With the state of the economy in Iran, it is no wonder that more and more people have fallen into poverty in the past few years, with more than 80% of Iranians living under the poverty line. As a result, the middle class has all but disappeared as the poverty line level has risen.

Under the rule of the Iranian regime, people have lost their homes and had to resort to sleeping where they can, from empty graves and ditches to rooftops or abandoned refrigerators. All the while, the regime officials are doing nothing to remedy this social crisis.

According to the state-run Jahan-e Sanat on August 9, official reports indicate the living conditions of all sectors of society have deteriorated.

The daily explained how the poverty line has increased by 38% in just two years due to the rising inflation in the cost of food and housing. They said, “Considering the living conditions of households in the last decade, it is clear that the growth rate of poverty has been faster than the growth rate of wages in all years, and the wage gap and poverty line reached 145% by the end of the 2010s.”

They also predicted that considering the current trajectory, due to the rising inflation rates and low incomes, more households will be set to fall below the poverty line in the next year.

Among all sectors of society, Iranian workers endure more pressure due to the regime’s anti-labor policies.

The ILNA News Agency reported in August that there is now a gap between living expenses and the wages of workers of 6 million Tomans. Families are struggling to provide even basic food staples like protein and dairy. They compared the Iranian situation to Venezuela where the economy is completely bankrupt and said that if the regime cannot rectify the problems in Iran, “the devaluation of the national currency, inflation, unemployment, etc., will be greater than now.”

Iran has one of the largest gas reserves in the world, just behind Russia, with over 150,000 million barrels of oil reserves. They are also in the higher ranks among countries with major mineral resources, with over seven percent of the world’s mineral resources, despite only accounting for one percent of the world population, according to a study by the regime’s Islamic Parliament Research Center.

But despite all its riches, more than 80 percent of the nation lives below the poverty line, and the middle class has essentially disappeared.

Of the estimated 85 million people living in Iran, 19 million Iranians have been forced to live in slums, and 7.4 million children have been deprived of their education due to the extreme levels of poverty. A quarter of the Iranian youth are currently unemployed and 75% of economic capabilities have been lost by workers. Shockingly, up to 1,000 children under the age of 3 are abandoned on a yearly basis as their parents cannot afford to raise them.

The most worrying consequence of the widespread poverty in Iran is that more and more people are willingly selling their organs to make much-needed money, with some mothers even selling their unborn fetuses to make ends meet.

The poverty in Iran is having a detrimental effect on society with millions suffering due to the mismanagement of the regime and the lack of the officials’ using money where it is most needed. According to the regime’s own figures, Iran’s income from oil exports is around $66 billion, while non-oil exports equate to $32.3 billion.

The regime continues to expand budgets allocated for meddling in Middle East countries, boosting its nuclear and ballistic missile drives, and launching dozens of military and security forces imposing an intense atmosphere of an internal crackdown.

Since mid-2019 and especially since spring 2020, along with the increase in housing prices and building materials, Iran is witnessing an increase in the cost of construction so that under the influence of this situation, the construction industry has been seen a huge recession and in recent months it is making many people hopeless to having a roof over their heads.

The new government has promised to build one million housing each year which has been criticized by many officials as a hollow promise due to the country’s bad economic situation.

But one news that has shocked many people about the housing situation is the government’s negotiations which the Chinese use of the country’s constructing industry.

Something that even many of the regime’s officials are complaining about it. In an interview Eghbal Shakeri, a member of the parliament’s Civil Commission said:

“In a recent meeting with the commission members, the Minister of Roads and Urban Development announced this issue and did not provide details about it, but it is not exclusive to Chinese companies, and companies with the technology of other countries can participate in the construction of Iranian housing under the condition of technology transfer. Shakeri stressed: ‘Technology transfer is the main condition for agreeing to the presence of foreigners in Iran’s construction.’”

Amazingly, on the question of why the government is not using Iranian constructions firms and engineers with the help of the world updated technologies Iraj Rahbar the Vice President of The Association of Mass Builders of Tehran Province answered:

“Unfortunately, the Minister of Roads and Urban Development does not have enough information about domestic facilities and capabilities in the construction industry.”

The question is, why then has the regime put someone at the helm of such an industry when he is not informed about the country’s construction capabilities?

The painful part is that now according to the expressions of some of the country’s experts, Iran has more than 500 thousand engineers, while many of them are unemployed and the government is insisting to use foreign engineers in different parts of the country’s industry which is raising the skepticism about corruption.

