Improving Iran’s ailing economy is of paramount importance to the President | Business and Wealth

Since the founding of the Islamic Republic of Iran, economic management skills have not been the strongest part of the country’s leadership. Iranian political leaders, especially those from conservative areas, have always believed that the stability and survival of Iran depends largely on politics and ideology. As a result, they do not want to compromise their political ambitions, as well as their political affiliations, in promoting economic and social development.

The founder of the Islamic Republic, Ayatollah Ruhollah Khomeini, also said that the 1978-79 Islamic Revolution was about positive thinking, not “about the value of melons”.

On June 18, Ebrahim Raisi, the country’s top court official, was elected the eighth president of Iran. Although the President is a highly controversial politician who puts his mind at the forefront of any financial crisis, all indications are that he will not take the economy as it does in the aftermath.

It’s all about the price of melons

Today, the survival of Iran’s political system depends more on the economy than ever before (in particular, since the end of post-war reconstruction in the late 1990s).

Since the 1980s, the Iranian government has been buying the loyalty of the Iranian people through direct and indirect mutual aid. However, over time, these subsidies have become a burden on the state budget. Over the past decade, the government has repeatedly tried to reduce the problem, but to no avail. By 2020, renewable energy alone is estimated to be $ 75-80bn, one of the highest in the Gulf region.

Iran’s economy is suffering from US sanctions and the coronavirus, which is exacerbating the financial crisis that has plagued the country, and now we need to work together to improve economic development and ensure that the government continues to have access to public trust. As a result, the President has no choice but to rebuild the economy as the main goal of the administration.

Meanwhile, Iran’s economic policies have been strengthened by building and strengthening the so-called “economic rejection” – a self-reliant economic system with a strong government, whose main goal is to ensure that power is a loveless environment.

And this system has repeatedly accomplished its purpose. Despite the severe sanctions imposed between 2018-20, and the dire consequences of the COVID-19 epidemic, Iran’s economy is still struggling.

But Iran also paid a high price for the success of its “resistance economy”. While the model prevented the recession, it also undermined the prospects for economic growth driven by social change.

According to the IMF, in 2018 and 2019, the country’s economy fell by 6 and 6.8% respectively. In 2020, it showed a modest growth (+1.5 percent according to the IMF and + 0.7% according to private companies), largely due to rising oil prices and the huge amount of oil that Iran exports. By 2021, annual inflation rates are expected to reach 36% (I expect further increase in 2021-2022), with unemployment declining at 10-12 percent while 33% of the population lives below the poverty line.

As a result of the economic crisis in the country – which is causing chaos and widening the gap between the people and the governments – the President may be forced to radically change the nature of “economic resistance”.

Finally, the President has been urged to address the economic crisis in Iran after he becomes President for political reasons. Iran’s civil rights activists have been widely criticized for failing to uplift the economy and change the lives of people during their rule. As a result, as President, Presidents will face tremendous pressure to provide not only economic growth but also a better quality of life. If they fail to do so, the Iranian people will lose the only stability they have left, as well as politics. In addition, economic security is also important in the future of the President’s politics, as he is currently the first in Iran’s next prime minister. If he excels financially as a President, he can offer this as proof that he will be a great leader.

Economic considerations have made the President’s policy at home and abroad

In this regard, there is no doubt that economic considerations will determine the extent to which President’s supervisors will act in domestic and foreign courts.

Globally, the new President will continue to push for the reinstatement of the JCPOA, as this will help ease sanctions and provide relief to Iran’s economy. It should also work to strengthen Iran’s ties with countries such as China and Russia, which can help Iran’s economic performance through economic growth. The president has also avoided a confrontation with the GCC, as he believes the rich Gulf states could be the key to Iran’s return to trade and economic activity.

At home, the first years of the President’s presidency can be explained by inertia.

The new president has no financial knowledge, and in comparison with what he said, he plans to follow the leaders’ actions on the economic front and continue to rely on “resistance economy”.

This “similar” method will work for several years. A slight reduction in the sanctions, which are expected by the end of the year, will automatically change the major economic signs. In addition, the global economic recovery from the COVID-19 epidemic will also have a positive economic impact on Iran. All of this gives the President the false impression that the economy is still working.

However, these positive things will no doubt be temporary and soon the President will soon face the need to restructure his economy in his country.

After signing the JCPOA and lifting more sanctions in 2015, Iran faced similar economic challenges. However, the government has not implemented the necessary reforms to make the country a better place. As a result, just one year after the permit was revoked, the country’s economic index began to plummet.

In the next few years, this history is set to repeat itself. In addition, in the meantime, there is no doubt that JCPOA reinstatement will abolish all penalties. As a result, Iran’s tensions and opportunities for new technologies and global economic systems remain behind the resumption of cooperation. And even if the worst sanctions are lifted, Iran will continue to be seen as a “dangerous” country for businesses.

In addition, lifting sanctions will not address many of Iran’s economic woes such as economic instability, economic instability, instability in markets and secret societies, the presence of black and gray markets, cronyism, customerism and corruption.

Also, if he chooses to continue the current financial plan after lifting the sanctions, the President could fall into the same trap as his successor, Hassan Rouhani, a few years ago. In 2015-2016, a reduction in foreign economic pressures led to economic growth. However, this growth did not change into a social change. Deliverance due to sanctions only enriched the people, fostered peace in Iran, and changed many sections of the population against Rouhani’s superiors.

At this juncture, in a few years (probably by 2023), the President’s stable government will be forced to implement new economic policies. To be effective, the new system needs to be based on a generous attitude and promote economic growth. It should also promote employment and economic growth, while allowing for the reduction of subsidies.

However, the President may not personally recognize such legislative changes. The rival economy has been a key factor in Iran’s development and can only be abandoned with the approval and support of the current Prime Minister, Ali Khamenei.

Therefore, economic growth is the main goal of the President’s leadership. But whether they win or not will depend on Khamenei’s willingness to allow the country to change course.

The views expressed in this article are those of the author and do not necessarily reflect the views of the editor of Al Jazeera.