The IMF blames US sanctions for the downtick in the Iranian economy, but there are deeper issues at play that relate directly to the Iranian Regime and its values. The Iranian military, specifically the Islamic Revolutionary Guard Corps (IRGC), has a worrying amount of control over the economy and that is a major factor in the lack of growth.
The IRGC isn’t good with things like managing money or helping consumers, preferring to threaten competitors, which is why they have failed the economy. The best example of this is probably when the Regime awarded the license for operating the main terminal of Tehran’s airport to a Swiss-Turkish consortium and the IRGC closed the airport in protest, claiming it was an issue of national security.
The money generated by the Iranian economy has never been distributed equally among government services or the people of Iran, instead of going to Iran’s legions of foreign militias and this has indeed been one of the reasons for US sanctions in the first place.
There are no good reasons to have the military involved in the economy – they’re trained for combat, not commerce – which is why most countries don’t do it, so why does Iran?
Well, obviously the military will always support itself gaining more power, especially if this can diminish its financial dependence on the state and reduce civilian oversight. This effectively means the IRGC can operate as a state within a state and gain political control. However, the Iranian government may well allow this expansion because it feels threatened by the people of Iran and believe that continue the mullahs tenuous grip on power, the military needs more power and money.
There may be some debate on the best growth model for developing economies, but all economists believe the military should stay away from the economy. Until Iran heeds this lesson, it will continue to suffer. However, as mentioned above, the Iranian Regime is scared of losing power and so will not restrict the IRGC’s control of the economy. Thus, the only way to improve the Iranian economy is for the Iranian Regime to be removed from power by the people and their organised resistance.