The Economy of Iran

The Economy of Iran and the Challenges to Iran’s Foreign Policy were Analyzed

 

The Hard Wall of Interaction and Ambiguity in the Future of the Joint

Comprehensive Plan of Action (JCPOA)

The obvious aspect of Rouhani’s government with the former governments is his strong diplomacy with the world. At the beginning of his administration and due to the commencement of nuclear negotiations with the six international powers which eventually led to JCPOA, while relieving tensions in interaction with the international community  , a considerable volume of dealings commenced for Iran with developed countries, especially with Europe. This was realized while during the previous eight years Iran was practically recognized as a secluded country in the international community and have reduced many of its relations with European countries due to idealistic dialogue in foreign policy and also complication of the nuclear file.  After the proposal of the dialogue of the civilizations during  the presidency of Seyed Mohammad Khatami and increase of international interaction with foreign countries , Ahmadinejad came with his new literature and emotional approach to diplomacy made Iran a secluded country even more than before, in a way that one of the senior diplomats of the Ministry of Foreign Affairs confirmed that within the ninth and tenth governments, the volume of our relations with Europe was reduced to the extent that Iranian ambassadors had serious limitations for meeting with the authorities of those countries and they could get appointments only at the level of chief of bureaus. Hassan Rouhani, however entered the  campaign with a key and could open the lock  on the Iranian foreign policy with realizing the nuclear agreement. JCPOA , other than being a political agreement, had another feature  which was opening the gets of the Iranian economy to the international markets and vice versa.  After conclusion of JCPOA and subsequently breaking of the hard wall of Iran phobia of the world public opinion that have unprecedentedly brought them with Iran , a kind of competition was formed among the European authorities for traveling to Iran.  In this regard, many authorities and high ranking officials  including the presidents of Russia, Austria, Switzerland, China, Indonesia, Turkey , South Korea, and Azerbaijan and also the Prime Ministers and Ministers of Foreign Affairs of Sweden, India, Germany , France , Japan and etc have travels to Iran , in a way that it is been said that every six days a foreign delegation has come to Iran. Meanwhile, government critics believed that such come and goes fundamentally had no particular result for the economy of Iran.  In the second term, Hassan Rouhani could get the votes of the majority of the Iranians relying on slogans indicating more focus  on the issue of economy . This is while the second term of presidency of Rouhani coincided with winning of Trump who one of his election slogans was tearing up the JCPOA.  Nonetheless, Rougani, even in his last debate, promised to eliminate non-nuclear sanctions against Iran . A promise that its realization seems to be out of mind. However, the cabinet of Hassan Rouhani for the second term was selected and now the demand of people not only is regarding foreign policy but the main public demand is improvement  of the   economic status of the country.  A topic that still can be related to the foreign policy.  It is obvious for all that economy requires to be present in the world equations. Post –JCPOA status could not arrange balanced conditions for foreign investments to come to the country . This time, authorities paid more attention to the issue of economic diplomacy, even more than before.  The ministry of foreign affairs decided  to establish the economic diplomacy deputy in order to strengthen this aspect. Perhaps one of the problems of Iran after JCPOA was inability to have a dialogue in the economic arena . Although conclusion of the contracts after JCPOA between Iran and some companies such as Boeing , Airbus  and or Total is somehow tying the economic interests with political relations as well , however, it should be noted that the Iranian private sector was not able to benefit from the post- JCPOA atmosphere as much as expected.

The Opportunities Brought by JCPOA for Iran

What makes the travels of Zarif during the past for years distinct from before is the companionship of the economic and commercial delegations with the political team of the Ministry of Foreign Affairs in a way that in each course of such travels , economic and commercial activists of the country separately accompany the  Minister of Foreign Affairs of the country in order to attend there and identify economic and commercial opportunities. Basically many of the analysts believe that the eleventh government  , with a kind of smartness  and due to experience of the extensive sanctions against Iran which was the consequence of the critical conditions of the nuclear file that had majority of the international community with it, could have tie political relations to economic relations and cooperation so by this can make the repetition of such conditions to cost much. A case that, however, the oppositions of the government believe it is not observed in the economy of the country. The other point brought up by the oppositions regarding the foreign contracts is the privileges that they believe are consumedly given to the other countries . Although no certain comment can be provided for the authenticity of such claim. The economic growth, on the other hand, requires investment in Iran. The government spokesman Mohammad Bagher Nobakht  have said before that we need 750 thousand billion Tuman of investment per year in order to gain the 8% economic growth.  It is obvious that this amount of investment requires sourcing them   from abroad and beyond the borders of Iran. In issue that reflects the necessity of  economic diplomacy even more than before. Although it should be mentioned that elimination of nuclear sanctions alone could not break the lock on Iran’s economy.  The fundamental problem of Iran’s economy is lack of infrastructures and transparency of the economy. In the meantime, longtime hostility between Iran and the United States , despite of elimination of the sanctions, caused the world creditable banks to refuse working  with the Iranian companies and businessmen. This is an unwritten law that is presented for several times by the economic activists. JCPOA, however, was a solution for the country in terms of important sectors such as sale of oil, gas and conclusion of contracts in this regard.

