All in Economy

India’s Iran Port Plans Languish Despite US Waiver

◢ Trump may have exempted Iran’s Chabahar port from sanctions, but India has struggled to realize its ambitions for the major infrastructure project. Recent government data confirms that no Indian investment has been made in the port in two years. As one Indian official involved with the project since its origins put it, “This was not what we hoped to achieve. Chabahar is only about photo-ops now, not substance.”

Iran Delays Currency Reform Demanded by Private Sector

◢ Despite sharp criticism from the private sector, the Rouhani administration has delayed a key reform to Iran’s currency policy, frustrating the country’s beleaguered business leaders. In late June, government spokesman Ali Rabiei stated definitively that the administration has no plans to eliminate the subsidized foreign exchange rate made available to importers of essential goods.

Iran’s Currency Begins to Shrug Off Trump’s ‘Battle Rial’

◢ Over the last 18 months, the Iranian rial has lost nearly 70 percent of its value, hammered by the Trump administration’s decision to reimpose secondary sanctions on Iran in violation of the JCPOA. But new interventions by the Central Bank of Iran appear to have helped stabilize the currency, leading some commentators to proclaim that the rial is no longer vulnerable to Trump’s maximum pressure campaign.

Iran Launches Ambitious Housing Program to Boost Sanctions-Hit Economy

◢ To help alleviate the strain of rising house prices, the Rouhani administration announced earlier this month that it would begin implementation of its long-awaited social housing construction campaign intended to increase the availability of affordable homes for low-income families. The National Action Plan for Production and Supply of Housing aims to construct 400,000 small and medium-size apartments.

Iran’s Supreme Leader Emphasizes Practical—Not Political—Economic Aims

◢ During a meeting with the Islamic Republic's political elite, Supreme Leader Ayatollah Ali Khamenei reiterated calls for a “resistance economy,” but also placed new emphasis on the “increasing the ease of doing business.” The specificity of some of Khamenei’s advice and observations about Iran’s economy suggests a greater appreciation for the practical importance of economic reforms that go beyond well-worn political slogans.

Iran’s Resistance Economy Is Kicking In

◢ The appointment of a new CEO at Iran Air exemplifies Iran’s renewed reliance on what its Supreme Leader, Ayatollah Ali Khamenei, has called a “resistance economy.” In order to overcome the restrictions imposed by sanctions, Iran will turn increasingly to a cadre of “resistance managers,” elevating individuals and empowering networks with unique capacities to keep Iran’s trade flowing under duress.

Iranians Forced to Forgo Meat Staples as Prices Soar

◢ Working class Iranians could look forward to a hearty meal of meat stew or kabob at least once a week. But with meat prices soaring to all-time highs, Iranians are having to cut back on their consumption in yet another example of falling living standards as Iran’s economy falters under the pressure of sanctions and mismanagement.

Devastating Floods Further Strain Iran's Creaking Economy

◢ Iran’s economy was already creaking as two weeks of flooding devastated communities across the country, killing 76 people and damaging critical infrastructure and industries. Hundreds of thousands of Iranians have been left to pick up the pieces at a time when economic pressures may mean that their government and fellow countrymen will struggle to provide adequate relief.

With Focus on Economic Relations, Iran-Iraq Ties Move Into the 'Daylight'

◢ Expectations were high when Iranian president Hassan Rouhani visited neighboring Iraq last month. During the trip, his first as president, Rouhani signed multiple trade deals with Iraq, where the return of peace and stability has renewed the government’s focus on economic development. Iran’s reinvigorated diplomacy towards Iraq reflects a new diplomatic and economic strategy towards its onetime foe.

Why China Isn’t Standing By Iran

◢ Last week, Iran’s economic minister was in Beijing for talks on bilateral trade and investment. An official readout of the discussions from China’s commerce ministry describes China and Iran as “comprehensive strategic partners.” Unfortunately for Iran, the data tells a different story from the official rhetoric.

Iran's Government Falling into a Debt Trap of Its Own Making

◢ President Rouhani’s budget proposal for the upcoming Iranian year will see the government run a deficit amounting to about 10 percent of GDP or 60 percent of the state’s general budget, excluding oil revenues and withdrawals from the National Development Fund. Rather than increase tax collection to ease budget gaps, the Rouhani administration plans to tap Iran’s nascent debt markets to cover its public spending requirements.

Iran Budget Under Scrutiny As Oil Revenues Fall

◢ Next week, President Hassan Rouhani will submit a budget proposal for the forthcoming Persian year (covering March 2019-2020). Currently, the Rouhani administration has few options as it seeks to avoid a budget deficit. Yet the political tradeoffs required when devising a budget under sanctions may prove more difficult to manage than the economic challenges.

Bankless Task: Can Europe Stay Connected to Iran?

◢ With US sanctions on Iran’s banking sector due to come into effect soon, European countries are now considering measures that would facilitate trade transactions with Iran through a new legal and institutional structure. European governments have been reviewing this legal entity, known as a Special Purpose Vehicle (SPV), for months. The timing of this public announcement suggests that they have a degree of confidence that the SPV can become operational, and that Europe can use the model to showcase its ability to deliver on its commitments.

Unintimidated, Iranian Lawmakers Pass Counter-Terror Financing Bill

◢ Over the last six months, the public debate in Iran around FATF-related reforms has reached a surreal crescendo. Seldom do countries experience such intensive political debates over measures as technical and obtuse as financial regulations. But 143 lawmakers voted bravely to pass the final of four bills required by the FATF action plan, in a landmark vote that may increases chances that Iran maintains ties with international financial institutions in the face of returning sanctions.

Iran's Currency Crisis Is Decades in the Making

◢ The experience of countries such as China show that currency devaluation can be managed and even turned beneficial for the economy by enabling the growth of exports. But in Iran, the devaluation of the rial has never been proactively managed, and subsequent administrations have only sought to respond to repeated currency crises, about once each decade. As Iran faces another such episode, it remains to be seen whether a real monetary policy might finally emerge.