Political Economy Iran

How does Iran manage its economic performance? intro How does Iran manage its economic performance?

Economic System Iran

Iran System Economic System Reflects the dilemmas of late modernization, authoritarianism, & war. Also an example of the resource trap Economic development didn’t really begin until under the Pahlavi dynasty The economy grew under a mercantilist system, an attempt at top-down industrialization Directed by the state, Iran made a rapid jump from agrarian society to an urban and industrializing society

Oil is controlled by the state Iran Resource Trap Oil Discovery of massive oil reserves in Iran have turned to be more bad than good Oil is controlled by the state Rather than directing money toward other development, leaders siphon off wealth to get rich or to fund their own policy initiatives Since the public is eliminated as the major source of state revenue, those in power can ignore the public & repress opposition Where oil is strong, the private sector is weak, limiting women’s participation in the workforce & their independence

Iran Bonyads Bonyads The 1979 constitution states “the economy is a means, not an end” Industries were nationalized after 1979 Industries were turned over to bonyads – parastatal foundations whose objectives are to help the disadvantaged They operate independently of government oversight or taxation Many bonyads have become major economic players and often monopolies that control major assets and industries

Iran Economy Problems The private sector is small, maybe less than 40% of the whole economy The unemployment rate is around 13% & may be even higher Worse for young people. 20% men & 40% women 20-24 are unemployed The numbers are even worse for highly educated Iranians because there are less opportunities for them to work In 2008, 56% of Iranians between 25-29 live with their parents & delay marriage for economic reasons

Iran FDI Foreign Investment One economic goal is self-sufficiency to secure the country from the West During the 1990s there was more interest in FDI especially to improve the aging infrastructure of the oil sector International sanctions drove away much investment. China is the major source of investment and new technology Iran has failed to generate much foreign investment in any industries other than oil

Iran Foreign Relations

Iran Foreign Relations Islam Iran’s leaders thought theirs was the first in a series of revolutions that would sweep the Islamic world & extend beyond Iran They support groups like Hezbollah and Hamas because of these ideals Hezbollah was trained by the Revolutionary Guard & attacked Americans in Lebanon in 1983. Hamas is supported by Iran and carries out attacks on Israel Associations with terrorist groups & focus on Shiism have limited the ability of the Revolution to spread.

Iran Foreign Relations The West (improving) Iran’s relations with the west go back & forth between reconciliation & conflict. In 1990s, President Khatami tried to improve relations with the West Sept 11th attacks seemed to be an opportunity to work together with the US. Iran has strongly opposed the Taliban govt running Afghanistan Iran was always anti-Saddam Hussein in neighboring Iraq because of the invasion in the 1980s.

Iran Foreign Relations The West (getting worse) The Supreme Leader & other conservatives were opposed to improving relations with the US US President Bush named Iran as part of an “axis of evil” that supported terrorism Iran’s pursuit of nuclear technology became a bigger global concern in 2001 In 2005, Ahmadinejad was elected after taking a hard line against Israel and the West & using nuclear technology as a symbol of national pride

Iran has much greater leverage in world affairs than many expected Foreign Relations Growing Influence Hostile rhetoric from the US convinced many Iranian leaders that they would be targeted after Iraq & Afghanistan Iran has much greater leverage in world affairs than many expected Iraq War ended Saddam Hussein and brought a majority Shiite population into power Shiite exiles in Iran returned to Iraq which gave Iran more influence there Iran’s influence is also growing in Lebanon, Syria, & Palestinian territories

Iran Foreign Relations Shrinking Influence Iran’s nuclear efforts have isolated it from the international community Arab Spring revolutions have made Iran less relevant in the region Arab states now have their own models for removing dictatorships & building new regimes without the 1979 Revolution ISIS has grown as opposition to the Iranian backed regime in Syria & Iraq ISIS has a world vision that seeks to eradicate Shiism Iran is more isolated now & has less to offer ideologically than any time since 79

Iran Nuclear Program

Iran Nuclear Program Nuclear Weapons Even before 1979, Iran was interested in developing nuclear weapons This was halted by the revolution and the Iran-Iraq War Early 1990s Iran began mining uranium & attempting to get nuclear technology from Pakistan and North Korea IAEA (International Atomic Energy Agency) inspects nuclear facilities to determine their purpose It’s acceptable to have programs to create nuclear energy, but not to be trying to obtain nuclear weapons

Iran hasn’t always cooperated with IAEA Nuclear Program Nuclear Weapons Iran hasn’t always cooperated with IAEA They have parallel programs – one that builds centrifuges for nuclear power, and a separate one that works on weapons Peaceful nuclear programs require enriched uranium – but that can be further enriched to produce a weapon For the past decade, international sanctions have tried to stop Iran’s nuclear program The sanctions limit trade that should deprive the govt of access to needed technology & force them to agree

Iran Nuclear Program Nuclear Weapons The sanctions strengthen the Revolutionary Guard – who benefit most from smuggling & illicit economic activity International actors have also tried to stop the program with espionage Israel has assassinated several top nuclear specialist in Iran Most Middle Eastern states are opposed to a nuclear Iran as well

Iran Nuclear Program President Rouhani The election of President Rouhani has improved cooperation on the issue Iran agreed to halt enrichment & place facilities under eth inspection of IAEA In return, the international community agreed to relax sanctions on oil exports and some imports Further steps were taken in 2015 under an agreement with the USA which forced Iran to give up most of its uranium and centrifuges

Ayatollah’s Advice Iran

Main Ideas Iran Ayatollah’s Advice Resource trap Lack of economic opportunity Relations with neighbors & West Nuclear Program Ayatollah’s Advice