What is the conclusion of Rouhani’s promises?

Hassan Rouhani recognized development of international relations as one of the important variables in the economy of Iran. An issue that in the opinion of many experts is true, although the economy of Iran needs reforms in its structure. However, it should be pointed out that entrance of foreign investments in the country can be directly related to the issues of inoccupation and employment . Although Rouhani’s competitors also gave strange promises for creating jobs , however, Hassn Rouhani and his vice president Eshagh jahangiri who both came into the presidential campaigns with a common goal, have presented a more logical view on job creation and could gain the trust of the Iranians for taking the power within the 4 years of their second term. Unemployment, however is an issue that with the presence of so many educated people to the job market can be a huge social warning. Production boom and development of business in real sense is tied with good foreign relations. During the time of election, Rouhani has said that we want to take our jobs back. Our tourism market was taken by Turkey, our gas market until the past year was taken by Qatar, Our aviation industry and us being the pole of aviation was taken by UAE and also our commercial and trade paths were taken by them, industrial investment is taken by Turkey, and our oil market was limited by Iraq and Saudi Arabia. All these caused us to give the job opportunities of our youths to other countries within the past 8 years and with political adventures we let the foreign investments to escape from our country and caused for development of our neighbors.  Now, upon implementation of this plan and considering the capacities of JCPOA , we want to take back the jobs that we have lost and gave to the neighbor countries , we want to return the investments that are gone.

Now, however, upon  several months after the new government of Rouhani is settled in , it seems that we are facing other challenges as well.  Trump and his policies concerning JCPOA , which of course faced the reactions of the Europeans , can itself bring doubts to the state of no tension atmosphere. An issue that can again influence the economy of Iran. Although Europe and the United States disagree about JCPOA , however, it seems that they are in agreement regarding defense issues of Iran  and experimenting missiles and are not happy about these things. This issue can entirely cancel the promise made by Hassan Rouhani in order to eliminate all sanctions and of course the main dependant to this issue is the economy of Iran that can be broken down again with tension impulses in the international arena.  The people, however, will remember one thing and that is the promises made by Rouhani to the public for improving the economic status.

Accustomed to Sanctions and  Unprofessionalism of the Traders

Some of the economic experts believe that after JCPOA, the economic diplomacy of the country was not ready to face and deal with the economy of the world and the necessary space is not provided for the private sector and the private sector did not receive necessary training for implementing international contracts. It is certain and small and medium sized companies required necessary trainings in order to conclude their contracts with their foreign counterparts. An issue that is one of the important consequences of the sanctions era. It seems that the private sector requires training for interacting with their counterparts in other countries. As Hassan Rouhani , in one of his speeches, has also pointed out such unprofessionalism  regarding the use of export opportunities . The status that emerged between Russia and Turkey due to the tension between them could have been useful and beneficial for us which we practically did not use. Some of the eye witnesses and economic activists confirm that after JCPOA, private sector could not have strong dealings with foreign companies due to lack of training. Although, the banking problem, as of the major factors for using such opportunities, should not be forgotten yet.

The Economy, JCPOA and the Role of Ministry of Foreign Affairs

 The diplomatic team of the government of Hassan Rouhani , under the leadership of Mohammad Javad Zarif proved that they have so much to tell in the field of foreign policy, however, the success of Zarif and his colleagues in the nuclear negotiations did not have economic signs . The governmental authorities, now, intend to turn the trend of diplomacy toward economy within the next four years. A measure that is late but yet can open a new chapter of the commerce for the country. In any case, the private sector requires governmental supports and of course the Ministry of Foreign Affairs , in order to enter the world trade arena. It is necessary to reform the structure of the Ministry of Foreign Affairs which apparently the governmental authorities have fully understood its necessity. Solutions such as reviving the deputy of economic affairs in the Ministry of Foreign Affairs are one of the reasons that indicate such understanding. The Spokesman of the Ministry of Foreign Affairs Bahram Ghasemi said in this regard: When economic diplomacy concerning the foreign area is discussed, it means that  you should use political tools and foreign political relation tools in order to proceed and advance foreign economic cooperation in a desirable way.

