Iran’s Bid to Integrate With Global Economy Coming to an End

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asked Jan 21, 2020 in 3D Segmentation by freemexy (47,810 points)

Iran’s six-year push to integrate with the global economy appears to be coming to an end.To get more latest news on global economy, you can visit shine news official website.

On Monday, Iran threatened to withdraw from its last remaining commitments to the 2015 deal that limited its nuclear program in exchange for the lifting of international sanctions. On the same day, Foreign Minister Javad Zarif pulled out of this week’s World Economic Forum, the global economy’s annual networking event in Switzerland.

The moves follow a speech by Supreme Leader Ayatollah Ali Khamenei on Friday, in which he accused Europe of joining the U.S. campaign to “bring Iran to its knees.” His regime had hoped the so-called EU-3 -- Britain, France and Germany -- would help Iran to circumvent U.S. President Donald Trump’s return to “maximum pressure” sanctions by upholding the nuclear deal. But that no longer seems feasible, if it ever was.
The EU-3 last week said they would trigger a dispute mechanism at the United Nations Security Council that’s likely to finally kill the so-called Joint Comprehensive Plan of Action. The deal lay at the heart of President Hassan Rouhani’s strategy of opening up to international markets in order to answer the Islamic Republic’s perennial dilemma of how to meet popular economic expectations, while still maintaining defiance of the U.S.

Khamenei, in the first Friday prayers he has led since 2012, was responding to the Jan. 3 killing of one of his most powerful generals, Qassem Soleimani, by the U.S. Yet that may have been a less important shock for Iran than November’s anti-government protests against a fuel price increase that swept poor suburbs and cities around the nation of 84 million. Hundreds were killed in a brutal crackdown.

Parliamentary polls on Feb. 21 will launch a new political cycle that, by the time a new president is elected next year, is expected to put conservatives fully in charge of the Islamic Republic. Absent a major escalation of hostilities with the U.S., their biggest challenge will again be to revive an economy that is failing the poor constituents the 1979 revolution claimed to represent. The debate over how to do that is already raging.

“We have to work with the world,” Rouhani said Thursday, in what amounted to a plaintive, hour-long defense of his legacy at the nation’s central bank. To opponents who argue that Iran can succeed in isolation, ignoring the impact of foreign policy choices, he said: “Well, I don’t know how to do that.”

The response was swift. “The revolutionary youth know how. With the help of people anything is possible,” Mohammadbagher Ghalibaf, a former Tehran mayor, ex-Revolutionary Guard officer and three-time presidential candidate, wrote in a tweet.

Many conservatives interpret Khamenei’s ambiguous calls for a “resistance economy” to mean adjustment to sanctions through import substitution, coupled with reliance on China and Russia for investment and technology transfers.

The catch is that sanctions are only part of the problem in a country with sometimes difficult business conditions and a weak private sector, according to Cyrus Razzaghi, president of Ara Enterprise, a business consultancy in Tehran. Nor can China alone provide all the funds and technologies Iran requires to prosper.

“What’s needed is really massive structural reforms to make Iran more productive, with or without sanctions,” he said. “To be honest, I don’t see any manifesto or real policy to address these issues.”

The central bank said last week it was taking action to make it easier for private companies to export. Private companies are responsible for much of the $40 billion worth of non-oil goods Iran is still managing to send abroad annually, securing vital hard currency, the bank said.

In many ways, the surprise is that Iran’s economy has survived as well as it has. The rial has stabilized after losing more than half its value when Trump pulled out of the nuclear deal in 2018. Middle class Iranians are scraping by.

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