Iran Staggers as Sanctions Hit Economy - Obama waging economic war on the Iranian people

- By THOMAS ERDBRINK - September 30, 2013 - The New York Times

TEHRAN — The owner of a bus manufacturing company here admits that he is a man who likes his routines, and so every day he continues to commute to his downtown office. There he orders cups of tea, barks orders to his factory foremen over the phone and signs a steady flow of papers his employees put on his desk.

“It looks like I’m working, right?” the owner, Bahman Eshghi, said, folding his hands. “No. In reality I am praying, either for a miracle to save our economy or for a fool to come in and buy my factory.”

For years, Iran’s leaders have scoffed at Western economic sanctions, boasting that they could evade anything that came their way. Now, as they seek to negotiate a deal on their nuclear program, the leaders are acknowledging that sanctions, particularly those applied in 2010 on international financial transactions, are creating a hard-currency shortage that is bringing the country’s economy to its knees.

This was evident in New York last week when Iran’s new president, Hassan Rouhani, emphasized the need to act swiftly to resolve the standoff over Iran’s nuclear program, perhaps in three to six months. While there may well be political reasons for him to be in a hurry, Mr. Rouhani and other officials admitted that the sanctions were hurting.

In repeated meetings during the week, Mr. Rouhani and his foreign minister, Mohammad Javad Zarif, said the government’s financial condition was far more dire than the previous president, Mahmoud Ahmadinejad, had let on.

Mr. Rouhani and Mr. Zarif did not publicly specify the severity of the cash squeeze. But Western economists believe the crisis point may be much closer than previously thought, perhaps a matter of months. Iran news outlets have reported that the government owes billions of dollars to private contractors, banks and municipalities.

Because of the sanctions, oil sales, which account for 80 percent of the government’s revenue, have been cut in half. While Mr. Ahmadinejad had asserted that Iran had $100 billion in foreign exchange reserves, the total had shrunk to $80 billion by mid-2013, according to a new study by Roubini Global Economics, a research firm based in New York, and the Foundation for Defense of Democracies, a Washington group that advocates strong sanctions against Iran.

But even that vastly overstates the amount readily available to Iran. Three-quarters of the $80 billion is tied up in escrow accounts in countries that buy Iranian oil — the result of an American sanctions law that took effect in February. Under that law, the money can be spent only to buy products from those countries.

Even gaining access to the remaining $20 billion is difficult — it has to be physically moved in cash because of Iran’s expulsion from the global banking network known by its acronym Swift, which had allowed the money to be transmitted electronically.

“They can’t repatriate the money back to Iran,” said Mark Dubowitz, the executive director of the Foundation for Defense of Democracies. “This is the dilemma Iran finds itself in.”

The sanctions pose other problems. Unable to arrange simple financing for business deals, executives are forced to transfer suitcases of cash through street-level money changers to shady bankers abroad. This is not only costly, with middlemen exacting fees every step of the way, but also dangerous, the cash making a tempting target for thieves.

Lower-level officials here and businesspeople are even more alarmed than the leadership, with some saying Iran’s economy is already on the verge of collapse.

The frustrations encountered by Mr. Eshghi (pronounced Esh-REE) in trying to conduct normal business deals are by all accounts typical.

A self-made entrepreneur, Mr. Eshghi, 43, said he had enough savings to scrape by for four more months. After that, if nothing changes, he said, he will have to make the difficult drive to the poor city of Malayer and tell his remaining 100 employees — out of 200 a few years ago — that he is closing the factory. The sanctions have so increased the cost of doing business that he is losing money on every bus the factory turns out, he said.

“Like a camel can survive in the desert on the fat in his hump, I have survived on my savings in recent years,” Mr. Eshghi said. “But now the end is near. I’m giving up.”

Before the sanctions were imposed, Mr. Eshghi, whose thick hair has grayed since he started his business in 2005, would walk to the bank just around the corner from his office. There he would sign a letter of credit to buy parts from China, pay a small portion of his order up front, have tea with the clerk and be back behind his desk in less than an hour.

