These 6 graphs show how sanctions are crushing the Iranian economy

Iran’s economy is collapsing after years of U.S. sanctions and Tehran insists Washington must suspend those restrictions before the two sides can return to nuclear talks.

Both countries have expressed interest in returning to the negotiating table, but neither the United States nor Iran want to give in to the other.

Iran signed the nuclear deal – officially known as the Joint Action Plan (JCPOA) – with the United States, China, France, Russia, the United Kingdom and Germany in 2015.

But former U.S. President Donald Trump withdrew from the deal in 2018 and imposed sanctions under a policy of “maximum pressure” to force the regime into negotiations.

Here are six graphs showing how the Iranian economy is struggling.

Iran’s economy contracted by approximately 4.99% in 2020, steadily declining since 2017.

In comparison, the Islamic Republic enjoyed strong economic growth of 12.5% ​​in 2016 after the signing of the nuclear deal. However, this grief was short-lived.

“It’s impossible to know exactly what the numbers would be if there were no sanctions,” said Abrams, a former U.S. special envoy to Iran during the Trump administration who is now a senior member of Middle East studies on the Council. of Foreign Relations (CFR). “But I think it’s pretty clear that the sanctions have had an impact on the Iranian economy and the government budget.”

The International Monetary Fund sees Iran’s gross domestic product grow by 3% in 2021.

The sanctions reduced Iran’s ability to sell oil and prevented the repatriation of money from energy sales, Abrams said.

“There are billions of dollars sitting on the banks of Iraq, China and South Korea … that Iran cannot get its hands on because of sanctions,” he said.

According to IMF estimates, oil exports from the Islamic Republic are expected to continue to decline in 2021.

The Iranian currency has been falling steadily since early 2018, but Matthew Bey, a senior global analyst at Stratfor, said the rial has “stabilized a bit”.

However, its value in the unofficial market stands at more than 250,000 rials per dollar, which is far from the official central bank rate of 42,000 rials per dollar used for most imported goods.

A weaker currency makes imports more expensive for locals and high inflation means the cost of living is rising at a time when people are already struggling with a weak economy and labor market.

High unemployment rates will rise further, given Iran’s economic struggles.

12.4% of the population is projected to be out of work by 2021, according to IMF projections.

The Iranian government is spending beyond its means, and has seen the fiscal deficit increase. While this is not always bad, it could restrict the country’s ability to improve economic activity and recover from the coronavirus pandemic.

“I’m sure the national budget has some interest (for Iran’s supreme leader, Ayatollah Ali Khamenei), because he would like money for the revolutionary guards, for Hezbollah, for Shiite militias in Iraq. and for other expenses they have, ”CFR’s Abrams said.

However, he noted that the usual concerns of a civilian government, such as national income, average family income, inflation rate or unemployment rate, may not be important to religious leaders.

An agreement between the United States and Iran is not impossible, but only if each party softens its current attitude, according to Bey.

The United States, Bey said, should accept that the release of sanctions is a necessary step in getting Iran to comply with the JCPOA. On the other hand, Iran must recognize that if it does not take “substantial measures,” the Biden administration cannot fully suspend sanctions.

Abrams, for his part, said there is a “very important problem” in the Iranian policy of the Biden administration, which is to reactivate the nuclear deal before negotiating a broader agreement that includes the Iranian missile program. and their support for the militias in the region.

“But once you got back to the JCPOA, you lifted most of the significant financial sanctions,” he said. “So you’ve removed most of your leverage to get Iran to accept these extra things you don’t want … to accept and I don’t see why I would agree at this point,” he added.

Stratfor’s Bey noted that Tehran insisted on the lifting of sanctions before talks could begin.

“Iran seems to have calculated that it can withstand the economic pressure that is accumulating as it takes a tougher stance against the Biden administration,” Bey said.