Tehran Beating The Drums Of Economic Windfall From Ties With Riyadh

He explained that Russia offers large discounts to China and India to offload its oil that used to be exported to Europe and elsewhere before Western sanctions were imposed after the invasion of Ukraine.

Iran is in the same situation, having been sanctioned by the United States in 2018, after former President Donald Trump withdrew from the JCPOA nuclear deal, demanding many concessions from Tehran.

However, Iran has gradually increased oil exports to China since the Biden administration assumed office and began negotiations to reverse Trump’s decision and revive the JCPOA.

Consequently, Iranians wonder why the government is facing a financial crisis and the national currency has lost half of its value since mid-2020 if oil exports to China have increased.

A news website in Tehran asked this week why the budget is in such a bad shape if the government claims ever-increasing oil shipments to China. Hosseini said that in the past two years daily oil exports have increased by 700,000 barrels.

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If Iran is shipping a daily average of 850,000 barrels of crude to China at 15 percent discount, it is earning around $65-68 per barrel at current prices. A simple calculation would show that Iran earns around $20 billion annually from oil sales to China.

This is a far cry from $100 billion a year it was earning around 2010, when oil was trading well above $100 a barrel, there was also no discount, and Iran was exporting more than 2.2 million barrels per day, compared to today’s less than one million barrels.

Another factor is that $100 billion in 2010 equals at least $135 billion in 2022 dollars, and global inflation has remained high in 2023.

Iran also ships oil to Venezuela and Syria, but there it hardly earns any money as the relationship is more political and the oil shipments more of a foreign aid scheme.

Therefore, after the United States imposed sanctions in 2018 and reduced Iran’s oil exports, revenues are now less than one-sixth of a decade ago.

Other factors also exist. Different Iranian politicians and officials have pointed out that to repatriate the funds from oil exports, Tehran must use middlemen to circumvent US banking sanctions imposed on third parties, and the amount it actually receives is 15-40 percent less. This adds to the loss incurred by the 15-percent price discount.

Not only oil export revenues are woefully in adequate for Iran’s oil-dependent government and economy, but the energy sector itself is suffering from years of neglect in terms of necessary investments, to the tune of more than $200 billion.

Hosseini expressed hope that with the recent agreement with Saudi Arabia to restore diplomatic relations, perhaps in the future Riyadh would invest in Iran’s oil and gas sector.

Government-controlled media and some officials have also raised expectations that trade can increase with Saudi Arabia in the coming months and perhaps Riyadh would make investments.

However, any foreign investment first needs lifting of US sanctions and for now there is no prospect for Iran reaching a new nuclear agreement with the United States.

Those with a controversial background made the most outlandish hard-line comments to prove their loyalty to the regime.

The rhetoric used on Qods Day speeches were a mixture of impolite, uneducated and politically incorrect opinions and part of Iran's rationalization of its irrational phobia about Israel's influence in the region.

Deputy IRGC Commander for Political Affairs General Yadollah Javani who was implicated last year in an infiltration case involving an alleged Israeli agent, Catherine Shakdam, a former consultant for UNSC on Yemen, went out of his way to threaten Israel's Jewish people rather than the Israeli government. He said, "The Jews should know that Israel is no longer a place to live," and told them "pack your suitcases!"

Javani stressed: "Israel should be wiped off [the map] and this is something that will materialize and the Jewish people will have to return to their home countries." Javani who was speaking in Rasht in northern Iran said the enemies are downplaying the importance of the Quds Day by creating doubts among young Iranians.

In Tehran, the day was marked in one of the Iranian capital's smallest squares, the Palestine Square and later on Revolution Square, a slightly larger venue to make sure that the people who were bussed in would fill the space.

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Javani claimed the Quds Day is now an international event. This was against the fact that some counties including Germany have reportedly banned Quds Day events.

He further claimed that recent unrest in Israel was a sign of its impending destruction, adding that the "Zionist regime" is no longer capable of surviving.

In Tehran, the former Judiciary Chief who currently chairs the Expediency Council, Sadegh Amoli Larijani, another insider implicated in major financial corruption cases, claimed the issue of Quds [meaning the problem of Palestine] is the world's biggest problem.

Another speaker, vice president for economic affairs, Mohsen Rezaei, said that Iran is collaborating with regional counties to create a strategic alliance against Israel. He was obviously mindless of the fact that nearly all Persian Gulf Arab countries maintain friendly ties and trade and cultural relations with Israel.

The rhetoric against Israel was also heightened IRGC-linked Fars news agency which recycled old comments by Khamenei on Israel. The report quoted Supreme Leader Ali Khamenei as saying that by wiping Israel [off the map] he meant that one day the Palestinians will elect their own government, and this is something that will most certainly happen.

Highlighting that Khamenei does not call for the destruction of the Jewish people stems from the fear of Israeli threats to attack Iran's nuclear facilities even without US help.

Khamenei is also utterly shaken by recent attacks attributed to Israel on Iran's military interests in Syria. Some recent reports indicated that Israel had attacked the depots of Iranian military equipment airlifted to Syria disguised as relief aid following a recent earthquake in the region. Iran has named at least three IRGC commanders who were killed during Israeli strikes.

On the other hand, Tehran hopes that news of conflicts in Israel and missile attacks on the country will overshadow the fiasco that followed alleged Israeli attacks on Iran's drone factory in Esfahan. Regime insiders might even hope that the anti-Israeli propaganda would downplay the importance of nationwide protests in Iran and rally Iranians behind the regime.

This hope was dashed by low turnout in Quds Day rallies as Iranians continue to defy the regime, especially rejecting its campaign to force women to use hijab.

