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Iran witnessing millionaire boom despite US sanctions and fifth Covid-19 wave

The Islamic Republic has seen one of the world's biggest rises in wealthy individuals despite sanctions and coronavirus ravaging the country
Iranian traders work at Tehran Stock Exchange on 1 July 2019.
Iranian traders at Tehran's Stock Exchange on 1 July 2019 (AFP)

Iran has witnessed a steep rise in the number of new millionaires over the past year, despite the country being subject to crippling US sanctions and experiencing multiple waves of Covid-19 outbreaks.

According to Capgemini's latest World Wealth Report, the Islamic Republic recorded the world's biggest rise in the number of high-net-worth individuals in 2020, boasting at least 250,000 millionaires and jumping three places to rank 14th globally.

According to the report, Iran now has more millionaires than Spain, Russia, Brazil and its oil-rich neighbour and regional rival, Saudi Arabia.

But with the country subject to crippling US sanctions and witnessing at least one fatality from Covid-19 every two minutes, some Iranians have questioned how the country came to acquire so many millionaires.

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"Becoming a millionaire is perfectly okay in a capitalist society, but in a country that chants anti-capitalism slogans and considers it as part of its revolutionary ideals, it’s a little bit odd, and not quite acceptable to society," Reza Ghiabi, a Tehran-based business developer who provides consultation to wealthy individuals, told Middle East Eye.

"This is totally different from those who become millionaires in Silicon Valley in a capitalist society like that of the US."

When an array of social groups overthrew the Iranian monarchy in 1979, paving the way for the establishment of the Islamic Republic, there was a widely held perception that the era of capitalists was over, and a new system based on a fair distribution of wealth would be established.

"We are intent on tearing out the roots of corrupting Zionism, capitalism, and communism in the world," Ayatollah Ruhollah Khomeini, the founder of the Islamic Republic, told the New York Times in 1988.

"We have decided to rely on God Almighty to destroy the regimes which are based on these three pillars."

Crippling sanctions

In much of the past four decades, Iran has tried to distance itself from capitalism, a system associated with the regime of the Shah and with the US. 

However, analysts say that Khomeini's revolutionary slogans do not appear to have been taken seriously by his successors, as the number of Iran's high-net-worth individuals (HNWI) might suggest.

What makes Iran's global HNWI ranking even more striking is that the country saw its population increase by 21.6 percent, and the wealth of its millionaires grow by 24.3 percent in 2020, despite the country grappling with US sanctions.

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Foreign Minister Mohammad Javad Zarif said this year that Washington's sanctions had inflicted around $1 trillion of damage on the economy.

Iran has been subject to a series of ongoing unilateral sanctions since 2018, when former US President Donald Trump withdrew from the Iran nuclear deal, known formally as the JCPOA.

Towards the end of Trump's term, Washington began to shift the focus of its sanctions, specifically imposing non-nuclear-related measures.

The moves appeared strategic and in anticipation of President Joe Biden's plans to re-enter the accord with Iran, as analysts warned non-nuclear sanctions would be difficult to reverse during nuclear negotiations. 

The sanctions, which have not been eased during the coronavirus pandemic, have increased the cost of living for ordinary people, driving up the prices of everyday goods, including food and medicine.

Stock market woes

According to the latest World Investment Report released by the United Nations Conference on Trade and Development (UNCTAD), foreign direct investment in Iran decreased from more than $5 billion in 2017 to $1.5 billion in 2019 and $1.3 billion in 2020.

The country's exports of goods and services also plunged from $111 billion in 2017 to $98 billion in 2018 to less than $29bn in 2020, according to the World Bank.

Ghiabi said the success of Iran's millionaires was largely down to money possessed by ordinary citizens, rather than entrepreneurship.

"Most Iranian millionaires are neither producers, nor entrepreneurs. They are not even good in attracting investment," Ghiabi said.

"In the absence of foreign investment and an opportunity for the growth of Iran's economy, these millionaires mostly get rich, not through foreign revenues or production income, but through the money coming from non-rich people's pockets," he added.

In September, the Iranian government injected one percent of the sovereign wealth fund - public money - into the Tehran Stock Exchange (TSE), which helped spur the millionaire boom, Forbes reported.

"Between March and July 2020, the TSE's trade values increased by 625 percent, compared with the same period a year earlier, and the TSE hit a record high in early August," read the World Wealth Report.

However, the stock market bubble burst and many ordinary Iranians who had been encouraged by the government to invest their money in the TSE lost a fortune.

Since September 2020, shareholders who suffered heavy losses have staged protests in several cities.

In April, demonstrations rocked Tehran, Mashhad, Isfahan and Tabriz, with investors publicly blaming Supreme Leader Ali Khamenei and other senior officials, including now-President Ebrahim Raisi, for their losses.

Mohsen Rezaei, the secretary of Iran's Expediency Council, said in an interview earlier this year that around "150 people whose investable assets exceed 1 trillion tomans [$40 million]... withdrew their money from the bank before the government decreased interest rates, and then got into the foreign currency, gold, stock or real estate markets".

"These people got into the stock exchange market from October 2019 to March 2020. Their investment in the TSE resulted in a 500 percent increase in the stock value. The middle class started to enter the stock exchange market in April and May, and the poorer classes sold their belongings and made investments in the TSE in June and July 2020," Rezaei added, noting that the investments by ordinary Iranians came just weeks before the stock market began to slide in August 2020.


The cryptocurrency market has also been credited with helping Iranian millionaires get richer. 

Crypto miners run powerful "farms" which involve large investments in computer data centres which require vast amounts of electrical power. In exchange for verifying "blocks" of transactions, miners are rewarded with new coins.

Famously volatile, Bitcoin, a major type of cryptocurrency, currently stands at more than $44,000 a coin, it reached a record high of $63,000 in April.

Arian, a bitcoin miner in Tehran, told MEE that he knew people who mined the popular digital currency at an industrial scale and made huge amounts of money until massive blackouts, allegedly caused by the activity of cryptocurrency farms, convinced the government to suspend all mining activities for a few months.

In January, a Chinese mining farm near the Iranian city of Rafsanjan - reportedly one of the largest such farms in the Middle East - temporarily closed after local media reported that it was using 175 megawatt hours of electricity.

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The farm, which employed 54,000 miners, is the largest authorised site for Bitcoin mining in the country, using almost a third of the total power allocated to Iran's crypto miners.

Due to cheap and subsidised electricity, Iran has emerged as an important mining destination, with a study by the University of Cambridge reporting the country accounted for more than 4.6 percent of the global computational power used for Bitcoin mining.

The World Wealth Report said that around 72 percent of high-net-worth Iranians had invested in cryptocurrencies.

Meanwhile, Tehran's Chamber of Commerce estimates that around 12 million Iranians, some 15 percent of the population, have invested in cryptocurrencies.

In 2019, Fateme Zolqadr, a member of Iran's parliament, revealed that two studios belonging to state TV had been involved in cryptocurrency mining. 

Mahmoud Vaezi, chief of staff to Iran's former President Hassan Rouhani, denied the reports, saying the government had no mining farms. However, he made no reference to state TV channels' alleged operations.

This article is available in French on Middle East Eye French edition.

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