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

After a period of stagnation, the United States and Iran have begun negotiations in recent weeks for a mutual return to compliance with the Iranian nuclear deal – the Comprehensive Joint Action Plan (JCPOA). So far, Iran has played hard, demanding that the United States go first and lift the sanctions it has imposed on its business with the Islamic Republic. But Iran may not have the economic strength to sustain 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 withdrew from the unilateral agreement. He then reintroduced strict economic sanctions on Iran. Importantly, these included secondary sanctions, which prohibited US companies from dealing with non-Iranian entities that had economic relations with Iran. The JCPOA is a multilateral agreement signed under 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, set the boundaries of Iran’s nuclear program, also arranging for surveillance. Instead, economic sanctions previously imposed on Iran have been lifted. President Joe Biden has promised in his election campaign that he will return to the Iranian nuclear deal. In a statement released by CNN, Biden called Trump’s “maximum pressure” policy “an advantage for the Iranian regime,” which allowed the Islamic Republic to approach the development of a nuclear bomb – which Tehran says it has no intention to build. experts are unanimous in their estimate that Iran has now taken significant steps towards building a bomb. Following the US withdrawal and the reintroduction of sanctions, the Islamic Republic has increasingly violated its JCPOA obligations by enriching uranium beyond the limits of the agreement, for example. they dealt a severe blow to the country’s economy. “I think Iran’s economy is closer to collapse than ever. People who believe that Iran’s “resistance economy” has worked because it has been resistant to crippling sanctions are right. But the resistance is disappearing now, “Dr. Mahdi Ghodsi, an economist at the Institute for International Economic Studies in Vienna and an expert on the Iranian economy, told The Media Line. Gil Feiler, a Middle East economics expert and principal investigator at Bar-Ilan University’s Begin-Sadat Center for Strategic Studies, told The Media Line: “Iran has hit a low point because of Trump’s sanctions. … [Iranian] rial has lost 50% of its value in less than two years. That is, Trump’s sanctions have had a huge effect, “he said. “Almost 6 million people are unemployed.”

According to an International Monetary Fund (IMF) report from April 2021, unemployment, which currently stands at 10.8%, is expected to rise in the next two years. In addition to sanctions, Iran has been hit hard by the coronavirus pandemic. Ghodsi says that “thanks to sanctions and COVID, Iran’s crisis is a double-edged sword that hurts society more deeply than other countries.” To make matters worse, the country expects to vaccinate a significant segment of its population no earlier than mid-2022, according to another IMF report. Rhodi points to the high inflation that has hit the country in recent years as an indication of Iran’s economy. difficult situation. “Annual inflation has been very high (up to 50%) in the last three years,” he says, “Many people who received monthly cash payments from the time of the people. [former President Mahmoud] Ahmadinejad, out of poverty. But because of the very high annual inflation from that policy of Ahmadinejad and more strongly from the “maximum pressure” campaign, that monthly cash distribution is now probably worth 1-2 kilograms of chicken. “Iran’s debt has reached $ 254 billion,” says Feiler. , indicating another economic indicator. “This is a huge debt, and you have to remember that Iranians have not lived in luxury in recent years.” The expert also adds that, for the first time since the 1979 Iranian Islamic revolution, the Islamic Republic appealed to the IMF last year and called for emergency assistance. Iran said it was worth noting that the $ 5 billion in assistance was intended to help it fight the pandemic. The Iranian economy has shrunk in recent years, registering a negative growth of almost 13% in 2018-2019, after the imposition of sanctions. However, the Iranian economy is not expected to collapse in the very near future, say both experts, even if sanctions remain in force. Ghodsi says the Islamic Republic has responded to “maximum external pressure” [campaign] with “maximum internal” suppression “, killing hundreds of protesters in national anti-government demonstrations that erupted in November 2019. The crackdown has helped the regime silence its dissatisfaction with the economic hardships resulting from sanctions. “I can say that Iran’s resilient economy, along with ‘maximum suppression,’ will allow the government to continue its economy,” Ghodsi said. In addition to suppressing dissidents, Feiler highlights a recently signed agreement between China and the Islamic Republic, consolidating a 25-year agreement to cooperate in trade, among other things. This agreement, along with other actions by countries that cross American borders, allow the regime to breathe what it needs to survive. However, while the Israeli expert agrees that the Iranian economy will not collapse tomorrow, he believes that his ability to survive with the sanctions in place is very limited. “If Trump’s sanctions were in place for another four to five years, then [if] it would have tightened them even more and monitored the smuggling “, the Iranian regime would have fallen, he says. “What Biden will do is throw them a lifeline.” Dissatisfaction with rising unemployment and poverty has toppled the regime. All of this is putting pressure on Tehran to achieve a revival of the JCPOA, which the US and its European allies have missed, says Feiler. The Vienna expert does not talk about a political collapse, but says: “If the sanctions are not removed quickly, the government can borrow again from the central bank, and the money supply will continuously increase more than the size of the economy. This can lead to hyperinflation beyond control, probably similar to what has been observed in Venezuela. Then, given the exacerbated circumstances, the nationwide cyclical protest bomb will implode into a stronger internal uprising. Therefore, the prospects [for the Iranian regime] it cannot be described optimistically if sanctions are not lifted. Given this danger, Ghodsi says Iranians need “a compromise is how the US can return to the JCPOA.” Instead of calling for a full lifting of sanctions, “while Iran’s non-compliance is still six or seven steps away from the JCPOA,” Tehran should push for a coordinated return to the agreement. In addition, as Iran wants to eliminate sanctions that are not related to its nuclear program – such as those related to human rights violations – Ghodsi suggests that a broader agreement should be reached after the return to the nuclear agreement – a path that has been suggested. previously, but so far, Tehran has strongly opposed it. Once the sanctions are lifted, the Iranian economy is expected to flourish. “We can expect Iran’s economy to grow by exporting oil to its level before US secondary sanctions under Trump,” says Ghodsi. Agreements with other countries will also stimulate the economy. He warns, however, that business with Western companies could resume more slowly, as “Western firms may need some time to assess the political risks surrounding Iran.” “I can jump ahead” with the lifting of sanctions, says Feiler, “jump politically, militarily and economically, and this will, of course, strengthen the regime. “Iran’s economy has huge potential,” said Bar-Ilan. However, he does not see this in a positive light. The Western powers “have no real understanding of the Iranian regime” or the fact that they will strengthen it and thus empower tyranny and encourage human rights violations.