Within Iran, the #economy is an issue that is front and center, especially in light of the recent #protests that opened 2018. Iran’s President Hassan Rouhani has been pushing an economic policy that includes foreign investment and the backing of the 2015 nuclear agreement.
The nuclear agreement lifted multiple sanctions and was seen as a way to boost the Iranian #economy. However, since the agreement went into effect in January 2016, the Iranian economy has not seen a significant resurgence. Unemployment remains high, particularly among young people. Additionally, environmental issues have driven more of the Iranian people into the cities, where jobs are scarce, and resources are being stretched to the limit.
While the oil part of the economy has begun to resurge, the non-oil part of the economy has continued to lag. The result has been a growing discontent, especially in light of increasing inflation and the recent release of the Iranian budget, which showed that subsidies to the poor were being cut, while budgets were being increased for religious organizations and other aspects of the regime’s government.
Rouhani’s budgets in recent years have focused on austerity, which seems to be felt by the average Iranian, while the corruption throughout the #regime continues to benefit financially. The struggling economy has made these divisions even more apparent, and with the U.S. government being active in shining a light on the regime’s activities in the Middle East, the result has been limited international investment in Iran, as these businesses weigh their relationship with the U.S. against their relationship with the regime and choose to avoid doing business with the regime on a large scale.
Mehrdad Emadi, an Iranian economist, noted that much of the economy’s poor performance on a deep-rooted structural issue, the influence of paramilitary bodies, such as the Islamic Revolutionary Guard Corps (IRGC) and various religious business institutions.
Those interests are unlikely to pay taxes and at the same time, are able to stifle the competition from smaller private companies due to their connections with the regime itself. While Rouhani is trying to demand more transparency in the business world, there are systematic changes that need to be made in order to see real change in the Iranian economy within the long-term.
“My guess is that nothing significant will change. The government will try to be open with people, to propose initiatives, but there are structural problems – diversification, the banking problem and relations with the rest of world, especially Trump,” said Emadi.
The IRGC has close ties to the regime but is an arm of enforcement for the Supreme Leader. Therefore, it seemed to catch the international community by surprise when Khamenei ordered the IRGC to loosen its hold on the economy. The question for many in the leadership of Iran and the international community is whether the IRGC will comply with the order or if they will break away from the Supreme Leader in this regard.
The IRGC has operated since 1979 and works in parallel with the nation’s armed forces. They have been used as an enforcement of the regime’s ideals throughout Iran, but also throughout the region, as they have been active in #Iraq, #Syria, and #Lebanon. There are also signs that the IRGC has been active in a subtler way in other countries within the region.
However, following this order could be difficult for the regime to enforce, as no one is exactly sure what the exact scope of the #IRGC’s business holdings are. Many in Iran use shell companies to hide the true ownership of various companies, thus giving the appearance that the economy is more privatized than is really the case.
It is unclear how the privatization of the IRGC holdings would work, but there are some who see this as a sign that the regime is trying to keep control by giving some feeling they are opening to the Iranian people.