Referring to Iran’s “economic nightmare,” the National Interest says that falling oil prices are contributing to a series of weak economic indicators that also have some of their roots in disappointment over the lack of progress that Iranian intransigence has created in the nuclear talks. Multiple reports last week cited this disappointment as key factor in the eight percent fall in the Iranian stock market – and a larger factor than even oil prices.
This is helping to preserve a situation in which Iranian industrial activity is below capacity, various business and economic agreements are being kept on hold, and unemployment remains high while average Iranians feel increased strains on an already meager standard of living.
Compromise in the nuclear talks might help to alleviate some of this pain by increasing investor confidence and leading Iran in the direction of major sanctions relief that would otherwise remain unlikely. But the National Interest speculates that instead, the Rouhani administration will likely make cuts to wages, subsidies, or both, or stretch capital expenditures to the extent that the rate of inflation for the Iranian rial begins to increase at a faster rate once again.
Reuters points out that even in spite of the effect of these policies on the Iranian people – and even in spite of the 30 percent rise in the price of bread that already took place on December 1 – the danger of civil unrest is kept somewhat in check by the nation’s repressive security structures. This points to the regime’s prioritization of its own power ahead of other issues, which may serve to explain its rigid position regarding the nuclear program as well.
Changes in domestic spending will help to preserve this policy, as will the structure of the Iranian system, whereby spending on security affairs comes not from actual government funds, but directly from Supreme Leader Ayatollah Ali Khamenei. These factors will also preserve Iran’s support for the Assad regime in war-torn Syria, despite the added economic pressure from oil prices that hit 61 dollars per barrel on Monday.
“Our support to our brother Assad will never change,” said a senior Iranian official in the Reuters report. “Because of (declining) oil prices we face economic hardship … but we will manage to continue our support to Syria, militarily and financially.”
Indeed, far from allowing low oil prices to affect Iran’s policy and national narrative, its officials have generally been using those prices as a tool in advancing the same ideas. UPI on Monday quoted Ali Larijani, the Speaker of the Iranian Parliament, as saying that declining prices were attributable to a conspiracy by the same countries that conspired against Iran during its war with Iraq in the 1980s.
Beyond this, Iranian official’s public narrative is not changing much, and is still defined by the same claims of strength and unflappability in spite of international analysis finding that that Iranian economy has been largely crippled by international sanctions. Bloomberg pointed out on Monday that the Iranian Foreign Ministry had issued a statement claiming that the Obama administration’s announcement last week of resumed diplomatic relations with Cuba were proof that sanctions don’t work.
As was pointed out last week, however, sanctions on Cuba and on Iran were substantively different, mainly on account of the international nature of those exerted on Iran. Many members of the global community are equally threatened by the prospect of Iran obtaining nuclear weapons, and they have made this discomfort known through compliance with US-led initiatives, leaving Iran to struggle to set up apparatuses for circumventing sanctions with the help of a small set of partners.
What’s more, Iran’s international isolation hasn’t only harmed its economy. It also poses a threat to its security. Iran has steadfastly maintained that it would not join the US-led coalition against Sunni militants of the Islamic State if asked to. It has also derided US contributions to the conflict, suggesting that an alliance comprised of Iran, Iraq, Syria, and Turkey would be sufficient to confront the threat.
This narrative persists in spite of the fact that the threat may be growing for Iran, and will likely continue to do so in absence of outside help. The Tower reported on Monday that Sunni militants in the Iran-Pakistan border province of Balochistan had begun to step up their attacks in recent days, with some of them reportedly declaring affiliation with the Islamic State. This in essence brings the current conflict closer to home for Iran and stretches it across both the western and southeastern borders of the country.