Warning from the Head of the Research Center of the Iran Chamber about Beijing's 'Colonial Trap' for Tehran

The head of the Research Center of the Iran Chamber pointed out the impact of sanctions on the loss of a significant portion of Iran's previous oil markets, stating that currently '92 percent' of the country's oil, sold at a discount of at least '30 percent', is heading to China. Hojjatollah Mirzaei, speaking at a meeting on the review of the 1404 budget, emphasized that Iran's hands are tied in how it receives payment for its oil exports, and it is Beijing that decides on the composition and final price of goods exchanged for this cheap oil. According to this economic expert, the consequences of sanctions and China's behavior towards Iran have led the country into a '19th-century colonial trap', from which, he claims, the government has no way to escape. The remarks from the head of the Research Center of the Iran Chamber regarding energy imbalance and the limitation of Iran's oil exports due to sanctions came just a day after an unprecedented warning from the Speaker of Parliament. Mohammad Baqer Qalibaf, on Tuesday, December 6, referred to the energy imbalance crisis, stating that Iran currently has 'no oil and market to threaten the world with'. The Speaker of the Iranian Parliament, without naming previous governments, said: 'There was a time when we would say we would cut off oil in the face of enemy threats, and it was our leverage of threat, but today, with this situation, which oil can we cut off and which market do we have?' The government of Mahmoud Ahmadinejad had threatened the West in 2012 that if sanctions were imposed on Iran, Tehran would also 'stop oil exports' to raise global oil prices to '300 dollars' and cause a global economic crisis. Over a decade later, not only have these threats not materialized, but Iran has been forced to rely on China and offer extensive discounts to sell oil to global markets. This comes at a time when Donald Trump's victory in the U.S. presidential election, coinciding with unprecedented cold relations between Tehran and the West, has raised the specter of new sanctions looming over Iran. The head of the Research Center of the Iran Chamber, in another part of his statements, criticized the 'lack of planning' of the Islamic Republic's governments for managing the country's economy, emphasizing the 'tied hands of the government' in securing and allocating development budgets. According to Hojjatollah Mirzaei, the absence of a long-term economic outlook has effectively reduced annual budget changes to 'formal changes' without any specific plan. Mirzaei, while pointing to a significant budget deficit, emphasized that '96 percent' of the country's budget is spent on current and mainly personnel costs, leaving the government with little room to change this section. He described the execution of national development projects as 'impractical and unrealistic', emphasizing the existence of 30,000 unfinished national projects and non-economic constraints on the government's use of the remaining 4 percent of the budget. The head of the Research Center of the Iran Chamber positively viewed the government's plan to increase taxes in line with inflation rates, while predicting that in 1404, the country's inflation rate would exceed 40 percent. Hojjatollah Mirzaei, referring to the impact of unprofessional decision-making on the serious increase in budget deficits, called for cooperation among the heads of the three branches of government to shorten the parliament's hand from unprofessional increases in the budget ceiling. This economist simultaneously considered the government compelled to raise gasoline prices to reduce the rapid increase in the budget deficit. The issue of increasing gasoline prices has long become a very sensitive social-political and even security topic. The sudden rise in the price of this essential commodity on November 24, 2019, during Hassan Rouhani's government, led to widespread and bloody protests across Iran. This issue even caused the then-president to claim he was 'unaware' of the implementation of the gasoline price increase. In recent weeks, Iranian political officials have repeatedly alluded to gasoline prices. While Fatemeh Mohajeri, the government spokesperson, directly emphasized that the budget for the coming year was prepared without considering an increase in gasoline prices, President Masoud Pezeshkian has repeatedly pointed out in the public assembly that the very low fuel prices in Iran are 'illogical and unsustainable' compared to FOB prices in regional countries. In this context, the Iranian government has liberalized the import and distribution of super gasoline at Gulf FOB prices. The emphasis of Pezeshkian's deputy on increasing gasoline prices; 'it is cheaper than drinking water'.