The damage is in projects like the Tehran-North Freeway project the regime used Chinese companies, and now after 20 years this project is being left unfinished and these companies have left the country.

Other effects which are hurting the country’s economy is that technologies for this field have been imported from aboard while the country owns the same power, and this is causing an increase in unemployment and many of the producers of these technologies in the field of the urban construction are forced to export their production to other countries like Iraq having no costumer inside the country.

Another sad thing is while training engineers are putting a huge amount of expenses on any country, Iran has one of the highest numbers of brain drain.

This situation raises doubts more than ever about president Ebrahim Raisi’s decision to construct one million housing units in one year.

What has been reported by the Iranian government’s statistical institutions speaks about the government’s failure to attract foreign countries and economic entities to invest in Iran. An opportunity that is now not imaginable anymore due to the regime’s insistence on its nuclear and terror activities.

The decrease of real investment, and the decrease of countries that desire to invest in Iran, and the increase of the macroeconomic variables such as the monetary base, liquidity, and most important the inflation are adding to this crisis.

According to the report of Iran’s Deputy of Economic Studies of the Chamber of Commerce in the 2000s, the average annual growth of investment was -4.7 percent, and the amount of a real investment was just 171 trillion tomans. This number in 2011 this the amount of investment reached 100 trillion which decreased to 98 trillion tomans in 2019.

To understand the loss for the Iranian government, it is enough to know that the total operating deficit of the 2020 budget released by the Supreme Audit Court on Tuesday was 183.3 trillion tomans, while the country’s total real investment that year accounted for only 54 percent of the operating deficit.

The continuation of this trend can be more destructive in the coming years. To compensate its shortcomings, the most important of which is the construction of power plants for electricity supply, the government needs a huge amount of investment which it doesn’t seem able to fund at least until the 5-year horizon.

Because of the regime’s nuclear crisis and the return of the regime’s oil sanctions, which have damaged the country’s uniaxial economy, the situation of the country’s investments become critical so that in addition to the decrease of the investment, the annual investment growth fall to -6.8 percent and the capital formation become negative.

Therefore, government economists call this decade the worst in Iran’s economic history, and many of them speak about an ‘unreversible crisis’ because nothing is predictable and is indeterminate and the situation has reached a state of uncertainty.

This situation has now led to the increase of the prices in the asset market and the lack of investments even by the country’s people. The people instead of investing, attended in parallel markets like currency and gold to avoid a sharp devaluation of their currency.

In addition to this crisis and parallel to it welfare fall rapidly in the society and the Gini coefficient exceeds 0.4 in 2018-2020 which is a sign of the increase of the class gap in the society.

The government respectively was forced to borrow huge amounts from the national bank to cover their budget deficit, which hurts the future generation of the country, losing their resources to invest in the development.

According to central bank reports, by March 2020, liquidity reached 3476 trillion tomans, an increase of 40.6 percent compared to March 2019 and an 84 percent increase compared to March 2018.

Liquidity was reported at the end of 2019 and 2018 at 2472 trillion tomans and 1882 trillion tomans, respectively.

To understand the magnitude of the numbers of economic variables in the 2000s, it is enough to know that the base volume of money in 2019 was about 352 trillion tomans.

According to the Tehran Chamber of Commerce’s deputy for review, assuming an annual growth of 5 percent of investments from this year in 2034, the country’s real investment will reach the figure of what it was in 2011, 170 trillion tomans.

And that is only if the regime becomes successful in the nuclear negotiations and be able to remove all the obstacles and sanctions which many of which are not related to its nuclear case, then it must witness a 10 percent increase of investment annually.

Meanwhile, other economic variables like monetary base, liquidity, and inflation will continue their path and these variables will not change positively and will challenge a real investment in the country’s economy.

Also lurking in Iran’s economy is the depreciation of capital. From the beginning of 2011 until 2017 the real investment was much higher than the depreciation of capital and the investments were able to cover the depreciation of capital. However, since 2018 this decreased suddenly and became equal to the depreciation of capital.

It should be noted that the depreciation rate with steep stability was increasing every year, but the amount of investment declined with a steep slope. So that in 2019 and 2020, real investment in the country did not compensate for depreciation costs.

As noted, the presence of a real private sector in the economic activities is important which does not exist in Iran, the only thing that does exist are the so-called private-government driven companies which the regime calls ‘Khosulati’ and are mainly in the hands of the regime’s IRGC. Important because without their presence the regime is forced to print more money which is increasing the inflation as we are witnessing now.

