Iran Amidst the Wolves

In saying that “we are ahead of a big trial, a trial of hardships and challenges, simply to provide a prosperous life to our people,” Pezeshkian has quite reasonably prioritized the welfare of Iranian citizens, a universal, non-divisive stance. Contrary to Western mainstream media insistence that an anemic economy helps account for relatively lower voter turnout, the Iranian economy has rebounded over the past few years from a previous period of economic stagnation, in conditions, it should never be forgotten, of continuing merciless Western economic sanctions warfare against Iran.

Here is a 2022 World Bank assessment:

Iran’s economy is characterized by its hydrocarbon, agricultural, and service sectors, as well as a noticeable state presence in the manufacturing and financial services. Iran ranks second in the world for natural gas reserves and fourth for proven crude oil reserves. While relatively diversified for an oil exporting country, economic activity and government revenues still rely on oil revenues and have, therefore, been volatile. A new five-year development plan is under preparation. The previous plan for 2016/17 to 2021/22 comprised three pillars: the development of a resilient economy, progress in science and technology, and the promotion of cultural excellence. Among its priorities were the reform of state-owned enterprises and the financial and banking sectors, and the allocation and management of oil revenues. The plan envisioned annual economic growth of 8%.

External shocks, including sanctions and commodity price volatility, caused a decade-long stagnation that ended in 2019/20. The large contraction in oil exports placed significant pressure on government finances and drove inflation to over 40 %for four consecutive years. Sustained high inflation led to a substantial reduction in households’ purchasing power. At the same time, job creation was insufficient to absorb the large pool of young and educated entrants to the labor market.

Over the last two years, Iran’s economy has started to rebound, supported by a recovery in services post-pandemic, increased oil sector activity, and accommodating policy action. Economic activity has also adjusted to sanctions, including through exchange rate depreciation which helped domestically produced tradable goods to become price competitive internationally. The decline in oil exports has prompted additional processing of crude oil and hydrocarbons that have then been exported as petrochemicals. Under sanctions, trade has pivoted further towards neighboring countries and China, and bilateral currency exchange, barter, and other indirect payment channels are increasingly used to settle international transactions as most assets abroad have become inaccessible due to sanctions. The government expanded cash transfers and subsidies to mitigate the impact of high inflation on welfare, but this also added to fiscal pressures as most interventions were not sufficiently targeted.

Iran faces intensified climate change challenges, including from severe droughts, which are restricting agricultural production at a time when global food prices and food insecurity are on the rise. While higher oil prices, due to a recovery in global demand and the war in Ukraine, have raised oil export revenues, higher prices of other commodities, including food items, have significantly increased the import bill. This increase poses additional strain on government finances as direct food price subsidies stood at 5 %of GDP even before the recent price surge.

In the medium term, GDP growth is expected to be modest if economic sanctions remain in place. Weaker global demand and new competition from Russian discounted oil exports to China are expected to moderate Iran’s oil sector expansion. Domestic demand will also be affected by the negative impact of high inflation on consumption and investment. The current account balance is forecast to remain in surplus over the outlook period, supported by higher oil prices and non-oil exports; a more costly import bill due to higher import prices will nevertheless limit the surplus. The fiscal balance is projected to benefit from the gradual upward trend in oil exports, but the budget deficit is expected to remain above pre-sanctions levels. Inflationary expectations, foreign exchange pressures, and deficit monetization are expected to keep inflation elevated, albeit gradually declining over the outlook period.

Risks to Iran’s economic outlook remain significant. Intensified climate change challenges such as more frequent floods, droughts, and dust storms, as well as energy shortages could significantly impact the economic outlook. These challenges coupled with the recent inflationary pressures could add to pressures on the most vulnerable and pose a potential risk of social tensions, particularly since modest growth is expected to generate limited job opportunities. Other downside risks relate to renewed COVID-19 outbreaks, further deceleration in global demand, and increasing geopolitical tensions if the Joint Comprehensive Plan of Action Vienna talks were to fail. On the upside, the projected growth outlook could be significantly stronger if economic sanctions were to be removed. Higher oil prices could also improve fiscal and external balances further.

