These 6 graphs show how sanctions are crushing Iran’s economy

The Iranian economy is crumbling after years of US sanctions – and Tehran insists Washington must suspend those restrictions before the two sides can return to nuclear talks.

Both countries have expressed interest in returning to the negotiating table, but neither the US nor Iran are willing to give in to the other.

Iran signed the nuclear deal – officially known as the Joint Comprehensive Plan of Action (JCPOA) – with the US, China, France, Russia, the UK and Germany in 2015.

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 charts showing how Iran’s economy is struggling.

The Iranian economy contracted by an estimated 4.99% in 2020 and has declined steadily since 2017.

In comparison, the Islamic Republic experienced strong economic growth of 12.5% ​​in 2016 after the nuclear deal was signed. However, that delay was short-lived.

“It’s impossible to know exactly what the numbers would have been if there had been no sanctions,” said Abrams, former US Special Representative to Iran during the Trump administration, who is now a senior fellow for Middle East studies at the United States. 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.”

The International Monetary Fund sees Iran’s gross domestic product grow by 3% in 2021.

The sanctions diminished Iran’s ability to sell oil and prevented them from repatriating money from energy sales, Abrams said.

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

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

The Iranian currency has fallen steadily since early 2018, but Matthew Bey, a senior global analyst at Stratfor, said the rial has “stabilized somewhat.”

Still, the value in the unofficial market is over 250,000 rials per dollar – that’s far from the official central bank’s rate of 42,000 rials per dollar used for most imported goods.

A weaker currency makes imports more expensive for the local population, 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.

Given Iran’s economic struggle, high unemployment rates will increase even further.

The IMF estimates an estimated 12.4% of the population will be unemployed by 2021.

The Iranian government is spending more money, and has seen a growing budget deficit. While this isn’t always a bad thing, it could limit the country’s ability to improve economic activity and recover from the coronavirus pandemic.

“I am sure that the national budget is of some importance (to Iran’s supreme leader Ayatollah Ali Khamenei) as he would like money for the Revolutionary Guards, for Hezbollah, for the Shia militias in Iraq and for various other expenditures. they have, ”said Abrams of CFR.

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

An agreement between the US and Iran is not impossible – but only if both sides soften their current position, Bey said.

The United States, Bey said, should accept that sanction relief is a necessary step to get Iran to comply with the JCPOA. Iran, on the other hand, must recognize that if it does not take “substantial steps”, the Biden administration cannot fully suspend sanctions.

Abrams, on the other hand, said there is a “very significant problem” in the Iranian policy of the Biden administration, namely to revive the nuclear deal before negotiating a broader agreement that will reinforce the Iranian missile program and includes support for militias in the region.

“But once you return to the JCPOA, you’ve lifted most of the major economic sanctions,” he said. “That’s why you took away most of your power to get Iran to agree to these additional things that it doesn’t want … to agree to, and I don’t see why it would agree at the time,” he added. add to it.

Stratfor’s Bey pointed out that Tehran has pushed for sanctions to be lifted before talks begin.

“Iran appears to have calculated that it can withstand the economic pressures that build up as it takes a tougher stance against the Biden government,” Bey said.