These six maps show how the sanctions crush Iran’s economy

Iran’s economy is crumbling after years of US sanctions – and Tehran is urging Washington to suspend restrictions before the two parties can return to key talks.

Both countries have indicated that they want to return to the negotiating table, but do not want the US or Iran to concede to the other.

In 2015, Iran signed the nuclear agreement – officially known as the Joint Comprehensive Plan of Action (JCPOA) – with the US, China, France, Russia, the United Kingdom and Germany.

But former US President Donald Trump withdrew from the agreement in 2018 and imposed sanctions under a ‘maximum pressure’ policy to force the regime back into negotiations.

Here are six maps showing how Iran’s economy is struggling.

The Iranian economy has shrunk by an estimated 4.99% in 2020, which has been shrinking steadily since 2017.

By comparison, the Islamic Republic enjoyed sharp economic growth of 12.5% ​​in 2016 after the signing of the Nuclear Power Agreement. However, the postponement was short-lived.

“It is impossible to know exactly what the numbers would be if there were no sanctions,” Abrams, a former U.S. special envoy to Iran, told the Trump administration. He is currently a senior fellow for Middle Eastern studies at the Council on Foreign Relations (CFR). “But I think it’s pretty clear that the sanctions have had an impact on the Iranian economy and on the government budget.”

According to the International Monetary Fund, Iran’s gross domestic product grew by 3% in 2021.

Abrams said the sanctions reduced Iran’s ability to sell oil.

“There are billions of dollars in banks in Iraq and China and South Korea … which Iran cannot get its hands on because of the sanctions,” he said.

According to IMF estimates, Islamic Republic’s oil exports are expected to decline in 2021.

The Iranian currency has been declining steadily since early 2018, but Matthew Bey, a senior global analyst at Stratfor, said the rial has ‘somewhat stabilized’.

Its value in the unofficial market still stands at more than 250,000 rials per dollar – this is far from the central bank’s official rate of 42,000 rials per dollar used for most imported goods.

A weaker currency makes imports more expensive for locals, and high inflation means that the cost of living is rising at a time when people are already struggling with a weak economy and labor market.

The high unemployment rates are likely to rise further, given Iran’s economic struggle.

According to IMF projections, by 2021, 12.4% of the population will be out of work.

Iran’s government spends above its capacity, and saw a larger fiscal deficit. While not always bad, it may limit the country’s ability to improve economic activity and recover from the coronavirus pandemic.

“I’m sure the national budget is of some importance (to Iran’s supreme leader Ayatollah Ali Khamenei) because he wants money for the Revolutionary Guards, for Hezbollah, for the Shia militias in Iraq and for various other expenses. what they have, Abrams of CFR said.

However, he pointed out that the ordinary worries of a civilian government – such as national income, average family income, inflation rate or unemployment rate – may not be important to the religious leaders.

An agreement between the US and Iran is not impossible – but only if each party softens its current position, Bey said.

Bey said the United States should accept that easing sanctions is a necessary step to get Iran to comply with the JCPOA. On the other hand, Iran must acknowledge that Biden’s government cannot fully suspend sanctions if it does not take ‘substantial steps’.

Abrams, on the other hand, said there was a “very important problem” in the Biden government’s Iran policy, namely to revive the nuclear deal before negotiating a broader agreement, which would undermine Iran’s missile program and support for it. include militias in the region.

“But once you are back to the JCPOA, you have lifted the biggest economic sanctions,” he said. “That’s why you eliminated most of your leverage to get Iran to agree to these additional things he does not want … and I can not see why that would be the case at that point,” he added.

Stratfor’s Bey pointed out that Tehran had demanded that the sanctions be lifted before talks began.

“Iran seems to be calculated to withstand the economic pressure that is accumulating because it is taking a more difficult position against the Biden government,” Bey said.