CORRUPTION HAS AN IMPACT THAT EXTENDS BEYOND THE DOLLARS STOLEN.
THE REPORT: SCALE OF CORRUPTION
Where Is My Oil? tells the story of how corruption in Iran’s oil and gas industry cost Iranians more than $1 trillion.
Corruption has an impact that extends beyond the dollars stolen. Where Is My Oil? uses a social accounting matrix (SAM) multiplier model to simulate the real impact of missing oil revenues on the Iranian economy. Here a few examples:
The United States Treasury estimated that sanctions cost Iran $160 billion in lost oil revenues.
REAL IMPACT: $600 billion loss to the economy.
Billions vanish into the Naftiran Intertrade Company and murky China deals.
REAL IMPACT: $92 billion and $84.5 billion respectively.
During Ahmadinejad’s presidency, billions are lost to sanctions, corruption, and Oil Stabilization Fund (OSF) scandals.
REAL IMPACT: more than $1 trillion.
Losses to corruption rival the losses Iran incurred during the Iran-Iraq war! It must stop now.
THE HUMAN COSTS
Losing $1 trillion out of the economy has devastating effects upon every Iranian who isn’t part of the regime’s elite.
Every $1 billion invested in the Iranian people yields massive benefits in terms of jobs, health, education, housing and security. By the same token, every $1 billion stolen or squandered by thieves of state is like a financial earthquake affecting Iranians’ lives, families, homes and minds.
LOSING $1 TRILLION OUT OF THE ECONOMY CAN HAVE DEVASTATING EFFECTS
Despite its vast natural resources and highly educated work force, Iran lags behind Bangladesh, Vietnam, Kenya, China and India in job creation.
Creating jobs costs money. If the oil revenues lost to corruption had, instead, been used to create jobs for the Iranian people, millions of jobs could have been created.
Depending on the sector, the IFC estimates $1 million invested in the economy can generate 100–600 jobs. The Zanjani scandal was about the loss of $2.7 billion—which could have created 270,000 to 1,620,000 jobs. The $22.5 billion converted into financial guarantees in China was like exporting 2.25 million jobs.
HEALTH: The $2 Billion Medical Crisis
To steal their oil is to steal their medication and is an assault on their health.
While sanction profiteers made millions from spikes in the price of medicine to food, Iran’s minister of health complained that the Central Bank only allocated $41.5 million out of $2.5 billion budgeted for the purchase of medicines and medical equipment. Meanwhile, the Central Bank gave luxury car importers preferential rates.
With oil revenues accounting for 50%–60% of Iran’s fiscal budget, corruption in the oil sector threatens the budgets of every ministry and deprives all sectors of Iranian society from the most basic services.
DRUGS: The Other Religion
A single tanker of oil—2 million barrels at $50 per barrel—would enable 167,000 addicts to receive a year of treatment for free.
In 2013, Iran faced “an official youth unemployment rate of 28% and inflation running at 42% a year.” The Economist called Iran’s drug epidemic “The Other Religion.” As the Washington Post put it, with addiction rates approaching 3% of the population over age 15, “Iran has no real competition as the world leader in per capita addiction to opiates, including heroin.
Had the government put in place safeguards to prevent corruption, or if it had a way to track and repatriate the missing $2.7 billion from just the Zanjani case, it could almost triple the budget for anti-drug operations.
EDUCATION: Cheating Teachers by the Tanker
Iran’s teachers also pay the price of corruption in the oil sector.
In 2014, the education ministry faced a 26% deficit. It had a shortfall of $1.47 billion, which is a mere 6% of the $24.5 billion siphoned out of the Central Bank’s account for “investments” for which Naftiran Intertrade Company has yet to provide an accounting. A $2 billion theft of oil would be the equivalent of robbing 1,000,000 teachers out of their salary, every month, for ten months.
Since there is little accountability and transparency in the operations of the Oil Ministry—as evident countless corruption cases—thousands of Iranian teachers and millions of students were absorbing the stress of a $1.4 billion deficit in the education sector. While they were struggling in the classroom, Iran’s fleet of tankers, the largest in the world, had been commandeered for one of the largest exercises in piracy in human history. Under the cover of sanctions, Iran’s tankers diverted oil and transferred the proceeds into offshore accounts controlled by Iran’s thieves of state—an oil mafia acting under the protection of the IRGC and the supreme leader.