Tensions have been high between Iran and Azerbaijan since November 2022 when both sides accused each other of engaging in terrorism and espionage. Iran has also suggested Azerbaijani involvement in the October 26 attack in Shiraz claimed by the Islamic State group (Isis-Daesh).

While some pundits allege that Tehran is awaiting a wrong move by Azerbaijan to attack the country, international relations expert Ali Bigdeli in Tehran told Rouydad 24 news website that the possibility of military conflict between Tehran and Baku is “nil” while criticizing Russia for “silence” over the situation given its close relations with both.

Tehran has also accused Baku of harboring Israeli intelligence and military elements that plan to use its territory in a possible attack against Iran’s nuclear facilities. “The [Azerbaijani] soil is a base for Israel from where it can threaten Iran's security,” Bigdeli said.

He pointed out that Israel has succeeded in “infiltrating” not only Azerbaijan but also other countries including Iran's neighbor Turkmenistan and Central Asian states. At the same time, Shia Iran's attempts to create “centers of resistance” in Azerbaijan where, unlike its Sunni rulers, 60 percent of the population are Shiites irritates Baku.

Around a quarter of Iran’s population is Azari, with analysts and activists disagreeing over the closeness of their cultural-linguistic links to their neighbors to the north.

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Hamed Khosroshahi, a Caucasus region researcher in Tehran, expressed a similar view about the possibility of war between Tehran and Baku in an interview with Donya-ye Eghtesad daily. The possibility of war is near zero because both Iran and Azerbaijan are aware that that they have ties that cannot be altered.

Azerbaijan’s Nakhichevan enclave bordering Iran needs to procure gas and oil through Iran on the one hand and Iran's dependence on transit to Russia through Azerbaijan, are important factors he said. “The two sides know that they should not allow tensions rise beyond a certain level.”

While saying that the two countries are currently “appraising” their military power, Vali Khalaji, Caucasus region and Central Asia analyst in Tehran, said escalation of tensions would not necessarily end in war and could instead result in “relaxation of tensions” given factors including interdependent transit needs.

Current tensions are closely tied to the recent escalation between Azerbaijan and Armenia. Secretary of the Security Council of Armenia, Armen Grigoryan on Friday accused Azerbaijan of preparing for military escalation. Baku vehemently denies the charge while accusing Yerevan of violating the Prague and Sochi agreements.

A transit corridor through Syunik province of Armenia which Azerbaijan is demanding to secure access to its Nakhichevan Autonomous region without Armenian checkpoints will disconnect Iran from its de facto ally and trade partner Armenia.

Russia’s Minister of Foreign Affairs Sergey Lavrov met with Armenian Minister of Foreign Affairs Ararat Mirzoyan in Samarkand, Uzbekistan, Friday and among other topics, according to Armen Press, discussed “unblocking of all economic and transport links in the region” and the Nagorno Karabakh issue.

Azerbaijan closed its embassy in Tehran afteran armed attack on Azerbaijan’s embassy in Tehran in January and earlier this month expelled four Iranian diplomats over what it called “provocative actions” which may refer to Iran's several military drills along the border with Azerbaijan in the past year including the latest in October.

Fresh skirmishes at Armenian-Azerbaijani border earlier this week left a total of seven deaths from both sides in one day around the contested Nagarno-Karabakh region. The Islamic Republic says it is neutral in the conflict, but it apparently backs its de facto ally Armenia and has warned it would not tolerate changes to international borders.

Ali Fatemi, Vice President of Iranian Pharmacists Association told semi-official ISNA news agency Saturday that there is shortage of neuroleptics, antidepressants, and medicines for patients with special diseases.

According to him, the government still imports IV fluid from abroad and even cold syrups are on the list of imported medications.

Meanwhile, Hossein-Ali Shahriari, Head of the Health Commission of Iranian Parliament said Wednesday that if subsidies are not paid to pharmaceutical companies, "the country will face a 40-50% price rise for medicines.”

The government struggles with a shortage of foreign currencies while it claims its oil exports to China have increased despite US sanctions.

Despite the warnings, Minister of Health Bahram Einollahi claims that “most medicines are available, and there will be no problem regarding the supply of pharmaceuticals this year.”

In the previous Iranian year, the medicine crisis intensified as people suffered from multifold price increases while many items were not available at all, pushing people to the black market and smuggled medicines.

The Islamic Republic has been claiming that United States sanctions prevent procurement of medicines, while Washington insists that humanitarian aid is exempt from sanctions and in fact, food, health and humanitarian products are not sanctioned.

Iran has been importing more than $1.5 billion of medicines a year. The country imported around 100 million euros of medicines a month just from Europe in 2022 and also large quantities from China and India.

Ali Kouhestani, Head of IRGC Ground Forces Research and Self-Sufficiency Jihad Organization, said in an interview with Tasnim news agency on Saturday that "Sadid 365 is a guided anti-armor missile with a range of 8 kilometers, which is capable of destroying all kinds of armored equipment."

“This optically guided missile is highly accurate in hitting the target, and with the ability to attack from above, it can also pass through the active defense systems and destroy them,” added Kouhestani.

The description is similar to the capabilities of the US Javelin anti-tank weapon.

In the top attack mode, the missile is required to climb sharply after launch and travel at a certain altitude, then plunge on top of the target. In this method, unlike the conventional methods, the missile travels a ballistic path to hit the target.

The method is more effective because usually the top armor of the tank is the weakest part, and it is easier to penetrate it.

Last week, Kouhestani claimed that the IRGC has developed its latest suicide drone known as the Meraj 532, that will be used by the ground forces with a one-way range of 450km.

Iran’s provision of drones to Russia in its war against Ukraine - a claim it denies - has led to a host of new sanctions on from Western countries including the US and Australia, and the European Union.