Iran’s economic outlook is grim
America last week announced that two aircraft carrier strike groups had been deployed in the Arabian Sea “to ensure freedom of navigation and the free flow of commerce,” while providing the commander with “significant striking power” when required. This is a major increase in US firepower directed at Iran.
Against this backdrop, Iranian President Hassan Rouhani last Friday — at the commencement of Nowruz, the Iranian New Year — directly addressed the American people. In this long fight, he said, “we all belong to one front.” Despite this, he noted that the US government had imposed “more than 100 collective punishment measures against the Iranian people.” He urged his audience to “speak loudly” to correct this “dark chapter in American history.” Later, Rouhani referred to the US’ offer of humanitarian assistance as “the biggest lie in history.”
With more than 27,000 people confirmed infected by the virus and 2,000 dead, Iran is among the worst-affected countries globally. Observers believe that the government was slow in publicizing the virus attack in its early stages and did not take adequate precautionary measures. This might have aggravated the spread and the death toll. From mid-February, however, the country has been tackling the scourge on a war footing, with lockdowns of holy shrines, restrictions on movement, and the nationwide mobilization of emergency medical services. Iran’s neighbors have put restrictions on the cross-border movement of goods and people, while the UAE has provided urgently required medical supplies.
The pandemic has aggravated the damage to the Iranian economy caused by US sanctions. And the government has blamed the sanctions for its limited medical supplies. Foreign Minister Mohammed Javad Zarif has asked the UN secretarygeneral to end the US sanctions, which are “obstacles to the sale of medicines, medical supplies and humanitarian goods.”
Iranian commentator Bijan Khajehpour has said that the pandemic could cause a contraction of Iran’s gross domestic product by about 3 percent. Hence, Iran, for the first time since its revolution of 1979, has asked the International Monetary Fund for an emergency loan.
In the face of challenges from sanctions, Iran has displayed both resilience and innovation. Its initiatives have included: Greater domestic production, increased non-oil exports, and the boosting of regional markets, including Iraq, Turkey and Afghanistan. However, with the US policy approach to Iran being limited to initiating fresh sanctions in the hope of pressurizing Tehran to return to negotiations, the outlook for Iran remains grim.
Its economy is likely to remain under severe pressure, while the regional tit-for-tat skirmishes could, at some point, escalate into a wider conflict that no one wants. What the Middle East desperately needs is a shift from “maximum pressure” to “maximum understanding and accommodation” in order to realize a comprehensive regional peace agreement. That would be the best outcome of the coronavirus pandemic.
Talmiz Ahmad is an author and former Indian ambassador to Saudi Arabia, Oman and the UAE.
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