Pezeshkian has demonstrated loyalty to the supreme leader Khamenei, seeming to underscore, according to Al jazeera, that the president-elect is seeking to avoid a rift with Iran’s political establishment. He has said he will defer to the supreme leader on matters of foreign policy (and, of course, defense). Yet some analysts consider that Pezeshkian’s win may see the promotion of a “pragmatic” foreign policy, ease tensions over the “now-stalled” negotiations with major world powers to revive a 2015 nuclear deal (read: deliberately wrecked by idiot Trump) and improve prospects for social liberalisation in Iran (well, yes, the women’s issue is indeed hugely important but the West should shut up about other people’s human rights violations and think much, much, more about their own).

Mostafa Khoshcheshm, a Tehran-based analyst and professor at Fars Media Faculty, said he was not expecting strategic changes to Iran’s foreign policy.

The foreign policy file, he explained, “is decided by the entire establishment, mostly at the Supreme National Security Council, where [there are] representatives of the government as well as the armed forces, the Iranian supreme leader and the Parliament.

If Donald Trump comes into office, I don’t really expect any kind of change, any talks between the two sides, or any change in the present course of actions,” Khoshcheshm told Al Jazeera.

Al Jazeera concludes that in the end, Pezeshkian will be in charge of applying state policy outlined by Khamenei, who wields ultimate authority in the country.

Al Jazeera describes Pezeshkian as a “centrist” while Western mainstream media describe him as a “reformist” and make much of his record as one who has advocated for improved relations with the USA. I am not inclined to make much of this and, in any case, am amazed that any Iranian who cares about the history, core values, dignity and independence of Iran can talk in good conscience about improving relations with a country that was culpable of overthrowing, in favor of Anglo-Amerian oil interests in the exploitation of Iran’s oil wealth, Iran’s democracy in 1953 in favor of a cruel autocracy, that has been implacably opposed to the Islamic revolution of 1971, has conspired with Israel in the fabrication of foolish narratives of Iran as a “nuclear threat” when, even now, it has no nuclear weapons and its major regional opponent (now that Iran has established good relations with Saudi Arabia) secretely maintains an arsenal of hundreds of nuclear warheads - yes, we are talking of course about the genocidal regime of Israel, - that has reneged on an international agreement to lift economic sanctions in return for Iranian concessions on the accumulation of enriched uranium for its peaceful nuclear energy program, has assassinated key Iranian army commanders, has an ally, Israel, that has murdered at least half a dozen Iranian scientists and that is now engaged in a genocide of fellow Islamiats (predominantly Sunni, in contrast to Iran’s prevailing Shia religious commitment) among many other indications of extreme Western hostility to a proud nation that has refused to succumb to Washington imperial power and its global financial and neocon authoritarianism.

My expectation is that Pezeshkian will not confront the leadership of Khamenei, and that, for the benefit of Iran as a whole, he will continue to do his best to pursue Iranian’s trajectory in the SCO and the BRICS. I anticipate that he will do nothing to upset the good relations between Iran and Russia, and that the two countries will, after all, conclude a mutual security arrangement.

I note that Western mainstream media are quiet about the indications of a robust electoral process in Iran, or express surprise that someone they label as a “reformist,” should have won the election. Rather, they prefer to emphasize the authority of the Supreme Leader and the fact that the roll of candidates for the presidency must be approved by a body of senior clerics. All this might seem to dampen Iranian claims to “democracy,” but, surely, no more than the way in which access to the candidate list in the USA requries the financial backing of billionaire sponsors and very great wealth, or the multiple ways in which the US congressional-military-industrial establishment (MICIMATT if you prefer the full version) contains the spectrum of permissible speech to an extremely narrow waveband that is dominated by distracting identity politics.

The British election has brought to power a piece of wood in the form of Keith Starmer who, ignoring completely the message of anti-Ukraine war Nigel Farage’s stunning rise to influence, decides to talk first (or almost first) among foreign leaders to none other than M16-stooge Zelenskiy and promise him a hundred years of solidarity. And what use is that going to be to anybody after a nuclear armageddon that the British foreign policy establishment is doing its best to provoke, while ignoring the social, cultural and economic decline of the UK?