1. Political Economy
Iran

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

3. Economic System
Iran

4. 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

5. 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

6. 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

7. 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 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 live with their parents & delay marriage for economic reasons

8. 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

9. Iran
Foreign Relations

10. 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.

11. 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.

12. 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

13. 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

14. 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

15. Iran
Nuclear Program

16. 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

17. 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

18. 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

19. 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

20. Ayatollah’s Advice
Iran

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