But things are far more complicated these days. When he wants to order components for his buses now, Mr. Eshghi has to follow a long, complicated and sometimes dangerous procedure.

His partner in China also works with European carmakers, who might drop him as a supplier if they know he is dealing with an Iranian, and is scared to death that “the Americans” will find out and punish him with high fines. “They treat me like a mistress they have to keep secret,” Mr. Eshghi said.

To avoid detection, his partner works through a third party. “Let’s call this middleman Mr. Chen,” said Mr. Eshghi. “Mr. Chen says, ‘No letter of credit,’ because the Americans have already fined the only bank willing to work with Iran in China, the Bank of Kunlun.”

So Mr. Eshghi, without any bank credit, must pay the banker all the money up front, through a bank in Dubai, where his wife and children have moved. First, he needs to gather all the cash rials, Iran’s currency, and give them to a money-changer. The money-changers then send the cash through couriers to partners in other countries who have stepped in to fill the void, asking up to 10 percent in transfer fees.

“Just last week one of these money-changers disappeared into thin air, stealing around $160,000 from me,” Mr. Eshghi said, lifting his hands in the air in a sign of desperation.

Barring theft, the payment slowly makes its way to the banker in China, who also takes a cut. Only then will the Chinese company begin to fill Mr. Eshghi’s order. “They promise loading in 10 days, but take two months.”

When the shipment finally arrives at the factory, “there are lots of issues,” Mr. Eshghi said, saying he felt he was losing on all sides. If the products are late or defective, he said, there is not much he can do about it. “What do I do? Send it back? That’s impossible,” he said. “I have to trust everybody and take all the risks.”

In July, he joked, he “nearly had a heart attack" when he found out that President Obama had imposed sanctions against any company working with Iran’s automotive industry. “That’s me,” he said. “I feed 100 families in a city where nobody has work. Is Mr. Obama waging economic war on our leaders or on us?”

Businesspeople in Iran have seen this coming and have been adapting, said one economic analyst, who asked not to be named to avoid trouble with the government. “But the government is slow and way too optimistic in their predictions,” the analyst said. “Now they are starting to feel the full force of what has been unleashed on them.”

The sanctions have introduced numerous distortions into everyday life. For example, Iran is allowed to use money it earns from oil sales only to buy products from the purchasing country. As a result, Iranian supermarkets are filled with low-quality Chinese products, while several infrastructure projects are being built by Chinese companies, rather than Iranian.

“We don’t have an oil-for-food program like Iraq,” the analyst said. “We have an oil-for-junk program.”

One economist, Mohammad Sadegh Jahansefat, said the government had been taken hostage by countries benefiting from the sanctions — particularly China, which he called the worst business partner Iran had ever had.

“China has monopolized our trade — we are subsidizing their goods, which we are forced to import,” he said, adding of its work in the energy industry, “They destroy local production and leave oil and gas projects unfinished so that no one can work with them.”

The state’s dire financial straits are especially tough on contractors and their workers. Akbar, 50, a building contractor from Isfahan, said a big state foundation had not paid $40,000 it owed him. “I will never again work for the state,” he said. “We just can’t trust they will pay up.”

Iranian business families are used to dealing with the roller coaster that Iran’s economy is. Patience is key, said Ali Khalilpour, 34, who operates a chain of sports apparel stores with his father. “We have fired many people, lost dozens of stores and lots of money following the collapse of the national currency,” he said.

There were times when the rial would fall 20 percent in value in a few months while the Khalilpours owed the equivalent of millions of dollars to Western sports brands in Dubai. They were forced to absorb the loss.

“It’s is hard, but some things are beyond your control,” Mr. Khalilpour said, before finding a silver lining.

Most of his competitors have gone bankrupt, he said, leaving the field to his family.

“We have faith that good times are finally coming to this country,” He said. “When they come, we will be the biggest player in the market.”

Rick Gladstone contributed reporting from New York.