Simply said, this is something which is making the life of the coming generation difficult and hopeless.

In recent years, the growing inflation in the country has led to the spread of poverty in Iran, so that the head of the Higher Institute for Social Security Research has stated that at least 30 percent of the population is below the poverty line in Iran. Of course, some estimates put the number of people below the poverty line in Iran more than this figure.

The spread of poverty in Iran has resulted that a large segment of the middle class falls below the poverty line, especially in the past three years.

Although in recent years, different statistics of the number of Iranians below the poverty line have been presented, and the regime’s government is trying to hide that real numbers, but all statistics agree on the principle that in the past four years, the number of Iranians below the absolute poverty line has increased year after year and more middle-class households have joined the lower strata.

For example, the Donya-e-Eghtesad newspaper recently citing the results of a credible international study, said that since the beginning of the 2000s, the number of Iran’s poor has doubled, with four million more falling below the international poverty line, earning $5.50 a day. Also, about 8 million people have gone from the ‘middle class’ to the ‘downward middle class’.

Or this June, Roozbeh Kordoni, head of the Supreme Research Institute of Social Security, announced that while the population below Iran’s absolute poverty line had reached 15 percent from 2013 to 2017, the number of people below the country’s absolute poverty line increased to 30 percent and by the end of 2019, practically 25 percent of Iran’s population was below the absolute poverty line.

So far, no comprehensive and consistent reports on the absolute poverty line have been presented about different cities and provinces of the country, which is considered for the regime as a secret and security issue.

Despite the lack of accurate statistics on the number of people below the absolute poverty line in Iran, the number of these people has definitely increased in the past three years, since the cumulative inflation in the three years of 2018, 2019, and 2020 was 115 percent, and of course, the average inflation rate in the 2000s was 24 percent.

In Iran’s economy, the middle and low-income segments of society are much more affected by inflation than the wealthy. Due to the disruption of wealth redistribution systems i.e., banking system, tax system, and subsidy system, the damage caused by inflation is directly imposed on the middle- and low-income classes, because this disruption in the country’s wealth redistribution systems is created deliberately by the regime’s officials in the favor of its elements.

With cumulative inflation of 115% in the past three years and due to the disruption of Iran’s economic system, certainly since 2018, the number of households below the absolute poverty line has been growing significantly compared to before, as a large part of the middle classes have joined the low-income segments of society during this period.

In the constitution of this regime, governments are also obliged to provide minimum livelihoods, including housing and jobs suitable for the people of the society, something that has not happened over the past decades, and the people’s protests for a basic life has been responded to always with repression, detention, and torture.

Unless the economic structures in Iran have been reformed, there is no hope for the eradication of poverty in Iran, because the three key systems of Iran’s economy, the banking system, the tax system, and the subsidy system, are all in the service of the wealthy ruling people.

Hidden subsidies, including fuel subsidies, energy carriers, and other subsidies in the manufacturing sector, all benefit the wealthy with manufacturing enterprises. Also, a large portion of importers of goods to Iran also have preferential currency rents or rents monopolizing in different markets, and this shows that Iran’s subsidy system is entirely regulated for the benefit of the wealthy.

The country’s banking system also fully serves the rich, because when the interest rate of banking system facilities is about 18 percent and inflation is about 40 percent, so it can be said that the real interest rate in Iran is -22 percent. This means that anyone who can get facilities in Iran makes 22 percent profit per year. However, in Iran, mainly the wealthy, i.e., those who have access to large collateral and have extensive rents, can receive large collateral.

In Iran, taxes such as wealth taxes, capital gains taxes, and taxes on luxury goods are not defined. Meanwhile, a large part of Iran country’s wealthy people is basically not paying any taxes, so that this group both deals with tax evasion and receives tax exemptions using written and unwritten laws and corrupt relations.

When the three key systems of Iran’s economy, tax, banking, and subsidy systems, serve the wealthy, so in such circumstances, the eradication of poverty is more like a joke, and until these wealth redistribution systems are reformed, there is no hope of reducing poverty in Iran.

In Iran’s inflationary economy, because wealth redistribution systems do not work properly, inflation is imposed on the middle and poor deciles of the society. This has led to a day-to-day decrease in Iran’s middle class in the past few years, and if this trend continues, we will soon see the elimination of the middle class, which means that Iran’s economy will become a bipolar economy in which 10 percent of the population will be wealthy and 90 percent of the country’s population will be poor.