October 18, 2016
Iran’s Sluggish Economy Post-JCPOA
By Mehrnaz Samimi
“The real rate of unemployment reaches 80% in some Iranian cities,” was the headline, a quote from the chief of an anti-narcotics commission working for a government body known as the Expediency Council.
U.S. officials assert that they have done everything required by the Joint Comprehensive Plan of Action (JCPOA) to implement sanctions relief in return for Iranian curbs on the nuclear program.
But despite the lifting of so-called secondary sanctions that inhibited foreign investment in the Iranian economy and the recovery of Iranian oil exports to pre-sanctions levels, most Iranians are not feeling any benefit.
With a few exceptions, such as the sale of U.S. civilian airliners, Iranians continue to face restrictions on direct dealings with the United States. It is still impossible for Iranians to wire money to relatives in the United States or for Iranian-Americans to send funds directly to Iran.
When the United States compensated Iran for weapons purchased by the Shah’s government but never delivered, it had to send millions of dollars worth of euros and other currencies to Iran in cash.
According to the International Monetary Fund, Iran’s overall economy will grow this year by more than 4 percent. But small businessmen contacted by this analyst complained that they are seeing little if any increase in their sales.
Arman, whose father has owned a business in Tehran’s Grand Bazaar for close to fifty years, says he can barely pay his store’s rent and other essential expenses. He imports and sells items of everyday use to people and also supplies the construction sector. Over the past several months, he says, “It seems like people are even hesitating to buy new water taps or toilet flushers. They hang on to what they have for as long as they possibly could, hoping [replacements] would somehow miraculously become cheaper.”
Tehranis who are seeking to sell property are resisting lowering prices and buyers hopeful that prices will go down are waiting, too. New construction has stagnated and many projects are on hold or moving forward very slowly. Iranian production and manufacturing sectors are also sluggish.
Car dealerships and factories face the same obstacles. While inflation has been reduced to single digits, it is still around 8 percent. Consumers are postponing purchases in hopes of finding lower prices. Yet somehow, some cars manufactured inside Iran have become more expensive, despite shortages in supplies and sluggish demand.
Most ordinary Iranians were extremely excited and immensely hopeful about the positive impact they believed the JCPOA would have. Yet those expectations have not been fulfilled.
Some say implementation of JCPOA has paved the way for European companies to start investing in Iran’s economy. Others, including a group of economic experts, believe people were not well-informed on what to expect post-JCPOA and misperceived it to mark the end of all of Iran’s economic hardships. This group has requested that the Iranian media paint a realistic picture of the country’s economic situation in which growth in some sectors could be painfully slow for a long time. They add that the JCPOA isn’t going to solve the economy’s biggest problems, especially unemployment.
Iranian conservatives, both experts and media figures, keep insisting how bad the deal has been for Iran, and how nothing has changed for the better. Ali Khamenei, Iran’s Supreme Leader, mentioned that the deal showed that Iran cannot trust the United States and that he had kept warning of this during the nuclear negotiations but “some” people refused to listen.
Many economists believe that Iran’s hardships, including unemployment and inflation, were not solely caused by the sanctions, but are rooted in government mismanagement. Some experts say that Iran’s economy remains gravely ill and in dire need of proper policy-making post-JCPOA.
Those who are more optimistic say far more time and patience is needed to see real change for the better. Pessimists believe the current situation will be as good as it gets.
This is a moment for quoting the great Hafez, one of Iran’s most precious poets, who writes [translated by this writer],
“They say through patience, stones turn to jewels
They do indeed, albeit with extreme suffering”
Mehrnaz Samimi is a journalist and simultaneous interpreter based in Washington, DC. On Twitter: @MehrnazSamimi