Exposed: Enron criminal billionaire’s diabolical plot to loot worker pensions

How an Enron billionaire, Wall Street and a major "nonpartisan" foundation are quietly robbing American workers

- By David Sirota - SALON - Thursday, September 26, 2013

In May of 2013, the Pew Charitable Trusts released a report that sounded a frightening alarm. Titled “Retirement Security Across Generations” and widely cited throughout the national media, the study found that a lack of retirement savings, less guaranteed pension income and the economic downturn have collectively exposed the next generation of Americans “to the real possibility of downward mobility in retirement.”

Summing up the study’s implicit push to stabilize Americans’ retirement future, a Pew official declared that lawmakers must focus on creating policies that help workers “make up for these losses and prepare for the future.”

Pew’s analysis, though eye-opening, was not particularly controversial. Writing in the Wall Street Journal, conservative Martin Morse Wooster acknowledges that the Pew Trusts are “treated as benign truth-tellers, so high-minded as to be beyond politics” – and the call to shore up Americans’ retirement security, indeed, upheld the organization’s promise 
to “generate objective data.” Based on indisputable evidence, it proved that the country’s move away from guaranteed pension income – and states’ willingness to raid worker pension plans to finance massive corporate subsidies – will have disastrous consequences.

What was surprising was the fact that at the same time one branch of Pew was rightly sounding this moderate non-ideological alarm to shore up retirement security, and Pew’s Economic Development Tax Incentives Project was warning of states’ wasteful tax subsidies, a more political branch of the organization was working in tandem with controversial Enron billionaire John Arnold to begin championing an ideologically driven plan to make the retirement problem far worse.

This Pew-Arnold partnership began informally in 2011 and 2012 when both organizations marshaled resources to try to set the stage for retirement benefit cuts in California, Florida, Rhode Island and Kansas. With legislative success in three of those four states, Pew and Arnold created a formal partnership in late 2012 that targeted another three states, Arizona, Kentucky and Montana.

This formal partnership continues today, with the organizations issuing joint reports and conducting joint legislative briefings advocating cuts to guaranteed retirement income. It is widely expected that this partnership will continue working in these same states and potentially expand operations into Colorado, Pennsylvania, Oklahoma and Nevada.

Should an Enron Executive Be Dictating Public Pension Policy?

In the lead-up to his anti-pension partnership with Pew, Arnold’s most relevant connection to pensions and retirement security came from working at Enron – a company whose collapse destroyed its own workers’ pensions and helped to damage the financial stability of public pension funds across America. Indeed, as the New York Times reported, “The rapid decline of the Enron Corporation devastated its employees’ retirement plan.” Meanwhile, in a separate story, the newspaper noted that “across the United States, pension funds for union members, teachers, government employees and other workers have lost more than $1.5 billion because of the sharp decline in their Enron holdings.”

In light of Arnold’s corporate pedigree, it’s no surprise that, rather than “laying the foundation for effective government solutions,” as Pew’s mission promises, the Pew-Arnold partnership has been a campaign to reduce guaranteed retirement income for pensioners. As Marketwatch reported in 2013, Pew and Arnold are “advocat(ing) for cash balance plans.” They are advocating for 401(k)-style defined contribution plans as well.

Like President George W. Bush’s proposal to radically alter Social Security, many of these plans would transform stable public pension funds into individualized accounts. They also most often reduce millions of Americans’ guaranteed retirement benefits. In many cases, they would also increase expenses for taxpayers and enrich Wall Street hedge fund managers.

A Pension-Cutting Movement That Ignores Data

These pension-slashing initiatives are part of a larger movement that aims to reduce or eliminate guaranteed retirement income for public workers. Leading this movement under the euphemistic guise of “reform,” Pew’s Public Sector Retirement Systems Project and the Arnold Foundation are trying to distract attention from what McClatchy Newspapers documented: namely, that “there’s simply no evidence that state pensions are the current burden to public finances that their critics claim.”

