Who benefits from Iran's economic crisis?

Who benefits from Iran's economic crisis?

During his visit to Tehran, German Foreign Minister Heiko Maas felt the wrath of Iranian government over the lack of success in saving the nuclear agreement. As German publication Der Tagesspiegel writes in an article "Auch im Iran wollen nicht alle ein Ende der Krise", without the support for Iranian trade, economic crisis in Iran and international isolation of the country are getting worse. And this is a very beneficial scenario for some powerful forces in the Islamic Republic.

If Europe won't be able to take concrete steps to protect trade with Iran from US sanctions in the near future, then the agreement will cease to exist, Javad Zarif said recently. At one time, Zarif and President Hassan Rouhani promised Iranians that the 2015 nuclear agreement would lead to increased trade turnoverwith the West and, consequently, an increase of the welfare level in the country. However, the US withdrawal from this treaty and introduction of new US sanctions last year crushed these hopes.

Rouhani's government is threatening to end the nuclear deal in early July if the current situation doesn't change. Maas, who wants to keep this agreement, along with his European colleagues, spoke in defense of the Instex payment instrument, designed to protect trade between Europe and Iran. Instex will begin to operate soon, but Maas has already admitted that he cannot promise "miracles".

Meanwhile, hardliners in the Iranian parliament are demanding to immediately withdraw from the nuclear agreement. Rouhani government urgently needs success to convince critics inside the country that their strategy is the right one, but even revolutionary leader, Ayatollah Ali Khamenei, is moving further away from supporting nuclear deal. Khamenei recently stated that he had warned Rouhani and Zarif several times that situation was developing in the wrong direction. Four years ago, he gave green light to the deal, but at the same time, he always made sure not to position himself as its active supporter. Today, Khamenei simply distanced himself from the agreement.

Both Iran’s supreme leader and other political players in Tehran don't trust not only the West, but also President Rouhani, who has demanded more power in recent weeks to resolve the country's economic problems. Opponents of the president from competing centers of power fear that if president's powers are expanded, their own influence will diminish. The fact that Maas and Japanese Prime Minister Shinzo Abe plan to mediate Iran’s conflict with the United States gives certain points to the Rouhani government, but Europeans call for new negotiations on the Iranian missile program, which Israel, Saudi Arabia and other states in the region perceive as a threat, and Tehran will never agree on this.

Economic interests also play a certain role for domestic opposition to the nuclear deal. Since Iran has had to cope with trade restrictions imposed by the United States and other countries for decades, private entrepreneurs and government institutions have learned to take advantage of the import and export deficit. Normalization of economic relations with foreign countries, which Rouhani wants to achieve, would hurt these forces.

The volume of Iranian shadow economy is estimated at about 30 billion euros, according to Iranian newspaper "Financial Tribune". Central role in it is played by the Islamic Revolutionary Guard Corps, which is under direct control of Khamenei. It's a really important economic player. Former Iranian President Mahmoud Ahmadinejad once called the IRGC "our brother smugglers."

Enterprises that are under control of the IRGC and are building their business model in the framework of sanctions consider Iran’s open Iranian economy a threat to their profits, Iranian expert from Israeli JISS think tank Menahem Merhavi said. These circles are close to the revolutionary leader Khamenei. “If Khamenei gives them green light, those who benefit from this crisis may even try to overthrow President Rouhani,” Merhavi warns.

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