Chris Van Es

Iran’s Failing “Mullahnomics”

As the stand-off between Iran’s government and opposition continues, one factor that may determine the outcome, but which is rarely discussed, is the rickety state of the Iranian economy. In particular, the mullahs' direct control of most production and trade deals poses a serious obstacle to foreign investment and external economic ties.

ISTANBUL – As the stand-off between Iran’s government and opposition continues, one factor that may determine the outcome, but which is rarely discussed, is the rickety state of the Iranian economy. Will its sclerotic performance ultimately turn out to be what tips the balance?

Iran’s economy has struggled ever since the Islamic Revolution, partly because of the economic embargo imposed by the United States three decades ago. Today, with Iran starved of technology and spare parts for existing equipment, OPEC’s second-largest oil producer in 2006 has become a net importer of refined petroleum products. Indeed, conditions in Iran’s oil industry had so deteriorated in 2007 that gasoline rationing was introduced, opening the way to a thriving black market.

Such shortages, no surprise, have stoked inflation. In November 2009, the Iranian Central Bank (Bank Markazi) reported a 22% annual rise in the price level. To spur investment, new measures have been undertaken to allow foreign banks to enter the Iranian financial system. Many have applied, but no license has yet been granted.

To continue reading, please log in or enter your email address.

Registration is quick and easy and requires only your email address. If you already have an account with us, please log in. Or subscribe now for unlimited access.

required

Log in

http://prosyn.org/bC2T7LM;
  1. China corruption Isaac Lawrence/Getty Images

    The Next Battle in China’s War on Corruption

    • Chinese President Xi Jinping knows well the threat that corruption poses to the authority of the Communist Party of China and the state it controls. 
    • But moving beyond Xi's anti-corruption purge to build robust and lasting anti-graft institutions will not be easy, owing to enduring opportunities for bureaucratic capture.
  2. Italy unemployed demonstration SalvatoreEsposito/Barcroftimages / Barcroft Media via Getty Images

    Putting Europe’s Long-Term Unemployed Back to Work

    Across the European Union, millions of people who are willing and able to work have been unemployed for a year or longer, at great cost to social cohesion and political stability. If the EU is serious about stopping the rise of populism, it will need to do more to ensure that labor markets are working for everyone.

  3. Latin America market Federico Parra/Getty Images

    A Belt and Road for the Americas?

    In a time of global uncertainty, a vision of “made in the Americas” prosperity provides a unifying agenda for the continent. If implemented, the US could reassert its historical leadership among a group of countries that share its fundamental values, as well as an interest in inclusive economic growth and rising living standards.

  4. Startup office Mladlen Antonov/Getty Images

    How Best to Promote Research and Development

    Clearly, there is something appealing about a start-up-based innovation strategy: it feels democratic, accessible, and so California. But it is definitely not the only way to boost research and development, or even the main way, and it is certainly not the way most major innovations in the US came about during the twentieth century.

  5. Trump Trade speech Bill Pugliano/Getty Images .

    Preparing for the Trump Trade Wars

    In the first 11 months of his presidency, Donald Trump has failed to back up his words – or tweets – with action on a variety of fronts. But the rest of the world's governments, and particularly those in Asia and Europe, would be mistaken to assume that he won't follow through on his promised "America First" trade agenda.