Rather than acknowledge that truth, Pew and Arnold have successfully manufactured the perception of crisis – which has prompted demands for dramatic action. Pew and Arnold have consequently helped shape those general demands into specific efforts to cut guaranteed retirement income – all while downplaying (or altogether omitting) any discussion of the possibility of raising revenue through, for instance, ending taxpayer-funded corporate subsidies and so-called tax expenditures.

This deceptive message persists, even though these annual subsidies are typically far larger than the annual pension shortfalls. Indeed, to advocate cuts in retirement benefits, Pew and Arnold cite a 30-year, $1.38 trillion pension gap – a $46 billion annual shortfall. Yet, they rarely ever mention that, as the New York Times reports, “states, counties and cities are giving up more than $80 billion each year to companies” in the form of subsidies and tax expenditures.

Such an insidiously selective message is eerily reminiscent of Margaret Thatcher’s infamous “There Is No Alternative” framing. It suggests that harming millions of middle-class workers is the only way forward – and that states shouldn’t dare consider raising pension-fund revenue by eliminating corporate subsidies. Thanks to Pew, Arnold and other groups, this has now become the dominant argument even though the amount state and local governments now spend on such wasteful handouts is far greater than the pension shortfalls.

Perhaps the most famous illustration of the pervasiveness of this deceptive argument comes from Detroit. When the city recently declared bankruptcy, much of the media and political narrative around the fiasco simply assumed that public pension liabilities are the problem. Few noted that both Detroit and the state of Michigan have for years been spending hundreds of millions of dollars on wasteful corporate subsidies. Worse, the very same political leaders pleading poverty to demand cuts to municipal pensions were simultaneously promising to spend more than a quarter-billion taxpayer dollars on a professional hockey arena.

But as outrageous as the blame-the-pensioners mythology from Detroit is, it is the same misleading mythology that is now driving public policy in states across America.

In Rhode Island, the state government slashed guaranteed pension benefits while handing $75 million to a retired professional baseball player for his failed video game scheme.

In Kentucky, the state government slashed pension benefits while continuing to spend $1.4 billion on tax expenditures.

In Kansas, the state government slashed guaranteed pension benefits despite being lambasted by a watchdog group for its penchant for spending huge money on corporate welfare “megadeals.”

In each of these states and many others now debating pension “reform,” Pew and Arnold have colluded to shape a narrative that suggests cutting public pension benefits is the only viable path forward. This, despite the fact that a) cutting wasteful corporate welfare could raise enough revenues to prevent such cuts; b) the pension “reform” proposals from Pew and Arnold could end up costing more than simply shoring up the existing system; and c) pension expenditures are typically more reliable methods of economic stimulus than corporate welfare.

Those inconvenient facts have been ignored in the political debate over pensions. Thanks to the combination of Pew’s well-known brand and Arnold’s vast resources, the pension-slashing movement’s extremist message has been able to dominate the political discourse in states throughout America.

The result is a skewed national conversation about state budgets – one in which middle-class public sector workers are increasingly asked to assume all the financial sacrifice for balancing the government books, and corporations and the wealthy are exempted from any sacrifice whatsoever.

A Microcosmic Story for the Citizens United Age

This is the story not merely of two nonprofits nor merely of one set of economic issues – it is a microcosmic tale of how in the Citizens United age, politically motivated billionaires can quietly implement an ideological agenda in local communities across the country.

Operating in state legislatures far away from the national media spotlight, these billionaires can launder their ideological agenda through seemingly nonpartisan foundations, with devastating legislative consequences for millions of taxpayers and families. And as the battle over America’s retirement proves, it isn’t just the infamous Koch brothers at work anymore.

In this particularly important fight over pensions, Arnold is leveraging his Enron fortune and his ties to top Republican activists to forge a powerful partnership with Pew. Having already spent at least $10 million on his crusade to cut retirement benefits, Arnold’s partnership with Pew is now driving and distorting the legislative debate over public pensions in at least seven states – and has helped enact huge cuts to retirement benefits in many of them.

