Iranian Sanctions Lifted, Reform Unlikely

The world community lifted Iranian sanctions upon discovery that Iran has abided by the terms of the nuclear deal, according to Business Insider. However, President Hassan Rouhani faces a tough road ahead with regard to economic reform, due to opposition from hardliners and Ayatollah Ali Khamenei. The Iranian economy suffers from declined living standards, rampant inflation and widespread youth unemployment.

The world community lifted Iranian sanctions upon discovery that Iran has abided by the terms of the nuclear deal, according to Business Insider. However, President Hassan Rouhani faces a tough road ahead with regard to economic reform, due to opposition from hardliners and Ayatollah Ali Khamenei. The Iranian economy suffers from declined living standards, rampant inflation and widespread youth unemployment.

As part of the sanctions relief, Iran will immediately gain access to over $30 billion in overseas funds, and the international community will lift an oil embargo against the country. Iran may have achieved its goal of ridding the economy of sanctions, but the real work begins with economic advancement.

The president stated that his country would need $50 billion a year in foreign investment to achieve an annual goal of 8 percent growth, notes the Scotsman. With that, the oil revenue will prove crucial in propelling the Persian nation forward despite lower oil prices, but without the necessary changes that would improve economic prospects, Iran will never reach its full potential.

Rouhani is a reformer, who champions progress, but the Ayatollah is the ultimate authority over political and economic affairs, and he remains unlikely to support the president’s agenda. Khamenei and other hardliners agreed to the deal to lift crippling sanctions, but they refuse to further integrate the country into the world economy.

No matter how progressive an Iranian president may become, the country remains shackled by authoritarianism and unyielding religious devotion, including a government that repeatedly ruffles feathers. The United States imposed a fresh set of sanctions that restricts certain Iranians and firms in response to ballistic missile testing.

All of this is bad news for investors who may wish to see a friendlier Iran, and even though the sanctions lift will permit greater business activity, the chances of an open economy are slim. Many in the business community, especially European firms, remain eager to operate in a country brimming with an educated workforce and untapped growth potential.

Moreover, the nation’s high youth population makes the country an ideal spot for opening factories and other businesses, as employers could rely on a steady stream of young people to fill job openings. This is not to say that doing business in Iran would come without risk, but many companies express willingness to take that chance.

The main drawback is that Iran is a country steeped in perpetual conflict with its neighbors—most notably Saudi Arabia—which does not bode well for a stable business environment as geopolitical tension and ethnic/sectarian violence wreak havoc throughout the region.