Chicken Bans, Bank Runs And Ramadan - Sanctions Start To Squeeze Iran

Chicken Bans, Bank Runs And Ramadan - Sanctions Start To Squeeze Iran
Christophe Ayad with Assal Reza

In Iran, the shortage of poultry has become the symbol of the economic "war" imposed on the Iranian regime by the West to pressure the country into abandoning its nuclear program.

Since a new round of European and American-led economic sanctions were enforced on July 1, the price of chicken has soared in Iran, rising from 3,000 tomans ($1.70) to 9,000 tomans ($4.90).

On July 23, an uprising broke out in the northwestern town of Nishapour to protest against the shortages and skyrocketing price of poultry. Across the country, endless lines have formed outside shops selling state-subsidized chicken at the cost of 4,700 tomans.

Discontent is so prevalent that the head of the national police, Esmaïl Ahmadi Moghadam has called for national television to stop broadcasting images that show people eating chicken.

At the same time, the state is attempting to coax the bearers of bad news: journalists. In the northern region of Gilan, the government has decided to offer journalists the possibility of buying chicken at a discounted rate just by showing their press credentials.

During the period of Ramadan, the Iranian authorities are keeping an especially close eye on the public. The Minister of Culture and Islamic Guidance Mohammad Husseini has also recommended that the media should "not exaggerate" the economic problems and "should not relay stories from the foreign press."

"The West is trying to create a divide between the people and the government," exclaims Yadollah Javani, an advisor to the Supreme Leader Ali Khamenei.

On first thought, it seems difficult to make a link between the price of chicken and sanctions that were supposed to target the military-industrial complex, linked with nuclear activity. In fact, it seems that the devaluation of the Iranian currency (40% since February on the black market) has made the import of grain more expensive. Yet, this economic crash is an indirect consequence from sanctions aimed at the entire Iranian banking system, the central bank included, as well as its foreign partners.

"There hasn't been this large an effort to isolate a country from the rest of the world since the boycotts against South Africa during the apartheid," explains Iranian-born French lawyer Henri N. Zoleyn.

Based in Dubai, Zoleyn specializes in business, and is particularly well placed to observe the effects of the strict American-led sanctions. For him, the attack is going well beyond the parameters of the fight against the nuclear program. It's a massive effort, aimed at systematically crushing the country financially.

There are dozens of examples: a wealthy Iranian client living abroad, whom HSBC bank called a few weeks ago to inform that she had two weeks to withdraw the million dollars she had in the bank before the her account would be closed; or the Iranian businessman based in Dubai, arrested in November 2011 at Prague airport for having sent four screws to be used in the aeronautics industry to his country by DHL. He is still in custody.

American visitors

The sanctions are also affecting businesses that export products abroad, such as dates, rugs or pistachios. In all these cases, the problem remains the same: it is impossible to transfer money in or out of Iran through the banking system.

"Not a week goes by where a U.S. Treasury representative doesn't come to Dubai to encourage bank directors, insurance companies or foreign companies to cut off all ties with Iran," says one diplomatic source.

Pressure from the Americans is particularly effective. U.S. President Barack Obama has just tightened the noose a little more this week by adopting new measures targeting the Iranian oil industry. Moreover, the U.S. Treasury has banned Iraqi bank, Elag Islamic Bank, as well as Chinese bank Kunlun from having access to the American financial sector for having aided transactions of millions of dollars from Iranian banks.

The U.S. Congress fired another salvo last Wednesday by adopting a law that targets every person or company working with Iranian natural gas, oil or uranium companies.

Iranian authorities seem to be ambivalent about which action to take: sometimes spurring on national patriotism, while other times trying to minimize the effects of sanctions so as to not to seem weak. The Supreme Leader Ali Khamenei advocated last week an "economy of resistance" at a meeting with chief executives.

Director of Iran’s central bank Mahmoud Bahmani used equally belligerent rhetoric: "Like in military combat where guerrilla techniques are used, we have to consider an economic war to make these sanctions fail."

With the implementation of the European oil embargo and the growing difficulties for major consumers of Iranian oil (China, India, Turkey, South Africa, Japan, South Korea), gross exports could fall by 40 percent in 2012, representing more than 80% of earnings by the Iranian state.

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Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.

Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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