Iran’s Statistical Manipulation Suggests Regime Vulnerability

Article Highlights

  • Supreme Leader Ali Khamenei declared in a rare visit to a cabinet meeting that the fictional use of statistics should stop.

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  • Statistics and other metrics have become a political third rail for Iranian politicians who appeal to populism.

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  • Iranian economists and beat journalists recognize that the regime considers honest discussion of sanctions treasonous.

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Editor's Note: FMSO’s Operational Environment Watch provides translated selections and analysis from a diverse range of foreign articles and other media that analysts and expert contributors believe will give military and security experts an added dimension to their critical thinking about the Operational Environment.

Source:Madir-i kal-i iqtisadi bank markazi khabar dad: tavarram 21 dar sadi bara-ye sal-i 90.” (The Director-General of Iran’s Central Bank Reports: Inflation at 21 percent for Year 90,” Donya-e Eqtesad (World Economy). 5 March 2012.

Michael Rubin: While Western officials debate the efficacy of sanctions, the one certainty regarding Iran’s economy is that the primary cause for its weakness is mismanagement. Iranian press analysis of domestic problems is often illuminating, as economics is the subject most immune from press censors.

Donya-e Eqtesad (World Economy), from which the selection below is drawn, is Iran’s marquee economic paper, Tehran’s equivalent of the Wall Street Journal or Financial Times.  Its writers often subtlety tweak Iranian politicians. For example, a year into President Mahmoud Ahmadinejad’s term, the paper disputed his vice president’s assertion that inflation was due to high unemployment, but then asked rhetorically, if Ahmadinejad administration believed the linkage to be real, why had they not created any jobs?

Economic columnists in other newspapers often join in the ribbing of the Iranian leadership. For example, last summer Abrar criticized Ahmadinejad’s poor grasp and random citation of statistics in a headline, “Mr. Ahmadinejad! Statistics will no longer solve your problems!” Indeed, it is not uncommon for financial beat journalists to catch the regime citing different statistics for the same item within the course of a week. Understanding the subtle ridicule, none other than Supreme Leader Ali Khamenei declared in a rare visit to a cabinet meeting that the government’s arbitrary and fictional use of statistics should stop.

Statistics and other metrics have become a political third rail for Iranian politicians who appeal to populism or foment crises as a way to distract from their own failing. As the Iranian fiscal year ended a year ago, Tehran-i Emrouz [Tehran Today] reported that while it was traditional to provide year-end reports, the government seemed to be stopping the practice. “Of course, for some time, it has no longer been customary to deliver economic reports and governmental statistical bureaus no longer feel obliged to deliver precise statistics on current affairs of the state,” the paper commented, adding, “Under such circumstances, one must use reports from international institutions such as the International Monetary Fund or the World Bank statistics in order to estimate industrial growth and the unemployment rate.” The lament followed Ahmadinejad’s attempt to coordinate statistical reporting to force statisticians to better conform to his political objectives. Understood by all Iranian economists was the huge discrepancy—seldom in the Iranian leadership’s favor—when comparing statistics offered by Iranian political leaders and those gathered more scientifically

It is against this backdrop that the Central Bank’s report on inflation is noteworthy. Two years ago, the Central Bank predicted inflation would be 10.8 percent. The Bank now acknowledges inflation now to be 21 percent, three points higher than it had estimated for this year. While the government expected some inflation because of the replacement of some subsidies with cash allowances, the rate was beyond prediction and places the inflation above a rate in which, as bad as it is, ordinary Iranians will amplify it in their minds. Indeed, if the official statistics are taken at face value, inflation has doubled in just two years.

The economy might be the freest beat for Iranian journalists, but that freedom is relative. The studied omission of any discussion of sanctions suggests that, despite regime rhetoric belittling their impact, sanctions are biting. Simply put, Iranian economists and economy beat journalists recognize that the regime considers honest discussion of sanctions to be treasonous.

Iranians signal that they feel the pain. Between September 2011 and January 2012, as the Iranian rial lost more than 70 percent of its value against the U.S. dollar, Iranian tourism plummeted in neighboring Turkey as hotel prices nearly doubled for Iranians because of the unfavorable exchange rate.

The perfect storm of inflation and sanctions will come to a head this month, as Iranians celebrate Nowruz, the Persian New Year. Foodstuff prices traditionally spike in March as Iranians prepare to entertain family and friends. If Iranians normally grumble, it is possible that soon they may shout. That the Iranian government refuses to acknowledge the impact of sanctions suggests that when the Iranians do protest their failing economy, it will be the regime rather than the outside world which will be in their sites.

Michael Rubin is a resident scholar at AEI.

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