Although other countries have made solid plans in this regard since years ago, however, understanding such necessity can be a solution for Iran. A great portion of foreign policy strategies in other countries are based on trade and somehow policies are orbiting economy. The Ministry of Foreign Affairs, therefore, should be able to stabilize this lost chain in its strategies within the next 4 years. Economy cannot reasonably grow without having communication and relationship with the world.

The Challenge of Domestic and Foreign Extremists

It is for sure that the new government of Hassan Rouhani is facing two political challenges and should fight two extremist political battlefields inside and outside the country. Trump and his fellow senators in the US senate are after an excuse for exiting from JCPOA and imposing sanctions while inside the country some consider JCPOA a historical disgrace and even encourage the policy of Trump. The extremists that during the sanctions encouraged the people to reduce their meals are now asking why people’s tables are short.  Although this dual treatment has a political root, however, it can surely cause problems in the path of Rouhani’s government. In any case, the economy of Iran is dealing with a phenomenon called corruption as well. An issue that cased the ranking of Iran to be a disappointment in the world level  in terms of economic transparency and bureaucratic corruption and in any case, if the twelfth government and of course the state cannot do something about it , then the public trust will be unstable and shaky. An issue , that will be a serious problem for the economic perspective of Iran.

Ambiguity in the Future of JCPOA

Donald Trump brings up the necessity of confirmation of the commitment of Iran to the nuclear agreement every quarter and every time we are facing a new problem in this regard. Trump could not tear up JCPOA even this time , but still counted it as a bad agreement.  Despite that, he took more radical positions than before in this time . Although his European counterparts reacted against it. This politician trader has threatened Iran several times to at least clarify his position toward Iran even clearer than before. Although his opposition to JCPOA was extremely objected by his counterparts in Europe , but still any measure can be imagined from the US side. Hassan Rouhani though believes that even if the US says that it is the worst agreement every day, they still cannot do anything for cancelling it. Despite all these, the game between the Iranian and the American sides should be observed under such circumstances. The economy of Iran, despite of all its infrastructural problems have several potentials as well for growth and booming. Although this is now tied with its foreign policy but it can be forecasted that the European sides do not intend to continue the tensions with Iran and to lose their economic markets. Perhaps we should wait for the days with more interactions , although such interactions will not be complete and full. America is an influencing player in the world. Having Trump as the president of the US , then the case is even harder. Although the international reports indicate that the economy of Iran will grow until 2020, but it should be noted that the perspective of the economy of Iran is more defined by its foreign policy rather than being dependant on economic variables. Therefore, if we assume that Trump , in addition to his fellow republican ( Bush, the junior) , not only calls Iran the axis of Evil, but also thinks about military attack , then troubling and inflammatory days should be assumed for the economy of Iran. Meanwhile, if the non-nuclear sanctions continue, it should be mentioned that the economy of Iran will not face a severe impulse  and such could only slow down the trend of economic growth.  In total, however, as said by many experts , president Trump is proved to be unpredictable and is able to change his decision even in the last moment. Nonetheless, it should be kept in mind that although the relations of Iran and Europe is passing its tranquil days , but Iran needs to reduce tensions with the US in order to be able to succeed and be present in the world trade arena. It cannot be denied that America holds one fourth of the world economy. This country has indirect influences on economic issues of the world such as global trade. The complicated financial system of the US enables them to indirectly influence the financial system of the world. An issue that proved itself during the sanctions  and then after their elimination, emerged  again in banking communications. On the other hand, US Dollar is the dominant currency in the world  and this is a great reason and a great obstacle in the commercial interactions of Iran . regardless of the fact that great technologies of the world are exported from US to the other countries, it should be pointed out that the more the level of tension increases between the two countries, the less hope will be there for a huge and wonderful event to take place in the future of the Iranian economy.   Knowing that, it seems Trump intends to impose more pressure on Iran to make it follow. An issue that has not happened like that within the past four decades and does not seen to  happen in the future.

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