The Mullahs are back in business.
According to the latest statistics, Iran’s economy is being stabilized, with oil exports increasing by approximately 30 percent. This economic recovery has emboldened and empowered the ruling clerics in the Islamic republic who are fighting several proxy wars in the Middle East by funding and arming Hamas and sending troops to Iraq to ensure the power of the Shiite coalition of Prime Minister Nori Al Maleki and by supporting the Assad regime financially, politically, militarily, and through intelligence.
This is mainly due to the Obama administration’s push to strike any kind of flimsy nuclear deal with the Islamic Republic to avoid taking serious actions. It is also due to President Obama’s efforts to remove economic sanctions on the Islamic Republic.
As the ruling clerics regain their economy, they will also be more empowered to reach the nuclear break out capacity, obtain nuclear weapons, and defy the West.
A year has passed since President Hassan Rouhani has assumed office. He received the blessings of Supreme Leader Ayatollah Ali Khamenei, and was elected predominantly to recover Iran’s economy, regain Iran’s currency (Rial) value, and get a flimsy nuclear deal without giving concessions, which will allow the Islamic Republic to continue enriching uranium and spinning its centrifuges.
The question is: how have the Obama administration’s foreign policies towards the Islamic Republic impacted Iran’s economy after a year? Has Iran’s economy, which had been deteriorating since the Iraq-Iran war due to domestic mismanagement and international economic sanctions, shifted its path?
According to reports, the ruling clerics in the Islamic Republic have witnessed the addition of billions of dollars to their revenues. According to the latest survey by the International Monetary Fund, “Iran has taken important steps to lower inflation… The Islamic Republic of Iran has made progress toward stabilizing its economy in recent months…”
In addition, according to Bloomberg Businessweek and the Iran Project, Masood Ahmed, director of the IMF’s Middle East and Central Asia department, pointed out to reporters in Tehran on Tuesday that “The process of stabilization has taken hold and we do see the results already in a dramatic improvement in inflation… [The] inflation rate has eased and currency rate has been stable and such improvements are the results of measures taken by the Iranian government…”
Several crucial factors play a role in this positive and promising economic recovery. First of all, thanks to the Obama administration’s altering of the Islamic Republic’s outlook in the international arena, as well as the progress in nuclear talks between the Islamic Republic and P5+1 (the United States, Russia, China, United Kingdom, and France, plus Germany), Iran has received billions of dollars, unfrozen its assets, removed the economic sanctions on some of its crucial industries including gold, precious metals, Iran's auto industry, Iran's petrochemical exports, and increased its oil exports particularly to Asia.
The aforementioned measures added billions of dollars to the Islamic Republic’s revenue. Secondly, the new administration in the Islamic Republic has attempted to lure mostly Asian (Chinese, Indian, etc.) investors and reform its contractual as well as economic policies in this regard.
For example, Iran’s oil exports have increased by approximately 25 percent in the first six months of 2014. The top importers of Iran’s oil are China and India. China alone has increased its oil import from Iran by fifty percent, India by nineteen percent, and Japan by 48.6 percent and South Korea’s import in the last year increased by seven percent thanks to the P5+1’s diplomatic headways with the Islamic Republic and the loosening of economic sanctions.
According to the Fars News and International Monetary Fund, Iran’s economy and GDP will stop contracting and will grow by approximately one to two percent in 2014, which will be a crucial factor in stabilizing Iran’s economy. The year before, Iran’s economy contracted by 1.7 percent. In 2015, the IMF report predicts that the Islamic Republic’s economy and GDP will increase by 2.3 percent.
On the other hand, according to IMF’s report, the inflation in the Islamic Republic has significantly declined by 29 percent "The exchange rate has appreciated markedly in the bureau/parallel market. The CBI has kept a lid on base money growth thanks to tighter credit to the banking system and some fiscal consolidation, and inflation has declined to about 29 percent in January 2014."
The Rial has also been strengthened. This also lead to a boost in the confidence of the Iranian regime, Iran’s Revolutionary Guard Cops (which dominates the economy), and the elite Quds forces (which fights in foreign countries).
Without doubt, President Obama has helped the ruling clerics in the Islamic Republic to make a considerable amount of progress in the last year in stabilizing the domestic economy, strengthening the Rial, reducing the inflation, filling the gap in the revenues and government’s budget, and turning the negative growth and contraction of its economy to a positive path.
As the nuclear talks project, a final flimsy nuclear deal is on the way. This will ensure the further strengthening of the power of the ruling cleric.
Most of this money goes to the regime’s revenues to achieve its ideological, geopolitical and regional hegemonic ambitions. Ordinary Iranian people have not yet received any of these benefits. For example, the unemployment rate is still in the double digits. According to the Statistical Center of Iran, the unemployment rate hit 10.4 percent. In addition, in Spring 2014, 700,000 less workers have been employed in comparison to the previous year, and in urban areas, the consumption of households declined by 5 percent, while in villages it went down by 12 percent.
In addition, the domestic crack down has increased as the regime becomes more powerful economically. As the regime and ruling clerics economic empowerment continue -- thanks to the Obama administration’s efforts -- the regime will ensure the reelection of the President Rouhani and achieve its hegemonic regional ambitions and Islamists ideological objectives more assertively.
Freedom Center pamphlets now available on Kindle: Click here.