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Iran’s Economy

For quite some time the Iranian people have had to endure major hardships resulting from an ailing Iranian economy, internal political bickering and most importantly harsh international sanctions applied by the US and its allies. However, a new sense of hope and optimism was engendered by the election of Rouhani to president in June 2013 and the promise that a new era of international cooperation and with it economic prosperity. Any progress, nevertheless, is dependent on how well Rouhani is able to negotiate the tricky machinations of the Iranian political system in which some factions would have much to lose from his success..

Iran is in a good position to revive its economic strength. The population is young, well-educated and hungry for success. The country possesses vital energy resources, a promising technology sector and a vibrant and growing mercantilist tradition. Moreover, Iran has developed into a geo-politically important player in the region. This makes Iran attractive for foreign investment, especially if Iran invests prudently in education, health care, infrastructure and technology to make the most of growing middle class optimism and initiative.

His strongest argument, however, in his efforts to sway the ultra-conservatives within the government towards his policy of mild openness and liberalization is that even the regime, and the regimes supporters, would benefit from economic growth. An Iranian government at the head of a healthy economy is better placed to issue contracts to non-government and government agencies. For example, the government has given the IRGC billions of dollars in government contracts. This is an astute move designed to pacify the IRGC, an organization that has traditionally sought to crush any moves towards reform as they might weaken its power.

Despite these tentative steps towards a more liberal political and economic system within Iran the balance of power is not about to go through sudden radical change. Reactionary forces aligned with Supreme Leader Ayatollah Ali Khamenei, much of the security establishment, and the clergy have much to gain from maintaining a stranglehold on power. By shutting down Iran’s nuclear ambitions President Rouhani was able to gain a first tentative success but there will be more struggles for him on the road ahead.

The conservative establishment in Iran cannot separate economic and non-economic issues and is bound to fear that a loosening of its grip on economic affairs will automatically mean a loss of their political hold on the country. In particular, they fear there will be renewed and powerful demands for political reform to permit freedom of expression and speech, more cultural openness, social justice and human rights. Perhaps most critical of all, they fear that the West might be able to exert more and more influence in Iran’s internal affairs. President Rouhani understands that perfectly and is seeking to act as a mediator between Conservative interests and the need to tap into the potential of the Iranian people by allowing them some measure of self-determination. He may not and does not want to rock the entire boat even so.

The nuclear agreement has provided Rouhani with popularity among the people and an opportunity to steer Iran towards a more promising future. He will need great fortitude when facing future trials and challenges.

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Dr. Fariborz Saremi is an Iranian strategic analyst based in Hamburg/Germany.Dr.Saremi is a regular contributor for World Tribun.com,Freepressers.com and Defense & Foreign Affairs. At times he has been a commentator for the German TV, ARD/NDR.

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