MESOP NEWS TODAYS COMMENTARY IRAN / THE OUTLOOK : STRATFOR ANALYSIS
Jan 4, 2018 | When the Protests Die Down, Iran’s Economic Problems Will Live On
- Some of the grievances behind the recent wave of protests in Iran, such as disappointment with the nuclear deal and low oil prices, will remain beyond the government’s power to change.
- Unstable food prices, decreasing purchasing power and high rates of unemployment and underemployment will continue to pose problems for everyday citizens across the country.
- The sensitive reform measures necessary to overhaul subsidy systems, labor laws and business contracts, which are as much political as they are economic, will probably set off more unrest in the future.
After a week of public protests, the dust is starting to settle in Iran. Without clear leadership or a specific political movement for protesters to gather around, the intensity of the demonstrations that popped up around the country has begun to dissipate. But that doesn’t mean the government in Tehran can breathe easy. The economic grievances that sparked the initial unrest are still alive and well among the Iranian public, and many of them are beyond the power of the current administration to fix. Furthermore, the work required to address the issues that are within the government’s control risks upsetting the delicate balance of Iranian politics.
Confronting the Things Tehran Cannot Change
One driver of the protests that may well inspire future episodes of unrest is the disappointment many Iranians feel about the Joint Comprehensive Plan of Action (JCPOA). When the deal over Iran’s nuclear development entered effect in January 2016, hopes were high among the country’s citizens that it would improve their economic circumstances. But while the JCPOA has helped some macroeconomic indicators, such as gross domestic product, its effects have yet to reach Iran’s lower, working and middle classes. Part of the problem is that Islamic republic is still under a complicated sanctions regime unrelated to the nuclear deal. U.S. restrictions on trade in dollars, for example, have made it difficult for Iranian banks to secure investments and do business with large financial institutions abroad. (The conditions of the JCPOA have, however, enabled Iranian banks to work with small and medium-sized banks in Asia, Europe and the Middle East and allowed the country’s banking system back into the international SWIFT network.) Given the current U.S. administration’s sharp opposition to the Iranian government, the sanctions are more likely to increase over the next year than they are to abate.