With other billionaires now reportedly following Arnold’s lead and investing in the campaign to cut public workers’ retirement benefits, the Pew-Arnold plot is poised to expand into every state in America. Indeed, as Institutional Investor reports, “From Blackstone Group co-founder Peter Peterson to New York City Mayor Michael Bloomberg, some of the wealthiest Americans are beginning to pay increasing attention to this issue,” meaning that pensioners will “have to get used to billionaires brandishing checkbooks” in their political crusade to cut retiree benefits.

The Corporate Bait-and-Switch

The goals of the plot against pensions are both straightforward and deceptive. On the surface, the primary objective is to convert traditional defined-benefit pension funds that guarantee retirement income into riskier, costlier schemes that reduce benefits and income guarantees, and subject taxpayers and millions of workers’ retirement funds to Enron’s casino-style economics.

At the same time, waging a high-profile fight for such an objective also simultaneously helps achieve the conservative movement’s larger goal of protecting profligate corporate subsidies.

The bait-and-switch at work is simple: The plot forwards the illusion that state budget problems are driven by pension benefits rather than by the far more expensive and wasteful corporate subsidies that states have been doling out for years. That ends up 1) focusing state budget debates on benefit-slashing proposals, and therefore 2) downplaying proposals that would raise revenue to shore up existing retirement systems. The result is that the Pew-Arnold initiative at once helps the right’s ideological crusade against traditional pensions and helps billionaires and the business lobby preserve corporations’ huge state tax subsidies.

In bequeathing its brand to an Enron billionaire and embracing this campaign, Pew is being steered back toward its ultraconservative roots. In the process, the retirement security of millions of Americans is being jeopardized.

David Sirota is a nationally syndicated newspaper columnist, magazine journalist and the best-selling author of the books "Hostile Takeover," "The Uprising" and "Back to Our Future." E-mail him at This email address is being protected from spambots. You need JavaScript enabled to view it., follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

Victory for people - Senate to Kill Monsanto Protection Act Amid Outrage

- By Anthony Gucciardi - September 25, 2013

This unprecedented move shows the true power of the anti-GMO, anti-Monsanto movement, and how elected officials are now being forced to side with the concerned population over the money-spewing Monsanto. After all, it was Monsanto who purchased its way into the initial Senate spending bill legislation via a rider dubbed the ‘Monsanto Protection Act’  through Senator Roy Blunt.

Officially labeled the Farmer Assurance Provision under Sec. 735 of the Senate Continuing Resolution spending bill, Senator Blunt was conveniently given over $64,000 by Monsanto before he handed the biotech corporation the ability to write its own legislation for the Monsanto Protection Act. And as I told you back in March here on the frontlines of anti-GMO activism, the financial payload dished out by Monsanto was enough to secure a major victory for corporations over both the public and even the federal government.

It was last March that Obama signed the initial Senate spending bill into law, subsequently bringing the Monsanto Protection Act rider into legal validity as well. But the rider only extended until September 30th of this year, and it was up to Monsanto to pull another slippery legislative trick out of their sleeves in order to pass a Monsanto Protection Act 2.0 renewal. Once again, however, Monsanto executives underestimated the power of the alternative news community and the intelligence of those who do not want to eat contaminated food.

And as a result, Senators are being forced to respond in a big way. As one Senator put it:

“That provision will be gone,” said Sen. Mark Pryor (D-Ark.) told Politico.

There is even discussion of how the Monsanto Protection Act came to exist in the first place, and more importantly how we can hold the politicians responsible.

“Short-term appropriations bills are not an excuse for Congress to grandfather in bad policy,” said Colin O’Neil, director of government affairs for the Center for Food Safety.

Once again, we have achieved a major victory in the fight against Monsanto and GMOs at large. As information on the subject continues to spread like intellectual wildfire, Monsanto’s days as a food supply hog consistently dwindle.

* Secret Ingredients - Full Movie - By Jeffrey Smith