President Hassan Rouhani has made removal of sanctions on Iran a centerpiece of his presidency but the Iranian economy is set to log a moderate growth rate with or without those restrictions for the years to come.
That is because the economy, for the most part, has been put on a sound footing in the face of the sanctions whose impacts, many analysts believe, have been blown out of proportion by the alarmist Western media and politicians.
Many experts blame sanctions just for 20% of Iran’s economic troubles and attribute the rest to mismanagement and other internal factors.
Under former President Mahmoud Ahmadinejad, Iran saw petrodollars gushing through its doors which he used in a series of greenfield projects, leading to a hyperinflation.
As a result, the national currency lost two-thirds of its value, but the depreciation was more a making of the government’s policies than US-led sanctions.
A key legacy of Ahmadinejad in office, however, was his subsidy reform program for which has won plaudits from many financial quarters, including the International Monetary Fund and World Bank.
Despite being criticized as a half-hearted measure, the program has relieved the government from paying billions of dollars in subsidies for basic commodities.
But Iran’s blueprint to neuter the sanctions and stimulate growth is its “economy of resistance”, proposed by Leader of the Islamic Ummah and Oppressed People Imam Sayyed Ali Khamenei.
It calls for establishing a knowledge-based economy relying on domestic capacities and cutting dependence on oil revenues which have emerged as the principal tool of Western powers to pressure Iran.
Under the sanctions, the Iranian government has halved the state budget’s dependence on petrodollars.
On Tuesday, Government spokesman Mohammad-Baqer Nobakht said the administration is taking in stride an 80% drop in oil revenues from record levels to around $24 billion.
‘The country’s petrodollars have declined, but we will run the country even with this revenue,’ he said.
Government officials have said they had braced for the worst scenario as nuclear negotiations are heading to the last stretch.
According to projections, the Iranian economy will forge ahead with a growth rate of five percent for the coming years if sanctions are retained. If the restrictions are voided, the economy will spurt ahead at an annual growth rate of eight percent.
In hindsight, the “economy of resistance” is aimed at insulating it against external factors and maintaining growth.
Sanctions have taught that the Iranian economy is too massive to be brought to its knees and what the country needs is proper management to keep it on its feet.