The deal struck between Iran and Western powers within the P5+1 framework agreement has prompted spontaneous joy among the Iranian populace, particularly the youth. Writing of the Iranian rank and file’s feelings concerning the agreement, one Iranian journalist reported to the Carnegie Center in Moscow that while the agreement is supposed to end Iran’s isolation and alleviate economic hardship, it is no less important to the popular masses in Iran that they feel their country was treated with respect. For most Iranians, the economic issue has been and remains the most pressing, in contrast to the nuclear program itself, which remains taboo and therefore cannot be discussed freely.
The majority of the Iranian press, including both conservative and hard-line media outlets, have embraced the agreement despite some reservations. This is also in part due to the fact that Supreme Leader Ali Khamene’i adopted the agreement after having thanked Iran’s negotiating team. Numerous media sources, both in Iran and abroad, have been trying to calculate the prospective benefits of the agreement for Iran’s economy as a result of the lifting of sanctions–from the expected windfall of Iranian frozen assets to the future export of hydrocarbonates.
Considering Khamene’i’s vow to continue the struggle against the United States, no normalization between the countries is in the offing, at least in the simple diplomatic meaning of the term. Thus, the most probable economic developments should be expected between Iran and Europe. While European pundits acknowledge the great potential of the Iranian market for European industries and companies, most specialized economic reporters are also aware of the fact that the agreement will have a minimal impact on Iran’s economy, despite the overall appeal of the Iranian market. The return of investors–if and when this occurs–will be very cautious, due to several impediments of the Iranian economy, which are unrelated to the sanctions.
It is noteworthy that numerous Iranian media outlets are fully aware of the domestic obstacles hindering economic development. In an editorial published prior to the signing of the agreement in the reformist Iranian newspaper Sharq and written by Iran’s seasoned and insightful political commentator Sadeq Zibakalam, Zibakalam wrote that one should not deem the agreement as:
Moses’ staff that will perform miracles in Iran’s economy! It cannot reduce the rate of inflation, create jobs for six million jobless people, remove chronic corruption in the administrative structure… The agreement is also not supposed to immediately make our relations with some of our neighbors friendly or create a Middle East free of nuclear weapons…. Nevertheless, the agreement is considered to be a historic turning point not only for Iran, but also for the entire world. Many of the Western commentators have already described the agreement as one of the greatest, most complicated, and most successful negotiations post-World War II…. Moreover, if we can strike a deal on difficult and complicated nuclear differences with the United States, is it impossible to reach an agreement in other fields with America as well?
If Zibakalam is urging not to be lured by euphoria, other media outlets have been even more outspoken. For instance, the moderate conservative media outlet Asr-e Iran argues that “with or without sanctions our country is suffering from dozens and hundreds of hardships caused by mismanagement, cultural intrinsic problems, a sick economy, entrenched corruption, and deep bureaucracy. The removal of sanctions will not make all these problems disappear.” The editorial further states that Iran is in urgent need of a clear and transparent economic development program. At the very least, the rate of corruption must be decreased.
An article published recently on the economic website Seday-e eqtesad explains why it is unlikely Iran will become a bonanza for foreign companies, contrary to the widely accepted image in both Iran and the West. According to recent statistics, 5% of Iranians live in total poverty, while 33% of the urban and 40% of rural population are defined as poor. Ten million Iranians are eligible for free “food baskets” to meet their needs. Finally, 33% of the Iranian population does not have purchase power, thereby making the Iranian market smaller than it may seem. Moreover, the Iranian economy suffers from four additional factors that heavily impede foreign investment.
“Is it really possible to work in Iran?” posits the article. In this regard, Seday-e eghtesad addresses rumors that McDonald’s is planning to open branches in Iran. It argues, however, that any foreign fast food company would be required to deal with countless permits and regulations, also because this would conflict with the interests of the local food producers.
The articles continues, “Are foreigners really coming to Iran?” In response to this question, the website cites a Financial Times editorial according to which foreign companies and banks are very cautious before entering Iran.
“Is anybody ready to bring money to Iran?” According to Seday-e eqtesad, “Official statistics indicate that 700,000 Iranians companies are registered in Dubai and more than a million Iranian firms are registered in Turkey. Iranian investors have transferred their capital to a safer environment. Considering these circumstances, one can assume that Iran is not very attractive to foreign investors.”
To conclude, the agreement is indeed a turning point in the relationship between Iran and the West, particularly Europe. There is still, however, a long way to go in order to achieve a real improvement of living standards and economic development due to numerous obstacles within the Iranian economy that are unrelated to the sanctions. Iranian analysts are fully aware thereof.