Two US soldiers die in an Iranian attack in Jordan

BeirutIranians received an unexpected message this Saturday from the authorities: save electricity and gas at home. The recommendation may seem minor, but it is profoundly symbolic in a country that has the world's second-largest gas reserves and fourth-largest oil reserves. The American military offensive against Iran enters its second week, and the military escalation does not seem to be stopping. Even less so after two American soldiers were killed this Saturday in an Iranian attack with drones and ballistic missiles against a United States base in Jordan, according to a statement from the US Army's Central Command. A third soldier is missing and four others were injured.

The message from the Iranian authorities comes after a seventh consecutive night of attacks. The United States has once again hit targets in Iran, including bridges, tunnels, surveillance facilities, underground weapons depots, and maritime infrastructure. They even attacked a desalination plant in the province of Hormozgan, in the south of the country, which left about 10,000 inhabitants of twenty villages without drinking water. Seven people have died, adding to those who have lost their lives in the last three weeks: a total of 50 fatalities and about 500 injured, according to data from the Iranian Ministry of Health made public this Saturday.

Tehran has responded with missiles and drones against facilities linked to Washington in Jordan, Bahrain, and Kuwait, where material damage and injuries have been reported, including thirteen American soldiers, according to the US Army's Central Command, adding to the fatalities. The military escalation also affects maritime traffic: Iran claims to have detained or attacked several ships in the Strait of Hormuz, while commercial traffic is once again reduced on one of the world's main energy routes.

Damage to infrastructure, difficulties in maintaining exports, the closure of the Strait of Hormuz decreed by Tehran, and the naval blockade by the United States further complicate the situation of the Iranian economy, weakened by years of sanctions, lack of investment, and an aging energy grid. The current crisis did not begin with the offensive, but it does exacerbate vulnerabilities that the Persian country has been accumulating for years.

The escalation also arrives at the worst possible moment for the country's economic expectations. Just a few weeks ago, the memorandum of understanding reached between Washington and Tehran opened the door to a partial easing of sanctions, the progressive recovery of frozen assets co5802469 and an increase in oil exports. It was not an immediate solution for an exhausted economy, but it was an opportunity to begin alleviating years of economic isolation.

Currency devaluation

But this horizon is now suspended. The rial has once again hit a historic low this week in the parallel market, with the dollar above 1.9 million rials. The depreciation of the currency makes food, raw materials, and medicines more expensive, and further reduces the purchasing power of households that have been enduring the loss of value of their income for years. Forecasts are also not optimistic. The International Monetary Fund predicts that the Iranian economy will contract by 6.1% this year, after having anticipated modest growth just a few months ago. The revision, of more than seven percentage points, reflects the impact of damage to energy and transport infrastructure, falling production, difficulties in exporting oil, and the uncertainty surrounding the Strait of Hormuz, one of the main arteries of global energy trade.

But perhaps the most worrying figure is inflation. The IMF calculates that prices will rise, on average, by nearly 69% this year. In practice, this means that even those who keep their jobs see their salaries losing value at a much faster rate than they can recover with any salary increase. The official minimum wage, converted at the free market exchange rate, is barely equivalent to about 87 dollars per month today.

The war, however, only exacerbates problems that have been around for a long time. The Iranian economy had been struggling for years due to international sanctions, chronic inflation, a weakened currency, and decades of underinvestment in infrastructure. The electricity grid already suffered frequent outages during the months of highest demand, and the energy sector needed millions in investments to modernize aging facilities, despite the country having some of the largest hydrocarbon reserves on the planet.

High unemployment

The labor market also reflects this fragility. Although the official unemployment rate is around 7.5%, this figure offers an incomplete picture of reality. Just 37% of working-age Iranians have a job. Millions of people have stopped looking for work and disappear from official statistics, while around 60% of workers operate in the informal economy, without contracts or access to unemployment benefits.

The consequences of the war threaten to worsen this situation. The Iranian Ministry of Labor itself acknowledges that the conflict has destroyed more than a million jobs, while independent economists put this figure at several million if the offensive is prolonged. For those who survive in the informal economy, losing their job often means being left without income from one day to the next.

The paradox is that the war has returned just as a part of the population was beginning to have certain expectations of improvement. The possible lifting of some sanctions, access to frozen assets abroad, and a greater capacity to export oil fueled the hope of stabilizing the currency, containing inflation, and recovering part of the lost growth. Today, this scenario seems increasingly distant.