“Iran’s economy is closer than ever to collapse,” said expert

After a period of stagnation, the US and Iran have been negotiating in recent weeks for a reciprocal return to compliance with the nuclear agreement in Iran – the Joint Comprehensive Plan of Action (JCPOA). Until now, Iran has played hardball and demanded that the US first act and fully lift the sanctions it has imposed on affairs with the Islamic Republic. But Iran may not have the economic strength that enables it to maintain its stubbornness and survive economically under sanctions.

In 2018, then-US President Donald Trump acted in line with his harsh criticism of the JCPOA and unilaterally withdrew from the agreement. He then imposed severe economic sanctions on Iran. Importantly, it includes secondary sanctions that have banned U.S. companies from trading with non-Iranian entities that have had economic transactions with Iran. The JCPOA is a multilateral agreement signed by former President Barack Obama in 2015. The agreement, with Iran on the one hand, and the US, European allies, China and Russia on the other, imposed restrictions on Iran’s nuclear program and also oversaw organized. In return, economic sanctions previously imposed on Iran were lifted. President Joe Biden has famously promised to return to the nuclear deal in Iran as part of his election campaign. In a CNN call, Biden calls Trump’s policy of ‘maximum pressure’ ‘a blessing for the regime in Iran’ that allowed the Islamic Republic to come closer to developing a nuclear bomb – which Tehran says it does not intends to build. experts are unanimous in their estimate that Iran has now taken important steps to build a bomb. Following the withdrawal of the United States and the reinstatement of sanctions, the Islamic Republic increasingly violated its obligations under the JCPOA, which enriched uranium outside the constraints of the agreement, although the sanctions could not deter the Iranian regime from pursuing its nuclear ambitions. , inflicted a severe blow on the country’s economy. “I believe that Iran’s economy is closer to collapse than ever before. The people who believe that Iran’s ‘resistance economy’ worked because it was resilient to crippling sanctions are right. But the endurance is disappearing now, ‘said dr. Mahdi Ghodsi, an economist at the Vienna Institute for International Economic Studies and an expert on the Iranian economy, told The Media Line. Gil Feiler, a Middle East economics expert and senior researcher at Bar-Ilan University’s Begin-Sadat Center for Strategic Studies, told The Media Line: “Iran has reached a low point due to Trump’s sanctions. … The [Iranian] rial lost 50% of its value in less than two years. “This means that Trump’s sanctions have had a tremendous effect,” he said. “Nearly 6 million people are unemployed.”

According to a report by the International Monetary Fund (IMF) of April 2021, unemployment, which currently measures 10.8%, is expected to rise over the next two years. In addition to the sanctions, Iran has been hit hard by the coronavirus pandemic. Ghodsi says that ‘Iran, because of a sanction and COVID, is a double-edged sword that wounds society more deeply than other countries.’ To make matters worse, according to another IMF report, the country is not expected to vaccinate a significant portion of its population until mid-2022. Ghodsi points to the high inflation that has plagued the country in recent years as one indication of Iran’s economic economy. predicament. ‘Annual inflation over the past three years has been very high (up to 50%),’ he says, ‘many people who have been handing out cash monthly since populist times. [former President Mahmoud] Ahmadinejad, risen from poverty. But because of the very high annual inflation since Ahmadinejad’s policies and stronger since the ‘maximum pressure’ campaign, the monthly cash issue is perhaps worth 1 to 2 kilograms of chicken. ‘ “Iran’s debt has reached $ 254 billion,” Feiler said, pointing to another economic indicator. “It is a huge debt and you have to remember that the Iranians have not been living in luxury in recent years.” The expert also adds that the Islamic Republic turned to the IMF for the first time since the Iranian Islamic revolution in 1979 and asked for first aid. It should be noted that Iran has asked for the $ 5 billion in aid to fight the pandemic. The Iranian economy has shrunk over the past few years, experiencing almost 13% negative growth in 2018-2019, following the imposition of sanctions. Despite all this, the Iranian economy is not expected to collapse in the near future, both experts say, even if sanctions remain. Ghodsi says that ‘the Islamic Republic has responded to the’ maximum pressure ‘from outside [campaign] with the domestic ‘maximum repression’, which killed hundreds of protesters in nationwide protests against the government that erupted in November 2019. The repression helped the regime quell dissatisfaction with the economic hardship resulting from sanctions. “I can say that Iran’s resistance economy and the ‘maximum repression’ will enable the government to continue its economy,” Ghodsi said. In addition to suppressing dissent, Feiler points to a recent agreement between China and the Islamic Republic, a 25-year agreement to co-operate in trade, among other things. This agreement, along with other actions by countries circumventing US restrictions, allows the regime the breathing space it needs to survive, while the Israeli expert agrees, however, that the Iranian economy will not collapse tomorrow, but he thinks that his ability to survive with the applicable sanctions is very limited. “If Trump’s sanctions were to last another four to five years, and [if] they would have made them even stricter and watched the smuggling, ‘the Iranian regime would have collapsed, he says. “What Biden is going to do is give them a lifeline.” Dissatisfaction with the rise in unemployment and poverty would have brought down the regime. All of this is putting pressure on Tehran to bring about a revival of the JCPOA, which the US and its European allies have missed, Feiler said. The Viennese expert does not speak of a political disintegration, but says: ‘If sanctions are not removed quickly, the government will be able to borrow from the central bank again, and the money supply will constantly grow more than the size of the economy. This could potentially lead to hyperinflation out of control, perhaps similar to that observed in Venezuela. Given the aggravated circumstances, the ticking bomb of cyclical nationwide protests will then explode into a stronger domestic uprising. Therefore, the prospects are [for the Iranian regime] can not be portrayed optimistically if the sanctions are not removed. ‘With this danger in mind, Ghodsi says the Iranians’ need to compromise’ is the way the US can return to the JCPOA. “Instead of lifting the sanctions in full, Tehran must pursue a coordinated return to the agreement, while Iran’s non-compliance is still six or seven steps away from the JCPOA. As Iran also wants sanctions unrelated to its nuclear program – such as those linked to human rights abuses – to be removed, Ghodsi is proposing a broader agreement following a return to the nuclear deal – a path previously proposed, but so far strongly opposed by Tehran. Once the sanctions are lifted, the Iranian economy is expected to flourish. “One can expect Iran’s economy to grow by exporting oil to its level before the US secondary sanctions under Trump,” Ghodsi said. Agreements with other countries will also boost the economy. However, he warned that business with Western companies could resume more slowly because “Western companies still need some time to evaluate the political risks surrounding Iran.” “They can jump ahead” once the sanctions are lifted, says Feiler, “jump politics. , military and economic, and this will naturally strengthen the regime. “The Iranian economy has great potential,” said the Bar-Ilan expert. However, he does not view it in a positive light. The Western powers have ‘no real understanding of the Iranian regime’, or the fact that they will strengthen it, thus empowering tyranny and encouraging human rights violations.