perverse private interests generated by the sanctions, and being compliant with the international community on the nuclear issue.

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